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Speaker 1: The more capital you have in your balance sheet, the

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Speaker 1: larger the percentage of your valuation is based on that

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Speaker 1: actual bitcoin capital asset, the more correlated directly you'll be

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Speaker 1: with bitcoin. If you only yield bitcoin by having demand

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Speaker 1: for your equity, it's really tough. If you can yield

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Speaker 1: bitcoin using issuing fixed income products that are overcoloralized, you

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Speaker 1: can still have bitcoin yielding a bear. I think strategy

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Speaker 1: transition from a meaningful software business to a meaningless software

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Speaker 1: business in terms of its overall evaluation. Now they're wholly

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Speaker 1: dependent on Bitcoin's content and growth rate for the success.

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Speaker 2: If you want to scale the company, you want to

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Speaker 2: issue the preferreds. I want to make sure I have

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Speaker 2: enough Bitcoin on my books to be credit worthy, but

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Speaker 2: not necessarily back those because if I back those as

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Speaker 2: a collateral assets and that actually damages my credit worthiness.

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Speaker 1: It has to be unsecurity.

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Speaker 2: Dan, I want to start with the big picture here,

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Speaker 2: because we're seeing an explosion of bitcoin treasury companies and

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Speaker 2: there's a lot of different differences there, but a lot

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Speaker 2: of people trying to copy the micro strategy playbook. But

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Speaker 2: you've said that most people fundamentally miss understand how these

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Speaker 2: companies actually work. And what makes them valuable. So what

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Speaker 2: is it that you think everyone's getting wrong in this space?

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Speaker 1: I think the main thing that people are misunderstanding is

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Speaker 1: this idea of bitcoin is collateral. And if bitcoin is

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Speaker 1: a pristine capital asset, if it's something that you can

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Speaker 1: borrow against, that you can leverage, or that you can

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Speaker 1: issue fixed income against, then bitcoin yield is great. But

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Speaker 1: yielding bitcoin from ten bitcoin to twenty bitcoin on your

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Speaker 1: balance sheet does not give you that next level unlock

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Speaker 1: of using the bitcoin in productive ways as a collateral asset,

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Speaker 1: whether that be in ten years, acquiring different cash flowing businesses.

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Speaker 1: Whatever the landscape may look like for business, may be

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Speaker 1: their bitcoin yield via productive products or issuing these fixed

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Speaker 1: income giant capital market arbitrages. You need that collateral to

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Speaker 1: enable those activities.

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Speaker 2: So when you're saying bitcoin yield, you're meaning at the

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Speaker 2: rate at which they're acquiring new bitcoin under their balance

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Speaker 2: you or the rate of their bitcoin balance is growing,

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Speaker 2: not earning yield on the bitcoin, but at the rate

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Speaker 2: that they're growing there they're bitcoin. So you're saying that

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Speaker 2: it's really irrelevant how fast you're growing it. It's really

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Speaker 2: the total size of it. And so it's cool if

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Speaker 2: you're growing it at fifty percent, but if you're still

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Speaker 2: only fifty bitcoin, it doesn't really matter. I guess that's

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Speaker 2: what you're.

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Speaker 1: Saying, and I think it's not as black and white

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Speaker 1: as I make it made it out to sound. But

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Speaker 1: for an investor, if you're in at one bitcoin and

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Speaker 1: they're bitcoin yield or the number of bitcoin you own

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Speaker 1: per share, So bitcoin yield is a function of both

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Speaker 1: the amount of bitcoin and the balance sheet and the

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Speaker 1: number of fully diluted outstanding shares. So in that equation,

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Speaker 1: as a shareholder your site, you have a lot more

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Speaker 1: bitcoin per share. But from a company perspective and a strength,

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Speaker 1: durability and longevity perspective, the more bitcoin they own, the

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Speaker 1: more optionality they have moving into the future with these

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Speaker 1: different products. So I think those are the kind of

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Speaker 1: the two factors you have to weigh when looking at

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Speaker 1: one of these companies. And then when you think about

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Speaker 1: like reaching critical mass, issuing equity becomes less and less

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Speaker 1: attractive as the size of the company grows. So I

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Speaker 1: think all these bitcoin treasuries need a play to move

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Speaker 1: into beyond just issuing equity and yielding bitcoin because of

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Speaker 1: the nav the m nav arbitrage.

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Speaker 2: Yeah, I want to dig into all the mechanics of that,

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Speaker 2: but let's just zoom out a little bit before we

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Speaker 2: digged super deep into this. Are you a bitcoiner, were

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Speaker 2: you hold were you holding bitcoin in deep cold storage

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Speaker 2: before jumping into this, or are you sort of like

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Speaker 2: an equities guy that have moved into this.

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Speaker 1: Prior to being a So I was a bitcoiner in

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Speaker 1: twenty twenty one. I was a twenty twenty one bitcoiner,

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Speaker 1: and I found my conviction during the FTX collapse just

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Speaker 1: out of pure luck. I was reading all the material

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Speaker 1: and it happened to be very long price at the time.

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Speaker 1: So I feel very lucky because of that. But prior

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Speaker 1: to that, I was an index investor. So you know,

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Speaker 1: all through my younger years, I was dumping all my

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Speaker 1: money in the S and P and so I've always

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Speaker 1: I've always really thought the idea of just long term

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Speaker 1: compound growth on your money is very, very powerful, and

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Speaker 1: that's why I've kind of been attracted to bitcoin. But

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Speaker 1: I found bitcoin through kind of an option's lens. I

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Speaker 1: studied a lot of quanticy to finance through college and

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Speaker 1: graduate school, and I've always found it really interesting that

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Speaker 1: for an acid like bitcoin, if you believe it's growing

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Speaker 1: out a roughly a power log growth rate or just

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Speaker 1: a steady high compound growth, you can make a lot

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Speaker 1: of money with long term options on an asset like that.

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Speaker 1: So that's why I was really attracted to it.

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Speaker 2: So you kind of were attracted, I mean obviously by

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Speaker 2: the growth rate number one in gu as we call it,

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Speaker 2: right number go up. And then because of your background,

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Speaker 2: you saw the ability to do options against it, which

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Speaker 2: then increases that. And then you saw the treasuries, and

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Speaker 2: then they're even increasing the options if you will, almost

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Speaker 2: on that, Yeah, exactly.

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Speaker 1: And the treasure is so interesting because there were no

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Speaker 1: I that called you couldn't buy options on ib when

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Speaker 1: I was buying options on mstr you know, So like

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Speaker 1: I was forced into bitcoin treasuries because I was interested

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Speaker 1: in options, and then I had to learn about bitcoin

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Speaker 1: judges along the way.

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Speaker 2: Yeah. So twenty twenty one, Class of twenty twenty one,

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Speaker 2: I want to ask about our reference. But so far

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Speaker 2: we've seen you know, in the last year, Meta Planet

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Speaker 2: being the second company or really the first company I

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Speaker 2: should say, that's actually been able to duplicate what micro

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Speaker 2: strategy and now strategy has done their stocks up like

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Speaker 2: seven thousand percent in like a year. And now we're

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Speaker 2: seeing ones like Blockchain Group in France They're up like

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Speaker 2: three thousand percent in six months. And then we see

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Speaker 2: like the Smarter Web companies up like eight thousand percent

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Speaker 2: in like two months. Those are insane numbers. I mean,

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Speaker 2: you're an index investor, like, those are insane numbers. But

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Speaker 2: it it it's very similar to what we saw back

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Speaker 2: in like twenty seventeen in the cryptocurrency ico boom. So

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Speaker 2: they weren't IPOs like kind of what we're seeing now.

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Speaker 2: They were icos, And so you hear a lot about

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Speaker 2: some of the differences there. I mean, have you gone

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Speaker 2: back and sort of studied what happened there to see

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Speaker 2: if there's any kind of common parallels there.

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Speaker 1: Yeah, And I'm not extremely familiar with the ico boom

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Speaker 1: and bus cycle. I mean I studied alt coins for

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Speaker 1: a bit in twenty twenty two, just looking at different projects,

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Speaker 1: understanding the tokenomics and stuff, and I mean I wasn't

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Speaker 1: all that attracted to it. And I think, what's I compare?

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Speaker 1: I think this bitcoin treasury craze more to the spack

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Speaker 1: craze of twenty one, so in twenty twenty. So that's

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Speaker 1: kind of my mental comparison. So there's people more knowledgeable

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Speaker 1: about the icos and they yeah, yeah.

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Speaker 2: I would, I would say that. I mean I think

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Speaker 2: both of very similar. I mean a SPAC was also

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Speaker 2: sort of like, hey, we're gonna raise a bunch of money.

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Speaker 2: We'll tell you what we're gonna do with it afterwards, right,

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Speaker 2: and then a lot of times they didn't have any

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Speaker 2: value there. ICO is sort of similar, like we raise

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Speaker 2: a bunch of money and then there's really just vapor

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Speaker 2: where there's nothing there, whereas these these treasury companies at

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Speaker 2: least they're buying bitcoin, so as there is that, yeah.

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Speaker 1: And there's fear greed, like I think icos and SPACs are.

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Speaker 1: You have to understand the fear greed aspect of any

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Speaker 1: of this, like trading behavior. So that's where they're helpful.

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Speaker 1: But ultimately, I think raising capital and putting into bitcoin

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Speaker 1: is actually a good faith, good hearted move. So we're

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Speaker 1: in a different sort of environment I think long term.

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Speaker 2: Okay, now, as we kind of dig into this, I

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Speaker 2: mean I want to get into the details, but we're

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Speaker 2: just kind of warming the audience here. But so you know.

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Speaker 2: I think you've said there's like two types of companies.

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Speaker 2: There's the tesla who holds a bitcoin on the balance sheet,

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Speaker 2: and then there's companies doing it as a strategy. But

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Speaker 2: would you also say that maybe within that, maybe there's

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Speaker 2: three companies. So there's the test let's put another balance sheet.

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Speaker 2: Then there's ones that are like a hybrid company that's

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Speaker 2: also running a strategy, and then there's peer play strategy companies.

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Speaker 1: I think absolutely yeah. I mean it can be. It's

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Speaker 1: it's kind of like a slider, right, you can adjust

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Speaker 1: how aggressive if you want to be with the bitcoin

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Speaker 1: capital market's arbitrage, or maybe you don't want to use

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Speaker 1: the capital markets at all to raise the bitcoin. You

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Speaker 1: just sweep your cash flows. And I think the most

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Speaker 1: important thing is in a falling bitcoin environment, which we

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Speaker 1: haven't really seen for three years, how do you navigate?

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Speaker 1: And that's going to be the real question. And I

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Speaker 1: actually think the strongest contenders in that environment are those

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Speaker 1: who sweep their cash flows into bitcoin.

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Speaker 2: So that means the strongest contenders would be ones that

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Speaker 2: actually have a business model that's making cash flow outside

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Speaker 2: of bitcoin.

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Speaker 1: I think it's a huge leg up. I think it's

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Speaker 1: a huge leg up for a bitcoin treasury, just even

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Speaker 1: if it's you know, five million dollars a year of

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Speaker 1: free cash flow, because you have so much optionality to

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Speaker 1: issue to to secure a debt and buy bitcoin in

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Speaker 1: market where the bitcoin price is suppressed.

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Speaker 2: Okay, but what do you think happens when a company

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Speaker 2: you have, like a similar scientific who's running like a

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Speaker 2: medical company, And like, as an investor, what do I

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Speaker 2: know about medical companies? And I don't know they're facing

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Speaker 2: a DOJ lawsuit and what could happen with that? And

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Speaker 2: oh what if they have a new patent and that's good,

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Speaker 2: but I don't know about that. But then they're also

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Speaker 2: running the strategy over here, so like how do I

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Speaker 2: value them? And so then maybe there's like this miscommunication

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Speaker 2: in the market. Whereas like Sailor he talks about I mean,

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Speaker 2: he made it very clear. I got to have dinner

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Speaker 2: with him in Prague and he said, if bitcoin goes up,

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Speaker 2: the market wants the strategy to go up twice as much,

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Speaker 2: and if bitcoin goes down, they want it to go

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Speaker 2: down twice as much because they the market needs to

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Speaker 2: know how to price around it. He's like, they don't

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Speaker 2: want me to lower the volatility, they'll just lower their position.

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Speaker 2: And so you know, he said, like he made the

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Speaker 2: funny case. He said, they've got game and spoke to

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Speaker 2: me tonight and told me the market was going to

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Speaker 2: crash tomorrow, and I hedged my position and the market crashed,

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Speaker 2: but we didn't. That's not what the market wants because

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Speaker 2: then they then they don't know what to expect, right,

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Speaker 2: And so then I start thinking about a similar scientific

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Speaker 2: and not to throw them under the bus or whatever,

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Speaker 2: but just as an example, like, how do I know

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Speaker 2: what to expect from that stock based off of bitcoin?

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Speaker 2: In that example?

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Speaker 1: And I think that's a really good question and something

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Speaker 1: I can't I can't answer directly because it's going to

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Speaker 1: be so diversified. There's going to be companies that exist

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Speaker 1: in so many different parts of the spectrum. But the

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Speaker 1: more capital you have in your balance sheet, the larger

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Speaker 1: the percentage of your valuation is based on that actual

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Speaker 1: bitcoin capital asset, the more correlated directly you will be

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Speaker 1: with bitcoin. That's all I can say.

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Speaker 2: Yeah, and then and then maybe that would only matter

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Speaker 2: for the common shares of the main company, But then

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Speaker 2: if you wanted to tap into Preford preferred shares or something.

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Speaker 2: Then that's a whole different piece, that's.

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Speaker 1: A whole different ball game. I find it extremely interesting,

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Speaker 1: and I think that's where all of this is going,

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Speaker 1: especially for the treasuries.

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Speaker 2: Yeah, for the peer play treasuries exactly.

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Speaker 1: All right, So.

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Speaker 2: We have we have a spectrum, and I guess probably

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Speaker 2: at some point, at what point does the bitcoin strategy

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Speaker 2: start to overtake the existing bitcoin So like strategy, for example,

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Speaker 2: you barely hear about the software business anymore, whereas like

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Speaker 2: kind of going back to a Tesla or if Apple

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Speaker 2: were to buy bitcoin on their balance sheet, it wouldn't

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Speaker 2: even really move the needle. But kind of going back

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Speaker 2: to like I mean, index investing, traditional equity investing, and

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Speaker 2: typically you don't really value companies as a multiple off

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Speaker 2: their nave, right, so it's really all about those discounted cashlows.

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Speaker 2: So then so I guess you have to get to

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Speaker 2: a point where that bitcoin overtakes the traditional business. I

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Speaker 2: guess that that's the way that you see it. And

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Speaker 2: then that's just it on a spectrum.

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Speaker 1: Yeah, And I actually kind of have a metric I

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Speaker 1: use in my head for that, and so I think

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Speaker 1: strategy transition from a meaningful software business to a meaningless

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Speaker 1: offware business in terms of its overall evaluation, when the

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Speaker 1: free cash flow from the operating business has ceased to

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Speaker 1: be able to cover the annual liabilities of their debt.

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Speaker 1: So when the preferreds became started becoming issued, they no

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Speaker 1: longer can cover those preferreds by their free cash flow

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Speaker 1: from their operating business. Up until the end of twenty

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Speaker 1: twenty four, they were able to cover all the convertible

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Speaker 1: debt coupon payments through their operating cash flow. So that

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Speaker 1: was a fundamental shift in their strategy. And now they're

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Speaker 1: wholly dependent on bitcoin's compound annual growth rate for their success.

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Speaker 2: Okay, now we talk about the underlying business model and

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Speaker 2: the point of having some sort of cash flow. Five

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Speaker 2: million dollars is good enough to sort of cover that.

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Speaker 2: But you've also talked about quite a bit about sort

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Speaker 2: of like the convertible bond problem, and it almost seems

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Speaker 2: like maybe Sailors sort of headfaked the industry almost, if

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Speaker 2: you will, because micro strategy came out with the convertible bonds,

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Speaker 2: and now there's strategy which is maybe like the two

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Speaker 2: point zero, which is like no more vertibles and now

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Speaker 2: it's like atm and preferreds. So what's this convertible bond

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Speaker 2: problem that you see that seemingly sort of headfake the

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Speaker 2: industry to like, now everybody's copying that part, but it

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Speaker 2: seems to be a big problem.

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Speaker 1: Yeah. I can only speak to the risks associated with

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Speaker 1: a convert relative to it preferred, and that's when duration,

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Speaker 1: so converts come do and that term debt is very

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Speaker 1: problematic if Bitcoin has a sustained draw down. Two, it's

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Speaker 1: the pricing of his convertible notes and the delta hedging

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Speaker 1: where people will tend to short the exposure to MSTR

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Speaker 1: relative to the bond. So the bonds when they get

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Speaker 1: issued represent about fifty percent exposure to MSTR. And most

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Speaker 1: of the large players who buy these bonds these convertible notes,

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Speaker 1: they short the stock and they scalp the stock on

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Speaker 1: the way down. And that's very predatory for the common shareholders.

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Speaker 1: And so I don't think that's super advantageous for any

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Speaker 1: company who's looking to issue debt. And that's why I

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Speaker 1: think that prefers become more popular.

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Speaker 2: So it's sort of like at the beginning, it was like,

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Speaker 2: oh my gosh, he's raising billions of dollars at like

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Speaker 2: zero point eight interest, Like that's amazing, Like why wouldn't

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Speaker 2: you want to be at billions of dollars at very

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Speaker 2: low rates? Which is why again sort of the headfake.

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Speaker 2: Now you see, you know, Swamp sequons, you know, raised

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Speaker 2: two hundred million of converts, and I think Pump's company

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Speaker 2: rais two hundred fty million of converts. And you see

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Speaker 2: that over and over and over. But I guess what

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Speaker 2: you're saying is the sort of that predatory nature or

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Speaker 2: really it's the function of that convert market is going

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Speaker 2: to want to short the stock and so even though

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Speaker 2: they're getting the bitcoin, then they have to face the

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Speaker 2: headwinds of the of the downward pressure against the equity price.

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Speaker 1: Exactly. Yeah, I mean it's a good and a bad.

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Speaker 1: Like with everything, there's a negative. So it's a positive

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Speaker 1: they get all the bitcoin, it's a negative there's some

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Speaker 1: downre equity pressure. One point I think that's really important

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Speaker 1: to understand about those converts is you can have a

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Speaker 1: senior on secured convert or a senior secured convert. And

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Speaker 1: something to watch out for in these capital structures are

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Speaker 1: the secured nature of those converts because then there is

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Speaker 1: a margin call preference in the price of bitcoint whereas

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Speaker 1: with Strategy and most other bitcoin try it's unsecured, so

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Speaker 1: there's no margin call risk with those convertible notes.

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Speaker 2: So the duration of that debt instrument, as well as

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Speaker 2: whether it's secured or not secure, is going to make

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Speaker 2: a big difference exactly.

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Speaker 1: All those terms really really matter, and we're trying to

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Speaker 1: value the credit worthiness of any of these companies.

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Speaker 2: Yeah, do you think there's like a ratio where, like,

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Speaker 2: you know, we could probably take twenty percent in converts

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Speaker 2: and that extra bitcoin will help our stock grow, but

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Speaker 2: it doesn't really hold our stock down that much. Is

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Speaker 2: there like some sort of a ratio that you think

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Speaker 2: might work or does it really come down to those

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Speaker 2: terms that you said?

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Speaker 1: Yeah, I think it depends on whether or not you

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Speaker 1: can cover those converts with free cash flow. If you can,

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Speaker 1: I would go heavy on the converts because you have

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Speaker 1: maximum leverage with the lowest amount of risk as long

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Speaker 1: as it's not secured. But in terms of the short pressure,

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Speaker 1: I think bitcoin's price pushes. Bitcoin's price is really the

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Speaker 1: forcing function there, Like I wouldn't The shorts are predatory,

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Speaker 1: but they're not. They don't cripple stock price, so I

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Speaker 1: don't think they're a massive issue.

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Speaker 2: So if you could get it on good terms with

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Speaker 2: potentially being unsecured where you're not basically forced to sell,

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Speaker 2: and bitcoin runs, we're making you all the time as

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Speaker 2: the time of recording, and I think we had one

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Speaker 2: thirteen today. If it runs the two hundred thousand, that

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Speaker 2: headwinds of the pressure of the short selling is probably

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Speaker 2: not going to matter exactly.

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Speaker 1: And when those converts are really deep in the money,

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Speaker 1: so there's a strike on the convert where they can

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Speaker 1: convert the short delta arbing, the delta hedging that goes

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Speaker 1: on is pretty much negated at stock prices well above

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Speaker 1: the conversion price, So as you get higher and higher

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Speaker 1: as bitcoin runs, it matters less than us.

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Speaker 2: You've said that. I think you've said that their predatory

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Speaker 2: towards the stock and that strategy is frustrated with them.

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Speaker 2: I mean, wouldn't there be an opportunity when the price

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Speaker 2: a bitcoin runs up to maybe buy those out or

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Speaker 2: close those out.

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Speaker 1: Yeah, strategy has the ability to convert call those for

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Speaker 1: conversion early as long as there's certain terms that are met,

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Speaker 1: and all of the duration terms have been met, but

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Speaker 1: it's not advantageous for Strategy or any Bitcoin treasury to

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Speaker 1: call them early because of the good faith with the

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Speaker 1: convertible note hedgers and purchasers, and because there's provisions that

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Speaker 1: make Strategy or any of these companies issue more shares

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Speaker 1: in the case the company itself calls the debt early,

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Speaker 1: so they're kind of just waiting until the delta hedges

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Speaker 1: are done hedging and they convert.

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Speaker 2: Yeah, just kind of like write it out.

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Speaker 1: I think it's their best best option.

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Speaker 2: Yeah, at this point. What about something more another type

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Speaker 2: of instrument, like the Blockchain Group has done where they've

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Speaker 2: taken bitcoin that can convert into equity. What do you

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Speaker 2: think about those types of converts?

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Speaker 1: So interesting, right, And the risk for the corporation is

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Speaker 1: exponentially lower when they take bitcoin downside, right because in

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Speaker 1: the case of Strategy convertible notes, they have a principal

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Speaker 1: payment due on a certain date in the future denominated

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Speaker 1: in USD. In the case of Blockchain Group, I mean,

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Speaker 1: it's denominated in bitcoin, So you're not going to face

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Speaker 1: a situation where you owe more bitcoin to creditors at

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Speaker 1: some point in the future, whereas if the price of

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Speaker 1: bitcoin plummets over the next four years, strategy will ultimately

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Speaker 1: owe those creditors more bitcoin as represented by the flat

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Speaker 1: US D value, so very very much so less risky

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Speaker 1: from a perspective.

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Speaker 2: But you might also say that then they would have

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Speaker 2: to give the bitcoin back. So to your point, you

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Speaker 2: to give it back and the US dollar value would

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Speaker 2: be lower. But like, if the entire kind of strategy

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Speaker 2: is to kind of keep that yield growing, if they

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Speaker 2: had to give back a bunch of the bitcoin that

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Speaker 2: would work in reverse. Wouldn't it be catastrophic.

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Speaker 1: It would be catastrophic, and I think for it would

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Speaker 1: be catastrophic. But the problem I think there is that

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Speaker 1: if those shares don't convert over a period of time,

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Speaker 1: it means the stock underperformed Bitcoin over that duration. And

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Speaker 1: so if the stock underperforms Bitcoin, that kind of it's

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Speaker 1: all it's all a mess. It's all bad, right.

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Speaker 2: If the stock can't overperform Bitcoin.

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Speaker 1: Exactly, then bitcoin yield wasn't effective and you lost money

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Speaker 1: as a convert holder.

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Speaker 2: So let's talk about that for a minute. So you know,

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Speaker 2: that's what we see. I see a lot in the

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Speaker 2: bitcoin space. I'm sure you do as well as like

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Speaker 2: will these outperform Bitcoin, otherwise why don't I just hold Bitcoin?

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Speaker 2: And so you know, in the bitcoin community, we believe

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Speaker 2: one bitcoin's one bitcoin, that's the hurdle rate, you know,

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Speaker 2: et cetera, et cetera, And so I see that a lot.

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Speaker 2: But then, like you're an index investor, you used to be,

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Speaker 2: So it's like modern portfolio theory or just normal portfolio

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Speaker 2: theory would be sort of a diversified portfolio, right, I mean,

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Speaker 2: maybe some people might put five percent towards bitcoin or

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Speaker 2: ten percent towards bitcoin, and it doesn't seem that the

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Speaker 2: majority of people are on a bitcoin standard. So they're

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Speaker 2: trying to beat the S and P five hundred, they're

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Speaker 2: trying to beat the inflation rate, but not necessarily bitcoin's rate.

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Speaker 2: So what do you think think about that? Because, like

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Speaker 2: I said, in the bitcoin community to be thinking, well,

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Speaker 2: why would I buy that if it can't outperform bitcoin?

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Speaker 2: But I don't feel like the normal, the normy investor

404
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Speaker 2: thinks that way.

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Speaker 1: Yeah, there's a lot of benefit and there was early

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Speaker 1: on for a bitcoin treasury company trading as a public equity,

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Speaker 1: the ability to margin and borrow at good rates against

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Speaker 1: that equity, the ability to sell calls the ability to

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Speaker 1: leverage that position and store it a broken's account. So

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Speaker 1: there are a lot of advantages to those public bitcoin

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Speaker 1: exposure equities. But the way I look at it is

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Speaker 1: like when I'm trying to value a bitcoin equity relative

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Speaker 1: to the bitcoin hurdle rate, is you can leverage bitcoin directly, right,

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Speaker 1: You can just take leverage on your bitcoin and tech

415
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Speaker 1: theory outperform it. So these companies have to have some

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Speaker 1: sort of debt instrument that you can't buy. They have

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Speaker 1: to have bitcoin yield in future expectations that you believe

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Speaker 1: will outpace bitcoin, And I think you have to look

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Speaker 1: long term and think about the durability of their own

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Speaker 1: bitcoin per share yield over a ten year period and

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Speaker 1: then decide for yourself whether or not they're going to outperform.

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Speaker 2: Right. But what I'm saying is I don't know if

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Speaker 2: the majority of investors in the world are trying to

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Speaker 2: outperform bitcoin.

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Speaker 1: Oh, I mean, great point.

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Speaker 2: Yeah, that's what I'm saying. So like you and I

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Speaker 2: in the bitcoin space were like, hey, if it's not

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Speaker 2: going to beat bitcoin's return, why would I buy it?

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Speaker 2: But the majority of investors out there, they're just trying

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Speaker 2: to beat the S and P five hundred, Yeah, or

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Speaker 2: they're just trying to beat inflation. So if you know,

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Speaker 2: if micro Strategy stock or XYZ stock went up thirty

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Speaker 2: percent this year, they might be pretty excited about that,

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Speaker 2: even though it underperformed Bitcoin.

435
00:20:31,800 --> 00:20:36,040
Speaker 1: Totally, totally. I think everyone has their own benchmark, right,

436
00:20:36,040 --> 00:20:38,600
Speaker 1: and if the SMP's the benchmark, a lot of anything

437
00:20:38,640 --> 00:20:40,360
Speaker 1: that has to do with bitcoin has performed quite well

438
00:20:40,400 --> 00:20:41,520
Speaker 1: relative to that benchmark.

439
00:20:41,840 --> 00:20:45,200
Speaker 2: Do you think there's some sort of like launch launch

440
00:20:45,280 --> 00:20:48,480
Speaker 2: plan and then like maybe escape velocity where like most

441
00:20:48,480 --> 00:20:51,040
Speaker 2: of these companies maybe are sort of bootstrapping off the

442
00:20:51,080 --> 00:20:53,960
Speaker 2: backs of bitcoiners djen bitcoiners that are looking for a

443
00:20:54,000 --> 00:20:56,720
Speaker 2: more yield than what bitcoin can provide. But then eventually

444
00:20:56,720 --> 00:20:59,680
Speaker 2: they get big enough to where they get into mainstream finance,

445
00:20:59,800 --> 00:21:02,280
Speaker 2: and then they're being purchased by regular equity holders that

446
00:21:02,320 --> 00:21:03,920
Speaker 2: are not trying to beat bitcoin as a hurdle rate.

447
00:21:05,280 --> 00:21:07,119
Speaker 1: Absolutely, and a lot of them do get included in

448
00:21:07,119 --> 00:21:11,480
Speaker 1: those passive equities passive indices in their you know, listing

449
00:21:11,520 --> 00:21:15,760
Speaker 1: exchange in their listing country, and that's a huge kind

450
00:21:15,760 --> 00:21:19,320
Speaker 1: of bitcoin trojan horse into the traditional capital markets. And

451
00:21:19,359 --> 00:21:21,000
Speaker 1: I think it's really really good for bitcoin. A lot

452
00:21:21,000 --> 00:21:23,080
Speaker 1: of people, a lot of hardcore bitcoiners, get upset with

453
00:21:23,119 --> 00:21:25,320
Speaker 1: the Bitcoin Treasury is saying it's paper bitcoin and this

454
00:21:25,359 --> 00:21:26,760
Speaker 1: is and the next thing. But I think what they

455
00:21:26,840 --> 00:21:30,640
Speaker 1: miss is that it's really an introduction of bitcoin into

456
00:21:30,640 --> 00:21:33,040
Speaker 1: capital markets in ways that you know, a lot of

457
00:21:33,040 --> 00:21:36,159
Speaker 1: investors holding these diversified portfolios don't even know they're holding

458
00:21:36,280 --> 00:21:39,440
Speaker 1: their beginning to hold these sorts of companies. I mean,

459
00:21:39,560 --> 00:21:42,440
Speaker 1: strategy was in the Russell to just got added to

460
00:21:42,440 --> 00:21:43,920
Speaker 1: the Russell two thousand a few months ago.

461
00:21:44,000 --> 00:21:46,560
Speaker 2: Yeah. I put a post on X a week or

462
00:21:46,560 --> 00:21:48,639
Speaker 2: two ago that went kind of viral and I basically

463
00:21:48,640 --> 00:21:50,639
Speaker 2: said that you know, these these are not for bitcoiners.

464
00:21:50,920 --> 00:21:53,199
Speaker 2: These are not a replacement for cold storage, right. This

465
00:21:53,280 --> 00:21:55,239
Speaker 2: is really for trapped equity that doesn't have a way

466
00:21:55,280 --> 00:21:58,520
Speaker 2: to get exposure to get into it, and so it's

467
00:21:58,560 --> 00:22:00,639
Speaker 2: not a replacement for that. That's why kind of the

468
00:22:00,640 --> 00:22:02,000
Speaker 2: first question I asked you is if you were a

469
00:22:02,000 --> 00:22:06,560
Speaker 2: bitcoin or first, But I guess back to that escape velocity.

470
00:22:06,600 --> 00:22:08,679
Speaker 2: So then if the company can get big enough and

471
00:22:08,720 --> 00:22:11,120
Speaker 2: it can be looked at like additional equity, then as

472
00:22:11,160 --> 00:22:15,479
Speaker 2: a previous a reformed equity investor, I'm just kind of curious, right,

473
00:22:15,440 --> 00:22:19,800
Speaker 2: we would typically value those based off of potential future earnings,

474
00:22:19,800 --> 00:22:22,680
Speaker 2: just kind of cash flows, et cetera. Right, so they'd

475
00:22:22,720 --> 00:22:24,639
Speaker 2: sort of have like, well, you know, if Apple can

476
00:22:24,640 --> 00:22:27,240
Speaker 2: continue to expand its iPhone sales and its profit margins

477
00:22:27,240 --> 00:22:28,840
Speaker 2: stay about the same, how much will be worth in

478
00:22:28,880 --> 00:22:31,240
Speaker 2: three years or five years from now? Even maybe a

479
00:22:31,240 --> 00:22:34,040
Speaker 2: Warren Buffett who would never invest into bitcoin because it

480
00:22:34,040 --> 00:22:37,400
Speaker 2: doesn't produce anything, but he liked capital efficient businesses, right,

481
00:22:37,440 --> 00:22:40,280
Speaker 2: so they had him out. They needed very little capital

482
00:22:40,359 --> 00:22:43,679
Speaker 2: kind of keep going. So then I'm curious how you

483
00:22:43,760 --> 00:22:46,240
Speaker 2: might look at these from like more maybe more in

484
00:22:46,280 --> 00:22:49,320
Speaker 2: that lens, right, So, like take strategy for example, it

485
00:22:49,400 --> 00:22:51,760
Speaker 2: sells a product, it has three or four products, right,

486
00:22:51,800 --> 00:22:54,080
Speaker 2: it's got to strike stripe drive, right, it's got it preferreds.

487
00:22:54,440 --> 00:22:58,000
Speaker 2: It has a massive profit margin on those fifty percent.

488
00:22:59,160 --> 00:23:02,560
Speaker 2: It's very capital efficient. It doesn't take any really very

489
00:23:02,640 --> 00:23:06,240
Speaker 2: much capital to do that. And then if it just

490
00:23:06,400 --> 00:23:09,440
Speaker 2: holds the bitcoin, I mean, Sailor said, what's the worst

491
00:23:09,440 --> 00:23:11,080
Speaker 2: that can happen? We can't raise any more money, and

492
00:23:11,119 --> 00:23:13,480
Speaker 2: we're a sixty billion dollar company growing by sixty percent

493
00:23:13,480 --> 00:23:15,920
Speaker 2: a year. So if bitcoin gets to two hundred thousand

494
00:23:16,000 --> 00:23:18,119
Speaker 2: or gets to five hundred thousand, then how much is

495
00:23:18,200 --> 00:23:21,600
Speaker 2: strategy worth? So I'm curious do you look at it

496
00:23:21,640 --> 00:23:24,080
Speaker 2: like that trying to sort of take that traditional equity

497
00:23:24,160 --> 00:23:26,440
Speaker 2: lens and try to sort of project out that diskind

498
00:23:26,440 --> 00:23:28,560
Speaker 2: of cash flow model.

499
00:23:30,040 --> 00:23:32,280
Speaker 1: I think you have to do those valuations on a

500
00:23:32,280 --> 00:23:37,360
Speaker 1: bitcoin standard because a traditional corporation's assets you can't personally

501
00:23:37,400 --> 00:23:40,720
Speaker 1: own and have them producing whatever they produce at a

502
00:23:40,800 --> 00:23:43,919
Speaker 1: rate of thirty percent annually. So I think it's difficult

503
00:23:44,040 --> 00:23:48,640
Speaker 1: to consider the bitcoin price appreciation as part of earnings.

504
00:23:48,880 --> 00:23:51,119
Speaker 1: I really like the metric bitcoin gain, which is the

505
00:23:51,240 --> 00:23:54,800
Speaker 1: new the US dollar value of the new bitcoin that's

506
00:23:54,880 --> 00:23:58,200
Speaker 1: added on a per share basis for any of these corporations,

507
00:23:58,680 --> 00:24:02,520
Speaker 1: because that's real new dollars in the door per share,

508
00:24:02,720 --> 00:24:04,720
Speaker 1: And so I really look at that metric try to

509
00:24:04,720 --> 00:24:07,160
Speaker 1: figure out how valuable that is moving forward, and that's

510
00:24:07,160 --> 00:24:09,400
Speaker 1: ever increasing because the price of bitcoin is also increasable.

511
00:24:09,480 --> 00:24:11,080
Speaker 2: What happens if Bigwin goes down, then.

512
00:24:12,760 --> 00:24:15,919
Speaker 1: Then you'd be looking at a scenario in which the

513
00:24:15,920 --> 00:24:19,399
Speaker 1: bitcoin gains still positive USD value, but it's not a

514
00:24:19,440 --> 00:24:22,320
Speaker 1: compounding positive USD value in the short term.

515
00:24:22,119 --> 00:24:22,840
Speaker 2: Right, got it?

516
00:24:23,240 --> 00:24:23,320
Speaker 1: So?

517
00:24:23,560 --> 00:24:25,119
Speaker 2: I mean a lot of people seem to use the

518
00:24:25,280 --> 00:24:28,879
Speaker 2: m NAV metric as sort of like that multiple to

519
00:24:28,880 --> 00:24:30,760
Speaker 2: the nave, right, and then the multiple to the bitcoin

520
00:24:30,800 --> 00:24:34,040
Speaker 2: that they have. Do you think that's more of like

521
00:24:34,080 --> 00:24:37,280
Speaker 2: a leading indicator of where the potential price could be?

522
00:24:37,400 --> 00:24:39,240
Speaker 2: Or is that like a lagging indicator sort of telling

523
00:24:39,240 --> 00:24:39,960
Speaker 2: you where they're at.

524
00:24:41,480 --> 00:24:44,159
Speaker 1: I think it's so hard and so complicated, and I

525
00:24:44,200 --> 00:24:45,800
Speaker 1: know we spend a lot of time thinking about this.

526
00:24:47,000 --> 00:24:49,800
Speaker 1: M NAV I originally believe was a function of the

527
00:24:49,880 --> 00:24:52,479
Speaker 1: leverage in the capital structure. Right, If you have one

528
00:24:52,520 --> 00:24:55,199
Speaker 1: hundred dollars a bitcoin and thirty percent of that is

529
00:24:55,200 --> 00:24:57,879
Speaker 1: on leverage, is borrowed ad zero percent debt, which was

530
00:24:58,119 --> 00:25:01,080
Speaker 1: originally how you know strategy the of the bitcoin leverage

531
00:25:01,080 --> 00:25:04,919
Speaker 1: equity capital stack existed. Then if you believe bitcoin's going

532
00:25:05,000 --> 00:25:07,840
Speaker 1: up over a long term time horizon, then the debt

533
00:25:07,880 --> 00:25:10,320
Speaker 1: will melt away in the value of the bitcoin will increase.

534
00:25:10,680 --> 00:25:14,159
Speaker 1: So there should be a theoretical premium on that leverage

535
00:25:14,160 --> 00:25:16,560
Speaker 1: if you believe bitcoin's going up. If you believe bitcoin's

536
00:25:16,560 --> 00:25:18,440
Speaker 1: going down over a long period of time, there should

537
00:25:18,440 --> 00:25:20,840
Speaker 1: be a discount on that leverage capital structure. So I

538
00:25:20,840 --> 00:25:25,000
Speaker 1: think one MNAV is function of the leverage. Now all

539
00:25:25,040 --> 00:25:27,879
Speaker 1: these companies are yielding bitcoin or increasing the bitcoin per share,

540
00:25:28,280 --> 00:25:30,600
Speaker 1: so a lot of times m NAV has become kind

541
00:25:30,600 --> 00:25:33,119
Speaker 1: of a function of the future expectations of on a

542
00:25:33,119 --> 00:25:36,000
Speaker 1: bitcoin each shareholder will have. And I think those work

543
00:25:36,200 --> 00:25:38,919
Speaker 1: in tangent and they ebb and flow, and there's just

544
00:25:39,000 --> 00:25:41,919
Speaker 1: market dynamics, you know. Index inclusion pushes up the MNAV,

545
00:25:42,480 --> 00:25:45,719
Speaker 1: fear push it down the m NAV. So it's not

546
00:25:45,880 --> 00:25:47,480
Speaker 1: just one kind of metric.

547
00:25:47,400 --> 00:25:50,240
Speaker 2: Would you say it could almost be similar in a

548
00:25:50,280 --> 00:25:52,880
Speaker 2: way to like a pe ratio where it's like sort

549
00:25:52,920 --> 00:25:55,119
Speaker 2: of like hey, Metaplanet's at a five or a six

550
00:25:55,520 --> 00:25:58,679
Speaker 2: because the rate at their bitcoin yield, the rate at

551
00:25:58,680 --> 00:26:01,119
Speaker 2: which they're growing the bitcoin stack, they can cover that

552
00:26:01,359 --> 00:26:03,760
Speaker 2: in a short period of time, whereas Strategies is much

553
00:26:03,840 --> 00:26:07,720
Speaker 2: lower because as a percentage, they're growing their bitcoin yield slower.

554
00:26:08,680 --> 00:26:10,240
Speaker 2: So it's sort of like that is that it's like

555
00:26:10,240 --> 00:26:12,840
Speaker 2: a forward looking metric based off of how fast they're

556
00:26:12,840 --> 00:26:15,040
Speaker 2: growing into that I think.

557
00:26:15,119 --> 00:26:16,840
Speaker 1: So I think that's a really good way to put it,

558
00:26:17,040 --> 00:26:19,560
Speaker 1: and that's definitely how the market's starting to price these things. Right.

559
00:26:19,600 --> 00:26:22,479
Speaker 1: We've seen really really high end navs for these smaller

560
00:26:22,480 --> 00:26:26,080
Speaker 1: companies that are yielding bitcoin quickly and lower end navs

561
00:26:26,080 --> 00:26:28,840
Speaker 1: for larger corporations that the base effect math kind of

562
00:26:28,880 --> 00:26:30,560
Speaker 1: inhibits their BDC yield for share.

563
00:26:30,720 --> 00:26:35,280
Speaker 2: Yeah, Now, because you think that size matters, would you

564
00:26:35,359 --> 00:26:37,480
Speaker 2: say that right for the collateral base that you could have?

565
00:26:37,760 --> 00:26:38,000
Speaker 1: Right?

566
00:26:39,280 --> 00:26:42,720
Speaker 2: Do you think the bitcoin yield is maybe used too

567
00:26:42,840 --> 00:26:45,000
Speaker 2: much and it's not really as important as people make

568
00:26:45,040 --> 00:26:47,480
Speaker 2: it out to seem because back to Smarter Web company

569
00:26:47,520 --> 00:26:51,120
Speaker 2: or even Metaplanet, they have a pretty incredible yield, but

570
00:26:51,320 --> 00:26:54,679
Speaker 2: micro strategy or strategy or you know, adds more bitcoin

571
00:26:54,720 --> 00:26:58,520
Speaker 2: in one purchase than Metaplant even has for example. So

572
00:26:59,040 --> 00:27:01,199
Speaker 2: I mean, how is that? Is that a metric that

573
00:27:01,240 --> 00:27:02,440
Speaker 2: you that you use a lot?

574
00:27:04,160 --> 00:27:06,439
Speaker 1: I think about it in a couple different ways, And

575
00:27:06,840 --> 00:27:09,640
Speaker 1: the main way I think about is durability of bitcoin

576
00:27:09,720 --> 00:27:12,920
Speaker 1: yield because the real question is how for looking are

577
00:27:13,800 --> 00:27:16,600
Speaker 1: the is in equity? Right? All equities are forward looking,

578
00:27:16,600 --> 00:27:20,639
Speaker 1: whether that be the price, the PD ratio, et cetera.

579
00:27:20,840 --> 00:27:24,040
Speaker 1: But with a bitcoin treasury company, then the question you're

580
00:27:24,040 --> 00:27:26,440
Speaker 1: asking is how far looking is the future expectation of

581
00:27:26,440 --> 00:27:29,199
Speaker 1: bitcoin per share? And so if the company has a

582
00:27:29,200 --> 00:27:31,720
Speaker 1: really fast bitcoin yield, but it can won't be able

583
00:27:31,720 --> 00:27:35,120
Speaker 1: to sustain bitcoin yield in five years or during a drawdown.

584
00:27:35,720 --> 00:27:37,199
Speaker 1: You can't look out that far. If you have a

585
00:27:37,200 --> 00:27:40,880
Speaker 1: company that can issue you know, eight percent fixed debt

586
00:27:40,960 --> 00:27:43,720
Speaker 1: against their massive capital stack and continue to yield bitcoin

587
00:27:43,720 --> 00:27:47,040
Speaker 1: into perpetuity, maybe that is a more durable, you know,

588
00:27:47,080 --> 00:27:49,639
Speaker 1: business structure. But where yet to see that, you know,

589
00:27:49,840 --> 00:27:50,800
Speaker 1: practice in the market.

590
00:27:50,920 --> 00:27:54,600
Speaker 2: Yeah, well at Prague there was video Sailor did with

591
00:27:54,720 --> 00:27:56,960
Speaker 2: Adam Back and Alexander from the Blockchain Group, and I

592
00:27:56,960 --> 00:27:59,720
Speaker 2: think he actually called it a durable business model, which

593
00:27:59,800 --> 00:28:02,359
Speaker 2: was issuing the preferred to add the bitcoin, and that

594
00:28:02,520 --> 00:28:06,440
Speaker 2: was the durable model. So going back to the size matters,

595
00:28:06,520 --> 00:28:08,719
Speaker 2: and you talked about like the credit worthiness and so

596
00:28:09,040 --> 00:28:11,960
Speaker 2: I'm guessing what do you mean by credit worthiness and

597
00:28:11,960 --> 00:28:12,800
Speaker 2: why is that important?

598
00:28:15,000 --> 00:28:19,680
Speaker 1: Credit worthiness? And for a bitcoin treasury company is really

599
00:28:19,840 --> 00:28:22,919
Speaker 1: comes down to the different tranches of debt in the

600
00:28:22,920 --> 00:28:25,720
Speaker 1: capital stack and how over collateralized they are by the

601
00:28:25,720 --> 00:28:28,919
Speaker 1: bitcoin and the track record of the company in bitcoin

602
00:28:28,960 --> 00:28:32,840
Speaker 1: acquisition and not messing up the strategy quite frankly, so

603
00:28:33,040 --> 00:28:35,000
Speaker 1: do they take do they borrow against their bitcoin for

604
00:28:35,040 --> 00:28:39,680
Speaker 1: other purposes that harm the bitcoin itself, that jeopardize the bitcoin,

605
00:28:39,720 --> 00:28:41,680
Speaker 1: Do they do things with the bitcoin, do they lend

606
00:28:41,680 --> 00:28:44,600
Speaker 1: it out that could jeopardize the bitcoin on the balance sheet.

607
00:28:44,640 --> 00:28:46,640
Speaker 1: All those things will hurt the credit rating of a corporation.

608
00:28:47,200 --> 00:28:50,160
Speaker 2: Then and issuing issuing converts that were recourse or had

609
00:28:50,240 --> 00:28:51,240
Speaker 2: term on them, right.

610
00:28:51,560 --> 00:28:54,600
Speaker 1: Exactly secure debt, I mean, that would really hurt the

611
00:28:54,640 --> 00:28:57,320
Speaker 1: credit worthiness of any security issued below it in the

612
00:28:57,320 --> 00:28:59,160
Speaker 1: capital stack, got it. And so these are the things

613
00:28:59,160 --> 00:29:01,720
Speaker 1: you're looking at, and people say the credit worthiness of

614
00:29:01,760 --> 00:29:04,440
Speaker 1: the company, I think the real question here is the

615
00:29:04,440 --> 00:29:07,400
Speaker 1: credit worthiness of the instrument, and the company kind of

616
00:29:07,400 --> 00:29:10,040
Speaker 1: defines that credit worthiness because in Strategies capital stack, or

617
00:29:10,040 --> 00:29:13,440
Speaker 1: in Semilar's capital stack, I mean, the similar converts are

618
00:29:13,480 --> 00:29:16,960
Speaker 1: credit worthy because of what Semilar has done in the past,

619
00:29:17,040 --> 00:29:19,520
Speaker 1: and their bitcoin stack is overclateralized by you know, x

620
00:29:19,520 --> 00:29:22,360
Speaker 1: amount percent. With Strategy, they have four different products, so

621
00:29:22,440 --> 00:29:25,240
Speaker 1: each of those it's a different credit rating rating relative

622
00:29:25,240 --> 00:29:26,920
Speaker 1: to each other. And there'll be more and more of that,

623
00:29:26,960 --> 00:29:27,479
Speaker 1: in my opinion.

624
00:29:27,680 --> 00:29:30,800
Speaker 2: But those preferreds, the four that you mentioned for Strategy,

625
00:29:30,880 --> 00:29:33,680
Speaker 2: they're not actually collateralized though, right, so they're sort of

626
00:29:33,760 --> 00:29:36,960
Speaker 2: backed by the credit rating of Strategy, but not actually

627
00:29:37,080 --> 00:29:40,120
Speaker 2: collateralize themselves.

628
00:29:39,920 --> 00:29:43,320
Speaker 1: They're not secured, but they do have a liquidation preference.

629
00:29:43,600 --> 00:29:47,280
Speaker 1: So in the case of strategies dissolution or if they're

630
00:29:47,320 --> 00:29:51,040
Speaker 1: also cumulative dividends other than stride, So the dividends if

631
00:29:51,040 --> 00:29:54,520
Speaker 1: they're ever missed for Striper Strife, they compound against Strategy,

632
00:29:54,840 --> 00:29:57,840
Speaker 1: and the shareholders have different provisions where they can put

633
00:29:57,840 --> 00:30:00,000
Speaker 1: a board member onto Strategy and make sure those difidence

634
00:30:00,080 --> 00:30:02,880
Speaker 1: get paid. In the case of the dividends aren't paid

635
00:30:02,920 --> 00:30:05,160
Speaker 1: over a long enough period of time, they're owe the

636
00:30:05,160 --> 00:30:09,200
Speaker 1: liquidation preference, which moves to meet the value of both

637
00:30:09,400 --> 00:30:12,760
Speaker 1: crecord strife. So there's protections in place that that protect

638
00:30:12,760 --> 00:30:13,440
Speaker 1: those shareholders.

639
00:30:13,440 --> 00:30:16,960
Speaker 2: So the same so they're backed by the credit worthiness

640
00:30:17,000 --> 00:30:19,280
Speaker 2: of micro Strategy, but not necessarily the bitcoin is the.

641
00:30:19,280 --> 00:30:25,360
Speaker 1: Collateral exactly, Yeah, exactly, And so then argue that worthiness

642
00:30:25,560 --> 00:30:27,680
Speaker 1: is a function of the bitcoin is collateral. But you're

643
00:30:27,720 --> 00:30:31,920
Speaker 1: totally right, it's not secured. It's not directly bitcoin collateralized.

644
00:30:32,000 --> 00:30:34,080
Speaker 2: Right, So then if you want to issue, if you

645
00:30:34,120 --> 00:30:36,280
Speaker 2: want to scale the company, you want to issue the preferreds.

646
00:30:37,440 --> 00:30:39,240
Speaker 2: I want to make sure I have enough bitcoin on

647
00:30:39,280 --> 00:30:42,360
Speaker 2: my books to be credit worthy, but not necessarily back

648
00:30:42,400 --> 00:30:45,000
Speaker 2: those because if I back those as a collateral asset,

649
00:30:45,040 --> 00:30:47,240
Speaker 2: then that actually damages my credit worthiness.

650
00:30:49,000 --> 00:30:52,160
Speaker 1: It has to be unsecured debt. That's yeah, that's the

651
00:30:52,160 --> 00:30:53,960
Speaker 1: only way I would put it. Yea. If it's if

652
00:30:54,000 --> 00:30:56,080
Speaker 1: you have secure debt anywhere in your sheet on your

653
00:30:56,080 --> 00:30:58,800
Speaker 1: balance sheet that's secured by the bitcoin, it really jeopardizes

654
00:30:58,800 --> 00:31:00,440
Speaker 1: the credit worthiness of the institution.

655
00:31:00,560 --> 00:31:04,920
Speaker 2: Got it. Okay, So you've got a new fund going.

656
00:31:05,080 --> 00:31:07,360
Speaker 2: Congratulations on that. Just for everybody that wants to know,

657
00:31:07,840 --> 00:31:10,560
Speaker 2: smart guy running a fund to obviously see the opportunity

658
00:31:10,560 --> 00:31:13,800
Speaker 2: in space, what is Can you give us your framework

659
00:31:14,000 --> 00:31:16,680
Speaker 2: that you're looking for to try to identify which are

660
00:31:16,720 --> 00:31:20,040
Speaker 2: going to be the outliers and where a good valuation

661
00:31:20,240 --> 00:31:21,840
Speaker 2: is today in the future, et cetera.

662
00:31:23,120 --> 00:31:27,040
Speaker 1: Absolutely, We only invest a small portion of the fund

663
00:31:27,160 --> 00:31:32,280
Speaker 1: in bitcoin treasuries. Specifically, our main focus is on preferred

664
00:31:32,360 --> 00:31:34,240
Speaker 1: coming to the market, So I guess that's a form

665
00:31:34,240 --> 00:31:37,920
Speaker 1: of bitcoin treasuries and the options chain. So I got

666
00:31:37,920 --> 00:31:42,080
Speaker 1: my start trading options on both IBIT, MSTR MSTR during

667
00:31:42,080 --> 00:31:44,400
Speaker 1: the bear and that's where I see a lot of

668
00:31:44,480 --> 00:31:49,000
Speaker 1: value is pricing bitcoin in decaying fiat options. I think

669
00:31:49,000 --> 00:31:52,160
Speaker 1: you can't price you can't price a bitcoin option in

670
00:31:52,240 --> 00:31:54,560
Speaker 1: decaying FIAT is what I've always believed, and I think

671
00:31:54,560 --> 00:31:56,719
Speaker 1: that will continue to be the case, especially as more

672
00:31:56,720 --> 00:31:58,600
Speaker 1: of these treasury companies have an options market, you can

673
00:31:58,640 --> 00:32:02,120
Speaker 1: express different bath in ways you can't with just a

674
00:32:02,160 --> 00:32:06,320
Speaker 1: traditional equity. So we're a leverage bitcoin alpha fund, and

675
00:32:06,360 --> 00:32:11,720
Speaker 1: we combine options on large stable bitcoin jrudgery companies and

676
00:32:11,800 --> 00:32:15,080
Speaker 1: small allocations to investments like you may.

677
00:32:15,040 --> 00:32:19,200
Speaker 2: Work, okay, so you're not like long any of these companies. Necessarily,

678
00:32:19,280 --> 00:32:21,800
Speaker 2: you're taking sort of your experience, your background with the

679
00:32:21,840 --> 00:32:24,760
Speaker 2: options market, and sort of leveraging up maybe more like

680
00:32:24,840 --> 00:32:27,480
Speaker 2: trading positions around these yep.

681
00:32:27,560 --> 00:32:32,560
Speaker 1: We take multi month, multi year directional positions on mostly

682
00:32:32,640 --> 00:32:35,920
Speaker 1: strategy and IBIT, but then we also go long for

683
00:32:36,000 --> 00:32:38,560
Speaker 1: long periods of time in these bitcoin truatury companies as well.

684
00:32:38,600 --> 00:32:40,360
Speaker 1: So it's kind of a hodgepodge of all.

685
00:32:40,240 --> 00:32:43,000
Speaker 2: Of that, got it. So then you're not really trying

686
00:32:43,000 --> 00:32:45,840
Speaker 2: to determine if it's cheap or expensive, or what the

687
00:32:45,960 --> 00:32:48,880
Speaker 2: valuation is today or potential future valuation. You're just more

688
00:32:48,920 --> 00:32:50,840
Speaker 2: looking for a dislocation in the market that you could

689
00:32:50,840 --> 00:32:54,560
Speaker 2: take advantage of exactly. Yeah, Yeah, which I guess would

690
00:32:54,600 --> 00:32:58,040
Speaker 2: still require you to somewhat understand where that fair market

691
00:32:58,120 --> 00:32:58,560
Speaker 2: value is.

692
00:33:00,200 --> 00:33:03,800
Speaker 1: So yep, it does, and so we are really focused

693
00:33:03,800 --> 00:33:06,360
Speaker 1: on trying to value the bitcoin treasury companies, and I

694
00:33:06,400 --> 00:33:09,760
Speaker 1: think valuing a bitcoin treasury company changes during every phase

695
00:33:09,760 --> 00:33:10,600
Speaker 1: of a market cycle.

696
00:33:10,760 --> 00:33:12,280
Speaker 2: So can you walk us through that? And can you

697
00:33:12,320 --> 00:33:12,920
Speaker 2: walk us through that?

698
00:33:13,840 --> 00:33:17,600
Speaker 1: Absolutely, as we enter kind of a euphoric phase, one

699
00:33:17,760 --> 00:33:21,760
Speaker 1: saying one old trading saying is two times crazy is

700
00:33:21,800 --> 00:33:26,000
Speaker 1: still just crazy. So as the cycle heats up, there

701
00:33:26,000 --> 00:33:28,120
Speaker 1: will be a lot of crazy things happening in the

702
00:33:28,120 --> 00:33:31,200
Speaker 1: market in dislocations. But I think the real money's made

703
00:33:31,200 --> 00:33:34,000
Speaker 1: on the backside, and who doesn't lose their shirt when

704
00:33:34,040 --> 00:33:37,280
Speaker 1: this is all over. So we're just very conscious of

705
00:33:37,960 --> 00:33:42,000
Speaker 1: not forward. We don't like to project out past historical

706
00:33:42,000 --> 00:33:45,120
Speaker 1: bitcoin yield for bitcoin treasuries, and that's something I'm really

707
00:33:45,200 --> 00:33:47,920
Speaker 1: really feel very strongly about. A lot of people see

708
00:33:47,920 --> 00:33:52,440
Speaker 1: the exponential growth in bitcoin treasuries and then assume that

709
00:33:52,520 --> 00:33:55,360
Speaker 1: will continue forward, that they'll own all the bitcoin in

710
00:33:55,400 --> 00:33:57,680
Speaker 1: like three months, And I think that's no way to

711
00:33:57,760 --> 00:33:59,200
Speaker 1: value one of these companies because a lot of it

712
00:33:59,200 --> 00:34:00,840
Speaker 1: has to do with liquidity, and so we try to

713
00:34:00,840 --> 00:34:01,800
Speaker 1: be pretty honest about that.

714
00:34:02,320 --> 00:34:04,840
Speaker 2: So Metaplan has been able to maintain this one percent

715
00:34:05,400 --> 00:34:07,520
Speaker 2: for quite a while. They've been pretty consistent about that.

716
00:34:07,600 --> 00:34:09,880
Speaker 2: But then you have a small company, like a smarter

717
00:34:09,920 --> 00:34:11,920
Speaker 2: web company who has like some crazy yeld that I

718
00:34:11,960 --> 00:34:13,120
Speaker 2: don't know if I saw it right the other day

719
00:34:13,120 --> 00:34:15,319
Speaker 2: it was like twenty four thousand percent or something like that.

720
00:34:15,360 --> 00:34:19,000
Speaker 2: I don't know. Gosh, obviously that's not sustainable, right, they'd

721
00:34:19,000 --> 00:34:20,760
Speaker 2: have the whole bitcoin supply in a year or whatever.

722
00:34:22,480 --> 00:34:24,680
Speaker 2: So what do you think happens to a company that

723
00:34:24,760 --> 00:34:26,640
Speaker 2: comes out of the gate hot with a really high

724
00:34:26,680 --> 00:34:30,080
Speaker 2: bitcoin yield that's obviously non sustainable, is going to have

725
00:34:30,120 --> 00:34:31,600
Speaker 2: to slow that down at some point.

726
00:34:33,239 --> 00:34:34,600
Speaker 1: It's going to be a function of the demand for

727
00:34:34,600 --> 00:34:37,720
Speaker 1: the equity. Right, if you're yielding bitcoin by issuing equity,

728
00:34:37,760 --> 00:34:40,520
Speaker 1: which a lot of these are doing via different mechanisms,

729
00:34:40,520 --> 00:34:43,960
Speaker 1: whether moving strike warrants or atm then there has to

730
00:34:44,040 --> 00:34:45,560
Speaker 1: be a sustained demand for the equity, which in a

731
00:34:45,600 --> 00:34:47,800
Speaker 1: lot of markets there are. Obviously Japan has been extremely

732
00:34:47,800 --> 00:34:50,680
Speaker 1: receptive and that's why it's performed so well. In other

733
00:34:50,719 --> 00:34:53,360
Speaker 1: markets that liquidity may drive up. Look at Strategy for example,

734
00:34:53,440 --> 00:34:56,280
Speaker 1: they had they had like three hundred percent annualized bitcoin

735
00:34:56,360 --> 00:34:59,839
Speaker 1: yield yield for three weeks last November. So it's all

736
00:35:00,280 --> 00:35:03,160
Speaker 1: liquidity in the market and kind of euphoria demand for

737
00:35:03,160 --> 00:35:04,680
Speaker 1: the equity, and I think that comes and goes.

738
00:35:04,920 --> 00:35:08,319
Speaker 2: Yeah, But I mean if that if that yield dramatically

739
00:35:08,400 --> 00:35:11,479
Speaker 2: slows down, I mean that could dramatically break the price,

740
00:35:11,600 --> 00:35:13,759
Speaker 2: the price of the equity down with it, right, because

741
00:35:13,800 --> 00:35:15,479
Speaker 2: if they're looking at sort of that growth and trying

742
00:35:15,480 --> 00:35:17,920
Speaker 2: to project out like the days to cover that whatever

743
00:35:17,960 --> 00:35:22,920
Speaker 2: potential projected high MNAB is, it seems like that could

744
00:35:22,920 --> 00:35:24,160
Speaker 2: be a catastrophic event as well.

745
00:35:25,360 --> 00:35:27,479
Speaker 1: Yeah, And that's one metric I don't use, is day's

746
00:35:27,520 --> 00:35:29,400
Speaker 1: color MNAB. I know a lot. It's been popular for

747
00:35:29,440 --> 00:35:32,160
Speaker 1: a lot of folks, but I think you have to

748
00:35:32,160 --> 00:35:34,120
Speaker 1: look at it from a risk reward framework. And if

749
00:35:34,120 --> 00:35:36,879
Speaker 1: you're treading at a twenty m NAV, your downsides your

750
00:35:36,880 --> 00:35:39,439
Speaker 1: downsides ninety five percent, and so that's something to really

751
00:35:39,480 --> 00:35:41,200
Speaker 1: really consider when you take these bets.

752
00:35:41,480 --> 00:35:43,840
Speaker 2: So what would be your key metrics that you're looking at.

753
00:35:43,920 --> 00:35:51,120
Speaker 1: Then it's the risk reward profile of potential bitcoin acquisition

754
00:35:52,080 --> 00:35:55,000
Speaker 1: realistically based on kind of liquidity and that specific market.

755
00:35:55,560 --> 00:35:58,800
Speaker 1: The downside of the enav compressing to the fair value

756
00:35:58,920 --> 00:36:01,719
Speaker 1: value of the leverage rate show, So that's not necessarily one.

757
00:36:01,760 --> 00:36:03,440
Speaker 1: That maybe be one point three, one point four, depending

758
00:36:03,480 --> 00:36:06,359
Speaker 1: how much leverage there is in the capital stack, and

759
00:36:06,400 --> 00:36:10,880
Speaker 1: then also kind of the market conditions for that specific equity.

760
00:36:11,040 --> 00:36:13,480
Speaker 1: So in the case amount of planet, obviously there's a

761
00:36:13,480 --> 00:36:16,759
Speaker 1: premium for the nuances of the Japanese market.

762
00:36:17,160 --> 00:36:19,080
Speaker 2: Because of the fixed income markets that they're sort of

763
00:36:19,080 --> 00:36:23,160
Speaker 2: trapped in that market, got it? So I like how

764
00:36:23,160 --> 00:36:24,920
Speaker 2: you said this. So the m NAB based off of

765
00:36:24,960 --> 00:36:28,440
Speaker 2: the leverage they have in the stack, because for a

766
00:36:28,480 --> 00:36:33,440
Speaker 2: well run bitcoin treasury strategy company, they're using leverage and

767
00:36:33,480 --> 00:36:36,120
Speaker 2: they're tapping into cheap, cheap debt cheap leverage in the

768
00:36:36,160 --> 00:36:38,759
Speaker 2: debt equity markets, So they should always be higher than

769
00:36:38,800 --> 00:36:40,440
Speaker 2: one if it's a good company, if it's a well

770
00:36:40,480 --> 00:36:43,719
Speaker 2: run company. And so you're looking at bitcoin' what's that

771
00:36:44,400 --> 00:36:47,960
Speaker 2: and Bitcoin's going up over a long period of time, right, Yeah,

772
00:36:48,000 --> 00:36:49,960
Speaker 2: but yeah, I mean if they can apply some leverage

773
00:36:50,000 --> 00:36:52,879
Speaker 2: and yeah, assuming right if bitcoin drop that leverage works

774
00:36:52,880 --> 00:36:54,520
Speaker 2: against them obviously to your point.

775
00:36:54,440 --> 00:36:56,760
Speaker 1: Exactly, I believe bitgoin's going yourself.

776
00:36:56,960 --> 00:36:58,719
Speaker 2: Yeah, well, over a long period of time, I mean,

777
00:36:59,040 --> 00:37:02,120
Speaker 2: you know, I still think the four year cycles in play.

778
00:37:02,200 --> 00:37:07,120
Speaker 2: Until proven otherwise, maybe that happens next year. We don't

779
00:37:07,160 --> 00:37:09,319
Speaker 2: know how high it'll go and how far to pull back.

780
00:37:09,640 --> 00:37:11,640
Speaker 2: I don't advise people waiting for a dip could go

781
00:37:11,640 --> 00:37:13,560
Speaker 2: to two fifty and pull back to one fifty if

782
00:37:13,560 --> 00:37:17,359
Speaker 2: we don't know. But until proven otherwise, there's there's there's

783
00:37:17,360 --> 00:37:18,960
Speaker 2: probably a bear market. Maybe it's only a thirty percent

784
00:37:19,000 --> 00:37:20,560
Speaker 2: drove down, we don't know, but it is going to

785
00:37:20,600 --> 00:37:24,040
Speaker 2: put these companies into that position. So you think, really

786
00:37:24,239 --> 00:37:26,520
Speaker 2: the ones that are going to sink or swim are

787
00:37:26,520 --> 00:37:29,200
Speaker 2: really the ones that use this leverage properly. I think

788
00:37:29,200 --> 00:37:33,160
Speaker 2: that's what you're saying right now.

789
00:37:33,360 --> 00:37:35,560
Speaker 1: And to have a way to use bitcoin in a

790
00:37:35,600 --> 00:37:38,640
Speaker 1: bear market, right, like we talked about earlier, if you

791
00:37:38,719 --> 00:37:41,640
Speaker 1: only yield bitcoin by having demand for your equity, it's

792
00:37:41,680 --> 00:37:45,040
Speaker 1: really tough. If you can yield bitcoin using issuing fixed

793
00:37:45,040 --> 00:37:47,760
Speaker 1: income products that are overcollateralized, you could still have bitcoin

794
00:37:47,800 --> 00:37:49,680
Speaker 1: yielding a bear and I think that's really that's a

795
00:37:49,680 --> 00:37:50,560
Speaker 1: big differentiator.

796
00:37:50,719 --> 00:37:53,040
Speaker 2: Yeah, because you're able to add when when it's when

797
00:37:53,040 --> 00:37:55,960
Speaker 2: it's cheap, which is good you're buying, you're buying the dip.

798
00:37:57,160 --> 00:38:00,440
Speaker 2: Theoretically you could just sort of hunker down and down

799
00:38:00,480 --> 00:38:03,080
Speaker 2: the hatches, you don't lose any bitcoin, and you wait

800
00:38:03,120 --> 00:38:04,839
Speaker 2: six or nine months and it comes back up again

801
00:38:04,840 --> 00:38:06,120
Speaker 2: and you're back off to the races again.

802
00:38:07,360 --> 00:38:07,800
Speaker 1: Exactly.

803
00:38:07,960 --> 00:38:09,160
Speaker 2: Yep, that's not the worst case.

804
00:38:10,440 --> 00:38:11,279
Speaker 1: That's a pretty good case.

805
00:38:11,320 --> 00:38:13,840
Speaker 2: The worst case is becoming a force seller.

806
00:38:15,200 --> 00:38:20,520
Speaker 1: Exactly. Ye do you see poor compression? Right, Like, if

807
00:38:20,560 --> 00:38:23,760
Speaker 1: there's a future expectation of bitcoin yield that doesn't manifest

808
00:38:23,800 --> 00:38:26,879
Speaker 1: and it's trading out of twenty m NAV, you may

809
00:38:26,920 --> 00:38:27,719
Speaker 1: never recover that.

810
00:38:28,120 --> 00:38:31,319
Speaker 2: You may never recover the twenty m NAV exactly right,

811
00:38:31,680 --> 00:38:33,680
Speaker 2: So you might get back down to a two or three.

812
00:38:33,920 --> 00:38:38,319
Speaker 2: But yeah, and obviously there's there's plenty of parallels in

813
00:38:38,480 --> 00:38:40,880
Speaker 2: history that shows that with certain tech stocks and stuff

814
00:38:40,880 --> 00:38:42,760
Speaker 2: that are still trading today is still really good companies

815
00:38:42,800 --> 00:38:44,920
Speaker 2: like Oracle for example, but never reclaimed it's like twenty

816
00:38:45,200 --> 00:38:48,719
Speaker 2: two thousand high. So we've seen that happen before. So

817
00:38:48,760 --> 00:38:51,840
Speaker 2: when you talk about defending the m NAV regardless of

818
00:38:51,840 --> 00:38:54,160
Speaker 2: market condition, what would that look like?

819
00:38:54,960 --> 00:38:58,520
Speaker 1: Defending the m NAV is really really important, especially with

820
00:38:58,760 --> 00:39:02,080
Speaker 1: senior claim over the bitcoin, so something like that. It's

821
00:39:02,120 --> 00:39:05,239
Speaker 1: been brought to my attention about the predatory shorting is

822
00:39:06,360 --> 00:39:10,760
Speaker 1: in a bear market, all these convertible note arbitragers press

823
00:39:10,840 --> 00:39:13,720
Speaker 1: the stock, They lay on the stock and push it lower,

824
00:39:13,719 --> 00:39:16,480
Speaker 1: push it lower, And when an en NAV goes lower

825
00:39:16,480 --> 00:39:20,200
Speaker 1: and lower and lower, the company can't issue equity and

826
00:39:20,239 --> 00:39:23,720
Speaker 1: yield bitcoin, so their m NAV drops, the bitcoin yield drops.

827
00:39:24,000 --> 00:39:27,040
Speaker 1: It gives the short sellers more reason to short the

828
00:39:27,080 --> 00:39:28,960
Speaker 1: stock because there's no bitcoin yield. So it's kind of

829
00:39:28,960 --> 00:39:32,799
Speaker 1: a self perpetuating downward cycle. Right. There needs to be

830
00:39:32,880 --> 00:39:35,239
Speaker 1: some sort of instrument that they can issue in such

831
00:39:35,280 --> 00:39:38,400
Speaker 1: a market condition such that they can get bitcoin yield

832
00:39:38,400 --> 00:39:40,640
Speaker 1: back up and running, they can add leverage to the

833
00:39:40,640 --> 00:39:44,040
Speaker 1: capital stack and force the shorts to lay off the

834
00:39:44,080 --> 00:39:48,200
Speaker 1: stock and take it potentially below one MNAV. That instrument

835
00:39:48,239 --> 00:39:49,680
Speaker 1: for strategy is strived.

836
00:39:49,840 --> 00:39:51,040
Speaker 2: So that's why you're so bullish on it.

837
00:39:51,120 --> 00:39:54,440
Speaker 1: Our ferds, Yeah, I think they're a really necessary component

838
00:39:54,760 --> 00:39:55,440
Speaker 1: of an LBE.

839
00:39:55,719 --> 00:40:00,040
Speaker 2: Yeah. So it's a necessary component. It's a race to

840
00:40:00,080 --> 00:40:02,879
Speaker 2: get there, but the company has to be credit worthy

841
00:40:02,960 --> 00:40:05,960
Speaker 2: enough to get there, So then you need size, and

842
00:40:06,000 --> 00:40:08,520
Speaker 2: you need some sort of longevity or some sort of

843
00:40:08,600 --> 00:40:10,279
Speaker 2: reputation to prove that you can do what you said,

844
00:40:10,320 --> 00:40:12,319
Speaker 2: you did, I.

845
00:40:12,360 --> 00:40:13,960
Speaker 1: Think all those things are extremely necessary.

846
00:40:14,040 --> 00:40:16,799
Speaker 2: Yeah, yeah, okay, Well, I mean that's kind of what

847
00:40:16,840 --> 00:40:19,000
Speaker 2: I see as well. That's kind of how I'm thinking

848
00:40:19,000 --> 00:40:20,839
Speaker 2: about it. What about I mean, how do you think

849
00:40:20,840 --> 00:40:22,239
Speaker 2: about it? I mean, I guess you're more of a

850
00:40:22,560 --> 00:40:24,520
Speaker 2: sort of I hate to use the word trader, but

851
00:40:25,000 --> 00:40:27,439
Speaker 2: you know you're doing a different strategy with your option

852
00:40:27,520 --> 00:40:30,719
Speaker 2: strategy and the fund. But how do you think the

853
00:40:30,840 --> 00:40:34,280
Speaker 2: average investor would think about allocating across these.

854
00:40:36,520 --> 00:40:39,680
Speaker 1: Well, I think you start with Bitcoin first. You understand

855
00:40:39,680 --> 00:40:41,520
Speaker 1: that you believe in that, and you look at it

856
00:40:41,960 --> 00:40:44,560
Speaker 1: what you expect to be it's terminal or long term

857
00:40:44,560 --> 00:40:46,919
Speaker 1: growth rate, and that's very high, and you can't really

858
00:40:46,920 --> 00:40:51,000
Speaker 1: expect to beat that unless you're a professional or are

859
00:40:51,080 --> 00:40:54,240
Speaker 1: very good working off that. You have to find something

860
00:40:54,600 --> 00:40:57,280
Speaker 1: that has a good risk adjusted return relative to bitcoin,

861
00:40:57,360 --> 00:41:00,520
Speaker 1: and most of these ledees they may have massive turns,

862
00:41:00,560 --> 00:41:03,759
Speaker 1: but risk adjusted it's difficult because it's so unknown and

863
00:41:03,920 --> 00:41:06,200
Speaker 1: so new. So I think you have to think really,

864
00:41:06,239 --> 00:41:09,759
Speaker 1: really hard, really really in depth about what happens in

865
00:41:09,840 --> 00:41:13,480
Speaker 1: a worst case scenario. In a bad scenario, how much

866
00:41:13,480 --> 00:41:15,560
Speaker 1: do you lose without allocation? How much do you make

867
00:41:15,560 --> 00:41:18,279
Speaker 1: in a really positive scenario and then decide how you

868
00:41:18,400 --> 00:41:21,680
Speaker 1: allocate two different whether it be an options contract, an

869
00:41:21,800 --> 00:41:26,480
Speaker 1: lbe a you know something else. So that's the way

870
00:41:26,560 --> 00:41:27,960
Speaker 1: the kind of mental framework I use.

871
00:41:28,440 --> 00:41:31,319
Speaker 2: Yeah, good, good, Okay. So basically what you're saying is

872
00:41:31,360 --> 00:41:32,560
Speaker 2: allocate based on risk.

873
00:41:33,960 --> 00:41:36,319
Speaker 1: Alocate based on risk. Yeah, and don't listen to any

874
00:41:36,320 --> 00:41:40,640
Speaker 1: mode about risk. Whoever is running the company, whoever, don't

875
00:41:40,640 --> 00:41:44,000
Speaker 1: listen to them. Everyone's talking their book. Think hard about yourself.

876
00:41:44,080 --> 00:41:46,279
Speaker 1: You have to protect yourself first and foremost. What is

877
00:41:46,280 --> 00:41:48,560
Speaker 1: the risk I am taking on based on my knowledge

878
00:41:48,800 --> 00:41:51,480
Speaker 1: of the prospectus, the capital structure, and everything I know

879
00:41:51,560 --> 00:41:53,160
Speaker 1: to be true about the company. You have to rely

880
00:41:53,200 --> 00:41:56,319
Speaker 1: on yourself because if anything goes south on any sort

881
00:41:56,360 --> 00:41:58,560
Speaker 1: of investment, no one will hold your hand. It's just

882
00:41:58,680 --> 00:42:00,000
Speaker 1: you in an empty brokerage account.

883
00:42:00,360 --> 00:42:03,920
Speaker 2: Nice. Give me a final thought. So we've obviously we're

884
00:42:03,920 --> 00:42:06,239
Speaker 2: talking about the treasury thing. It's the hottest subject going

885
00:42:06,320 --> 00:42:08,400
Speaker 2: right now, as we've seen it all the big conferences.

886
00:42:09,000 --> 00:42:11,680
Speaker 2: If someone walked away from this conversation with one key

887
00:42:11,960 --> 00:42:16,640
Speaker 2: insight about the future of these bitcoin treasury companies, what

888
00:42:16,760 --> 00:42:18,719
Speaker 2: is that? What does the future hold?

889
00:42:18,880 --> 00:42:21,360
Speaker 1: It's very easy to compare the bitcoin treasury companies to

890
00:42:21,520 --> 00:42:24,879
Speaker 1: a spack craze or ico craze. But if you believe

891
00:42:24,920 --> 00:42:27,279
Speaker 1: in bitcoin long term, there will be relevance for a

892
00:42:27,280 --> 00:42:31,280
Speaker 1: bitcoin treasury strategy. The part of the bitcoin treasure strategy

893
00:42:31,400 --> 00:42:35,600
Speaker 1: I don't know will exist in five years is issuing equity.

894
00:42:35,680 --> 00:42:39,160
Speaker 1: The demand for equity in the market to yield bitcoin.

895
00:42:39,239 --> 00:42:42,480
Speaker 1: That's been a massive capital market's arbitrage that has existed.

896
00:42:42,719 --> 00:42:45,720
Speaker 1: I don't think it will exist into perpetuity. So people

897
00:42:45,800 --> 00:42:49,200
Speaker 1: have to understand that all these bitcoin treasuries will have

898
00:42:49,239 --> 00:42:51,960
Speaker 1: to evolve over time, and I don't know what that

899
00:42:52,000 --> 00:42:54,560
Speaker 1: looks like right now. It seems to be preferred and

900
00:42:54,600 --> 00:42:57,120
Speaker 1: fixed income debt issuance, So that's kind of where I

901
00:42:57,160 --> 00:42:58,160
Speaker 1: think people should be looking.

902
00:42:58,239 --> 00:43:00,600
Speaker 2: So the opportunities now don't it's going to look like

903
00:43:00,640 --> 00:43:02,080
Speaker 2: in a couple of years is they don't let it

904
00:43:02,120 --> 00:43:06,239
Speaker 2: pass you by exactly? All right, Dan, you guys do

905
00:43:06,239 --> 00:43:08,680
Speaker 2: a great job on the True North podcast. I want

906
00:43:08,680 --> 00:43:10,480
Speaker 2: to shout that out. We'll link to that down below. Dan,

907
00:43:10,520 --> 00:43:13,279
Speaker 2: you do amazing contribution there. Anything else people should be

908
00:43:13,280 --> 00:43:15,080
Speaker 2: paying attention to for you?

909
00:43:15,080 --> 00:43:18,000
Speaker 1: No, all my works on my Twitter, my Twitter feed

910
00:43:18,040 --> 00:43:20,880
Speaker 1: at Hillary Underscore, Dan h I L l e r Y.

911
00:43:21,320 --> 00:43:24,200
Speaker 1: I'm running a small private place and fund that will

912
00:43:24,239 --> 00:43:28,920
Speaker 1: be a combination of auctions and bitcoin treasury strategies. It

913
00:43:28,920 --> 00:43:32,319
Speaker 1: won't be a complete swing, you know, home run, it

914
00:43:32,320 --> 00:43:35,759
Speaker 1: will be steady outperformance of bitcoin ideally. Other than that,

915
00:43:35,840 --> 00:43:37,640
Speaker 1: thanks for everything to do Mark, This has been awesome.

916
00:43:37,719 --> 00:43:38,640
Speaker 2: Yeah, thanks all, ich Stan