Water is the New Gold: Insider Briefing of 25 February, 2021
Helping You Thrive in the World's ONLY Vital, Scarce and
Can decentralized, modular desal replace the mega-plant trend and save coastal communities and tidal ecosystems? I covered that and the real estate investor who contributed his housing development to the fund...Can OriginClear Finance use it to demonstrate the use case for managed services? We believe it, AND that an ethereum style, smart contract-based water coin could be developed for funding.
FEATURED OR COVERED IN THIS BRIEFING — QUICK LINKS
- The controversial desal plant that Governor Newsom is pushing and what Erin Brokovich had to say about it.
- Some of the possible new desal technologies and what OriginClear has to do with it.
- Alfredo Guatto and his incredible contribution to OriginClear Finance.
- Why are real estate investors diversifying from real estate to a water fund?
- What "layering" is and how it is key to OriginClear's operational strategy.
- How broken and failing infrastructure is connected to rapidly rising water rates.
- Why outsourcing at the point of use and managed services are a perfect fit for our OriginClear business model.
- Our simplified water coin plan and the OriginClear use case.
- Why our water coin is designed as a robust application and not just a "widget."
- How the water coin works and incorporates smart contracts.
- How we would gear the water coin to the production of pure water.
- Why Harry Dent predicts a 40% crash in the stock market and what you could do to be more prepared.
- OriginClear's "quiet building plan" and how it relates to you!
- How you can participate in the OriginClear strategy and arranging a consultation.
Transcript from recording
Well, hello everyone. It's filling fast. Thank you very much everyone for being on board, I'm going to get right onto it while we continue to fill. Big show ahead, so much to discuss.
New Asset Class
Water is the New Gold, of course, and it really is a new asset class as my fellow strategist Ken Berenger likes to put it. And as an asset class, we need to think about what assets will be durable in the coming times. And there's going to be much more about that, specifically in this show and you get to make up your own mind as to what you think. All right.
Forward Looking Statements
So, safe harbor statement, just disclaiming our statements as being really the best that we know at the time. Not perfect, but we think we're pretty good at doing what we say. You get to vote on that with your support, right?
Desal Plant Controversy
So today I was discussing this interesting development, Erin Brockovich, oh my God. I can't believe what's going on in Huntington Beach. We see a picture here of the power plant down there, and they want to build in the space, I guess, to the right of it, a 1.1 or $1 billion anyway, desalination plant. Problem with that is that it's not exactly a ecological solution, current desalination is pretty gnarly.
And so what I, this was sent to me by my friend Pye Ian, and I made a little comment that desalination tech was badly obsolete, and wow, things went really, moved ahead very, very fast over the last few hours.
This is the article in the L.A. Times. And you heard about when he ate at the French Laundry without masks and so forth, well, it was the birthday party of his good friend who is the major lobbyist on this, and it's not a pretty picture.
UC Irvine Connection
So what happened, well, it turns out that Pye is an advisor to the UC Irvine Innovation Center. And here I am speaking at the innovation center. It's got a slightly different name now, but that's back in 2017. And so I know some people there and we may have something interesting going on working with UCI. Basically, here's how it is, we think that desalination can be dramatically improved.
The technology is out there. And if you just wanted me, I can share with you right now some of the things that are out there. For example, there's this cool technology for turning saltwater into freshwater using electrolysis. Look familiar? Yeah, this is a lot like what we've got. So there's that technology.
And then there's another one with carbon nanotubes which are literally an atom thick. One atom thick carbon rolled into cylinders. And that is very interesting. Because it could be as much as 20 times more efficient in terms of water permeability. Means letting water through. Then basically this reverse osmosis is a lot like pushing water through a rock. It's unbelievably energy intensive. They've worked a lot to make it less so, but still this would be a dramatic improvement.
10 Years Later...
Now let me just show you something. If we scroll up here this article 2011. And if we look back in the Wires turn salt water 2012. These are old articles. It seems to me that we could be doing more to bring this technology to play. Why are we still dealing 10 years later with reverse osmosis when there's this new technology, which could be vastly better.
Decentralization of Desal?
And the other thing that I pointed out in a conversation that I had this afternoon with Pye. Was that we have, let's take a look for example, nuclear technology. The idea of giant nuclear plants has gone away. Instead you have these small it's called pebble reactors. And they're not huge. They're the size of a living room. And so you can have a lot of them and they're very, very safe.
Well, how about a similar concept for desal, as opposed to giant billion-dollar things with huge water intakes that suck up all the microscopic water life and so forth. Why don't we just have a lot of smaller units that are very, very efficient, inexpensive energy-wise. And can be put in Africa everywhere. That's a different kind of attitude. And this is again, decentralization. Moving away from these giant central systems that government loves.
Advance New Technology
Now, why does government love giant central systems? Because they are built by organizations, corporations that can afford to pay lobbyists millions to sway the politicians. And essentially buy votes. Well, there's a better approach. And now we've got the people at Huntington Beach are extremely up in arms. And we may be able to work with these people. I'm not going to say Erin Brockovich because I don't have access to her. But the people who are in Huntington Beach who are very active trying to change what Governor Newsom is doing. And at the same time advance some new technology. So very interesting. Stay tuned.
Today's news Alfredo Guatto and OriginClear Finance. Well, our good friend, Alfredo Guatto, we've gotten to know him really, really well. He is an Argentinian developer. He's been developing in the United States, a very nice development. And it's a couple million dollars worth. That's what is claimed. Remember that this is all subject to closing. And it is something that we have agreed with him and he's fully committed. But we have to make sure that everything is completely tied down.
Why a Water Fund?
But he is actually going to be with us next week to discuss this live. And why did he do this? Why would a developer have a very nice set of lots in Port St. Lucie, which is a very, very nice area. Why would he go with a water fund?
And the answer I think is very simple. Let me just say this before I go on with the announcement. Used to be that you could make your career in real estate and nothing else. And your whole portfolio is real estate and everything was fine. Then came 2020, and now real estate is a risk commodity. It's a risk asset.
Now, people are doing well. You got three categories in real estate right now. You've got the people doing really well. You get the people who are doing so-so, but they just can't get their liquidity. They can't get their money. It's just a little bit marginal. And then the people who are real trouble shopping malls, commercial buildings, office buildings, and so forth. So there's a spectrum.
Diversifying Real Estate
Real estate investors, we're finding, are really interested in diversifying out. We know now. Because, it's happening right in front of our eyes. It's right in front of our eyes that these properties are coming our way and going into this OriginClear Finance. We'll be building it over the next few weeks.
We'll be moving very, very quickly. It's super exciting. So that's, what's going on with that. And remember, next week, we'll get to talk to him and ask him, "What were you thinking Alfredo, when you decided this?" And of course, Arte Maren, the CEO of Philanthroinvestors®, who's making all this happen will be there, and he will be extremely helpful to discuss this as well.
What is Layering?
Which brings us to what I call layering. What we've been working on for all these years is layering our capabilities. And here is how it looks. We've built engineered solutions the ability to build anything. Anything from a $50,000 system, all the way to a $2 million system for Xcel Energy, a major utility, etc. We added in 2018 Modular Water Systems™, which is this prefab technology. Now we're adding Water as a Service® with the financing. And finally this idea of a water coin.
Now, what am I talking about when I say this? It isn't just because all of a sudden crypto's hot and so forth. But remember that back in 2018, I was serious about this, but we ran into, nuclear winter I was going to say (chuckles), crypto winter. And we just had to shelve it. And it's a good thing because we had a problem with the 2018 vision. And I'll talk about it here.
Let me just tell you what we're talking about here. First of all, we know that there's problems with water. And that water demand will exceed supply by 2040 by I believe about 50%. And one third of all people in the world don't get safe drinking water. That is a scandal. Now there is technology. Like I was just talking about the desalination technology. It's out there. Why is there still a problem?
Well, centralized water systems are falling apart. The federal government is only paying 9% of the bill that cities and counties have to pick up the rest of, for the central water plants. And the money's just not there. And in places like India, it's just doesn't even exist. Now, as I told you, in recent shows, water rates are rising much faster than inflation.
It's good for investors. It's good for us because we believe we're going into major inflation, but I was astonished to find the other day that there's companies that send out water trucks with clean water for various business uses in America? I thought it was only happening in the developing world. Well, it's happening everywhere. So this is a really interesting problem. Which is infrastructure falling apart.
Pay by Usage
Now what's happening is that industry, agriculture and commerce are picking up the slack. But of course it's not what they do. And they don't have the capital. So the entire water industry is moving towards this outsourcing tendency, this trend. And we have a company that pioneered that in our release today called AquaVentures. And they got sold to Culligan for over a billion dollars cash, because they pioneered exactly this.
When you do a website, you don't have your own server. The server's sitting in a farm at your internet service provider. This is the same thing here. You outsource it, you pay, you could pay by the month, but typically it's good to pay by the usage. That is what works really, really well. And just pay what's on the meter. It's what people are accustomed to.
Now we're busy raising capital and it's going well, as you saw. We've got a big milestone today. And what's great about these managed services, is that when you are taking care of everything for a client, you're doing all of their maintenance, everything, you're going to be with them for many, many years. It's just how it is. So we're making capital a non-issue, and also they don't have to worry about managing these systems. It's a very powerful model.
Our Use Case
Okay. So as a result, we are building this OriginClear Finance. And so OriginClear Finance is our use case. We decided we really... you know, we've talked a lot about creating a marketplace and so forth, but that's extremely complicated. What we decided to do was we would be our own water treatment company, which we are, and our own funder. So we'd control both sides of the game and therefore we could make... have high control in what we deliver to the customers. So this is what we're using to develop all of the network systems and services.
Proof of Water
Now, on top of this, we're now looking at this coin. Now the problem back in 2018 was that we were like, oh my gosh, how are we going to get proof of water? How are we going to... you know, we're going to be sending people to wells all over the world and of course there's going to be hackers from places like Russia and so forth that are just going to take advantage of this. So how do you do it? Well, it's very simple.
Now that we have managed services and these things are happening. Remember that AquaVentures, that deal was done back in April, it's very, very new, that it's proven. Now that we have managed services, we can say, "Hey, guess what?" The water coin only represents contracts where water is being paid for by the gallon, metric ton, whatever. Right? And so now, it's very simple. The coin is simply a way to monetize managed service contracts. And it's very easy to pay distributions.
Coin Represents Production of Clean Water
Now, I just want to tell you that, all the details here, there's a lot of legal stuff to be worked out, and this may be, there's a lot of things that we need to think about as we move forward. So don't take any of this thing for granted. We don't even know distributions will be paid, who knows. But here's what is important is we believe that this water coin should represent actual production of clean water.
Rick Garcia says (Ricardo my man), "I really like this idea of the water coin."
Riggs: And you're absolutely right. It's amazing to me that we don't have a water coin, isn't it? I mean, oh my gosh. Now, there are people doing crypto and blockchain in water, but they're more focusing on things like water rights and so forth, which is great. I think it's wonderful. But we're talking here about desalination, reclamation, recycling, all the treatment of water. That is huge business. I mean that's the trillion-dollar industry that we've been talking about that really should be a $5 trillion industry because it only treats 20% of the world's water. Right?
Well, how do we get from one to five? Well, we have to set up systems that are very robust.
Now, what we have here is I'm going to talk about how we do that. But the key here is to not have what's called widgets. Right? If a company sells a piece of equipment to someone and never tracks its performance, that's not a coin. Not going to happen. Sorry.
It's only where it represents performance contracts that have metering on a network operations center, a NOC. That's the way to go. And some people have been calling it the "Internet of Water," right, is one statement. Also, you might call it the "Bank of Water" as the other way to put it. Well, regardless, this is an opportunity here to build something robust.
Now, I want to talk just a little about how this works. Bitcoin, the thing you've been hearing about is not very useful because it does not have what's called smart contracts. Ethereum, years ago, pioneered something called smart contracts. That's where the coin itself, you can embed instructions. So you go, when a certain amount of water is treated, pay the licensor his royalty, pay the supplier of the equipment, pay this, pay that. All these structures are built-in, which is going to dramatically simplify the managed services, which are typically very complex.
Well, if it's all built into the coin, now you just trigger it, and there'll be different templates for different situations. Maybe one's for desalination and one's for wastewater treatment, et cetera. One's for conveying, you know, making water travel from one place to another. Another usage for this is cleaning up aquifers, meaning groundwater. As long as it's being done, somebody paying for it on the meter, then we can capture it in a smart contract. And we end up with this Decentralized Finance (DeFi) contract.
Produced Pure Water
So mining pure water is a good way to put it, but basically, the water coin represents produced pure water. So clean water, desalination, wastewater treatment, groundwater cleanup, et cetera. And here's what's cool. Charitable organizations have a big problem. They raise a bunch of money and then they send this thing out to Chad or Central Africa or whatever. And now what are they going to do? How do they track it? Well, if they put in place this template with this coin, perhaps eventually. But for now, they can do it with just a regular managed services contract.
Coin Scales Up
So as I'm saying, the water coin is not necessary to do it. It's just how I believe it scales up very, very well. So now they can put out this managed service contract. There's a meter. It's internet. Blah, blah, blah. And it's all managed through the coin process.
I want to make it clear that we're still building the finance capability. We're still planning the coin. No assurances that it will happen, but it's moving very quickly. So if anybody wants to drop in to chat and ask any questions, I'll be happy to answer them. And Rick says, "Wow, this is a game-changer." Thank you, sir.
The Overall Market
So, while you're thinking of questions, I'm going to zoom out a bit and talk a little bit about the overall market. And there's a man named Harry Dent, who didn't have very kind things to say about the current market. He thinks it's going to go to hell in a handbasket. Here's the video I'm going to play a brief excerpt from, and that is there's a giant correction coming, blah, blah, blah.
Okay, great Sure, there's going to be disruption and everybody should be ready for that. Do not believe that this market's going to keep going up. It is what it is. But let's take a look at what he says. I think it's important. I'm just going to play a very brief excerpt that I think says a lot to us about the marketplace, et cetera. So this is at about minute 14:26 of this video. And I think you'll understand what I'm getting at because he's saying, "Look, when things crash, what's going to replace it?" And I think this is where this goes. Take a look.
Start of video presentation
Transcript from recording
Harry Dent: So that's the same thing going on here. Blockchain can restructure monetary systems with a potential Bitcoin gold like standard at some point when Bitcoin gets high enough and stable enough where you could have a bottoms-up system that grows totally by transactions of consumers and businesses and governments, and in no longer top-down micromanaged by central banks and politicians who always overstimulate, always push down their currencies to cheap for exports. All governments do is manipulate in the wrong way. "
End of video presentation
Period of Unsettlement
Riggs: Okay. So you can go ahead and watch the rest. It's... As I was saying, just look up Harry Dent stock market 40% crash, and you'll be able to see the video. And it's a very sensationalist headline, but please, I'm in the market. I've got all kinds of stops set. It's like, oh my gosh, this is not a good time to be completely overconfident. Vince Donovan says [In chat], "Very smart man, but he's been saying this for years and years."
And that's absolutely true, Vince. And he explains here, he says, "Look, it should have happened in 2008. And if it had happened then, it would have been cured much easier." But unfortunately, we got into this huge, we're bringing in wheelbarrows of cash. Which the market has absorbed again and again, and again. And for the last couple years, we've had only 1.9% growth, real growth in the economy. But that has been masked by all those wheelbarrows of money.
The point he's making is, I'm right, but what's happening is that governments are staving off the day of... It's like, you keep borrowing from your rich uncle, but then one day he wants the money back. Like, oops. So, that's the concern here. And look, whether or not there's a stock crash... he says that the baby boomers back in 2005, whatever, they started retiring and stopped spending. And now, it's going to take a while for the millennials to kick in. So, 2025 onwards is going to be great. There's going to be a period of unsettlement. Right.
Now, the key is for you not to freak out. And I'm going to show you what I mean by that, because I would not be showing this to you if it did not have some kind of idea of what to do. Right. And Ken and I have discussed this at length, and Ken is very sharp with this. And he'll be happy to discuss it further with you.
Build the New Asset Class
Our plan is to build this new asset class of water. So while all this craziness is happening, we're not an over-valued asset. Water hasn't even begun. It's not in a bubble at all. This is what's great about it. Right. It's an emerging asset. This is why Ken has people lined up from the real estate industry who want to come in here. And our job, of course, is to make sure we don't get dogs, but we can do that. All right.
Building the Use Case
So then we're building OriginClear Finance into a use case for wider adoption of what we call managed services, which is this outsourced water treatment. During these times, water is an essential commodity. It will grow. I believe that because it's not over-hyped. My gosh. Have you heard about water being at all time highs? No.
What is been rising, is water rates. Quietly water rates have been rising faster than the rate of inflation. And as a result, is unaffordable in many cities and it is what it is. That frankly helps. Okay. So, water is counter-inflation. So I leave you with that. I don't want to overdo the case.
And I'm going to move into the participating in our future part and really Ken and I have talked about this at great length. I want you to feel that you can discuss this with him and have a great strategic discussion with him. He is extremely smart.
So just book a call, oc.gold/ken. Do it fast. His days are full. Oh my gosh. I end up talking to him 10:00 PM. He and I were on the phone to a crypto attorney in Dubai at 11:00 last night. Given our schedule, that was not fun but, time zone bingo, as the attorney put it.
Okay. So next week we will interview Alfredo Guatto. That's going to be a lot of fun. What was he thinking? Why is he putting, he and his partners, because he's not alone, decided to make this move. That's so cool. I'm so excited about this degree of really people saying, "I believe." And then walk the walk, as well as talk the talk.
So, we're in a very different place than we were a couple years ago. And I have to say, I say it again and again, that the pandemic was a wake up call for
" Chris Wirth here, talked with Tom M this morning." Wow. This is super cool. I'm not going to get into specifics because he's actually talking about becoming a distributor. And he believes that he can work on state side markets with European union ExIm Bank financing, which is Export-Import Bank financing. So, thank you, Chris. As I say, I won't be giving your email and phone number on the air here, but I love that you're doing this.
And Kevin just popped in the phone numbers to call. You can always talk to Devin if Ken's not available and Devin, in turn, can get to me. And remember, when you see that newsletter from me and you hit reply, it goes into my inbox and I'd love to hear from you.
So with that, I wanted to thank you for a wonderful little discussion. I love it. And I love how many people have hung around all this time. It means a lot to me. All right, guys. Thank you very much. Have a good weekend and let's see you next week. Thank you.
Register for next week’s Insider Briefing: HERE