Frmo Corp

Good afternoon, everyone. This is Therese Byers speaking, and I'm the Corporate Secretary of FRMO Corp. Thank you for joining us on this call. The statements made on this call apply only as of today. The information on this call should not be construed to be a recommendation to purchase or sell any particular security or investment fund. The opinions referenced on this call today are not intended to be a forecast of future events or a guarantee of future results. It should not be assumed that any of the security transactions referenced today have been or will prove to be profitable, or that future investment decisions will be profitable or will equal or exceed the past performance of the investments. For additional information, you may visit the FRMO Corp website at frmocorp.com. Today's discussion will be led by Murray Stahl, Chairman and Chief Executive Officer, and Stephen Bregman, President and Chief Financial Officer. They will review key points related to the fiscal 2025 first quarter earnings. And now I'll turn the discussion over to Mr. Stahl.

Okay, thank you, Therese. Thanks, everybody, for joining us. So I'm going to, in my... introductory remarks, I'm going to do it in two parts. One, I'll point out some things I find interesting that are on our financial statements. Then I'll point out some things that are not on our financial statements that I also find interesting that would be good to get some more information on, I think. And then we'll go to questions. So let's start with the things that should be obvious. So looking at the balance sheet, you can see there are Total assets, $548 million. That's a record for us in the event. And you'll see our cash balance. I'm not sure if the $42.4 million is a record or not. It looks like it's certainly a recent record for many, many years. I don't know if we might have modestly exceeded that at one point. But if we did exceed it, we didn't exceed it by much. So it's close to a record, possibly a record. Here's some things that are on the balance sheet that the consequences are not necessarily so obvious. Let's do the most obvious of less obvious first. You'll see our deferred tax liability is now up, exceeds $42 million. It's basically a tax-free loan from the government. As long as we keep that going, we're going to earn a lot more money than we otherwise would earn if we paid debt. So that's one of the reasons, but not the only reason why we're long-term investors. So that is a number worth paying attention to. Now, a part of that number is something you'll see under security sold, not debt purchased. We basically sell short what we call dysfunctional and other people call path-dependent ETFs. and you see our cost basis comfortably exceeds $10 million, and the market value is less than $1 million, it would be nice if we could carry that and never realize a tax. But there are two things bad. Number one, sometimes if these are... these are exchange-traded notes or ETNs. Some of these are exchange-traded notes. They have a maturity date, and we have to realize it. So we have no choice in that regard. And secondarily, even when they're funds, they're ETFs, and they're not notes, and therefore we don't have a maturity date as such, those funds pass out K-1s to people. And if we're short, then we might... inadvertently or let's say by the nature of the investment have profits passed out to us from being short and therefore we have to pay tax on it. So it's not quite as good as a long-term security that you hold, but it's almost as good. So that when that declines in value, there's margin released. And as you can see, that is not insignificant part of our cash balance. And we use our cash balance to do all sorts of interesting things. you'll hear about presently. Another thing that you'll find not so obvious but interesting, so you have these digital assets. It's now over $9.5 million. We keep mining more digital assets. You'll see the cost basis went up. The cost basis goes up not because we bought digital assets, we mine digital assets. So the mining is continuing. We have to live with the fluctuation up and down in value. And in this quarter, the value actually went down modestly. But in the long run, it's going to be a great investment. That also forms a part of our deferred tax liability, it's worthwhile saying. Now, if you go further down the balance sheet and you will see digital mining assets, that is the equipment net of accumulated depreciation. That's actually the equipment that we have, that we own, that we use to mine. You'll hear in a moment about we've been doing a lot of our mining inside of Winland. You'll hear about that presently. We're not actually letting these amounts decline nothingness. here presently been changing the kinds of equipment we've been buying. And we've been buying mining equipment gradually. This is a very unusual sort of balance sheet position relative to other companies. Other companies make huge investments at one time and they wind down, make the market. We've had a gradual approach. Now, I'll go into the gradual approach in just a minute or two. Let me point out where we've been dramatically increasing our crypto investments and that's by expanding into Winland. So much of our cryptocurrency mining activity takes place in Winland. So we own as a firm now, these are round numbers, not exact, but for our purposes, they're exact enough. We own as a firm about 38% of Winland. And, um, Because a company related to us called Horizon Common and myself personally own about 2%. We control about 40% of the votes of Winland. So we do two things. One, we buy Winland in the market to gradually increase our exposure. But secondarily, of late, for most of the cryptocurrency mining equipment we bought, we basically swap that. We buy new equipment. We swap it with Winland. in exchange for shares of Winland, and that of course raises our ownership of Winland. The reason for the gradualist approach is twofold. The first is that when we started mining years ago, there was no one, including ourselves, that knew everything there was to know about mining, nor could anyone have known everything there was to know about mining, because the nature of mining over the last eight years has changed in some ways quite dramatically. So we've been learning as we go. And our mining operations have gotten much more efficient than they ever been. And I would say this year, to count the year 2024, we've made the biggest strides we've ever made in efficiency and profitability. And we're still learning. So it's an ongoing learning experience for everyone. Second reason is the nature of the equipment is constantly changing. So you were to compare the most recent iterations of equipment and the energy efficiency related to that relative to the equipment that you could have purchased eight years ago, it's just incommensurable how much it's improved. Now, if the equipment generations were released On a predictable cycle, what you could do is you could buy a lot of equipment in one order, and you could wait for it to depreciate, and you'd know, you'd be able to plan at what time you need to buy new equipment, meaning you'd be able to know in advance when your equipment might be obsoleted. The trouble is that there's a number of companies active in that field, and no one knows, including sometimes the companies that produce this equipment, when the new generation of equipment is going to be released. They're all competing with each other. So it's not an established market in the sense of equipment markets under field, trucking, agricultural equipment, automobiles. It doesn't have a schedule attached to new equipment iterations. Therefore, we have to be very careful not to put too much money into any one generation equipment for two reasons. One, the danger of being obsoleted by a new innovation. And secondarily, the new equipment, we'd like to buy a small amount and test it because some equipment is just more durable than others. And we've had some great experiences where we bought equipment and we would have thought ourselves very fortunate if we would have gotten a useful economic life of not even three years, we ended up getting an economically useful life that exceeded four years. Sometimes it happens. I'm being very fortunate in that regard. On the other hand, sometimes some other things happen that we either couldn't have predicted or we should have predicted but we didn't predict. Here's something we should have predicted. This happened a while ago that we just didn't predict. We should have more thoroughly checked every delivery of equipment for the presence of viruses. And on one delivery, we forgot to do it. It's a remediable situation, but you have to stop what you're doing, unplug all the machines, and search for viruses. And that can be very time-consuming. Then you have to remove the viruses from machines. That can be even more time-consuming. And how effective it is, we had a certain period of time when we couldn't use the equipment productively, meaning we couldn't mine. It wasn't a great number of devices, but it actually happened. And it wasn't a great number of devices because we never buy in any shipment a great number of devices. And that's one of the reasons we don't do it. Unfortunately, we forgot to check that shipment. And look, they're human beings and sometimes these things happen. Here's something that we probably could not have predicted but happened to us. We have diversified our equipment into a variety of different hosting sites. Some cases we control those sites, other cases we don't. And believe it or not, some of our equipment actually got hit by lightning. wasn't destroyed, but was rendered basically inoperable. So did we have insurance for those machines? No, we did not have insurance for those devices. Why did we not have insurance? Should we not have predicted that? We did predict it. We would very much have liked to have had insurance. Unfortunately, at that point in time when these things happened, no insurance company was willing to insure Small batches of advices. They felt that the underwriting results were too unpredictable. In any case, on our balance sheet, we're effectively, not really, but effectively self-insuring. We can afford the odd mishap if it actually happens. So we're well prepared. In any event, at some point, or actually at this point, we're increasing our... ownership of Winland and we're increasing our crypto mining activities. They're getting much more profitable than they've ever been. And at some point, if we reach that point and we own over 50% of Winland, we're going to have to consolidate. At that point, FMO will be effectively an operating company. So as I said, we're learning constantly. Our profitability is increasing. It's never been better than it is right now. And if things go as planned, It's going to be better yet in the forthcoming months. We've been looking for many, many years for business to get into to turn this into an operating company. We didn't want FMO to be yet another asset management company. And of all the, and I wrote this in the shareholder letter, of all the potentialities, there were businesses that we didn't know very well. We didn't want to buy those. There were businesses we did know very well and we liked, but they were just too expensive, we wouldn't have had a high return on capital. So it became this, and this is something that we thought would be within our ability to comprehend and end up having a good outcome with, and I think you can see from the results, we have a pretty good outcome thus far. So that's the plan, and that's a brief resume of what we've done. So without further ado, maybe Therese, you probably have some questions that you've compiled. And I think we'd be delighted to answer those if you would kindly read them to us.

I'd be happy to. The first one we have is, what FRMO issue keeps you up at night?

To tell you the truth, maybe I shouldn't say this, but I'll say it anyway. I actually sleep very, very soundly. And I'll tell you why I sleep very soundly. Our equity investments, not entirely, but largely, were invested in hard assets. And if you examine the history of wealth on this planet, and I think I've written about this in several of my compendia, throughout history, wealth has been largely in hard assets. Why? Because unlike intellectual property assets, Hard assets, they're like land or gold or things of that type or diamonds. They exist more or less infinitely. Intellectual property can always be surpassed by superior intellectual property. We live in a very unique age historically in which if you look at stock market capitalizations, Intellectual property has a lot more equity in market capitalization than tangible assets. And I believe that's going to shift. So there's that. And then we also prepared, through our cryptocurrency investments, for the ongoing currency debasement that's taking place, not just with U.S. dollar, but everything in the world. And you'll see the BRICS companies, or BRICS countries, I should say, are about to have... And they're talking about having a BRICS currency that would at least trade alongside the dollar. And it's going to be backed by some hard asset like gold or maybe a basket of hard assets. And there comes a time that the asset-producing nations of the world will be reluctant to accept the alt currency. Those are the big risks. We prepared for them. And I don't stay up at night worrying about it. But I will say during the daylight hours, we work exceedingly hard to prepare for a variety of contingencies, such as which I thus far talked about a few of our mishaps in cryptocurrency.

So I hope that's a good answer. Yes.

The next is, what is MYAX's competitive advantage?

What is MyEx's competitive advantage? Well, to begin with, and this is an opinion, MyEx has, in my humble opinion, the best technology of all the exchanges. And I don't think it's even close. So measured by latency, the ability to adapt to new products, I think it's the best. But of course, that's just my biased opinion, so you can take it for what it's worth. However, MYACs have one other interesting attribute that the other exchanges, I think, do not have. That's more tangible. So MYACs is a multi-asset class, multi-geography exchange. So are there multi-asset class exchanges? Yeah, so MYACs is multi-asset because It has a stock exchange, an options exchange, and also has a futures exchange, which is the old Minneapolis Green Exchange. That's now MyEx Futures. So the CBOE has an equity exchange, an options exchange, and a futures exchange. So it has that, but MyEx also owns Bermuda Stock Exchange. That puts it in a different geographical jurisdiction. None of the other American exchanges have that. And the real stock exchange, because on the one hand, it's part of the United Kingdom, so Brexit affects it. On the other hand, it's a separate jurisdiction, so Brexit doesn't entirely affect it. It has what's known as an ESMA, which is the right to trade in Europe under certain conditions. So I don't know of any exchange that's yet achieved that diversification of act. It's pretty neat. And I think MyX, as you can see from their press releases, they're building on that. And we'll see how they do as the months progress.

SpaceX is increasingly launching heavier payloads. Will part of the AI infrastructure move from Earth? to outer space to take advantage of lower temperatures and lower latency?

Well, I'm out of my depth in answering a question like that. I can just tell you this, that the Chinese, I guess about 10 or 12 days ago, the people of China, launched their competitor to SpaceX, which is known as ThousandSails. So SpaceX, I think, is supposed to have 7,000 low Earth orbit satellites. I think 1,000 sails, when it's finished, is going to be something like 14 or maybe 16,000 satellites. I don't recall exactly what it's going to be. Will the critical data of the world move out to space? I very much doubt it. May well be. that you get free cooling because you're outside the Earth's atmosphere, so that's good, but the trouble is you've now got to project the results of inquiries down to base stations on Earth so all your secure data can be intercepted by anybody with a high-quality antenna. So I don't think any corporation is going to have really secure data, and I don't think any person is going to want their social security number or their credit card number or their bank account beamed off satellites because any rascal could pick it up. So I think the only way to keep it secure is landline. So I don't think they're moving any of that data center business to space. That said, There may be computations that are very complicated that might be worthwhile doing in space, but nothing that's data proprietary, I shouldn't think.

The next question has a long prelude.

Management has proposed that index ETFs are becoming the marginal price setter in the market. second quarter Horizon Kinetics commentary asserts that if index funds had, quote, begun in direct contravention of its purpose to directly change clearing prices and the very character of the markets it purported to free ride upon, end of quote. An element of this idea that I'd like to ask about is whether management could recall here any data on the proportion of average trading volume in major index stocks that is directly attributable to ETF creation and redemption activities versus total market volumes as opposed to secondary market trading of ETF shares, which do not cause buying or selling of the underlying share. One would think this proportion should be quite large in order for index funds to be price makers rather than price takers. My understanding is that share creations and redemptions in passive index strategies are responsible for only a small amount of total market trading activity. A 2019 Vanguard study, which management can find as titled, quote, a drop in the bucket indexing share of US trading activity, end quote, concluded that only 5% of average trading volume in major index stocks is directly attributable to ETF creation and redemption activities, though I'd note they only use a single year of 2017 data. What evidence supports management's idea that ETFs set prices given their apparently small contribution to total trading activity?

Okay. Well, first of all, it's a good question. Let me start. There's a lot I can say. Let me start that study is designed to answer its own question in the way it's supposed to be answered. So you can't merely look at redemption and creation baskets and then take the ETF trading itself and ignore it. So for example, let's take the most widely traded DTF, what I believe is the S&P spider, symbol SBY. And I don't remember the number of shares traded off the top of my head every day, but I think you can look it up in minutes and you can see that it wouldn't take very many days before the entire SPY changes over. So to say that the trading of SPY or the Vanguard ETF VOO, also S&P 500, or the iShares S&P 500 ETF IVV has no effect on security prices when it's the major share of New York Stock Chain trading volume. The problem with the whole analysis is, I'll go into it deeper in a second. So basically say there's volume of X on New York Stock Exchange And then you look at the creation redemption basket, say it's really only a small proportion of the volume. And you don't look at the major components of New York Stock Exchange volume are the trading of ETFs. There's no question about it. And I could give you many, many more ETFs to look at. You could look at QQQ. There are many others. And basically take all that ETF trading and put it into the column of the active managers when it's all indexed. To actually do that, I think that completely... misses the mark, if I may say so. That's number one. So to do a proper study that way, you'd have to add the trading of the ETFs, because those are stocks. So it's not that people create and redeem baskets, it's that they trade the indexes as if they are stocks, and in fact, they actually are stocks. So to say that that index trading does not affect security prices I mean, how do I say this politely? I don't know how to say it politely. It's an escape from reality. I'm sorry for expressing it that way. I normally don't say things like that, but it really is. Now let's look at it another way. So if you were to look at it in terms of the assets under management of indexes, so for example, index providers, which is S&P Global or MSCI or Russell, which is owned by London Stock Exchange, On their websites, they give you what their assets under management are, meaning how much indexed investments are, or what is the market value index investments that are managed in accordance with their indexes. And it's an incredibly big number. I put it in one of the compendia. I don't remember which one it is, and I don't remember the number off the top of my head, but I'm willing to bet whatever I said, it wasn't that long ago, I'll bet it's bigger today. So now, if you take that figure, which is, it's a big figure, whatever it is, look at your trading volume, how could you come to any other conclusion than the theory that's a drop in the bucket is ludicrous on its face?

So that's my response.

Hey, in September of 2022, Horizon Kinetics published an article called mining economics and what drives the Bitcoin price volatility versus information efficiency, where they link the price of Bitcoin as being led by the price of ASIC mining rigs. The piece includes a graph that compares the price index of mining equipment with the price of Bitcoin from dash dot hash rate index.com, which seemed to show a strong correlation from the start of 2022. However, since January 2023, we've observed significant divergence in this relationship with Bitcoin's price rising substantially, while ASIC prices have remained relatively depressed and stable. How does management reconcile this apparent breakdown in the correlation that supported the thesis in this article? Has management's view on the relationship between mining economics and Bitcoin's price changed? Furthermore, how might this shift impact FRMO's Bitcoin or rig purchasing strategy moving forward?

Okay, well, first of all, I don't believe I wrote that. I don't know who wrote that. So somebody wrote it, but I don't think it was me. So let me just, I don't think it requires correction, but it requires some degree of explanation. There are three vectors here. that really govern the price of Bitcoin. So one is the halving. So every four years, the block reward gets cut in half. And if you wanna look at it this way, if you wanna mine the same amount of coins, assuming the equipment doesn't get any better, you gotta get twice as much equipment. But the thing is, the equipment does get better. So In order to understand what that's all about, you have to look at how much electric power the equipment actually uses. The equipment of today uses electric power much more efficiently than past years, but on the other hand, there's more mining rigs. So put all those things together, and that's really what drives the Bitcoin price. The most important vector I would have to say is the halving. So the equipment, it can affect the price. So for example, if for some unexplainable reason, the equipment prices were to drop tomorrow, Bitcoin would definitely drop. The reason that the equipment prices don't shift the way they did historically, and that's probably what you're referring to in that graph, whoever it was that did it. The person who did that graph is probably unaware that starting around the end of 2002 or the beginning of 2003, Bitcoin device prices established what is effectively a futures curve. So if I put an order in for an S21 today, I'll pay X dollars for it, whatever that number is. But I can, as an alternative, say I don't want to put an order in today for, let's say, December delivery. I want to put an order in for January delivery. They actually refer to it, it's not a real futures market, but when people talk among each other, they refer to it as the futures curve or the futures market. So you combine the machine and the futures market, the device and the futures market for January delivery. And the difference between the price for delivery ASAP and the price in January is the amount of money you would have made in the interim. The difference between getting delivery ASAP and waiting until January for delivery. You'll see it's actually pretty efficient. So what's happened is the vector of the change in money prices has now become completely predictable. And that's something that if somebody is going to update that, that graph has to be taken into account. But it's not to say that there's no correlation between the price of the equipment and the price of Bitcoin. It's really not the price of the equipment. It's how much equipment you need to get the desired result, to get the desired outcome, how many coins you wish to mine. So I think had the graph been expressed correctly, That way, I think you look at it in a different way. But again, I don't believe I wrote that. I don't recall writing it in any way. So I hope that's a good answer.

You said there were three vectors. And you mentioned one, I think, unless I missed the other two.

No, there is the having, which is every four years they have. there's the price of machines, and the third one is the hash rate, or better said, difficulty coefficient. The reason I say hash, I'm going to define these terms in a minute. The reason I say the hash rate is because the hash rate is the easiest to understand. The hash rate is the aggregate computational power of the system. If you take every Bitcoin mining device, and add it up with computational power, some are more powerful than others, some are earlier, some are later generations, they have different computational power, add it all up. That's the hash rate. And the hash rate right now, or at least I looked an hour ago, so I'm not looking now, was 711 exahash. Exa means one followed by 18 zeros. And the reason I use that term hash rate, even though it's a common term, Reluctantly, I use it because when I say, yeah, you're a computational imperative system, it's easy to understand, as opposed to the difficulty coefficient, which is harder to understand, but I should get to in a minute. So, yeah, it's every instance, okay, I have all these computers, they have a certain processing power, add it all up, I get it. The trouble is that they don't really get it because this hash rate number is not that there's an electric cable connecting every device in the world, that number, the hash rate, is an estimate. It's an estimate, it's a good estimate, but it's only an estimate, and it can be off sometimes. The estimate is based on how long it takes to solve the block. So you have two weeks, basically, of block song activity before they recalibrate something called difficulty coefficient, which I'll get to in a minute. So during those two weeks, A block can be solved in 10 minutes, a block can be solved in 11 minutes, a block can be solved in 8 minutes. Well, if they're solved in more than 10 minutes, the difficulty coefficient is going to decline. If they're solved in less than 10 minutes, the difficulty coefficient is going to go up, and the computer estimates what the difficulty coefficient is. And at the end of that period of time, the computer comes up with numbers. So the hash rate is estimated. So I use it with a little reluctance because I know people are going to think, they're going to say that, well, this is what the aggregate computational power system is. So if we had all these devices, all these servers within our control, we can actually measure it precisely. We can measure precisely. So basically, if the blocks are being solved in eight minutes instead of 10 minutes, we're going to assume that that the hash rate computational power system went up by 20%, when in reality, it might just be randomness. Why is it randomness? Because solving the block amounts to guessing a number. You're trying to guess a number. That's what you're trying to do. There's no fancy math involved. You're trying to guess a number. Now, what is that number? Now, once you understand what this number is, you'll understand difficulty coefficient. So basically, you're trying to guess a number in what's called the SHA, S-H-A, stands for secure hashing algorithm. The SHA-256, the SHA-256 algorithm, what does that mean? That means that you have to guess a number that's 256 digits long, everywhere from 255 zeros and a one to 256 99999. So the total number of values you can get is more than the number of grains of sand on this planet. So it's really a big number. So you would say that sounds pretty secure. And when people say that, other people say, yeah, but what if you get more powerful computers? Like what if you get like a quantum computer and couldn't it guess it, couldn't the computer guess it a lot faster and thereby hack the system? And the answer to that is yes, but it's not a problem. Why isn't it a problem? Because there's something called the difficulty coefficient. Difficulty coefficient is just a coefficient in number. If you multiply the SHA-256 number by to create increased number of possibilities. So for example, If you want to double the number of possibilities, you could multiply this huge vast number by two, or by three, or by four, or by 10, and so on and so forth. Right now, the difficulty coefficient exceeds 95 trillion. So this number, this 256-digit number, that is this vast number of possibilities, You take that and you multiply by, I believe it's 95.2 trillion. You create many more possibilities. But you can never get to the end of infinity. You can have infinity times infinity. So no matter how powerful the computers that are devised, you can always come up with greater difficulty coefficients. So I probably gave you more information than you want. on how this whole system works, but I hope I addressed your question in any event.

I recall that Mr. Stahl once mentioned in the fiscal year 2022 third quarter call that he did not see much value in Bitcoin developers pursuing scalability or medium of exchange technologies, such as the Lightning Network. If the price of Bitcoin is ultimately linked to the price of mining rigs, as management has published articles about in the past, would greater commercial and practical utility not drive greater transaction volumes and T's and thus greater Bitcoin-dominated net present values for mining rigs that would raise the price of the rigs and Bitcoin alike? Posed another way, what does management see as being the essential factors that drive mining rig value and thus Bitcoin prices.

Okay. So to begin with, I just said, and I just want to reiterate this, that the Bitcoin price is driven by the difficulty coefficient. It's driven by the price of the equipment. It's driven by the difficulty coefficient. It's driven by the hash rate, the price of the equipment, and by the halving. Those are the vectors. There are three of them. Those are the important things. Now, you might say, well, wouldn't it be great if you wouldn't have the block size limitation? The block size limitation, incidentally, for those who don't know what it is, when Bitcoin was designed, it was designed to have a four megabyte block size limitation. That means there's only so many transactions you can fit in a four megabyte block. And that's it. So now a lot of people, when they say we've got to get to scalability, well, we're going to have a lot of transactions. Those transactions are then going to fit into the four megabyte block size. So let's expand the block size. And there are many people who propose that. And the Bitcoin holders or the Bitcoin miners and the Bitcoin holders or the Bitcoin community, if you prefer that phrase, Bitcoin community, and I include myself in that, is 99.99% fanatical. and does not want to even slightly increase the block size. Just don't want to do it. And every effort to create a fork to modify Bitcoin to increase the block size has met with unbelievable opposition. When I say unbelievable opposition, 99% plus, well over 99%, don't like it. Why don't they like it? Because one of the reasons that you have hacking on the internet and all these digital payment systems is because for all intents and purposes, they have unlimited block size. So in Bitcoin, one of the things I should have said is it's a four megabyte block size and you only have 10 minutes to solve the block. So basically, you gotta get there first And you can't have a computer that keeps trying to guess numbers forever. Because sooner or later, someone's guessed a number and be able to amend the block in a way that you don't want to happen. You'll make it really, really difficult to validate a block. So the amount of money you spend on electric power is going to be more than the amount of money you can get if you're going to pursue some type of nefarious plan. And so far, Bitcoin's never been hacked. That's why everybody opposes it. So, and I oppose it too. So, the last thing we want is scalability. So, the way Bitcoin is evolving thus far, and as I said, it might change. The way it's evolving thus far, and I'll refer you to some statistics, you can see this for yourself in a moment, that Bitcoin is evolving in the kind of system where You don't really want to use Bitcoin for a small transaction. You want to use it for a relatively big transaction. So if you want to send $2 to your friend, or you want to buy a cupcake, Bitcoin is not for that. You could directly do it. It's not designed for that. It's designed to transfer large amounts of money on a secure basis. So the dollar volume of Bitcoin is the biggest of all the cryptocurrencies. I believe, if I'm not mistaken, the dollar volume of Bitcoin every 24 hours is comfortably in excess of $24 billion. So to give you an idea of what that number is, it's probably more than the volume of Apple, which is the biggest stock in the S&P, expressed in dollars. Now, I'm not looking at these figures, so I may be a little bit off, but $24 billion is a big number. If you're interested in doing small transactions, chances are you should go to another cryptocurrency that has the Bitcoin protocol, but it's set up for that because it solves the block more frequently. An example might be Litecoin. So Litecoin recently... is doing, Litecoin, by the way, has a fraction of market capitalization of Bitcoin. Bitcoin is like 1.3 trillion plus market capitalization. Litecoin on a good day is 6 billion, if it's even 6 billion. So it's a tiny fraction of Bitcoin. However, having said that, Litecoin does in volume about $4 billion a day. So assuming in round numbers is $6 billion market cap, two thirds of it is trading every day. So for small transactions, Bitcoin has a block time of two and a half minutes. So you like that sort of thing, then Litecoin is the thing for you. Or if you prefer, and some people do prefer, you might wish to try Dogecoin. Dogecoin has a more expansive monetary policy than either Bitcoin or Litecoin. but it's not all that expensive. And the problem with Dogecoin is it doesn't have anything remotely close to the transactional volume of Litecoin or Bitcoin, but it does manage to do a couple hundred million dollars a day. And some people have said, I don't know if this has any truth or not, but some people have said it seems reasonable that it's possible that what was once known as Twitter and is now known as X could find a use case for Dogecoin by making it the transactable currency in that social media. So you want to exchange value. Maybe it'll be Dogecoin. Maybe it won't be. I just don't know. But that's a possibility. So Bitcoin was never designed to be all things to all people. And I don't think the holders of Bitcoin are ever going to accept that. There seems to be no evidence for that. And if they did accept it, then the people who are purists, which at the moment is way over 99% of them, are going to go to another cryptocurrency. And you'll never stop the Bitcoin people because they modify Bitcoin. If somebody actually did it, the purists will just have unmodified Bitcoin because it's all open source code. So nobody's stopping the... the innovators, if the innovators want to have a much bigger block size, they can create a fork, and they've done it already several times, and they can invite people to use it. Well, every time they've done that, they've done it, I think, half a dozen times, nobody comes to use it. Now, when I say nobody, it's virtually nobody. Some people do want it, but it's a minority. So I guess that seems like what I have to say about that subject.

So what's next, Therese?

Regarding one of FRMO's smaller venture investments, how does Diamond Standard solve the logistical and security issues with a physical coin or other asset that is supposed to be tracked on a one-to-one basis on a digital blockchain? For example, it doesn't seem like anything stops someone from physically tampering with and removing the diamonds from the coin or bar from the resins and replacing them with fake diamonds before trading the physical asset, etc. Is it physically impossible to remove any diamonds from the physical asset without such tampering being detected by the onboard technology? What happens in issues of disputed tampering?

Well, there is an RF code that goes with it. So you can certainly break the resin open And you're going to damage the transmitter. And I don't know how you can get around that. So that basically makes the coin automatically unauthentic. And anyway, the Gemological Institute of America will not honor a gem certificate. It's certified by the Gemological Institute of America. So if you mess with it, I don't think anyone's going to validate that. So I don't think that's a realistic risk.

I wouldn't worry much about it. It's very hard, by the way, to counterfeit diamonds.

So you can always, if you were doing things like that, someone could bring a ring in to be engraved. It's a diamond ring. It's happened. They take out the stone. They put in a much less valuable stone. The average person wouldn't know.

But that's what you have appraisers for. So it gets detected pretty fast.

Incidentally, you have forgeries, and I wrote about this recently, in the world of art. It's actually more common than you believe. You also have forgeries in the world of rare wines. It's also common, but it doesn't stop the wine market. It doesn't stop the art market. I don't think it's going to stop the diamond market.

With modern technology, you can validate all these things. Okay.

During the 2023 shareholders meeting, a question was brought up regarding FRMO's stake in the REN Fund and a large holding of the fund in Apix Medical, as well as some questions about the history of that company's CEO, Charles Goodwin. Management revealed that there was an informal promise not to sell Apix without the agreement of the prior fund management, my question is, is that agreement expected to last indefinitely? That is, is there no corresponding informal expiration on holding that company, like say if the investment doesn't work out within some period of time? By my accounting, the company has not had positive return on equity or return on investment capital since 2013, and it's not improved much while being held in the fund or since Horizon Kinetics has taken over management of REN. At what point does fund management have an overriding fiduciary duty to deal with the position based solely on its fundamentals on behalf of other shareholders?

Okay, to begin with, Horizon is solely responsible for success or failure of that position. If we feel like selling it, we're totally at liberty to sell it. We can sell it tomorrow if we feel like it. Or if we want to keep it, we can keep it. So what happened to that company is, The chairperson that you note resigned on a certain day in May, and a new person took the helm and is developing a very different marketing plan. The problem the company really had wasn't in technology. Technology works well. The problem is in marketing. So what you really want, ideally, is there are these... Renewable, I don't know what the right word is. There are, I'll call them applicators. I don't think the company would call them applicators, but they're applicators. So basically it's a skin treatment. And you need this applicator. What the applicator basically does is it burns away the top layer of wrinkled skin. And the technology actually works. It actually works very well. So if it were used more frequently by people, then basically you can't reuse the applicators. You'd sell more applicators, and therefore the return on investment from everybody's point of view would be a lot higher. So there are really marketing challenges to tell people about this procedure, and it has an amazingly high success rate. And if people use it more, it'd be just great. So this person who took office said, Recently, the person is a marketing specialist, and the person has developed a plan to address that issue. That person came in in May. This is October. We've got to give the person a chance, and let's see if the person is going to be able to succeed or fail. So it took a few months to develop the plan. The plan was deployed in late August, early September. The little information I've had so far is it seems to be working well. Let's give the person a chance. If it doesn't work well, we can always dispose of it. But we're at liberty to dispose of it at any time, including tomorrow, if we are so inclined.

Okay.

Management has expressed the intent to convert FRMO into a crypto mining business, eventually plans to lift to a higher visibility exchange, and has recently added the company's direct digital asset ownership in its most recent quarterly filings. Given the intended direction of the company, would management consider providing look-through reporting of FRMOs or windlands broken down or aggregate mining metrics such as hash price, hash rate, energy costs from its mining operations, and hash rate capacity factor of rigs? Other public Crypto mining operations such as TerraWolf report such metrics and having these metrics reported by FRMO may be useful in analyzing differences in trading multiples between FRMO and other miners. For example, this would allow derivation and comparison of things like operational costs and Bitcoin revenue versus hash rate and understanding where various public operators stand along the cost curve in relation to FRMO.

Okay, I have no problem providing any of that information. I'm certainly willing to do it. There is some other information that you're going to get that is none of those figures. It's just additive. We're not going to hide anything. There's some other information that you're going to need to properly evaluate, and you can get that information, too. So give us a chance. Right now, we're in the process of... improving our operations. It's pretty good right now. In 90 days, I suspect it's going to be better. Can't guarantee that, but I think it's going to be better. And we're ready to provide any and all information. And I think when you compare it to other firms, I think you'll be very pleased with the outcome. But I'm delighted to provide any information that people want.

There's no secrets here.

Please explain how Horizon Kinetics Holding Corporation, being public, will impact FRMO financial statements starting next quarter and what it would mean today based on latest Horizon Kinetics Holding Corporation share price offers of about $24 and last reported financials.

Well, it doesn't impact the financial statement as such, the numbers you see in a financial statement, because We can continue in Horizon to use the equity accounting method. There'll be differences that you can figure out from the financial statements what percent we own of Horizon Kinetics. You know what the mark capitalization is. You can take that percentage and multiply it by the mark capitalization. You can see what the market value of Horizon Kinetics position is, if it's bigger or smaller than what we carried on the balance sheet for. So you can get a different look. It doesn't mean it's a better look, you can get a different look than you can get by just reading the financial statement. We didn't bring it public for that reason. The only reason we brought it public is that one of our founding members unfortunately died and the estate has to be settled and the estate needs the money. So the fairest way to value it for estate purposes, is the market. You might like the price, you might not like the price, but that's the fairest way. And that's the story, basically. Horizon Mechanics didn't need any capital, wasn't looking to raise any capital, got plenty of capital, so that's actually what happened.

When and what dividends shall be paid by, I'm going to call it HKHC, for example, quarterly dividends and the year-end extra perhaps. It is obvious that HKHC earnings are dependent on whether performance fees are owned by its how many hedge funds, which can only be determined at year-end of the fund's fiscal years. Are the fiscal years, are the years fiscal or calendar? What is the total approximate market value of how many hedge funds HKHC managers today.

Okay. To begin with, we're on a calendar year. So you'll find out the performance fee at the end of the year. I guess you'll find out in January. We'll find out on December 31st. We intend to pay a quarterly dividend. And we get a performance fee. There'll probably be an extra dividend. We're a publicly traded company. I can't guarantee there's going to be a performance fee, but the board's going to meet, look at the financials, and we'll decide what the dividend is going to be. And there'll be a public announcement, whatever it is. And if we're so lucky to have a performance fee, you'll know. And there may be a dividend associated with that as well. What is the market value of all of the performance fee products together? I don't know it off the top of my head. We could probably get you that number. Just understand on the performance fee, there's two dimensions to it. So we have funds that hold private securities that we accrue a performance fee. We don't realize the performance fee. So... If the investment were to be realized, we would collect probably several years of performance fee in one year. That could actually happen. So I'm reluctant off the top of my head to give you the number because I don't remember it, number one. And so it's going to be inaccurate. So I don't want to do it. But it's no secret. I mean, we can get you that number. And the second thing is when you look at that number, you're going to have to divide the the performance fee eligible funds in two categories, those that accrue and collect a performance fee yearly because they're public trade securities, and those that accrue but do not collect a performance fee yearly because it only can be collected when there is a realizable event. So you'll need that information. And I guess Horizon Kinetics will provide it because people are probably going to want it.

What is the year-to-date performance percentage of these funds?

Year-to-date performance? Well, again, I don't want to quote number because I don't remember the number off the top of my head. I'm not sitting here with a sheet of paper that has a number on it. Let's just say the number is satisfactory. And I'm sorry to be so vague about it, but that's all I can do at the moment.

I don't have a number in front of me, but we'll get you that number.

Do all of the funds own TPL, Texas Pacific Land Corporation? And if so, how many shares of TPL are in these performance funds?

Okay, again, I don't, have a spreadsheet with all those numbers. I never really needed it myself. We can get you all that information. Horizon is probably going to be asked all those questions and it'll provide all sorts of information. Not all the funds have TPL. As an example, I alluded to earlier, we have some private funds. TPL is a publicly traded security. If we have private funds, we own privately traded companies. TPL is not going to be included in that. So TPL is not in everything. But to give you the actual numbers off the top of my head, I don't have them. But I'm sure Horizon in due course will produce all that information. Remember, that's a Horizon. Those are Horizon statistics, not necessarily FRMO statistics. But I'm sure they'll produce all those numbers.

Another TPL-related question. How many shares of TPL does FRMO own today? I actually looked it up. Around 230, and if you want me to disclose it?

Well, if you looked it up, then it should be disclosed, right? Let's disclose it.

Okay. It's 24,024 shares at Fidelity, and I don't know.

Are you sure? I don't think that's the number, Therese. I think you're wrong about that.

Oh, you know what? I didn't include Gromax either, so you're right.

Well, that's number one. And number two, you have to include the proportional shares that we own indirectly through the various funds, which is on that sheet of paper that you normally provide, which I don't have right now, but it's supposed to be on the website. Is it indeed on the website?

I believe it is, and if it isn't, we'll make sure it is.

Why don't we take a deep breath? Why don't you look at the website? read the numbers and the date they're accounted on, and we can give everybody information.

Okay. In the meantime, I'll give you another question.

Same question.

Okay, well, you know what? Let me, while you're looking at it now, let's not go to another question. Let's deal with this question. In the meantime, while you're looking for that number, I will tell people this is why I don't keep these numbers in my head because as you can clearly see, even if you have spreadsheets in front of you, you can read the wrong line. It's not as easy as you might think. There's a lot of numbers to keep current with and it's easy to confuse one number with another number. So that's why it's best I have a website where a separate human being, or I think it's a team of human beings, calculates these numbers. And that's why we have the website to provide people these numbers, which I'm hopeful you'll be able to find those numbers presently. How are you coming?

I do have the number from that spreadsheet. I am getting it from our files, but I'll make sure it's on the website.

Okay, is it on the website now? Let me ask you. Okay, that sounds right. So what is the number? Let's repeat that number.

What is the number? $159,101. Okay, that sounds now.

That number, let's just specify if that's indeed the right number. Where are you getting that number from?

From the spreadsheet that we had for this quarter. Okay, and what is the date?

I understand, but what is the date? What month and date?

As of August 31st, 2024.

Okay, and what does it say? What is the heading of that? Does it say our proportional ownership? Does it say, what does it say? Because it's not our direct ownership. It would have to be our direct ownership and our proportional ownership.

And that's why you're at the CEO.

Because what you might be looking at, Therese, just as I say, be careful. What you might be looking at is you may be looking at the number that includes all of the shares of HK Hard Assets. And not all the shares of HK Hard Assets belong to FRMO because there are other investors in HK Hard Assets. So you might not be looking at the right number.

I'm looking at. Held indirectly through public and private companies, so it's proportional. But I was not including what's held directly. Okay.

Why don't we do this? Okay. Well, go ahead. Say what you have to say.

Well, add the held directly and the indirectly proportionate.

Okay. Well, let's just give the indirectly and directly number. We have both numbers, and people can add them up.

Okay.

What is the indirect number?

20 direct number 29 29 514 and the held indirectly this is proportionally calculated is 159 101. okay so our total ownership is obviously some of those numbers okay that's good okay what's the next question i hope we address that Same question regarding LandBridge and with respect to that, did any of the above or any of the HKHC entities purchase shares at the $17 offering price with respect to shares of FRMO, the hedge funds HKHC of which we own almost 5% shares? Is that correct? And purchase of LandBridge shares at what cost today?

Yes. We obviously purchase shares on the initial public offering. We purchase shares subsequent. We have a certain number of shares, and there's some spreadsheet somewhere that will tell you exactly how many shares we have. And if you have that, you can read it. If you don't have it, that's fine.

I don't have it.

Okay. Well, it didn't come up on the spreadsheet because now someone's asking, and I guess it's another number you'll have to put on your spreadsheet. So you can go back to the team, let them calculate those numbers. If you don't have number shares, obviously the other answer is a question you couldn't have as well. So you'll have to gather that information.

Okay. Will do. HKHC.

Yep. HKHC appears to have allocated the $80 million worth of LandBridge acquired at $17 to all of its investment advisory clients. Is that correct? What is the average fee? HKHC earns net on the investment advisory accounts. It is obvious that LandBridge shares have tripled in price and value, and so will be a very meaningful source of HKHC revenues and profits, and hence book values each of which we own almost 5% interest positions. At the same time, if HKHC is going to pay a dividend and particularly a special dividend at year end, or will it be next year in the first quarter? We, FRMO, could actually receive a meaningful amount of cash from dividend payments. Bottom line, I am trying to get at, it's clear that the assets of HKHC manages, that the assets that HKHC manages should have meaningful positive revenue and earnings results the way things are going in the markets. And therefore, FRMO investments and revenues and net worth of HKHC could be significantly benefiting us.

Okay. So let me just start by saying, so when we purchased $80 million of LandBridge, it wasn't all our money. It was also purchased. A lot of it was on behalf of the clients. So as per how much was given to the clients and how much do we have in HKHC and FOMO and et cetera, et cetera, et cetera, I don't have that number to hand, as you heard, but they will make every endeavor to get you that information. Now, in terms of directionally, you know, the earnings of Verizon Chemex. Let's say this, I said something similar at the annual meeting. So really from 2007 to maybe the end of 2023, period of, let's say, 16 years. As a value investor, we made money, but relatively speaking, as a value investor to other investments one could have had, let's say mega capitalization technology investments, we underperformed. We didn't underperform each and every year, but viewed cumulatively over 16 years, we did. So that affected our asset gathering, and it also affected the market value of the assets upon which we can charge. That changed dramatically. Depends on what month you want to look at it, but at some month in 2024. What month was it? Reasonable minds may differ, but it's gotten a lot better. So why has it gotten better? That's one question you might want to have, which I'll address momentarily. And why didn't we do something sooner to address that? And I'll address it right after. First thing, why has it gotten better? Because the amount of assets that had to be gathered to build data centers, it's in the trillions of dollars. Just the United States of America. But that doesn't measure it because data centers are worldwide phenomena. So it's some incredible amount of money that's going to be spent over the next five or six years. And beyond that, no one can see, except the spending will definitely not end five or six years from now. So that's going to put a severe strain on all kinds of hard assets. That's why we're positioned in hard assets, because that was our forecast. And it finally came true, and that explains at least 2024 performance. So you might ask, well, why didn't you in the interim buy the other things, sell them at the opportune moment, or swap them for the hard assets, perhaps not entirely, but largely, since the mega-capitalization technology stocks are extremely liquid, why didn't you do that? Well, a couple of answers to that. First answer was, we didn't get it right. We thought the mega-capitalization technology trend was going to end in 2019 to 2020, and we might have been right. Were it not for the fact that a small thing like the coronavirus happened, that led to the work at home movement and education at home and all sorts of things that probably nobody could have predicted. And that gave the technology companies an extra three or four years lease on life that prolonged our period of less than desirable performance. And the second thing was that even had we executed perfectly, wouldn't have helped us at all. So you might find that an astonishing statement, so I'll try to defend it. That basically, in order to outperform the S&P 500 with technology, we have to have more technology in S&P 500. That's pretty obvious. So in round numbers, if you looked at the S&P tear sheet today, In round numbers, I'm going to ignore decimal points, the S&P, the way it's calculated, is 32% weighted in technology. However, I don't calculate it that way. I calculate that number is 42% in round numbers. And how dare I argue with such an obvious calculation? Well, because Facebook, now known as Meta Platforms, and Google, now known as Alphabet, And Amazon are not included in the technology group, even though everyone knows perfectly well they are the largest factors in the data center movement. So Amazon is in the consumer discretionary sector. And meta platforms now bet in the communication sector. So technically speaking, the manner in which it's calculated, it's not technology, but it is technology. So now you're at 42%. So you might say, well, why didn't we put 50% in technology and beat it? And we would have beaten it, but it would have helped us not at all. Why? Because no one would have compared us to the S&P 500 where we have 50% technology. And rightly so. We would have been compared to technology funds that are 100% technology and we've underperformed anyway. So, It would all have been for naught.

We knew that in the beginning. So it was a very difficult period. And sometimes you just have to accept that.

Not that we didn't make money for our clients. It's just that we weren't going to alter ourselves that way. And the largest part of our money is high net worth individuals. They're all taxable. And then at some point we had made this transition. We would have paid a huge tax bill. and to one end. Now if you look at the funds and the mutual funds released publicly traded, look at it, you can look at it right now. Look at our record relative to the S&P. And I think that the record speaks for itself. So you can look at the return up to September 30th, that's the most recent numbers that are there, it's on the website, you can look at it. I think the returns at a paradigm fund or small capitalization fund as examples I think they speak for themselves. And you can be the judge whether what we did was smart or not. But we weren't going to help anybody by doing a lot of trading and making everybody pay a lot of taxes. We probably wouldn't have had the returns we even had. That's the best way I can answer it. Anyway, they're already the returns.

You can look at them. They're no secret. They are what they are. And I think they're pretty good if I do say so myself.

Isn't it also because of the difference between our fiscal years and the calendar year of HKHC and the time lag and FRMO reporting the full results from whatever it's good fortune. FRMO is not likely to see any of it until our fiscal fourth quarter and annual report ending in May. Please elaborate.

That's not true. We're on accrual accounting. So in the event we collect a performance fee and there is a dividend, we own shares, which is extraordinary. If we own shares of FRMO, if we own shares of Horizon Common, which we do, well, not Horizon Common, Horizon Mechanics, which we do, We're going to get that dividend, and it'll be received at the exact same time. Everybody else receives their dividend, and it'll be booked quite appropriately. Don't forget, in the case of FRMO, it's not just a rising kinetics dividend. There's also the revenue share. So it's a big performance fee. There'll be a very big revenue share. And now you can judge why we never wanted to... change the revenue share or sell it. Because one day there was going to be a big performance fee and we would collect a lot of money. Now, we can't guarantee you it's going to be a big performance fee. If it is, if there is one, we're getting it when we're entitled to get it. And before we get it, we're going to be required to accrue it.

So you'll see it in the financials.

Okay, now several, a multifaceted question on data centers. Is it likely or unlikely to see data center construction in the Permian Basin of the multi-million square foot variety? Most observers and many high-tech firms seem to be saying there will be a need for 10 times more data centers than presently exist in our country. Larry Ellison in his last conference call actually said he needs 10 times more. Do you have any idea of whether that means 100 or 200 or 300,000 square foot data centers or 2 to 7 million square foot data centers? Facebook already has a 7 plus million square foot data center in Oregon, I believe. Won't size of the center determine how many will be needed?

Not necessarily. All I can tell you is... Data centers primarily that are going to be built are of the hyperscale variety. Hyperscale data centers are in the millions of square feet. And if you think that's a lot, think again, because next generation is going to be exascale data centers, much bigger than that. It's hard to even visualize what they're going to look like. So the amount of data that's going to be needed provide the services that people seem to want to desire. By the way, I'll interrupt myself by saying I personally, just speaking for myself as a human being, not for FMO, not for ISM, just for myself as a human being, I have no interest in having any of those services personally. But that's just me. Everyone else seems to want it. So let me tell you why no matter how many data centers are built, it's not going to be enough. So the The data center model that we're working with is derived from the internet model that we have. The internet model that we have is clearly an advertising model. So you Google something, and that may or may not result in a purchase, but it's a financial transaction in the sense that people are paid just direct traffic to different websites. That's why you have a term called traffic acquisition costs. So it might be the biggest business there is, online commerce. Okay, now, so tremendous amounts of money are being spent to attract people to choices between millions, hundreds of millions of websites or web locations. So now let's do a hypothetical just so you understand how much data is needed. You decide for your anniversary, you and your wife are going to attend a Broadway show. You're going to go to the Wednesday matinee because it's not that crowded. And you walk out of the Wednesday matinee and it's about 4.30 and you really enjoyed the show and you want to have dinner. And there are all these dining choices. in the city of New York. And it's not unusual to suppose that you and your wife might look at your smartphone and see what are the available dining choices. Well, the available dining choices want to market to you. In order to market to you, they have to know where you are. So you must have had this experience. You were looking at something on the internet you're texting someone, or you're emailing someone, and all of a sudden you get some type of notification that something you're very interested in is available right nearby. Well, one of the things that's going to happen actually is happening right now. You have 336 million people in America, and during the bulk of the day they're using some type of handheld device, and they're being tracked in their locations. Their dining choices are being tracked. Their purchases are being tracked, not for any nefarious purposes, just to sell more goods and services, or if you prefer this phraseology, to make the advertising dollars more effective. So think of how much data is required, and it's never going to end, because your preferences are always changing, and they're always learning more about you, and your location is always changing. That in itself is virtually limitless. Think of all the transactions in New York Stock Exchange, all the information you can get from that. Think of all the financial information the Internal Revenue Service needs. Think of the Federal Aviation Administration that not just wants to track every aircraft that's in the air, but wouldn't it be great if they could track all the birds that are in the air? Because every now and then, A bird gets into an engine, causes a plane crash. So if the FAA, through radar, could track all the birds, we'd have safer airline travel. So more accurate predicting of weather requires more data. Go on and on and on like this. The amount of data that's required is limitless. So here's a statistic I gave someone the other day. They were shocked, but If you count self-published books, because now you can on Amazon, you can publish your own book. You don't need a publisher. How many books yearly are published in the English language? Books. A typical book is 350 to 400 pages. The answer is somewhere between 4 and 5 million. And they're all online. Can you imagine how much data that is? It's so much data that nobody can ever read them all. Even the entirety of the population couldn't read them all. So what can you do? You have to read them through devices, and devices need to summarize them. That's ChatGPT. Then how many scholarly articles are written? How many tweets are written? How much social media?

Instagram, chats, texts, emails, videos people take, photographs, security cameras. et cetera, et cetera, et cetera.

What establishment, whether it's entertainment or dining or shopping or education, airports, doesn't have a multiplicity of security cameras? And the video is data rich. You never know when it's going to be needed, but it's cumulative. It's constantly being added to the system. So it's mind-boggling how much data there is. It's being, let me just quantify it for you. The numbers I'm going to give you, they boggle the human imagination. Right now, according to the people who claim to know this subject, we have in the world today, stored and it's increasing, we have 100 what they call zettabytes. Zettabytes. What's a zettabyte? One zettabyte is a trillion gigabytes. So that's how much we have right now, and the people who claim to know this subject project that six months from today, we're going to have 200 zettabytes.

That's in six months. So it's an astonishing amount of data.

Now, where is it stored? On servers, obviously. What are these servers? They're just big electromagnets. That's basically what they are. And they're constantly on because they had to be constantly on because you never know when someone's going to want data. So, and then, even if you could turn it off for a while, the energy cost of turning it back on and powering up that system is more. The energy cost is leaving it on perpetually. So it's on perpetually. And the energy requirements to run the system like that globally is mind-boggling. So it's going to have its impact on commodity prices, particularly the price of natural gas, which is going to end up being the fuel of choice. And that gets back to our earlier question of why we're positioned the way we're positioned. Because the river was flowing in a certain direction. It was coming to us. So all we had to do is wait. We didn't have to do anything, really. And we didn't. It's called intelligent inactivity. So it's incredible what's happening. in the world. Now, having said that, I started this answer out that speaking for myself as a human being, I don't require those kind of services. I'm personally delighted to go to the library and sit at a desk in New York Public Library and read the hard copy. If I really want to go to the movies, I'm happy Saturday night to go to the movies and watch what comes on the screen. I don't need to have Netflix at 3 a.m., but I'm one person. That's not what the world wants. So you might call it progress. And maybe it is. And that's the direction the world's going. And it's going to go there whether I object to it or not. I don't personally object to it. I just don't participate in it. But that doesn't mean the rest of the world isn't going to do it. So it's incredible what's happening. It has a good side and it has a bad side. And the bad side or one of the bad sides is going to be a insufficiency of resources. and not just for natural gas, more importantly, in its efficiency of water for cooling these data centers. And we'll see how far it goes.

So sorry for the elongated answer, but that's the answer.

Okay. Given HKHC has a very significant investment in LandBridge, It is, of course, very clear you expect good things from that company. The company chairman made very clear his intention to have the company be home to data centers. Moreover, the majority of land, rich land, only has surface rights. So the conclusion is obvious. In the case of TPL, that which should be obvious is by no means obvious. All the requirements for data centers would appear to be plentiful at TPL, not just cheap land on which they can build, but not just plenty of water for air conditioning and gas to power turbines to generate electricity, but also on which to place windmills and solar collectors. Does TPL have markers seeking customers for data centers, or is their phone ringing off the hook? And if not, why? From all the companies that need 10 times more data centers, as mentioned above. Since Larry Ellison in particular just told the world that he needs what he needs, why wouldn't TPL have already been courting him and others? Why hasn't TPL made a peak with respect to data centers?

Okay, well, first of all, I don't wish to be and I really shouldn't be a spokesperson for TPL on data centers or anywhere else. Let's just say demand is going to be extraordinary and I don't think if there's going to be any problems in having a great outcome at DPL, in my humble opinion. And I'm going to leave it at that. And those questions, which are really great questions, they're best addressed by the company. But I think it's going to have a great outcome, my personal opinion. And you know how much stock we own. I obviously believe that. I mean it sincerely. We'll see what happens.

Okay. This is also about TPL and kind of related to what you said. I know you're not the complaint department for TPL, but I'd like to mention to you as an accessible insider today that when TPL holds its conference calls, they only last a little less or a little more than a half hour versus every other company in the world that schedule an hour. And FRMO, always a lot of time for all the listeners to ask all the questions they want to ask. even if it means reprising the conference call, which, of course, you have done. CPL takes questions from two and sometimes three so-called analysts only that appear to be from institutions that frankly appear to be bottom-ranked ones. The CFO and CEO who speak never allow any other questioners, and despite the passage of only 30 minutes, they don't even say, we'll see you again in three months, like every other company does. As a matter of fact, everything they say seems like they're reading from a script. As I say, you are not the complaint department. Would you do something to change the way these calls work and see to it that they allow more questioners with more questions to be tolerated, please? The two top executives do act like they care, not a lick, whether they make friends or positively influence people. Is the board aware of this? You don't have to answer, but you might share this information, this question with them. Ask them what the purpose of a conference call is when the two executives make it clear they have a strong distaste for taking questions quarterly from shareholder representatives or, heaven forbid, shareholders.

Well, to begin with, I don't think any big company has a strong distaste for taking questions quarterly. I think everybody is interested in getting questions. I think everybody in the company appreciates interest in the company, and I know that to be true. And I don't think their conference call format is radically different than the conference calls that I see of the biggest capitalization companies. I'm on a lot of them, and they don't last long. any materially different amount of time than what you, the questioner, have just described. So best thing to do is pick up the phone and call someone in management, and I have extreme confidence that they will engage with you and they'll get you an answer to your question. Speaking for myself and what I do, so I think this is true. I believe it's true. In the world of quarterly conference calls, I think we hold a record for the amount of time we're willing to spend with investors and answer all manner of questions. I'm prepared to stay here as long as I have to stay and I'll answer any question anybody poses to me until you run out of questions. That's my practice, but I'm not faulting anyone else. I don't think that's the standard practice of the typical corporation, but Again, I'm not folding anybody. As far as TPL goes, I have every confidence they'll address any questions they receive. I think just pick up the phone and engage, and I think you'll get a good response. That's my personal opinion.

Okay, and the last question. By the way, when will HKHC be reporting its September quarterly results, and will you be holding a conference call, and when might that be?

Okay, we definitely are gonna have a conference call. I don't know if a date has been scheduled yet, because I'm not the person who scheduled them, but whenever they schedule a conference call, take my word for it, I will be there. I'll handle it in the exact same format. I will answer every single question. I think the way it works is the board first, this is the first time they've gone through this exercise, the board reviews the financial results, the board, the audit committee approves the financials, we approve the financials for release, there's going to be a press release, and then there'll be a quarterly conference call for investors, and you'll ask all sorts of questions, and even though I try to do my best to address everything, I may not necessarily have, as I had today, I may not necessarily have the answer statistically to every question at my fingertips, but We'll get you an answer. And eventually, the way to deal with it is, if they're important statistics, we'll do an FMO. We'll have a series of tables. It'll be on the website. And you don't have to ask. It'll just be there. And if we miss something or you think of something that wasn't asked before, we'll put it up there because there aren't any secrets, really. You have every right to know. And I'm proud of it. And I'd like to give you the statistics. I have nothing to hide. So I don't know what shareholders always want. But I'm happy to provide everything that is within my power to provide. Just understand that I don't memorize every number. So I'm reluctant to give you a number I haven't committed to memory. With that qualification, I'll release everything and everything that legally is permissible to be released.

Well, that was the last question.

His last comment was, thank you for taking my questions, Mr. Saul. We appreciate you. and how you personally operate. So that's the end.

Okay, well, thank you very much for that compliment. It's high praise indeed. And so I think maybe I've exhausted everyone's patience, but if you think of a question that occurs to you in the aftermath of this meeting, don't hesitate to get in touch with us. We'll get you an answer. And of course, we're going to reprise this in about 90 days. And we're going to do an Horizon Canucks conference call as well. We look forward to taking questions. So thanks for being a great audience. Lots of very intriguing, great questions. And look forward to doing this soon. Thanks very much. And I'm signing off now.

Thank you, Murray. That's the end of the conference call. You may now disconnect.