Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: We talked about this at the top.
Speaker 3: Bitcoin not having a great year. It's headed for its
Speaker 3: fourth annual decline in its history, and the first one
Speaker 3: that didn't coincide with a major scandal or industry meltdown.
Speaker 3: So we're talking about cryptocurrencies. The bitcoin specifically now nearly
Speaker 3: seven percent lower for the year. It's down around thirty
Speaker 3: percent from its October sixth all time high.
Speaker 2: Volumes low and investors.
Speaker 3: Tim Bieling a Bitcoin ETFs you know about this, you
Speaker 3: do a weekly bitcoin show, you know, yeah.
Speaker 1: I mean the bear market means that bitcoin has decoupled
Speaker 1: from stocks, the S and P five hundred closing in
Speaker 1: at a record earlier this month, up sixteen percent for
Speaker 1: the year. Bitcoin struggle to find footing. The bitcoin minor
Speaker 1: and accumulator Mara Holdings knows all too well about the drop.
Speaker 1: Its own stock down more than thirty six percent so
Speaker 1: far this year. Nearly twenty eight percent of the float
Speaker 1: is shorted.
Speaker 2: With more.
Speaker 1: We head to Paris and to Fred Tealey's chairman and
Speaker 1: CEO of Mara. Fred, good to have you on the program.
Speaker 1: The decline in the asset price this year certainly, you know,
Speaker 1: one hundred and twenty six thousand dollars, that was a
Speaker 1: major high earlier this year. That was a big moment
Speaker 1: for the cryptocurrency. But down close to thirty or more
Speaker 1: than thirty percent from that, How much lower does bitcoin go?
Speaker 4: I think your bitcoin at this level is finding support
Speaker 4: in the kind of eighty four thousand range, which is just.
Speaker 2: About where the.
Speaker 4: Break even point is on most ETF purchases Bitcoin ETF purchases,
Speaker 4: and that seems to be a level of support where
Speaker 4: essentially people large investors who are trying to defend their positions.
Speaker 4: If you would want to keep it above that level,
Speaker 4: which if it falls below that, you'd see more sales.
Speaker 4: M's probably out of the ETFs back into liquidity and bitcoin.
Speaker 4: It's very much driven by global liquidity. You had the
Speaker 4: expectations of more from the FED and you know, more
Speaker 4: clarity around market structure. But I think what you really
Speaker 4: have to look at is there was a huge run
Speaker 4: up in the kind of August through September into October
Speaker 4: pure period, and you know, a number of us felt
Speaker 4: the market was frothy in the beginning of Q three
Speaker 4: and things were getting a little bit overheated, and you know,
Speaker 4: now we've seen some of that come off.
Speaker 2: You've also seen a lot of money.
Speaker 4: That rotated into AI now rotating out of AI and
Speaker 4: starting to rotate into more Dow stocks. And so I
Speaker 4: think you're generally seeing a risk off environment. Risk off
Speaker 4: tends to drive people out of bitcoin. But the liquidity
Speaker 4: that the federal government is going to inject in the
Speaker 4: marketplace now that quantitative tightening is over, we're starting to
Speaker 4: see easing again. We believe that will bode well the
Speaker 4: dollars down, which also bodes well for bitcoin. And I
Speaker 4: think you're going to continue to see bitcoin preiate. But
Speaker 4: you've got to realize it's a very large acid class.
Speaker 4: It's a couple of trillion dollars in size, and it
Speaker 4: takes a lot to move the price. And I think
Speaker 4: what we're seeing now is just some healthyber tracement.
Speaker 3: Hey, if I may just jump in for a moment,
Speaker 3: you know, I am wondering, Fred, you say that it's
Speaker 3: it's a risk off environment, and yet I'm looking at
Speaker 3: an S and P five hundred that's still near its
Speaker 3: all time high, you know, and we've seen quite a
Speaker 3: bounce back when it comes to the S and P
Speaker 3: five hundred also a very big market. So I'm just curious,
Speaker 3: you know, how do you square that if we're seeing
Speaker 3: investors still willing to move into the equity markets but
Speaker 3: not crypto that disconnect.
Speaker 4: Well, I think you have to in regards to crypto,
Speaker 4: you have to look at the derivatives market, which is
Speaker 4: much bigger than the actual spotpit coin market, and you
Speaker 4: have to see the sheer amount of leverage and positions
Speaker 4: that have come off since the peak. You know, you've
Speaker 4: gone from the ninety billion dollars range down to the
Speaker 4: thirty billion dollars range of open positions, and so that's
Speaker 4: a huge amount of leverage that comes off, which essentially
Speaker 4: sucks wind out of the marketplace, and people have been
Speaker 4: moving their money out of bitcoin and into other things.
Speaker 2: I think you've also seen look at the AI stocks.
Speaker 4: Most of the second tiery AI stalks have all seen
Speaker 4: a pretty large come down since the peak, even stocks
Speaker 4: such as Oracle, look at Core, We've you know, look
Speaker 4: at these stocks and how they've performed, and I think
Speaker 4: what you're seeing is a rotation out of some of
Speaker 4: those and into other stocks. And bitcoin is associated with technology,
Speaker 4: it's associated with the risk on assets and it's very
Speaker 4: associated with liquidity.
Speaker 3: So having said that, and you talked about the run
Speaker 3: up that we saw earlier in terms of crypto, that
Speaker 3: where it got to maybe like frothy levels. We're now
Speaker 3: at what eighty seven thousand and eighty seven thousand, three
Speaker 3: hundred and two and change. So what do you think
Speaker 3: should be the level of crypto that makes more sense?
Speaker 4: I think you have to look at the long term trend,
Speaker 4: but more importantly, go back a little over a year ago,
Speaker 4: go fourteen fifteen months ago, no US money center bank
Speaker 4: would deal with crypto related companies, nor would they take
Speaker 4: crypto deposits, nor would they let you trade crypto, nor
Speaker 4: would they let you wire money to crypto exchanges. Almost
Speaker 4: and today you have every bank, including JP Morgan, now
Speaker 4: moving ahead and doing all sorts of things with crypto.
Speaker 4: You're seeing tokenization of assets. DTCC has now gotten a
Speaker 4: no action letter from the SEC around tokenizing assets. You're
Speaker 4: seeing all sorts of activities around the traditional finance environment
Speaker 4: where they're embracing crypto. And I believe that what part
Speaker 4: of the effect of that is you're now going to
Speaker 4: see all sorts of things wrapped around crypto which will
Speaker 4: make the space much more relevant.
Speaker 2: But it takes time for those products to take effect
Speaker 2: get launched.
Speaker 4: And I think again, bitcoin has had a great run,
Speaker 4: you know, over the past fifteen years. It's been one
Speaker 4: of the best performing assets on record, and I think
Speaker 4: that we're going to continue to see great performance out
Speaker 4: of bitcoin over the coming years.
Speaker 1: So, Fred, you're a bitcoin minor, you're also a bitcoin accumulator.
Speaker 1: We've spoken to Eric Trump of American Bitcoin and I'm
Speaker 1: curious he's also a minor, also an accumulator. What makes
Speaker 1: your company different than American Bitcoin.
Speaker 4: Well, any company that minds bitcoin is performing the exact
Speaker 4: same service for the bitcoin network, which is essentially assembling
Speaker 4: transactions into blocks and then competing to win the right
Speaker 4: to essentially add that block to the blockchain. What differentiates
Speaker 4: Mara from American Bitcoin. A. We own all our rather,
Speaker 4: we own about seventy percent of our hosting operations. We're
Speaker 4: fully vertically integrated. We own power generation, We generate energy
Speaker 4: off of wind farms, off of flare gas and oil fields.
Speaker 4: We operate on four continents. We also are fully vertically
Speaker 4: integrated from a technology perspective. We operate our own pool.
Speaker 4: We co founded the only US ACIK manufacturer for bitcoin
Speaker 4: mining A six. The rest of the market is all
Speaker 4: dominated by Chinese companies, and we have been very proactive
Speaker 4: in helping drive a lot of the growth of crypto
Speaker 4: around partnerships with energy companies. And I think you know,
Speaker 4: we're still considerably larger than American Bitcoin, not just in
Speaker 4: our mining operations, but also in the amount of bitcoin
Speaker 4: that we hold in our balance sheet.
Speaker 1: On the identity part of this, trying to understand what
Speaker 1: the company looks like. You guys issouldven this week saying
Speaker 1: you're not a digital asset treasury firm, so you should
Speaker 1: not be excluded from MSCI, whereas the company said it
Speaker 1: has been adopting a bitcoin treasury strategy by holding its
Speaker 1: mind coins. What is the difference between being a treasury
Speaker 1: company versus a company that adopts the treasury strategy. Help
Speaker 1: us with the nuance there.
Speaker 4: Sure, so, a bitcoin treasury company, for example, like Strategy
Speaker 4: or micro Strategy as it's formerly known as, has acquired
Speaker 4: all of its bitcoin by purchasing it.
Speaker 2: Mara has mined the majority of its bitcoin.
Speaker 4: We've also purchased bitcoin in the market, but most of
Speaker 4: our bitcoin is the product of our mining operations. We
Speaker 4: have chosen to hold our liquid assets in bitcoin because
Speaker 4: we believe again better to hold our cash in the
Speaker 4: best performing asset class over the past fifteen years than
Speaker 4: to hold it in fiat, which is continued in losing
Speaker 4: its value, or just to hold it in treasuries, which
Speaker 4: will only you know, pay a dividend of you know,
Speaker 4: the low single digit percentage points. So bitcoin has been
Speaker 4: an excellent place for us to hold our cash and
Speaker 4: we'll continue to be so, we believe over the long run.
Speaker 4: But we generate bitcoin by mining bitcoin. We're not out
Speaker 4: in the market buying bitcoin on a regular basis like
Speaker 4: micro strategy. We have from time to time gone into
Speaker 4: the market and bought it when we think it's very opportune.
Speaker 4: Last year, there was an opportunity to buy bitcoin when
Speaker 4: it was in the sixty ish thousand dollar range, and
Speaker 4: we bought bitcoin because we had a feeling it was
Speaker 4: a belief allow that it was going to go up,
Speaker 4: which it did. And there are times where we're opportunistic
Speaker 4: like that. But we sell bitcoin that we produce to
Speaker 4: fund our operating expenses. So you know, we are not
Speaker 4: a company that holds our bitcoin. Every single bitcoin that
Speaker 4: we have. We actually sell bigcoin from production to fund
Speaker 4: our business. So we're an operating business. Bitcoin mining is
Speaker 4: our primary business, and bitcoin just happens to be how
Speaker 4: we hold our funds.
Speaker 3: Fred One thing I'm just curious though, going back to
Speaker 3: what you've seen in terms of the fatigue in the
Speaker 3: price and bitcoin coming down. You know what's interesting is
Speaker 3: and I'm just looking at some of our reporting and commentary.
Speaker 3: You know, you've got a White House that's very much
Speaker 3: favored or favoring the digital currency world. You have the
Speaker 3: President declaring crypto a national priority. US Congress has passed
Speaker 3: a landmark stable coin legislation, and bitcoin exchange traded funds
Speaker 3: were raking in billions of dollars. You know, we've seen acquisitions,
Speaker 3: We've seen so much movement, and again I'm going back
Speaker 3: to the decline that we've seen in crypto. You it's
Speaker 3: a pretty favorable environment. So, I mean, is all of
Speaker 3: the good expectations in terms of news already priced in
Speaker 3: and it can't get.
Speaker 2: Much better now.
Speaker 4: I think, like anything, any asset will revert to mean,
Speaker 4: and bitcoin is simply reverted to mean. It has most
Speaker 4: probably over corrected. But you had in the past six months,
Speaker 4: a huge amount of accumulation by the plethora of digital
Speaker 4: asset treasury companies that were formed, you know, and the
Speaker 4: you go back not too long ago, it was basically
Speaker 4: MicroStrategy was the only real one you had met a planet.
Speaker 4: To a lesser extent, similar scientific was a smaller one,
Speaker 4: and we were a large holder of bitcoin.
Speaker 2: That was kind of it.
Speaker 4: And then all of a sudden you had all sorts
Speaker 4: of companies come out of the would work.
Speaker 2: What did they do?
Speaker 4: They raised cash, They went and bought a bunch of bitcoin,
Speaker 4: which drives the price up. Price comes up, people start
Speaker 4: putting money into ETFs. You start getting bigger derivative positions.
Speaker 4: It's a flywheel effect. And if you just draw a
Speaker 4: trend line over the past number of years, you'll see bitcoin.
Speaker 2: It's just perverted.
Speaker 3: The meme got to run, Fred, Thank you so much.
Speaker 3: Fred Tiel, Chairman and CE of Mahra