Using Bitcoin to Survive and Benefit: Eric V Stacks

CONFERENCE: Bitcoin Atlantis | Day 3 | Open Source Stage

PRESENTATION DATE: Mar 3, 2024

SPEAKER: Eric V. Stacks

TRANSCRIPTION AND PROOFREADING: Matt Kulis

Introduction

Thank you wow, wow, this is a interesting experience for me. I’ve never used a microphone. I’ve never publicly spoken. I’ve been a cannabis producer for the last 15 years of my life, so the whole model for me was really to kind of not get attention and live in hiding. So this is quite foreign, so bear with me. I’ll do the best that I can and share my experience as a commodity producer experiencing deflation in the world, and how Bitcoin has helped hedge me against that.

I grew up in Southern California, and at a young age my parents divorced and my mother remarried to a psychiatrist. And as a result of that marriage and that relationship, a lot of my family members got into pharmaceutical drugs. By the time I was in my mid teens, [that] was the first time that I had been around other children or teenagers that were using cannabis, [and] the first time that I had smoked cannabis.

I realized quite quickly that cannabis was not a dirty disgusting drug, like the fiat world had led us to believe. That kind of opened my mind, it was a catalyst for me to learn and understand that there was a lot of things that we were being taught and told, about what’s happening in the world, that were not actually true.

Grit and Perseverance

By the time I was 21 years old several of my family members including my mother had died as a result of using antidepressants and anti-anxiety pills. That really lit a fire under my ass. I had kind of vengeance against what was the fiat world, although I didn’t call it the fiat world at the time. At the age of 25 years old I was invited from Southern California to Northern California to trim and harvest cannabis on a cannabis farm. For me that was a dream come true, and I’ve been living there ever since. 

[Adorable interruption.]

Excuse me, that’s my daughter. She, -we’re, all extremely tired. We flew from Northern California, and It took us 24 hours to get here. It was a big trip, so we’re all a little exhausted. [*Letting out a little smirk in the direction of his family. This is what bitcoin is all about: family.]

Life in Humboldt

So 15 years ago I made it to Humboldt County and I started growing cannabis. For me it was a very passionate thing for me to do, and there was also a bit of a vengeance. It was like every time that I bag a pound and sell [it] to the marketplace it’s kind of an F-you to what I believe is a corrupt pharmaceutical industry, and a corrupt world. In 1995 prop 215 was passed in California which was medical marijuana legislation that allowed for people to produce and sell medical marijuana within a Patient Collective. What that led to was a multi-billion dollar industry. By 2018 the people of the State of California voted to pass prop 64 which was recreational adult use cannabis. 

Regulatory Hurdle Rollercoaster

Given the fact that I had been producing cannabis since 2009, by the time 2018 came around, I was in the perfect place, at the right time, to purchase a property in consultation with Humboldt County in the state of California to get a state license and produce cannabis lawfully, with no question.

That was for me, a dream-come-true, so I went through the painstaking process of jumping through all these regulatory hurdles. I spent every dollar that I could possibly get my hands on to buy property and go through the very cumbersome regulatory process to become licensed. Within no time the market crashed, the value of the product that I was producing plummeted, and my “dream-come-true” ended up becoming a nightmare.

At that time that was the first property that I had ever purchased, so I had the largest economic incentive that I had ever had in my life to go down the rabbit hole and to learn about what was causing the boom-bust cycles. I needed to figure figure out why this monumental achievement for me within my life [so-quickly] became an existential crisis. Being able to plan for the future without knowing what the value of my product was going to be was extremely difficult. 

Pain is Life’s Greatest Teacher

The regulatory hurdles and the impedance of their costs were so much that it really brought a lot of economic pain. I believe that pain is life’s greatest teacher. In the time that I owned this cannabis farm, I started to learn about our money system and the boom-bust cycles. I started to realize that supply is always meeting demand, and as things become more abundant, and supply meets demand, we [as producers] drop prices. And [as you can obviously see] our money system is clearly broken, and everybody who’s here understands that. We have a debt-based fiat monetary system where the monetary units are lent into existence as debt against assets. Which means that everything within the marketplace has to go up in “value.” 

Dollar Denominated Wage Deflation

To this day I’m experiencing dollar denominated wage deflation. The amount of money that I earn, denominated in dollars, is literally going down on an annual basis, while my cost of operating is going up. I have an extreme version of what we’re all experiencing in the world as we liberate things that the market wants from being scarce. As we make them abundant, we’re creating an existential crisis for the producers. So we’re all getting squeezed, and we all have different versions of the same problem, and in my case, it was an extreme version of this problem.

Hope

In the two years that I owned this property, in the middle of that, at the end of 2017, is when I discovered Bitcoin. I had several light bulb moments, and it was, thankfully, my discovery of Bitcoin that caused me to understand that supply meeting demand is an issue with the fiat monetary system, and the adoption of Bitcoin as a treasury reserve asset or a savings technology does hedge very effectively against this existential crisis that we all have. If you’re making a surplus and putting that surplus into Bitcoin, on average, your treasury reserve or your balance sheet is appreciating at a faster rate than your wages are deflating.

The Power of Theft

It’s common knowledge, or seemingly common knowledge, especially within the Bitcoin community, that if, for example, you make $30 an hour and your cost of living goes up 15% in a year because the monetary expansion is 15%, and you get a 10% bump in wages, you actually had a 5% haircut.

[Editor would like to note that due to the percentage recovery, or “50/100” rule, real loss of purchasing power would be approximately 6.5% – that silent theft of 1.5% is the biggest grift of all. Calculations are as shown below.

Real Loss of Purchasing Power = 100% – (Real Wage after / Real Wage before) * 100%

Real Loss of Purchasing Power = 100% – ((1.10 * W * 0.85) / P) / (W / P) * 100%

Real Loss of Purchasing Power = 100% – (1.10 * 0.85) * 100%

Real Loss of Purchasing Power ≈ 100% – 0.935 * 100%

Real Loss of Purchasing Power ≈ 6.5%

End of editor’s note.]

I’m actually, as a great example, 10 years ago a bulk, wholesale, premier pound of cannabis was $3,000. Today, that same pound, actually a better pound, is $1,000, but my cost of operating and cost of living has doubled, if not tripled. That means that I make between 1/6th and 1/12th what I used to make 10 years ago. So this is a major issue within the cannabis community, and really within all businesses. We all have different versions of the same problem, in some sense. It’s kind of like the robot maker, that makes a robot, that makes robots. Without a hard money standard, he’s out of business, and he’s living on the streets. Or he has to build a regulatory moat around that technology and have some sort of a patent so he can centralize that and then monetize that. Everybody else is then living on the streets because you have one person benefiting from a technology that should be liberating [all of us] from scarcity [unaffordability] within the marketplace. 

The Saylor Strat

Really, I owe so much gratitude to Michael Saylor in the Saylor series. That helped me understand the process of commoditization, and the existential crisis that we have as things become commoditized. You’re incentivized to drive the price down to the marginal cost of production, and even below that, to keep your business operating.

Also, so much gratitude to Jeff Booth and his work. It helped me to understand, very clearly, the forces that intuitively I knew were making my life extremely difficult.

Fortunately, I pivoted my business and I sold my property. At this point now, I live entirely on a Bitcoin standard except I do have to use dollars unfortunately. But all of my surplus goes into Bitcoin. So if I wanted to continue to produce cannabis, the fact that I have a BTRS [Bitcoin Treasury Reserve Strategy], it allows me to hedge myself against the free market and the deflationary forces.

Economic Incentives

Once again, thanks to Jeff Booth, where you have a large margin anywhere within the marketplace, it’s a large economic incentive for people, entrepreneurs, and capital to move into that sector of the marketplace and attack/arbitrage that margin, provide whatever it is that the marketplace wants and, in turn, it’s going to drop the value of that, which should be good for everybody, but it’s not because of our broken money system. So the main forces that actually have made my life so difficult as a cannabis producer, which is going to be commoditization, and jurisdictional competition. In the state of California, additional examples include:  energy, also very expensive, taxes, regulatory fees…. [Naturally] other states are coming online with legal cannabis, and they’re offering much more favorable rules, with much more favorable business incentives. It costs less to operate your business.

“Well-Intentioned Politicians“

Commoditization and jurisdictional competition. Those two forces on a fiat standard, as a producer of essentially anything really, cause a big problem. But those two forces are actually the forces that make Bitcoin so important and so valuable, because as supply meets demand, you’re dropping the value of whatever it is that you’re producing.

Well, as the demand goes up for Bitcoin, the supply doesn’t change. That in jurisdictional competition now makes it so that if, for example, California, which, as Saylor would say, there’s a bunch of well-intentioned politicians who are trying to come up with more rules and more regulations and more fees to make everybody’s life better. Well, if they have taxes or fees that I’m not interested in, I can vote with my feet, and I can move somewhere else.

This is going to cause, as Breedlove says, the government to become more beholden to the preferences of its citizens. Without Bitcoin, producers of essentially everything have a serious issue. I’ve pivoted my business model as a result of these forces, but let’s say I was on a farm, I was a rancher, and this was a generational farm. If I’d been sweeping my surplus, or if I were to be sweeping my surplus into Bitcoin, the bitcoin’s appreciating at a faster rate than I’m losing my wages. Bitcoin is a way for us to make it through this transitional period where fiat is centralizing everything.

Access to Capital and Arbitrage

Another issue that I think about a lot, pertaining to cannabis, is that there’s little-to-no fiat leverage available in cannabis. With farmers, there are a lot of subsidies. There’s American AgCredit, so in the community that I’ve been living in for the last 15 years, families that have been working really hard and producing a product that the market wants, as Federal legalization takes place, this is the issue with commoditization. You’re going to have publicly traded companies that are going to be able to sell shares on Wall Street. They will take that capital, [and use it] to put up infrastructure all across the country. Then, they’ll be able to leverage debt against that infrastructure to operate their businesses. They’re going to have a heavy incentive to drive the value of the product below the variable cost of production. That’s going to cause small producers to go out of business, and allow these large publicly traded companies to buy these businesses up for pennies on the dollar.

Feel the Squeeze?

Whether you’re a content creator, work in the tech industry, produce a product like cannabis, you’re a rancher, we’re all suffering from the issue of supply meeting demand as we make things more abundant on a fiat standard. We’re all getting squeezed, and the best way to hedge ourselves against that is with the hardest substance in the known universe, and that’s Bitcoin. Without Bitcoin, I’d be absolutely toast.

The Most Important and Amazing Thing that has Happened in all of Human History

I’m absolutely so grateful for the fact that I discovered Bitcoin and the amazing people, the community. I can’t even barely believe that I’m here. Andre watched one of my Twitter rants and reached out to me, saying, “hey, would you come and do a keynote speech?” And, you know, obviously, I had a lot of fear and anxiety about that, but I’m super happy to be here and to be a part of this amazing movement. 

This is, as far as I’m concerned, the most important and amazing thing that has happened in all of human history. And to be living here now, to be a part of it, is just so special. It’s so special. 

There’s nowhere I would rather be, and there’s not another place in time and history that I’d rather be a part of. 

So, thank you. I really appreciate it. 

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