It was a beautiful day, the sun beat down, I hit the radio while I was driving.
Trees went back
Me and Del were singing
Little runaway
I was flying
Yeah, running down a dream
That never would come to me
Working on a mystery
Going wherever you leave
Running down a dream
I felt so good, like anything was possible, hit cruise control and rubbed my eyes.
The last three days, the rain was unstoppable, it was always cold, no sunshine.
Yeah, running down a tree
That never would come to me
Working on a mystery
Going wherever you need
Running down a tree
Woo! Welcome back.
True North, episode 39.
chapter two, full sail ahead. We are going to get after it. We're going to have some fun.
We are back. It's been a while. Let's get the crew out on stage. Let's put the price away.
Welcome back, everybody. True North, the investment grade Bitcoin podcast.
Appreciate everybody that's joined today. We've got just a couple hundred people up on the screen
here so far, which is great. Thanks for being here. And we've got a lot to get through. Some
exciting times. It's been 34 days since our last stream. A lot has happened. A lot has
gone down in the markets. We've seen changes in interest rates. A lot of political things
have happened. Prices of BTC is just chopping around. There's just been so much going on,
and we're here to get through it. And obviously, we have new ownership. So
True North has gotten acquired and we are here to walk through it and we're going to be okay.
We're definitely going to be okay, guys. I can confirm that. So without further ado,
before we get into our general statistics and information and start talking about what's going
on in the scene here, I've got the crew here today. We've got Soleil, Adrian, Mason, Dan,
and Ben. And we're going to talk about this strategic acquisition because I think it is
a lot more bullish than a lot of people have really indicated or identified. So a little bit
of background. Obviously, I took a role at Strive here within the last couple of months.
And so within that role, it was very clear that I was wearing two different hats. I was wearing a
Strive hat and I was wearing a True North hat. And additionally, over time, we had started to
noticed that if we wanted to take TrueNorth to the next level, we were going to need a little bit
more resource. So we were kind of thinking about, okay, do we get sponsorships? What does this look
like? How do we get the additional help that we need to slice up clips and push out content into
different spheres and different locations? So this was a great opportunity to take multiple hats,
turn it into one hat and provide a bit more resource to help us grow this ecosystem and grow
this story. So me personally, I think this is the biggest story in all of finance, and I will
continue to hang my hat on that. That's why I've got a job in this space. When thinking about
monetizing True North or kind of what we are doing here, my ultimate goal was to get a job
in the Bitcoin world. And many of the people on the screen here have also gotten jobs or gotten
things that they're doing in the Bitcoin world that they feel good about, that they're excited
about. And because of that, I sold True North for a dollar, a single dollar. This wasn't a huge
exit strategy for me to go make a ton of money. This wasn't a money grab. It just goes against
the ethos. It goes against True North. It goes against everything that we're trying to do here.
which is educate the community, bring people up to speed on corporate finance,
give some perspective of what's happening behind the scenes.
And every single one of the people on the screen now are now players in the game.
So would you rather have perspective from people that are playing in the game,
in the arena, or commentators that are commentating from the outside?
And I would say likely the former in most scenarios.
So in terms of what's next, like what does this look like?
I'm an employee of Strive. Everybody else is independent contractors. Everybody can say whatever they want. Like nothing is going to change. And that is by design. Like the goal is to not really change anything. It's really to elevate the quality of content that we're putting out and the ability to grow and bring up the entire ecosystem so we can get more people Bitcoin jobs.
We want to expand True North into a network and continue to elevate the entire ecosystem so people can grow into this space and continue to talk about the benefits of the future.
a little bit of perspective like I grew up lower middle in like lower middle class I've always been
really focused on understanding the world and like trying to share that because I grew up with a lot
of like pain and pressure when like monetarily when I was growing up so to the extent that I
can share that information such that people can not have those things that I felt growing up is
is a really big goal of mine. So this is truly a benevolent movement, despite what some of the
Twitter bots and everybody else seems to think. So I'm excited about the future. And the other
thing I'd like to bring up, and this is just a small little cherry on top, the company that
Strive reversed merged into was a digital finance media company that controlled Instagram, TikTok,
and Discord media. And there's an entire crew of people that will have to be able to clip up content
and push it out into different distribution channels that we didn't have previously. And
that's just kind of fits within the whole thing. So if anything, I would say I am 100% all in
on this entire space. And that's the way this is going forward. So I think it's a really exciting
time to be talking about this stuff. And yeah, we're going to go higher. I think everybody's
going to go higher. We're going to try to lift the entire space. Hopefully everybody that wants
a Bitcoin job can get a Bitcoin job and we'll see where this thing goes. I think you got to
answer the important question though, Jeff, that everybody wants to know, which is,
What are you going to spend that dollar on?
Please, please bother Matt about this dollar because he still hasn't paid me the dollar.
And I want a physical dollar.
I want like a crispy one.
I can put it up on my wall behind me and say like, this is the true north dollar.
You got to frame it.
I got to frame it.
I want to do a whole thing with it.
So yeah.
Do you mind if I jump in there, Jeff?
I do want to be very clear.
Like I think Jeff's been pretty good to me and to all of us saying like we can still share our personal investment opinions about the entire system.
And I wouldn't have agreed to do this had it not been for kind of full autonomy and freedom with regards to my opinions in the space and, you know, my trading activities and surveyor and the like.
So I just want to be very clear to the listeners that things won't change or won't be censored with regards to our views on the market.
We'll keep it respectful, but not censored whatsoever.
so rest assured 100% if grain was I got his Ferraris for 10 minutes I mean I
guess we might have to moderate that a little bit but the only 10 minutes at a
time 10 minutes maybe five maybe grain gets five minutes on his Ferraris but
yeah go ahead so I agree nothing nothing really changes and I've got a statement
from our new overlords that I've been instructed to read and it goes I sole a
of sound mind and free will have fully ported from strategy to strive this is financial advice
we have one anarchist in our group I'll leave it up to you guys to figure out who it is but
he's necessary you need the anarchist the anarchist I don't know what you mean
yeah absolutely and look and we got Mason Mason's working for a Brazilian company he got a he got a
got a place he's living in New York. I mean, living in a finance hub, finance capital.
I have a job. I have that. I'm a no, I'm an adult now. It's a job. Unlike college graduates.
I call Mason like I call him sometimes. It's like noon. You may see you just waking up.
He's like, yeah.
He's got no more, no other words.
You get a, you got a case of the stupids, uh, you know, going out,
being in New York out till two o'clock in the morning. I know how that goes.
Yeah.
You had some, uh, you had some late nights recently, right?
Yeah. Out in New York. Yeah. Oh my God. The last couple of the last, yeah.
my jesus the last seven days in a row have just been absolutely insane uh i've been up till you
know midnight 2 a.m in the morning getting these uh getting these deals that deals done that we've
been working on and uh what an incredible time having a having a peek behind the curtain is just
incredible we've got a like a whole huge team working on this stuff and everybody's doing things
but yeah hopefully i can get some sleep here this weekend but uh who knows dbd dbd and we've got
adrian i know adrian you're you're working in the space too it's just it's crazy how far everybody's
come in the last 12 months right 12 months ago who would have thought like we were all just doing
our own things talking to each other on the internet and we started talking about the same
thing and we're like wow this story is big this is like really this is this is interesting and
And now here we are all trying to move this entire movement forward in our own separate ways and different perspectives, which is just so cool.
Right. And that's that's really a call to action to everybody else.
Like you need to go to these events.
You need to start talking to people and you never know where one conversation may lead.
I think one row I met with Rohan last week in New York and I messaged him like 24 hours before the conference.
And I said, hey, are you coming to this event? And he's like, oh, you know, I wasn't planning on it.
And then he messages me an hour later and he's like, OK, I'll be there.
And now we're talking about like building these models.
He got a sailor retweet a little bit ago. And it's just that type of stuff can happen and you can do anything in this entire market.
So like go to the events, talk to people and get out, get out there.
Like there's no, even if you get things wrong, like that's okay.
Like that's the only way to learn is by getting out there and doing things.
Well, so the thing about this is that Jeff, you and I talked, what was it?
February 24th.
It was like that, we had that weekend call when we first started talking about strategy
and like putting out more content and like that.
Yeah.
And we were all wondering why the hell people kept yelling at us online.
where we're just trying to put out content and make them aware of this opportunity.
So the reason why I say that is Jeff would not have actually had me involved in this
if I was the type to not speak my mind and actually put out what I actually thought was the case.
So for anyone that's concerned about us selling out, we have not sold out, at least not yet.
So we're still doing this for the right reasons, and we're still trying to put out content.
and we're trying to help everyone elevate and make themselves more financially independent and wealthy.
So I wouldn't have any worries about us being bought out and sold out
and selling our souls to the corporate overlords yet.
Wait till we start our meme coin.
That's going to be the signal.
That right there is going to be the signal.
Somebody, please do not start a True North meme coin because that will not be us.
My money's on Soleil. He's going to front run it.
put his own out. I think one of the biggest things that came out of this while we're kind of doing all
the reflecting, right, is this has all been a really long journey for everybody here. I mean,
the amount of time that we've all spent talking now, one of the biggest things out there that
tells people who you are is the amount of consistency you put in over a long period of time,
no matter what market conditions are. There's been plenty of times where the markets were good
and everyone's having fun, and that's great, but we've all gotten kicked in the teeth a lot too.
And a big part of this is just everybody kept showing up. And I think that's why you're seeing
the results from everybody who's finding themselves in roles or doing their own thing
or working as advisors for other companies. There's a massive, massive value to surrounding
yourself with people who always show up. And, you know, I would say with this group, that's one of
the most unique things I found here. You know, quite frankly, I'll be honest, when we started this,
you know, I kind of thought it was going to be like a six month thing. And then we'd all end up
kind of drifting off into our own things, you know, but it was fun for the time. And I thought
it would be great. But everyone kept showing up over and over and over week after week.
And I think that that's the reason why, you know, so many people are doing so many cool things. I
I mean, Dan's out here running a hedge fund,
Mason's king of Brazil, Adrian's advisor at all these places,
Soleil out here cranking like it just it just been fun And it been fun to watch everybody else journeys materialize here too because we know we just at the start for everybody
Right.
There's, there's this period of time.
And when things are bad, this always happens where if you go out and you just
listen to, you know, everybody online or just the markets in general, right?
People want to drag your conviction down with theirs.
And they want you to meet them at the bottom.
And that's one of the things I've really admired about most of the people in this group is to us, this is a years long thing.
So when we see periods where, you know, things go sideways for a while or price action doesn't do what we want it to do, like days and weeks and months, you know, don't dictate success.
It's the same thing with everybody on here.
It wasn't days or weeks or months that caused it.
It was years, right?
It was years of putting in the work.
It was years of showing up.
And it's the same thing when you have a thesis like this.
So, you know, it's been really cool.
And Jeff, I give you all the credit in the world for, you know, keeping this group together
for so long, because that is not an easy task to do.
So kudos to you.
Yeah.
Thank you.
Yeah.
Wrangling everybody.
And right.
We're in year one of this digital credit world, right?
This is year one.
This will evolve so much over the next decade.
and it's big enough to continue talking about this, right?
This is a $150, $200, $300 trillion idea
that we're literally sitting on in the very first year
and we're the only ones talking about it.
If you're here, kudos to you.
There's going to be only 497 companies in the S&P 500 right now
do not hold Bitcoin on their balance sheet.
Anybody that's here in the chat or hanging out watching,
there's so much opportunity out there to go get integrated and and start doing these things in
different places so again just want to encourage everybody uh keep keep doing that stuff uh one
last word on strive um like they strive has this like very american core built on meritocracy and
like american values so this freedom of speech concept is incredibly important and there was
That was critical in terms of moving this forward and providing opportunity for everybody to speak their mind.
So that's the last thing I got to say there.
And it's going to be a lot of fun.
We're going to get some more people.
We're going to get some more guests.
I think the guests will be elevated.
I think we'll get more shows going on underneath this.
If you're interested in continuing to build out content underneath this, let's have a conversation.
and we want to build this whole economy
and bring the whole system up.
And to the extent that there's other episodes
of other people talking about this stuff,
absolutely go for it, like right on.
Well, for me, the thing that's really cool about this
is I didn't know what Ben even looked like
or sounded like for six months.
And we were messaging each other on a daily basis
about analysis, about all kinds of stuff, right?
So this has been a really cool experience
and a really cool journey.
the fact that we've all kind of eventually come together we've met in person a few different times
we've been doing this and it's just a really um refreshing kind of grassroots thing people think
that we've sold out but they don't realize that we were just a bunch of dudes talking to each other
online for like months at a time before this all happened so you know i i think it's just i think
it's fantastic quite frankly yeah let's take it higher okay shall we shall we all right we're 18
minutes in i feel like that's enough uh i think we hit it over the head everybody's everybody's
pumped we we got the fud behind us and shall we get back into what we normally do and talk about
everything that's going on yeah the chat is clamoring for the disclaimer i guess they love
the disclaimer here we go i was just kidding when i said it was financial advice ladies and gentlemen
what you're about to hear may be amazing but it is not financial advice it's for informational
and educational purposes only.
Jeff, back to you.
There we go. Sorry.
That's what we were missing.
Interrupt. So I.
Shout out to him, by the way.
Like the. Oh, yeah.
Shout out to Tim.
Yeah.
Shout out to Tim.
Dominating everything right now.
Yeah.
Well, he just decided to go all in on Bitcoin, guys.
So yeah, I know.
Yeah, he wasn't all in before.
He's going to be all in now.
So before it was all Diet Coke and vibes.
I don't know what the hell's going to happen now.
Diet Coke and vibes.
Yeah, I mean, like that unconference was one of the reasons that we had this M&A
transaction over the last seven days, which is insane.
Like that's that's how business gets done.
And it was an electric event.
And I encourage everybody to go to the next one.
But it was so focused on Bitcoin treasuries, right?
There was no meme coinery.
There was no it was just so laser focused on running a Bitcoin treasury.
Sailor was quite literally a co-host.
I think it was on stage three or four times.
I think I might put this in my Twitter bio, but Michael Saylor has now asked me a question,
which I feel pretty good about.
And yeah, what an electric event.
I think it was the right size of an event too.
You know, sometimes you show up at a lot of these events and they're massive, right?
If you went to Bitcoin 2025 and you've got 30,000 plus people that are there in attendance
And then, yeah, you've got all the shit coinery going on and all the exhibition halls and everything.
This one, what I liked about it was it was it was so focused.
And everybody who was there has some type of a role in this industry or they're enthusiast investors or whatever.
But everybody there was engaged.
So all of the conversation was really, really focused.
And I think you get a lot of opportunity to meet and spend time with people that you probably recognize, but you don't get a lot of chances to interact with.
And it was kind of that perfect size event to be able to go and connect with all the people that you wanted to.
So, you know, I don't know how many it ended up being.
I think they had tickets for like 425 or something like that.
But it felt like the right size for that type of an event.
Yeah, and you just get access to people.
I think I met at like probably 120 people had some really good conversations with you know 20%
of them and yeah just incredible incredible vibes and um yeah go to the next one yeah it was so cool
because people would like introduce themselves but their first name and then to be like oh yeah
I'm such and such handle on x and then you're like oh shit that's you and then you like really
know the person so it's this it was just really cool and there's been a couple conferences since
then all right so there's we we missed a few there was the unconference uh the hc wainwright conference
there was uh btc uh hong kong bitcoin asia which was also pretty crazy uh so quite a few things
somebody was asking what what happened there bitcoin asia there are about 20 000 people there
the prior year there are about 4 000 people there so it increased like 5x year over year
which was pretty crazy uh eric trump ended up making it out and it was nuts when he got on
stage like everybody in that crowd like took pictures it was like a rock star got on stage
which i found very interesting hong kong's a crazy city uh but the uh there were a lot of people
really focused on just Bitcoin kind of as a medium of exchange.
It really felt like the Asian markets were a couple of years behind on the Bitcoin treasury space.
So there was a little bit less focus on that. And I think that that was growing, it seems like.
So that was just kind of my general takeaway from Bitcoin Asia.
And then the H.C. Wainwright conference. Ben, did you go to that? The the sailor presentation there?
Yep.
What was that like? Investment bankers, just a bunch of investment bankers sitting there watching
Saylor just go on an absolute heater or what?
Yeah, it was. And I mean, the conference really didn't revolve around the treasury space,
but ultimately that became the keynote. There was a lot more of the health and biotech stuff going on
at that conference. But it was interesting to have the contrast because right before Saylor went up,
it was an entire panel of the digital asset treasury companies, all the ETH treasuries,
and all the ones that are getting into all the other coins.
And I found it interesting because one of the executives up there
kept kind of taking shots at Saylor, right?
Saying that Saylor told him not to do this.
It was a bad idea.
And then Saylor came in and he made a comment to him.
And then Saylor got up there and just went on an absolute heater.
And it showed the disconnect in the level of understanding
of broad markets, of finance and economics,
and he just did exactly what he always does.
I mean, it was an hour of him
just really educating the market on the opportunity here,
how they spotted it, how they're going to capitalize on it.
And it was night and day between the panels.
So yeah, everyone, that was when the room filled up.
It was standing room only.
People were all over the place.
It was a great presentation.
It wasn't dissimilar to what he does
on a lot of the earnings calls, right?
he just kind of modifies it for the current time and then any developments in the market but
yeah he went on an absolute heater for about an hour in that one too awesome right on go watch
those they're worth one interesting slide in that presentation was he he showed the breakup of
institutional ownership uh within you know common uh the common share class and i think i think i
I have the numbers, right? I think it's 26% of common shares are owned by passive flows.
26%?
Yeah, 26%.
Of the market, of the entire market?
Of the entire flow.
Yeah, that makes sense. That makes sense. Which is crazy. If you look at some of the larger,
I've done this analysis on some mag seven stocks, which is pretty interesting. The S&P 500
holds like 6% of Apple stock. It's like just the S&P 500 alone, let alone all of the other
passive index funds on the planet. So it's super helpful to have that context of the architecture
of the market and how this stuff works, because that is really that underpins this entire movement
is that there are pools of capital that are just buying things if you put it in the right wrapper
and you put it in front of them, they're going to buy it. And that's this Trojan horse of
slamming Bitcoin into the equity and debt world is by doing it in this perspective. And it's a
self-fulfilling, like reflexive flywheel in and of itself. So great point, Mason.
Okay. We're going to switch over to leverage. We're going to talk leverage here for a minute.
Classic leverage update. Hold on. Let me put the guys over on the right.
Okay, we show this every week. Why do we show this? Because this entire, the Bitcoin treasury
model is a function of the assets that these companies hold on the balance sheet, the relative
leverage that they have on their balance sheet. And that gives you an understanding of the risk
profile of these corporations, how they're designed. And it's something that we are
continuously watching to understand, you know, what, like, where, where are we with, with the
size and scale of these companies. So as of today, so this is strategy 639,000 Bitcoin held,
Bitcoin price of 113,250. I think it's falling on us. Let's do a 112,500. I know I can automate
this, but that is not the purpose. Bitcoin assets. So they've got about $72 billion of BTC assets held
on balance sheet. Look back to where we were in January of this year, it was $41 billion of assets
held on balance sheet. So there's been a significant amount of additional value that's
added to the balance sheet, which is pretty huge, pretty huge. They've got $8.2 billion of debt. This
is all convertible debt. Some of that is trading in the money, about $3 billion of that is trading
in the money and 5 billion is not. They've got about $6.5 billion of preferred stock. So if you
look at the net capital held on balance sheet, just taking the Bitcoin assets, less the debt,
not including the preferred because the preferred that do not have maturities.
There's no maturity on the preferred equity. So when you're thinking about assets, less debt,
I'm only pulling out the convertible debt. So that gets us to $63 billion of net capital.
And if you back out four years of the preferred dividends, it's roughly around
$60.8 billion. So looking at a leverage ratio, including the preferred stock,
So nominal leverage ratio, including the preferred stock and the bonds, it's roughly around 20%
and a debt coverage multiple around 8.7. These numbers are slightly different than the strategy
website, but please look to the strategy website, strategy.com for up-to-date information. I just
like to track how this has changed over time historically. And that's also because my
spreadsheet is like 65 pages long and I just want to keep track of it. And so when you think about
the risk of this balance sheet and the profile here, the price needed for the assets on the
balance sheet to be worth less than the debt plus four years of dividends is roughly 23,000. The
price of Bitcoin needs to go down to $23,158, about 80%, and stay there for an extended period
of time for strategy to not be able to pay their liabilities into the future. So when you're
thinking about the relative risk profile, you can run probabilistic frameworks and scenarios,
which is available on the strategy website. You could go to the strategy website. There's a column
that's titled BTC risk, and it calculates the probability of the cumulative probability
that the assets will be worth less than the liabilities at the duration of each one of those
instruments. So it gives you a really good probabilistic framework for these things moving
forward. We're going to build this out quite a bit here. We're working a lot on this framework
and this information because as more entities run into the preferred equity market and this fixed
income market using Bitcoin backed credit, this communication, this story, this framework needs to
be absolutely nails and it needs to be really sharp And we want to hit this from all ends and all perspectives So we going to continue to build on that on that framework Anybody else have anything to add
Yeah, I mean, I would jump in and I'd say, Jeff, I like this frame.
I think it's interesting to look at the perpetuities as liability.
I mean, they aren't, you know, gap accounted liabilities.
Absolutely.
And you can think of just the dividend payment as being outstanding liability.
I personally like the PREF plus convertible leverage ratio that they use.
I think it's a super reflective metric because ultimately perpetuities do bear risk, especially in low interest rate environments.
So I really like looking at the liquidation preference and looking at that leverage in total.
And I think we're getting up to a more fair value or closer to a target leverage ratio, which is something we've been kind of looking to do over time.
And it's been happening week by week with the slow trickle ATM of the PREF stocks.
I think that's probably their biggest struggle at this point is how quickly can they get some scale in those PREF offerings?
I mean, one of the big ones that clearly had a massive amount of demand just because of the size of the IPO was Stretch.
and so far they've not been able to get that thing up to par yet.
And I think that's going to be one of the bigger challenges
is getting that one jump-started.
And it's interesting because it's one of the products
that when you look out in the market
and you look at the addressable market of any individual product,
particularly a product that is applicable broadly,
both for institutions as well as individuals,
stretches that product, right?
I mean, it's that high yield savings account.
It's that money market replacement.
And I think that they really want to be able to get that one going.
But right now they're kind of handcuffed because they're not going to issue with the ATM at these levels.
But they're going on to two months now trying to get that thing up to the $100 par value.
So for strategy, I think the biggest challenge at this moment is they've just got to find ways to get more leverage on here.
and obviously the goal of this is to get it done through the prefs and I think you know sailor going
to these conferences and getting all those clips going around and getting people to understand
just how powerful these products are and how broadly applicable they are will help but we
need to see that translate into what they can issue into the market every week so that we can
start to see that leverage start to climb because if they have to continue using the common stock
ATM for the acquisitions right now. That's a continuous de-levering tool. And eventually,
they need that leverage to go the other way. So I think that's the primary thing that the market's
kind of sitting on now. He made some interesting comments at Tim's conference in terms of what he
would be willing to do. And I think that was good for the market to hear. He went all the way to,
what is your absolute worst case scenario here if you needed to meet these dividend liabilities?
and he went as far as to say, look, as your last resort, you have Bitcoin and you can sell Bitcoin.
And if they absolutely had to, they'd be willing to. But he also made comments about
a willingness to use different types of derivatives in order to not have to use the
common ATM to raise that capital to pay out those dividends. So I think that was a big,
big moment in terms of messaging out to the market just to show that they're willing to
remain flexible. It doesn't mean they're going to deploy them all right away. I think
people are going to be looking for, you know, things like warrants and other things to be
issued into the market right away. But I think it's going to be some time before they would
actually go down that route. But the messaging said that, you know, he's at least he's hearing
people, right? There's been a ton of concern around that. And people want to hear those
worst case scenarios. And it gets highlighted in these market conditions, right? In these market
conditions, everyone's always focusing on worst case scenario, even though they're so over
collateralized here. But leverage is going to got to remain number one. He said the value
proposition of this is effectively being a levered long play against Bitcoin. And now for strategy,
they've got to start scaling that back up. They've gotten 2D levered and that's where they got to
focus. But that's up to the market partially. Yeah. I wonder what you guys think about that.
I mean, that statement about the derivatives to pay the PREF coupon payments was quite insane,
And quite frankly, that's probably the last thing I would have ever expected to come out of the mouth of someone like Saylor,
which I find extremely interesting that he'd be willing to enter into that sort of agreement,
which I think is not necessarily a bad thing, but it represents a massive shift in kind of the sentiment and the positioning from him and the strategy team moving forward.
I think it's interesting and it kind of plays into this.
I know a lot of us don't like it, but this idea that, you know, they are becoming kind of a trading firm
or they could in theory somehow use the Bitcoin in a manner to pay the PREF dividends. And I'm not
actually, I don't really subscribe to that. I personally think they should set aside a year's
worth of PREF dividends in cash and just use that to pay the PREF dividends. But the fact that they're
willing to go into the derivatives market around Bitcoin is pretty insane. Well, like the best part
is they've got everything at their disposal. And he said the quiet part out loud, obviously you can
sell your bitcoin but effectively what sailor said is like come pry it from my dead hands
like that's literally the absolute last thing i'm going to do and you know what i probably want you
to take me to court in order to do it and in that moment of time if the bitcoin starts ripping and
goes the other way he's like okay like i'm back you know uh so to the extent that you could delay
or if that's a tactic that's that's always a possibility the derivatives market that's probably
slightly above selling your Bitcoin. That's probably the absolute last thing you want to do
right before selling your Bitcoin because it is volatility dampening. And when you're thinking
about the volatility enhancement, if you're selling amplified Bitcoin, the last thing you
want to do is cap the volatility or do something on that front. But that being said, if that's what
they need to do, then that's what they can do. And it's been really surprising seeing the
the market's frustration with the concept of using the ATM to pay off the dividends.
There's so much liquidity in this stock. It's like the 18th largest publicly traded equity
in the market and oftentimes higher. And yet they've raised $500 million in a week. They've
raised $2 billion in a week before. And people are concerned about them having
ability to raise 600 million dollars over the course of a year and if you were to spread that
over every single trading day it's just like an absolutely negligible uh quantity of the average
daily trading volume so it could be you know it could be spread out over time but the the real
novelty here that i think is often very very much overlooked is they by having an atm on each one of
these perpetual preferred instruments it effectively allows them to refinance any transaction
at any point in time like 20 like whenever they want which is just a fascinating um advancement
here because historically if you wanted to go refinance uh a loan or something that you had
you've got to go like remarket it to everybody else in the market right you go package up your
your financials. You do the financial colonoscopy. You put a presentation together. You go carry it
around the market. You go to different marketplaces and you try to find the best terms. And now,
if you like the terms, you can take them. You can issue more equity at that point. And that is just
a really, really novel thing here. I think another really fun takeaway from the Unconference was
this uh sailor did a a poll a hand raising poll of everybody in the audience and he said okay who
here has a savings account and it's like okay everybody raises their hand who here's got an
equity account it's like okay everybody raises their hand and um who here holds corporate debt
one person raised their hand in the entire audience he's like okay um who has a savings
account above 4%. And a couple of people raised their hand. And so what he was trying to emphasize
is like, okay, everybody holds equity. What if I take a high yield savings account and make it
equity? So this trading account that you look at every single day when you wake up and you're like,
well, what are the markets doing today? And you can hold your savings in that type of vehicle with
a dollar sign in front of it. It's a dollar sign ticker, STR, name your preferred instrument.
and that is rethinking the world that we live in that is novel it's not uh it's hard to
conceptualize that's why we're here talking about this stuff it is it is creating new instruments
and so people can live their world live their life in a different way than they have in the past and
and be in a more prosperous position and be able to store their energy in a better way so
that was a on top of explaining you know the ability to pay their dividends in different ways
but it really clicked. It's like, oh yeah, again, you're wrapping these things in an instrument or
product that everybody can potentially buy all across the globe without borders. And that's a
lot easier to consume than trying to tell somebody, okay, go to an exchange, link your bank account,
go buy some Bitcoin on the exchange, go get this USB drive, go buy the Bitcoin on the exchange,
send it to this usb drive oh make sure to double check the usb drive that you don't
you run the code a couple times so you get your wallet right and then when you have these 24 words
that get spit out make sure you put them on metal but don't store them at the same place
store them geographically separated you know it's like holding holding bitcoin the commodity
i recommend it i recommend everybody go through that process it is not super simple it like should
everybody be able to figure it out yes but think about like the average intelligence of society
think about the average person on the planet and their intelligence and then just know that 50
of the people are dumber than that like that's like that's that's what we're working with so um
it's helpful to ladies and gentlemen oh what you're about sorry tim tim amazing
I don't know how that happened.
I don't know.
But anyway, yeah, all this is all brand new.
Yeah, I think that poll was insightful.
I think the point is that the modern day person has a banking account and probably has a brokerage account.
And I think this is in line with the broader trend of the democratization of finance that we're seeing from the likes of Robinhood.
And it kind of made me start to think about access to these securities, to the preferreds.
I think Robinhood is like number one.
like they should they should be knocking on their door saying hey how will how will you
guys put preferreds on your platform this is you know your your your clientele your audience here
would love this yeah and uh so on robin on robin hood there's that there's no preferred equity
instruments there's zero which it makes sense because who else on the planet has held preferred
preferred equities before this like nobody nobody's out running around saying oh yeah give
me the preferred equity like that you know who's doing that is probably the most boring bond people
that you've ever met in your life that are running a pension fund and are just like there for their
job you know they don't want to lose their job so uh yeah it's this whole this world can get so big
through just these instruments. If you're talking about how do I infiltrate Bitcoin into the
financial world, you can disrupt literally the biggest market being the fixed income market.
Bitcoin disrupted the money market. It fixed the money. And this is another thing Saylor said,
which is dead on. You got to fix the capital markets. You got to fix the interest rates.
You got to fix the debt markets.
You've got to go fix every component of the financial world.
Like you can't just sit back on your Twitter profile and tweet about things and get mad and just post memes.
Like you actually got to go out there and do things and infiltrate in different areas.
And that's that's like that's why I wanted to take a job.
Like that's why I wanted to work in this area and do this stuff is because this should be pervasive because the instruments that you can create are better than anything else.
that exists out there. Like the fixed income instruments, you could go look at every other
physical risk instrument in the entire market. This has better yield, better risk profile,
lower risk, more liquidity, and every single component of it looks more attractive.
It's over collateralized. And there's room, there's so much room here for all of these
advancements because you think about there's 4,800 banks, there's 4,800 credit unions,
there's 5,800 insurance companies all providing the same thing. Is there room for multiple Bitcoin
treasury companies doing this stuff? Absolutely. And they're all going to do it a little bit
differently. And that's where we are. We're at year one. Is strategy going to be the biggest
for the rest of time, probably because they've got literally an order of magnitude moat over
and above everybody else.
But that moat is also lifting everybody else up to provide securities in the space too.
There's a lot going on.
Yeah, I think there's this notion, you know, and we're in a very small echo chamber out
here on X, right, where everybody thinks that everybody else in the world is just going
to go buy Bitcoin.
And most people have no understanding of Bitcoin, right?
I mean but there a range out there And what I always say is I think that being able to get access to it through either equities like Preferreds or these treasury companies or the ETFs I think that serves as a
really good on-ramp to start that educational journey for most people, because it's simple.
So you get the exposure to the performance of Bitcoin, but you don't have to understand all
the technical details behind it yet. But as soon as you have an asset like that, that starts
performing for you, that's when your interest starts to climb. That's when you're willing to
actually go do that diligence and learn what it is that you're holding so i don't necessarily
discourage people when they want the on-ramp to be an ibid or any of the other ones and i think
products that are coming out through the preferreds effectively being able to replace
some of the you know largest pools of capital for normal people right which is going to be
savings accounts and maybe money market accounts you know that provides a service that's made
possible by Bitcoin. And just that alone, if all you were doing was trying to move somewhere where
you're getting a better interest rate, right? If all I wanted was to get away from a 3% interest
rate bank account, and I could go to a 9% interest rate through a product like Stretch, that can be a
massive difference to people. And eventually you start asking the question, why does this work?
Right? What is it that's making this possible? Why can this company pay me 9%, 10% while the banks
can only pay me three. And that's just scratching the very surface of the journey of Bitcoin,
where you finally go out and figure out exactly how broken everything is.
So I think that the products are going to be what helps Bitcoin penetrate into the masses.
And over time, you're going to see that adoption and people are going to see that Bitcoin itself
does have a, I've heard it said as the sovereignty multiple, holding Bitcoin itself on your own,
And when you really understand how powerful that is to have a bearer instrument like that,
you know, that's, you know, that's when you've really turned the corner and you understand
the value of what it is that you're holding and what's making everything else possible.
Yeah.
Dan, I'm curious your perspective now that you're a Mr. Hedge Fund guy.
How are you thinking about balance of these things in a, in a portfolio
in terms of like risk mitigation and like efficient frontier.
Is that a consideration?
Are you YOLOing strike options?
Oh, wait, there's not strike options, but there's strife options.
There's options on these things now, which is also a very fascinating development.
But like how are you thinking about them as a capital manager?
Thanks for, yeah, thanks for the segue.
Anyway, I mean, I think people underestimate looking at these things.
Well, you've got this collateral base, which is Bitcoin for all Bitcoin treasury companies, right?
And you have this, so you have the static collateral base and largely it's unsecured in all these corporate structures.
And then you figure out, and then you issue securities on top of this collateral base.
And that's largely been the Bitcoin treasury model for the past six months.
So then you think, okay, where do I, how am I positioned in the capital structure?
And I think for us, I know for me as like a retail investor prior, it's I didn't think enough about the converts in my position in the capital structure.
But it's always been something that's like, oh, the converts are super, super valuable.
We've seen all the charts of how well the converts have performed, how low the volatility has been and how you get that common stock upside with that debt like downside.
And so I think moving forward, the press is something that people should really seriously consider.
But it's different because of the equity issuance and the ATM issuance on the preferred.
so that's the way i'm trying to look at them so i think the preferreds so like for example i think
strike is extremely undervalued right i think a strike is criminally undervalued relative to the
common the problem is you do have this kind of ramp up period for the uh for the prep products
so it's something to consider and think about but i think strategy is actually doing a great job
managing the prices and the volatility and you've seen the volatility come down and the correlation
to bitcoin come down across all the prep products so like for example if you look at the correlation
of stretch strategies product to btc it's zero percent look at mstr correlation it's minus 22
so while it's not at 100 yet it's not pegged 100 it is a stable product so there there has been some
really good developments i think in strategies capital structure and so that's how i'm looking
to position i do think stretch will in fact stretch and strife will be a safe haven uh in a bear market
and i'm starting to really believe that we're we're like so close every day i look at the
stretch performance and i'm like when when is it going to happen when are we going to when are we
going to get the pig we're so close but i swear it's been trading at 97 like 97 and change for
a month straight i think it's going to be 98 and 100 um into i just think it's going to trade there
you just don't you don't think there's they're going to get a peg regardless of interest rates
coming down or uh the the capital structure shifting even higher the volume i think the
volume has to pick up really really high because would you buy it at 100 if you know it would be
called at 101 so you would never buy it at 101 so you could buy it at 100 but the only reason you
probably bought it as 100 if they're selling it at 100 because they can't sell it at 101
because no one will buy it at 101 so that means you probably buy it below 100 but as long as it's
below 100 you can expect an interest rate increase for the next month so i expect it to settle
somewhere around 99. but people will buy it at 101 because of the yield i think that's the whole point
yeah but they won't i don't think there'll be new participants at 101. just depends it just
depends, right? Like this, this is where I think the, this general framework of like, I truly think
risk is mispriced globally. If there's a landslide of capital, let's just say you've got a bunch of
people are in the equity market right now, chasing AI, PE ratios, PE ratios across the market are at
all time highs. They're I think higher than like.com bubble times. If there is any blow off top type
event. I'm not saying that there will be markets can stay irrational for very long.
Where does that capital flow?
No, I think you're totally right, Jeff. I'm just saying, if they can call it at 101,
you're not a new buyer at 101. That's my own point.
If they can call it at 101, well, they're selling shares at 101 to bring it back down to 100.
It's callable at 101. So they can convert you at 101. They can give you cash at 101.
they can give you cash at 101 yeah they call it right interesting yeah huh okay we're gonna have
to we're gonna have to click it we're gonna have to click into that framework a little bit um
interesting 100 yacht party yeah they can actually the interesting thing is they can actually sell
at any price so yeah yeah yeah they're legally able to sell they could issue stretch today at 97
if they wanted to yeah that would probably be a pretty bad signal to the market and doing that
i would assume uh yeah even that their intention is to bring it up to this hundred dollar peg
um it was interesting to see that i mean interest games that interest rates came down 25 basis
points stretch didn't really move much um really stayed kind of flat it's just i'm wondering how
long it'll take for the market to like wrap their head around this risk profile again this instrument
is what like three months old not even and like it just takes time for this stuff to get around to
the market like anybody that's willing to underwrite bitcoin risk here has got an incredible
opportunity and i've been talking with matt about this quite a bit a lot of uh institutional money
managers need a track record before that they they can invest in things and that track record might
be like three to five years so like as a as an asset manager you know selling funds um
it if you have a track record then the number of people that can buy your instruments increases
drastically so like there's this window of time here where like there isn't really a track record
but you understand the product and you understand the instrument where you have alpha over and above
the rest of the market because you can conceptualize the product and where it's going to go
there is uncertainty obviously but the people that are interested in these products will be
rewarded for taking on that uncertainty in the form of excess yield over and above everything
else like you think about again the what is the downside risk the downs like i think strc like
the entire capital stack i think they could pay over like a hundred years of dividends just based
on the bitcoin collateral that they have on their balance sheet like like that's that's not junk bond
status that's that's triple a investment grade and they're trading as if they're distressed debt
like junk bond status so they're like the spread against everything else is so vast uh that that
will in my opinion it should close it might just take forever but that's a opportunity for everybody
yeah i think i think what we're kind of seeing or what we have saw is retail has essentially boot
strapped these these preferred products and i think it will just be a matter of time before
the broader market the institutions accept this as kind of a a new paradigm within their world
because it is the new paradigm as sailor says it's the it's the nuclear powered flying hover
car and everyone else is in, you know, horse and buggy. Yep, absolutely. That's a great post from
young sailor. Sailor posted, we are now pursuing credit ratings four days ago. And that's a whole
another ball game if they're able to get credit ratings on these things because that, again,
as more capital can come in the door, these money managers have mandates where they can't
um you know they can't buy things if they're underrated like again thinking about like insurance
companies my background perspective there the if you have these instruments that are really liquid
and they're rated and they're bitcoin backed your whole financial structure of all these companies
can literally fundamentally change and i i said this on stage at the unconference but one of the
reasons that the entire insurance industry buys reinsurance is because they are protecting it's
the volatility in their balance sheet if they have a catastrophe that comes in the door
they don't want to liquidate all of their assets all of their illiquid assets and take a loss on
all those illiquid assets so that's why they buy reinsurance and now with the creation of these
new fixed income at these fixed income instruments they're more liquid more more they're safe they're
better yield they're more liquid and if they get raided that turns the insurance industry model
like upside down like the balance sheet capital management literally upside down and the need for
reinsurance starts to become less and less that should improve the price of insurance for anybody
that's buying insurance from any of these you know companies that are leaning into bitcoin
that there's like the amount of opportunity in every in every sector of the financial world is so big
big. It's just hard to fathom. Okay. Prefs. What else should we talk about? Jesus. There
was so many things that happened. Should we just go through the list of things that happened
in the last 35 days? Start at the top. Because that was pretty insane. Just going to go through
it. Interest rates went down. Options on the prefs. Pipe unlocks. Bitcoin treasury company
nav compression, bots expanding, risk and leverage developments, AI just going through the roof and
energy going through the roof. BTC relative to gold. Gold is just on an absolute tear.
Strategy didn't get included in the S&P 500. The Bitcoin unconference, core versus not. The
intense debate is heating up. There's been M&A in the market. People are working in Bitcoin.
Bitcoin is a unit of account and then gap earnings.
Maybe I'll start with earnings because I just posted about this and I did the math.
So I might as well share it.
Q3 closes in six days and maybe I'll make this a little bit bigger.
So Bitcoin price has it right now.
What is it?
About 113,000.
That's fine.
113,000.
So the Bitcoin price at the close of Q2 was 107,700.
The gain on the Bitcoin held from Q2 on strategies balance is about $3.2 billion.
The gain on Q2 Bitcoin accumulated is a loss of $114 million.
So the net income estimate for the quarter is about $2.3 billion, which equates to around $8 earnings per share.
Overall, just taking the actual reported earnings over the last four quarters, the EPS estimate is around 20.
So strategy is technically trading at like a 15.5 PE ratio.
But what do we know?
There's been a new accounting method that's been adopted, FASB Fair Value Accounting.
And so since FASB Fair Value Accounting, if you were to take that methodology and apply
it back the last four quarters, the true PE ratio is more like 6.7 and the trailing 12
month earning per share estimate is around $49.
So a material difference between what's actually been reported and the actual gain that's
been effectively maybe not that's unrealized still sitting on the balance sheet so again
significant that's it's just a c this is just an enormous balance sheet and i think many people
don't like fail to recognize how large this thing is and how large it can continue to get because of
the plumbing that they have in place uh and the lack of leverage on their balance sheet right now
moving forward into the future.
So I'm going to pause there.
What are we talking about?
What's next?
Win inclusion.
What do we think?
They obviously were,
they obviously did not make
the inclusion here this last quarter, Q3.
I'm not incredibly surprised.
It seemed like a lot of people were.
Maybe some people had some tail options
expiring within the time horizon.
talking about it like we were talking i think josh was clearly quite bullish on first go around
inclusion we've been talking about this event for the past nine months so i totally get why people
you know are a little upset that it didn't go through and i totally get that and it wasn't the
people have been expecting the front running didn't happen i think you know there's big boys
in the market that know how these things behave and so i think for me at least when the front
running wasn't occurring i got a little nervous and expected it not to happen because unfortunately
the reality of the matter is big institutions position prior to these things and whether or not
you like it you know the front running we saw qqq i think is quite indicative like looking back
like it's so funny looking at price action historically and being like oh that was obvious
right but if you had just looked at that prior run-up you saw mnav expansion real buy pressure
on the stock without even Bitcoin running yet. Like that was clearly institutional front running
of QQQ. We didn't see that happen with S&P. So I don't think now looking back, it's not necessarily
a surprise they didn't get an S&P. Will they eventually in the future? Yeah, I think it's
likely. But I think you got to look at the price action and maybe that will kind of show us when
that's going to happen. My guess is I'm thinking third go around is kind of the first time that
I'm feeling really up that I'd start to feel optimistic about it. I think that, you know,
for this one, it's too new of a type of company for a committee, I think, to really wrap their
head around. Cause you know, while we all think everyone sits around and thinks about these all
day long, I think they just got something totally new thrown at them. And it's a committee of people
that nobody knows who they are, a little weird, but you know, nobody knows who's on the committee
and they're sitting in the room, making a decision on whether these companies get in.
And, you know, when you've got really the first opportunity for entry coming from this change in FASB fair value accounting, I think that was enough of a one off for them to be able to hit pause and say, we need to wait and see how this plays out.
I think if you get two in a row where now they're profitable and they're hitting all the metrics, I think then they can start analyzing it.
And then I think on the third, if you get three consecutive periods where they've got the opportunity to get in, my guess is it's on that third one where they finally break through.
Total guess, obviously, I don't know.
But that's the logic I've been playing with in my head.
But to your point, Dan, I think a lot of it is going to be watching those capital flows ahead of time.
Right.
Somebody always knows something.
And it's why before a lot of announcements ever get made to the market,
you start to see these equities moves.
You start to see those volumes climb.
So, you know, it's something we're going to have to watch for and see what happens.
I hope I'm wrong.
I'd love for it to be the second, but I'm tempering my expectations
and thinking that it's probably the third go around.
Is that what happened with Tesla, Jeff?
Two.
They got in on the second.
So they, yeah.
So they reported Q2 earnings in July.
of 20 and they missed the september inclusion and then they got in december that was announced in
like late november and they they can be added uh at any at any other time too like randomly
um companies get included because you know they want to get rid of a company like walgreens or
something you know uh and so there there is possibility for that but to your point ben like
like showing some stability in this new gap FASB earnings is pretty big.
Just some context.
I mean, I've had some conversations with people that have been surprised
that strategy reported the gain as unrealized net income,
the net income on the balance sheet.
and they even said i was surprised that sailor had the balls to report net income like the bitcoin
gain is net income on the balance sheet and then my initial reaction was like like hatred it's like
these are these are the rules like this is this is the accounting rule like this isn't even it would
be weirder if he didn't you know and it was like i was a little deceptive maybe i was just like
totally astonished um that that was the that was a commentary and that that commentary exists in many
places in like large capital uh markets so just for the context of like how the rest of like the
world in new york views this thing they still think that it's a surprise that they're able to do this
so like what we've known for over a year now about this change in accounting rule and we've
been talking about for over a year there are people with corner offices that like don't
don't get it so just keep that in mind that's how early that's how early we are yeah i wasn't
surprised they weren't included for a few reasons i think when um the previous earnings prints we
had a lot of market analysts calling for negative eps that said to me that a lot of people were
still um there's still a broad disconnect in how the market was perceiving the equity in terms of
um the the the business itself they were discounting the the bitcoin business entirely
um furthermore i think s p inclusion would we have to think about what it says to the market it
legitimizes bitcoin based earnings right so once strategy gets in i think that opens the door for a
a lot more broad adoption of Bitcoin,
because we think that Bitcoin has been legitimized.
We think that this model has been legitimized,
but I think that there's still a disconnect in the market
where the market doesn't think that.
So if the S&P were to include strategy,
that would say a few things.
I would say one, Bitcoin-based earnings are legitimate.
Two, this is a legitimized model.
And three, it opens the door for a lot more companies
to have broad-based adoption.
And I don't know if they were ready for that.
So I think that there is an aspect of the adoption
or the acceptance of the FASB rule changes were a factor.
But I also think the market isn't ready
for what that would signal.
If strategy gets in, I think the floodgates open
in terms of other companies wanting to adopt this model.
So we, well rather I have tempered my expectations
and I kind of align with Ben
and thinking that they may get in on the third go round,
just because this says a lot more to the market than just strategy gets in.
I think this legitimizes Bitcoin in an entirely different way if they do get in.
And I don't know if the S&P community was ready to take that leap.
Also, guess who the rating agencies are for the press?
Have you heard of the S&P Global?
They're one of the primary rating agencies for these types of instruments.
So to the extent that they're having communication and conversation about these instruments,
I would suspect that that information gets sent around the S&P, the company S&P.
Well, think about it.
If they get included, credit ratings would perhaps have to be around the corner.
I don't really see how that, one doesn't follow the other.
Instantly increases the credit quality.
They're going to include in the S&P 500.
Their credit quality is instantly increased.
They've got more trading volume that's going to be on their stock constantly
because you've got the passive bid.
You understand how the instruments are designed.
the market cap should technically like theoretically increase which provides more
bitcoin in the balance sheet for over collateralization it's just the whole thing is reflexive
um i'm sure this i'm sure this scares people like this thing is so big and so
this is a such a monumental decision right if you think about its impact on like humanity
pretty big so thinking that you have control over that that's pretty big also just crazy that the
s&p 500 has a human committee that makes rules about this stuff like the largest passive index
on the planet is actually an active index that's behind the times on technology and stuff it's
interesting well well also think about it this way too in terms of the floodgates opening if you
are a company on the cusp of inclusion or if you're a company that wants inclusion and strategy gets
in i think you now have to look at bitcoin as a legitimate way to swell your the the value of your
company so the market cap of the company and sell the interest around the company right because it
shows that there's a legitimized model that the the s p committee has already signed off on once
if you follow the same strategy that they would have a hard time saying no to you wouldn't they
So I think that this, the community, to your point about them being scared, I think it could be that, but I really do think it's about the message it sends and about market perception.
Bitcoin being in the S&P 500 in a company the size of strategy sends a very, very different message than corporate adoption.
There's corporate adoption, then there's it being legitimized on a global scale for all corporations.
in one fell swoop. I think that's something fundamentally different. So when that happens,
I anticipate their market reaction being very, very powerful. And I just don't know if they
were there yet. Also, there's an aspect of they want to see what happens after over a few quarters
as well. Is Bitcoin going to drop? Are they going to go negative EPS again? Are they going to be
able to maintain this momentum? I think there are a lot of things that still need to be ironed out
before strategy gets into the S&P 500.
So I'm with Ben.
I think the third go around.
If Bitcoin cooperates, if the price cooperates,
if growth cooperates, if the markets cooperate,
I can see us in 2026 talking about strategies inclusion
into the S&P 500.
I've also got to imagine that there's some level of conversation,
and maybe there isn't, around the business model
and the capability for the business model to swell the market cap,
which would absorb the flows from the index.
It's like a company like Strategy getting in there
becomes the black hole of all the capital flows
from the S&P as they continue to scale and scale and scale.
And as Bitcoin goes on runs and the dollar devalues,
that balance sheet gets more valuable.
The market cap starts to swell
and they start drawing in all these passive funds.
I do wonder if they spend time on that aspect of it
and if that concerns them going,
wait a second, this whole model,
is going to result in massive market cap over time.
Yes.
Right, Jeff, you've said it a lot of times.
It's probably going to become the biggest company in the world by market cap over time.
If you're an index and you're going, well, this company can get into my index
and it's going to siphon off all the passive flows
because it's just going to draw the capital out of everything else,
does that start to concern you?
And do you then have reason to hold them out?
I don't know if they do or not, but it's certainly a consideration you have to think of.
Yeah. It's like, it's a pretty irreversible decision.
Like,
you're approving an industry now.
Yeah. Like once it's in, it's going to be harder to put the toothpaste back in the tube, you know?
It's funny. It's funny to think about like the S and P, like, you know, they're at the gate and they're looking at the horse and they're like,
I don't know.
This is a pretty big horse.
Yeah.
It's pretty big.
it would look good in here it would look good i mean it would look good in here
yeah i also think that something needs to happen though um and i know it keeps talking about it i
probably saw the broken record i think they need to pay a little bit more attention to their legacy
business and try to scale it i think that all of those factors play in to them being included in
the s p 500 because if they can scale their operating business and have a greater operating
cash flow, that signals to S&P that they have a sustainable model versus just being, I don't
know, maybe some people view it as, is this Bitcoin model something that's sustainable
long term?
Like what happens in a bear market, things like that.
So I do think that they have roads to inclusion.
I think they have roads to higher multiples, but they're going to have to diversify their
approach a little bit.
And I really think that once that happens, there will be a fundamental shift in how the market perceives the equity.
And the AI is the flavor of the month.
Go ahead, Dan.
Yeah, I just have to hop off the next five minutes, guys.
I just want to say thanks.
All right.
Any final thoughts, Dan?
No, I love that we're back in action.
Super excited.
We're back.
The sun is going down earlier.
The weather's getting a little bit colder.
We're getting close to fall.
And there are less things to do outside over the next six months.
So we're going to be back in action.
We're going to be hitting it hard.
And yeah, absolutely.
Thanks for being here, Dan.
All right.
Bye, guys.
Catch you later.
See you.
All right.
What else?
I'd be curious to get everyone's opinion just on the industry in general.
Treasury companies?
know we've typically covered a lot of mstr but there's a ton going on out there and there's so
many more companies now and we're seeing things that we haven't really seen before so i would be
curious just to get everyone's view on you know the state that the industry is in broadly but
then also the segmentation that's happening out there amongst all the different treasury companies
yeah so i think there was an announcement today that now the uh you need to have a hundred bitcoin
on your balance sheet to be in the top 100, which is a monumental change, which used to be just like,
you know, 15. If you had 15 Bitcoin, you'd be in the top 100. And I think pretty soon that will be,
you need to have a thousand Bitcoin to be in the top 100. That might be another year. I bet within
another year that you need to have a thousand Bitcoin to be in the top 100 publicly traded
Bitcoin companies. So to your point, Ben, this industry is changing, things are moving and
shaking. And I mean, we did an M&A transaction this last weekend, and that's now providing a
proof of concept for other things that can happen in the industry for everybody. Any company can go
out and perform a similar type transaction. You could do it private company to public company,
company, private company, private to private.
It could be two small companies.
Let's just say you operate in similar jurisdictions.
You got similar business models.
Maybe you want to combine forces and push it together.
Maybe that makes sense.
And seeing things through a Bitcoin lens allows those conversations to happen and flourish which I was fascinated about This transaction that we did this last weekend most of the communication and the thought process was about using Bitcoin as a
unit of account. So like while we had to price things in fiat, like we thought about it in Bitcoin.
So like it was just this whole weekend, I'm like, oh my God, I can't believe I'm doing this right
Like this is and like the communication was very, very positive and it was directionally very favorable.
And ultimately, like if this this never would have happened the other direction, like a fiat company trying to do M&A with a Bitcoin company is likely not going to happen, in my opinion, because like the company that holds the Bitcoin can just say like, no.
I'll just sit on my Bitcoin.
I don't, I could just wait.
I could just sit here and wait and like focus on my business.
Maybe I need like just weather the storm.
Whereas.
Jeff, what if the, what if the fiat company is willing to pay a premium for the Bitcoin?
Let's say sometime in the future, there's a mad rush to get your hands on some Bitcoin.
and there's one of these micro companies right now who has the Bitcoin and is potentially trading
below 1MNAV, it could be a great way for a larger fiat company to acquire a massive or potentially
a massive amount of Bitcoin in one fair swoop. I think you just said why every single company
should trade at a premium. That exact reason is why every single one of these Bitcoin treasury
companies should trade at a premium. Because eventually, there's not going to be any supply
left. And if you're a company like, I don't know, pick random, like Sherwin-Williams, and you're
like, okay, I need to go buy like Bitcoin and I've got this net income and I need to go buy
10,000. Like let's think five, 10 years from now that just 10,000 aren't going to be available.
So how do you do that? You go buy the mom and pop painting supply company that has accumulated
6,000 Bitcoin over the last 10 years. And then you go figure out how to get the other four.
Yeah, like, I think that's truly how some of this stuff may evolve.
Yeah, that's a great point.
I mean, at what point I see a hypothetical scenario where strategies in the S&P, they're
climbing up there.
At some point to every other company, it becomes obvious how effective this strategy is, and
it's built off bitcoin and that you need to get your hands on bitcoin and i think at some point
there's a a real sentiment shift where this doesn't become some kind of quirky strategy that
is you know seems absurd it becomes a necessity and and then what lengths do do companies at that
point uh what what do they do to get the bitcoin yeah and i i think will simultaneously happen with
individuals as well yeah it's this oh sorry no no no no just yeah individuals want bitcoin
individuals will want to own companies that have bitcoin um this is going to happen
it's the same character arc that you take as a as a person like i found i found bitcoin because i
I saw the world is like, there's no way out.
I'm running this rat race.
I'm running faster and faster.
My life isn't getting better.
There's no way I'm going to be able to have kids.
Like, what am I doing?
Like, what's, what is going on?
Um, and that, that was really what like steered me here.
Now companies, companies are inherently behind that because they're like
amalgamation of a lot of humans.
Um, so I think you're, I think you're spot on.
and shane brings up a great point like convincing a board and a management and stakeholders to hold
bitcoin yeah it's very hard people still think it's very risky a hundred percent and i think
that's where there's so much opportunity for some of these smaller companies like anybody that's got
a couple hundred bitcoin on their balance sheet right now like you're gonna be good like you're
probably gonna be okay and be able to weather the storm for a very long time
when the rest of the world figures out that they need to hold some of that stuff.
Also very interesting that the expansion of these DATs.
Now the industry has created this new term, DAT, digital asset treasury,
and you're seeing companies that are capitalizing on Ethereum and Solana
and all these other things.
I think some of the M&A opportunity may be in the digital asset treasury space
in the future with forced conversion into Bitcoin.
something to keep an eye on explain that one to me jeff because i as soon as you said digital asset
i just thought not gonna make it that's all i'm gonna make it well yeah we all agree right everybody
on everybody on the screen agrees so let's think about a bear market scenario where uh fart coin
sells off by 95 and let's just say bitcoin's down like 40 uh who's in strength anybody that
that holds Bitcoin on their balance sheet.
And so you may be able to convince said Fartcoin treasury
to merge with you or you acquire them
because they're dead in the water and there's no way out.
And you tell them like, in order to do this,
you have to convert 100% of your treasury into Bitcoin.
They're trading some like a super compressed MNAV
or whatever that may be.
And as part of it, that's part of the agreement.
i i and they have some kind of business as well maybe they're not just like stacking part coin
maybe yeah so i i went to i went to anthony copliano's event uh a few weeks ago and i would
say it was a little bit more uh and you know it wasn't it wasn't the maximalist uh bitcoin treasury
company conference that that tim put on but it was a little bit more wide-ranging and accepting and
And what I kind of took away from it, and there was talks of DATS,
and there was talks of DATS that own DATS, multiple layers of DAT securitization.
But I think the Wall Street perspective is you take X crypto token,
you put it on a balance sheet, you securitize it, and it's a money printer.
and and they you know there's a fundamental misconception there uh which is an understanding
of bitcoin and and why this why this actually functions scarcity risk risk the the the longevity
and status of the network as as being the the oldest here the most decentralized the most
trusted, the most powerful. And yeah, I think we'll look back at this time and
I think it will look ridiculous in a very hyper Bitcoinized world.
It'd be like, what were these people doing? It was right in front of them. All they had to do
it was a dot Bitcoin as a treasury reserve asset,
go on to a Bitcoin standard.
And there was a limited opportunity for them.
Instead, they went for the seemingly quick buck.
People see opportunity everywhere, right?
And when you've got these smaller coins
that are less liquid, right?
It's not gonna take as much capital
to really move that coin's price.
The problem is, is the liquidity there
the other side of it so i think right now what you're probably getting most over there is you're
you're getting a lot of vc capital that's coming in and capitalizing on the equity market side of
that so you get a digital asset treasury that comes in raise raises hundreds of millions or
billions of dollars they go put it into a token that doesn't trade overly liquid so it drives the
price up which in turn you know in theory drives the value of the equity up because of the holdings
on the balance sheet and then those VCs get to cash out into the equity markets on that.
The problem is, could that company ever unwind that position if they needed to?
I was talking to one banker who's done a few of these DAT deals and he said there was one
company that had a concern because they were raising too much money and they didn't want
to immediately own 10% of the token.
And that was a real potential outcome, which shows you how far down the curve these companies
are looking at these coins because of the impact that they can have.
And it's just not the same value proposition.
When you look at any of those other tokens that are out there, you've got to ask yourself,
what market are they competing for?
And what value are they bringing?
And even if they're bringing a value today, you have to ask, is this going to be a low
cost based competition for them right our fee is going to have to be a race to the bottom so if
you're going to go and be the token that is part of secure taking securities and putting them on the
blockchain and trading on them you know are people going to want to trade securities that have high
fees because of that particular blockchain or are they going to migrate that to the lowest cost chain
that's out there and that's going to take a lot of the value proposition away right it's more like
being a tech company and you're competing and you're ripe to be disrupted along your journey.
And I think that's the hard part. What Bitcoin's competing with is value storage. It's capital.
And so that's a very usable use case for anybody. We're looking at the devaluation of the dollar
and your bet is that that's not going to stop. And because of that, you want an asset with a
a completely fixed supply, right? At the most basic, that's all you need to think about in this
type of a trade, which is why over a long period of time, you can be very confident that Bitcoin's
going to perform quite well in dollar terms, right? If those dollars are always going to devalue,
you can be very confident over a long time frame. It doesn't mean everything is going to go great
this week, this month, this quarter, right? That's not what it means. But over a long enough time
period. It's why everyone talks about Bitcoin in four year timeframes. And I think when you think
about treasury companies, you have to do something similar as well. You know, most of these companies
really emerged and call it the last six months. There were a few before that, but call it really
the last six months. And if you go out and you just take a sentiment pulse on it, you know,
the market's basically declaring that they're all dead now, right? In six months, half of them have
hardly gotten past their initial capital raise and then the market's deciding that they're dead.
And a lot of that is we're being lulled with Bitcoin's performance. It's just not moving yet.
Right. It's doing one of these. It's chopping sideways. There's not a lot of activity. It seems
like broadly across the sector, there was probably some pretty big capital allocators that pulled out
because when you look at a sector like these treasury companies and pretty much every chart
is identical. And it's just been a slow grind down over the last several months, which will
break conviction very easily, right? It's not fun. It's not fun for anybody. I don't love it.
I like this a lot more when these things are, you know, rocket shipping on us around. You know,
that's way more fun than what's happening now. But it's also the period in time that's going
to create opportunities, right? These are times where you allocate. You go do a lot of research,
you pick the ones that you think give you the best risk reward at this point in time,
given the market conditions. And I think there's going to be a lot of companies that people are
overlooking that are probably going to be some of the big winners. There's a lot of nuance that's
happening out there. And I know people hate these capital raises right now because there's nuance
with pipes and when those shares get registered to the investors and what those investors do with
those shares. And that's understandable, right? These are very complex transactions.
But those, I think, are also going to be once people learn more about the capital raises and the mechanics about how everything works, it's going to also present a lot of opportunities.
So people looking at the companies, and I've been associated with one with Sequence that's been trading below the net asset value.
And at one level, you look at it and you think, if all I wanted was Bitcoin exposure at this point in time.
but I wanted a way to potentially outperform. Could I go look at these companies that are
trading deeply below one times NAV? Once you get through all the settlement periods of
shares clearing through the market and the pipe investors selling them and that price stabilizes
and you start seeing volume fall off. Now, if I just wanted Bitcoin exposure,
you could largely expect, and I don't know, this is untested because we're kind of going through
this cycle for the first time, but you could kind of expect that because that balance sheet is filled
with Bitcoin, it would start to act as Bitcoin beta, right? It should, in theory, start to move
that equity alongside Bitcoin. But what you've got during these periods where you've got companies
trading less than the value of the assets is you've got the opportunity to potentially outperform,
if your only thesis is, at some point, if Bitcoin runs, then there's a mania that I think it might
get valued at the value of its assets. If that was your only thesis, you never thought it was
going to get a premium again, but you buy something at, I've seen some that have gotten as low as 0.75,
0.74, like some of them have gotten pretty low down there. There's several of them right now.
If that comes back and gets back to only one times nav when Bitcoin really rips and whether it's
new all-time highs or it's just price action is good and people are starting to get bulled up
again, if you close that gap, you outperform Bitcoin in a pretty serious way.
So I think there's opportunities for people to scan these markets now, but
you've got to think about it differently than we have in the past, because we've
got a completely different market than we had a year ago.
Companies are different.
The setups are different.
The way capital is being raised is different because the other side of this that you see you know we look at strategy and they got one of the more complex models out there It simplifying now but they used more tools than a lot of the other companies have
You know, you've got two very different schools of thought, like raising capital via equity with ATMs.
A lot of the companies that people are really pumped about and that have been doing great now for a really long time are almost exclusively raising equity capital.
It's the equivalent of just using an ATM and they don't really have leverage on.
And I think that shows the disconnect.
And maybe it's more a part of the journey, like trying to figure out what is the right
scale where you need to focus on efficiency, right?
There's a certain level where you need to build the nav on the balance sheet so that
you can actually go and deploy these other tools and be interesting to institutional
level capital if you want to go the preferred routes.
But at a certain point, like where strategy's at now, and obviously nobody's close to them,
but you start looking at the efficiency of the capital raising.
And you have to try to maximize the impact of every dollar you're bringing in so that
you can continue to provide that Bitcoin yield out into the market.
And I think now that we finally have all these companies at various levels of deploying this
strategy and various levels of size out there in the market, now people are getting the chance to
go digest and figure out how do you segment this market, right? What buckets do you put these
companies into and what phase of their growth is it that I personally want to be investing in,
right? Do I want the mature companies that are already in the institutional capital
markets and they're raising money via these, you know, preferred products? Or am I somebody that's
seeking that growth curve? Am I just looking for a company that's scaling all the time, right?
raising capital putting it on the balance sheet am i looking for that kind of run up i think that
a lot of people started looking for that after meta planet had that really sharp run up and they
were just stacking bitcoin like crazy and you know dylan and simon are animals over there so they're
constantly you know buying bitcoin but i think that that refocused people and you start looking
at well maybe there's a huge amount of value in that initial growth curve and now i think that
everything's kind of come back out all the premiums have been drawn out i think you had some
some large capital that exited the market and that kind of compressed the premiums while bitcoin's not
doing anything or grinding down you know this is that reset reevaluate period on the investing
journey here and it's a good opportunity if you got people that are just getting into it right
you get to reach all these companies and you've got international companies that have completely
different ways of raising capital. I think it's going to be an exciting time. It certainly isn't
going to feel like it right now for most people, just because equities in this space haven't been
performing hardly at all across the board. But these are the times, right? I've said it before,
nobody wants to be a buyer when it's time to buy. And that's the hard part in this, right?
The best time to get in is basically when you've taken the emotional hit, but it's hard, hard to do.
A lot of people think that these deals that have raised pipe capital are dead.
And the reality is they hold Bitcoin.
So they're certainly not dead.
To your point, there's ways to value these things and see them in the marketplace.
These are institutionally complex products around like you're talking small market cap type Bitcoin treasury companies.
One of the reasons that we haven't really focused on them too much is because they are so small relative to strategy.
And the amount of risk associated with any one of these individual instruments is just so much different.
And it requires due diligence, analysis, thinking broadly around the whole landscape of the market, thinking of who's invested in these things, incentives, the whole kit and caboodle.
um so it makes them just inherently very complex but to your point ben
um these are the hard times are when you want to be thinking a little bit
more strongly about being aggressive well and mna changes things too yeah because that sends a
signal out to the market that you know other companies can become targets for this i think
there's going to be a lot of consolidation in here.
You know, I don't think the top 100 is going to look a lot like the top 100 in 12 months.
No, no way.
Because of that benefit of achieving scale.
You know, I think that that is really going to change things.
And that's, you know, it's both exciting.
And I think for a lot of people, it's going to make them nervous in this space as well,
because everything's changing quickly.
Yeah.
I mean, if we rewound this back to, you know, True North episode one,
or when you were doing Quapro back in the day.
This is an incredibly different market, and it's far more complex.
Yeah.
Less than it used to be.
Right.
The peers that have entered this market now are sophisticated from the institutional side.
And the way that capital is getting raised is different.
And, you know, for better or worse, that does change things.
Yeah.
And the grift is also shifted towards altcoin treasury companies.
I mean, what's Tom Lee sitting on now, like $9 billion of ETH?
So I could be off by a couple billion there, but I think that's around what it's at.
But go ahead, Mason, you were going to say something.
Yeah, I think a lot of Bitcoiners have forgot that a company that holds Bitcoin, let's say
they purely hold Bitcoin and they accrete, let's be conservative, a few percentages of yield a year,
they're going to outperform 99% of fiat companies just simply by their exposure to Bitcoin.
So I think the cyclicality that we're experiencing right now is not new.
You see it in miners. And actually, miners right now have been going absolutely wild. But they were down the most in April, in the spring, compared to a lot of the Bitcoin treasury companies. And now it's completely inverse, right? The miners are up, MNAPs are down.
So I think it's really fascinating to watch kind of the capital rotation within Bitcoin proxies moving forward.
And I think the two industries will be counter related, it seems.
100%. Adrian messaged us in the chat and he's going to head off, but I will kick it over to Adrian for final thoughts.
What are you thinking?
Oh, yeah. No, I think Ben and Mason hit on a few important points. So with regards to MNF
compression, I actually hate that term. I think sentiment shift is a more accurate descriptor,
but that's just my opinion. And the reason why I'm bringing that up is because if you take a look at
everything we just discussed, right? So we have BitMine. That took a lot of the mind share and
attention in the market away from Bitcoin treasuries, right? Bitcoin treasuries across
the board have been underperforming. Iron, Cypher, Marathon, those Bitcoin miners have been
outperforming in the last two to three months. And one, their seasonality kind of aligned with
it rather nicely. And two, the AI narrative is not going away anytime soon. So I don't know if
any of you have... I know, Ben, you've had positions in iron. I know I have. Those finally
started performing after a long while. And it's been very, very interesting to watch the shift
in sentiment around all these different equities. And it's almost like the air has been sucking out
a balloon a little bit in terms of the Bitcoin treasury companies, but that's going to shift
right back to where it was, right? So I think that October, November, end of the year,
we're going to see a broader sentiment shift towards the Bitcoin treasury companies again.
And I think it's because a lot of them are beta plays. Well, not a lot of them, all of them are beta plays to Bitcoin and Bitcoin seasonality and Bitcoin's price action is going to determine a lot of the price action that we see.
And with strategy, I think people need to accept the fact that it's much larger now. Therefore, it's going to take a lot more money to move it. And it's going to be perhaps more sensitive to broader market dynamics than it was in the past.
that's not a knock. I think that's just a signal of growth. So I've been relatively patient in the
last few months as everyone has been screaming online, talking about strategy and talking about
how everything is underperforming, just anticipating Q4. And I think Q4 is going to tell us a lot of
what is to come. If for some reason we underperform in Q4, then I'll start reassessing.
And when I say underperform, I'm talking about Bitcoin, I'm talking about strategy,
talking about all the bitcoin treacheries if those underperform in q4 i'll get a little bit
i wouldn't say concerned but i'll have to reassess um but we've we've literally seen
nvidia go to four trillion dollars in market cap we saw what happened oracle recently right
the mind share in the market has been sucked into ai related plays and we've seen that with iron
we've seen those cipher those are ai related bitcoin miners and then we also have my share
going towards the ETH treasury companies like with BitMine. So it stands to reason that we would have
seen the multiple on these equities drop in the last three months. But I anticipate that's going
to shift right back for Q4 when Bitcoin's seasonality and price action and price history
is the strongest. So I think everyone just needs to be patient. Let's see what Q4 brings before
the doom and gloom conversations take over too much. That news on the AI was like, you know,
taking a power strip and plugging plugging the plug into your own power strip it's like a 100
billion here and 100 billion there and it's all getting recycled to the 100 billion dollars of
this money that's made out of thin air and yeah it'd be interesting to see how this plays out
right nvidia is a company with 55 billion dollars of capital in their balance sheet protecting a
five trillion four and a half trillion dollar market cap um leveraged on future cash flows
that are uncertain with a whole host of risks and i wonder if there's a point in time where people
say what what am i doing holding this stuff like what's the point so maybe yeah but the thing with
it is though um i think people need to be very mindful when they're talking about the the ai
situation because i think it's more of a paradigm shift and a and a model shift more than it's a
bubble but that's just my two cents on the matter and in the chat someone is saying that i said the
fundamentals reflect sentiment and sentiment reflects fundamentals that's not what i said
so you may want to pay attention a little bit closer but um besides besides that um you know
it's been a great conversation as always um the chat's always entertaining with people just
saying stuff but there's a lot of great comments in there so i appreciate a lot of the comments
that we see um looking forward to doing this again next week um and the week after that the
week after that it's great to be back so guys it's been great but i got a dog to walk and i got stuff
to take care of all right later adrian thanks for hanging what was interesting with the uh the
bitcoin miners was you know they were all declared dead not too long ago as well right they were the
dogs of investing for about a year right i mean that was those were some of the first companies
that was how adrian and i actually got connected about two years ago now was we were covering the
bitcoin mining space and you know over there everyone was viewing them all as bitcoin miners
and the thesis that we ultimately landed on was I'm trying to pick the ones I don't believe are
Bitcoin miners. Bitcoin mining was great because it gave you the ability to turn on revenue without
having to go find a customer. You plug in, but you're effectively building data center infrastructure
and I think you could get a similar type of effect with these treasury companies.
Everyone's focusing right now on just the accumulation phase and comparing them as if
just these accumulation tools is the only thing they're ever going to be able to do.
But I think that the companies that are building these war chests are going to have the opportunity
to evolve and they're going to go all different directions. There's not going to be one right
answer at the end of this, but I think a lot of people will be surprised a few years from now
when they find out what benefit having a massive stack of capital actually provides to a company
because it provides all the optionality you could ever hope for. 100%. So,
So what do you think in this matter?
Where's your head out on all this stuff?
AI, infrastructure, treasury companies,
DATs, volatility, covered calls.
What do you think?
Well, I'd rather own a fiat company
that stacked cash than a DAT
that stacked fucking Ethereum.
I'd rather just have a melting ice cube.
You'd rather have a fiat treasury company?
Exactly.
Than a free-falling freaking...
Be honest, though.
you're trading options on them yeah yeah i might be uh i might be extremely short
but um yeah the um the the pref options caught me a little off guard
um strife and stride makes a little bit of sense but i still don't understand options on stretch
but um i haven't looked at the options chain on them really at all so i'm really curious to see
see like what the pricing like what the pricing kind of reflects because there there might there
might be something there um you could scalp a little bit but it's it's still pretty immature
too so the liquidity is not there yeah but i think the cool part is that they they're they exist
like what other preferred equities have options markets on them like that just makes the liquidity
even higher and deeper for the preferred instruments for the underlying underlying yeah
and it creates more instruments that you can hold in a diversified portfolio of all these different
things right you can like hedge your downside and you even even take more less risky positions and
scalp uh you know yield off of these things so like we don't even know to the the extent of
of like what kind of creativity can be built with different combinations, which I mean,
somebody is going to do it.
It's probably not going to be me, but somebody is going to do it.
One other thing I wanted to bring up is these digital asset treasury companies thinking about like this idea of just the design of this marketplace And I go back to this a lot from Jesse Myers here just outlining the size and scope of the marketplace
So this fixed income market, this bond market being $318 trillion, strategies set up plumbing
to harness this capital in this marketplace. Now, the plumbing is anybody that's buying these
instruments needs to underwrite the riskiness of Bitcoin and Bitcoin into the future.
So anybody that's, you know, got an ETH treasury company or Solana treasury company, they're
harnessing this equity bucket.
And the underlying coin itself is somewhere in this money bucket, but they're not even
tapping into this bond bucket at all.
Now, if they were to start tapping into this bond bucket, and let's say Tom Lee wants to issue perpetual preferred securities, you now have to underwrite ETH and the strength of ETH.
So would you rather have this guy?
You got to underwrite this guy.
Or you got to underwrite these.
Which would you rather do?
Which is less risky?
Which is more risky?
and which is going to have significantly more institutional capital than the other.
And you play this game out far enough. What are you going to do? Are you going to underwrite XRP?
You really think XRP is going to be less risky than a Bitcoin-backed fixed income security?
No way. No way. Zero. Zero percent chance. So the end game here is Bitcoin runs all of this stuff.
Because the risk profile is profoundly different.
And like, that's, that's what I'm super excited about.
It's like, I don't need to underwrite this guy.
I need to underwrite the protocol.
That's it.
So, um, I think the digital asset treasury space, what is there money to make there?
Sure.
Like there's a ton of equity capital that's flowing to it.
And it's very clear the sentiment.
But I mean, there's stupid people everywhere.
There's stupid people throwing money around everywhere.
And I think that's just going to.
Look at the XRP market cap, right?
What is the XRP market cap?
What is it like 250 billion?
Is it higher than that?
If it's higher than that, that's crazy.
It's higher than strategy.
Yeah, by like 150 billion, which is crazy.
Yeah, we live in a time where XRP is bigger than strategy.
171 billion.
so the market cap of xrp is about 80 billion dollars it's almost double the size of strategy
which which what is xrp that's insane i encourage i encourage somebody to tell me what it is
everyone's uncle has bought it yeah uncle yeah it's going to a thousand oh my god there's this
guy that literally he's he's talked on like cnbc and he's out in the he's out there and he's saying
like xrp is going to go to a thousand i'm like oh my god it's not going to 10 trillion right like
no way actually i think the math the math might have been a hundred trillion actually i think
i think if you run the math is like a hundred trillion i'm like just you're out of your mind
and like he's he's getting airtime on cnbc or like fast like one of these bloomberg shows i'm like
you got to be kidding me that's like but these people aren't doing any math i don't know how
much they paid uh just the incentives are are not aligned and the shit coiner is to be honest it's
been a brilliant business model though yeah i mean think about it you're basically witnessing the
power of marketing and you get to just self-fund the marketing with the token that you completely
pre-mined and then conveniently lost the first batch of blocks so that data magically disappeared
so no one can go review that and now you just get to sell those into the market and fund marketing
and take that capital and just go buy actual real businesses like they'll build a real business out
of this but the xrp token is going to have nothing to do with it that's where the delusion sets in
is people still think that there's a world where xrp is like running bank transactions and
you know that's that's not reality the ripple xrp disconnect yep yeah 100 okay what else we got
um man somebody was asking about um the video that's been circulating where sailor weighed in
on the Knotts versus Core
in a roundabout way.
He talked about Op return.
And I guess it was in Prague,
which makes me mad I didn't go.
But apparently he said
the best way to ruin Bitcoin
would be to find a well-meaning developer
and tell them to make it better.
The point is, we understand
that we have to fix the bugs.
sure but if you've got a contentious change maybe we pump the brakes on that so basically
you know the road to hell is paved with good intentions i think so it was it was good to hear
that and i think it would it would make sense for every single treasury company to do a review of
all of the upgrades that are that are coming up and and find out and i guess decide for yourself
if they're contentious and then make a recommendation to your custodian what code do you want us to run
do you want us to remain on core v29 because we don't like v30 do you want to run the alternative
knots something like that and maybe it's it it would be good for the custodians to do those
reviews too but somebody's got to be doing the the studies and then making recommendations to somebody
how's your node running been going i hear it buzzing down there yeah you got it down there
which one are you running how long did it take you to get set up uh yeah like the whole process
so it's embarrassing for me because i worked in it but my role was so niche it's like software
related and i don't know jack about hardware so i've got to start nine server um bitcoin not
crypto's channel has some really good tutorials there's also one from btc sessions and um if you
check out bitcoin.crypto's channel i think he's got like a discount code you can use for um a
start nine server as well but i think they're all in back order um the other one that's good is um
is it umbral i'm really correct yeah um but yeah i got the start nine and i spent like
a few hours on over two days doing it and i had like 17 youtube videos open trying to figure it
out um but it got done and um i really haven't had to make any transactions since so i'm kind
of excited to i don't know move some bitcoin around and use my own uh my own node to do it but
yeah it's just sitting there and
whirring every so often
you have a miner too? You're running some
bit axes over there? I'm excited
to do it actually I got my
son one
a bit axe and it was
fun to just go through the exercise
but now I'm kind of motivated I'm like
you know what I need to start mining with it
get that connected to it
get my own template I'd probably
roll with ocean that's more of a decentralized
platform
you know mining decentralization is kind of important too so you know now that I have a node
I can sit on my high horse and you know feel better than everyone else who's not running a
node you know that's the important part and it is the fun part of progressing through bitcoin is
when you get to this phase right you've been investing in it but now you're actually figuring
out how it all works and how it all connects together and some of the most fun I had was I
got a start line as well and tinkering around and configuring that and then getting a minor and
I just picked up a I think I've got a brains mini minor and mostly because I'm a sucker for a nice
screen that can you know show me data on it I don't know why I just love that it's way bigger
than a bit x I don't think it gets me any more hash power than a bit x does but it you know I got
suckered in by that but getting it all configured and actually playing around and starting to
understand how it all works and connects is massively valuable so i think for a lot of people
it's it's a matter of time before you get to that level but uh it's still one of those where you've
got to have the time because it does not go smoothly still there's still quite a bit of work
done to be able to have just normal everyday people be able to you know spin up a node and
get it running luckily there's a lot of people out there like i think i used btc sessions video and i
was setting mine up as well it was it was pretty good so luckily there's people out there doing
that work to to expedite it and help you troubleshoot it oh yeah for sure the and and uh if you
get a miner going you got to monetize the heat output right so then yeah powerful enough to have
much heat output you know yeah but there's the uh the bath house in new york that's uh oh yeah it's
powered by well the electricity that comes in the door and then they have miners that sit in between
And then all the heat output goes to all of their spas and their saunas.
And so it's like this underground Roman bathhouse, but in totally like techie New York fashion.
It's so sick.
And like it's pretty affordable, too, because they're mining Bitcoin.
Right.
Yeah, it was badass.
I went I went there the day before the unconference.
And I'm just going to have to make them make that mandatory every time I go to New York City now.
Steam room.
dry sauna was like 180 degrees so and then you can just you can walk out of there and go straight into
a 44 degree cold plunge and then you could just go right back into the steam room or whatever
they got like a salt water one that's like easier to float in you want to relax and there was like
that one was like more of a quiet room and there was a bunch of couches people just passed out
everywhere i guess they were i don't know relaxing or whatever but i'm not i'm not sleeping in public
it was kind of that was kind of weird but um yeah the freaking rooms were amazing and i only used
half of them there was like a couple of world pools that whirlpools that i never made it made
it to but um yeah i'm gonna go early one day and spend the entire day yeah there's a business model
for anybody out there that's a a spa or sauna freak is you know monetize the heat output there's
a guy in colorado that's even put a book together about like the heat output of ma of mine i think
I think it's called like Bitcoin heat or something around that.
But that's an industry.
That is an entire industry that somebody can get into.
Like these things are going to be on the top of everybody's homes
and be the furnace in the winter.
Because why not?
If you're able to recapture some of that value.
And there's a lot there.
that's what i really like when you go to like the local bitcoin meetups you know because yours may
be more polished over by where you guys are but you get kind of that anarchy edge that's out there
the people that are doing this on homesteads and like there's a guy i was talking to tonight and
he's heating everything with bitcoin miners he's got a water heater out on his homestead that's
just heating the water up with the bitcoin mining and obviously it only gets warm it's not like
you're going to boil that water or anything. But then he's also like circulating water underneath
the floors to heat it. And he's heating maple syrup with it. I guess that's part of the project.
Like he's just integrating it into everything. It's just Bitcoin miners all over the place.
It's really, really cool stuff. You have to have warm maple syrup. You know what I'm saying?
This is what you could do when you have like the time and energy and you work for yourself.
And on a Bitcoin standards, you could think about like all these other things. You have some free
capital and you go figure out what you want to do so cool oh yeah so cool all right we're right at
right at two hours maybe we'll pass around we'll do final thoughts um i'll kick it over to you
mason let's get you let's get you cooking yeah um well just my general takeaway from the conference
was this industry is so nascent we're we're just at the beginning everyone's still trying to figure
out you know whether it's companies what what their strategy is how how do they want to proceed
into the future how do they want to differentiate themselves amongst their peers um or or within
their region and i think there's just so much opportunity out there right now uh for both
companies and and for investors and i think to uh to survive this industry which is on top of
Bitcoin, which is highly cyclical, highly volatile, you're going to need to hold on pretty tight.
So if you're here tonight following us and if you've been following us for a while,
I think you're going to make it. But in the meantime, there will be a lot of tourists.
There will be a lot of noise. And make sure you're protecting yourself from it. Have conviction,
build it, focus, and stay the path.
Wise words. Wise words, Mason. Over to you, Soleil.
All right. So I will see you all in Montreal if you're going to be at the Canadian Bitcoin
Conference 2025. I'll be there too.
October 16th and 18th. So I'm just addicted to conferences now. I can't stop.
Ben, you have to go. We're all going.
That's what I'm hearing.
Yeah.
16th to the 18th.
Yeah.
We should go see hockey.
I know Mason is.
Yeah, I'm playing.
Are you really?
Yeah, I was a high school hockey player.
Okay.
Yeah.
Is it going to be a core versus hockey?
I can't skate, so you can just
make me the goalie, and I can just stay
Yeah.
And fall down or on the, on the, on the, skate, skate faster backwards than, than you can
fall over and do a little race.
All right, over to you, Ben.
Yeah, I just think that this is going to be an industry where you're going to have to stay engaged to try to stay ahead.
You know, there's going to be a lot of movements that are out there.
We've got a lot of new companies that are going to do things a different way.
You're going to see a lot of different flavors of transactions as these companies try to scale up.
And, you know, the research aspect of this is going to be massive.
You know, I know people hate to go and review SEC filings, but that's part of the reason why it creates edge is because most people won't do it where you go read the details and you understand the nuance and you understand the timelines.
And I think as more and more companies emerge into the space, that's going to become so critical.
But we're right on the front end of this.
And I'm hearing a lot of people talk like Bitcoin's dead now, even though we're coming into the most, historically, the most bullish quarter of Bitcoin in every cycle.
So right now, I feel like we're all getting lulled into frustration.
And, you know, it's understandable because nobody likes to be down money.
I don't like to be down money.
I'm sure nobody else does either.
But these are the time periods where you reevaluate what you're holding, why you're holding it,
if your thesis has changed, and then you review your thesis around Bitcoin. And if you don't
believe it's over for Bitcoin and you think Bitcoin is going to continue to move and that
we're going to come into this bullish period, then as long as you're positioned well and you focus on
finding good entries you can close your eyes and wake up in four years right this is a this is a
long-term game this isn't a monthly game or a quarterly game this is a several year game that's
out here and you want to allocate accordingly we all learned that with bitcoin it was the foundation
of all of our thesis it was the asset that brought everyone into these and we built up that resilience
in our investing to be able to ride that volatility in Bitcoin because we knew over a long enough time frame, we would be up money.
And it became a very easy way to invest But moving into the equities you shift into an equities mindset And that a different type of investing than I think a lot of people got accustomed to with Bitcoin So Bitcoin should always be the foundation
Always start there.
It's what makes all of this possible for all of these companies.
It's the asset that everybody's betting on.
Make that the foundation.
And then if you want to take swings to try to outperform, go for it.
You're only down money if you go.
Right?
And you can zoom in far enough to find a time period where strategy's underperforming,
but how come nobody ever says, why were we overperforming in November?
Like that was a completely unrealistic blow off top.
And the correction that we've had just brings strategies priced down to where it would have been
if we didn't get that ridiculous euphoria.
I think there's the reality out there that the emotional baseline on any investment gets struck at your cost.
Yeah.
So your emotions get set where you entered.
And that's how it is for everybody.
It's why nobody agrees.
There's never going to be consensus on any investment because everybody had different entry points.
right the reason why there was a lot of frustration when when we weren't you know getting upset about
the strategy price action you know part of that is is cost basis driven right all of us were in
early we saw this trend way ahead of it and so you know while you're down right in your brokerage
accounts you're still way up because you know you picked the right time to enter these trades
But I also look at most of these have been in existence for six months. So you got to give more than six months time to declare a strategy or a company strategy as dead and over and that the industry is over. Six months is not enough time for that.
So we got a lot of runway ahead of us here.
There's going to be a lot more innovation.
You're going to have a lot more scale coming to the market.
You've got a lot of big players that haven't even really been able to enter the market yet.
Right.
We've got all these SPACs that are still hanging out there that have massive amounts of Bitcoin.
We don't know what they're going to do yet.
So I think there a there a lot of excitement a lot of activity that going to come into this space And with that comes nuance And that going to be what going to kind of reignite the research into this again I think
I think we got lulled for a little bit.
We started to understand really well.
I kind of liked the days when all we had to break down was convertible bonds.
We got pretty good at convertible bonds, and now those are going by the wayside.
So we're going to have to pick up the next wave of all these and master those.
We need another prep to figure out.
I think we're still figuring out these preps, quite frankly.
Yeah, for sure.
Jeff just learned they could redeem the stretch shares at 101.
True, true.
Still learning those.
It always comes back to this.
I don't want to be that grandpa that said I could have bought Apple at 82 cents.
And then your grandson says, well, you didn't.
Well, you could have, but you didn't and you didn't hold on to it.
So cool story, bro.
Do you know what's worse than that?
What being the grandpa who bought the Apple stock and then started the podcast about the Apple stock and then sold out?
That would be worse.
Oh, yeah.
Your grandson pulling up receipts of you.
Yeah.
He's about how great the stock was.
Yeah.
you said it was going higher but then you sold yeah it's like i'm here this is com i've like
committed there's receipts uh yeah your plot committed now i i am definitely committed 100
um that's where we're going okay well uh my my final thought here is we are in year one of
digital credit this world is moving very fast bitcoin is money everything else is credit
that's all i've got i got one last thing go ahead i need people to guess what they think the name of
the next strategy prep will be we need this on record just in case one of us is right i can tell
you mine first if you guys need to think for a minute go ahead go go first so we can eliminate one i gonna say that that it going to be Stratus Stratus That is like the stratosphere
Okay. It also fills the U in there, you know,
yeah, that's building out there.
It's definitely STRU. There's a hundred percent chance.
Oh, oh, oh, on the F.
It's going to be senior to stretch.
I'll go with strut.
strut that's good stratus strut man okay and then there's uh there's got to be another one
an e1 right yep yeah let's see yeah that's your bet mason what you got i don't know
you want to copy soleil's homework double down on strut
I was playing to the sailor, you know, aerospace angle. That's why I went straight.
Yeah. You know, honestly, it's like midnight over here. And this feels like a New York
Times crossword. Yeah. Mason, you don't play Boggle?
I'm a working man.
And, you know, I put money into my 401k.
It's rough.
Trying to buy a couch.
You know, you're just trying to buy a couch.
It's hard times.
My money is crazy.
It's like I go from my bed over here to my desk.
Long commute.
Yeah, it's a lot.
All right.
Well, then we'll cut you a break.
But think about it.
Come back.
without without the acronym the potential you know fiat is blank uh i would say i would say
probably strong and a lot of people are saying this in the chat too my guess would be strong
um wait don't we need an e gotta go strength strength oh there you go s-t-r-e strength
there's a whole new world out there there you go all right guys well two hours and ten minutes in
Thank you everybody for joining. Thanks for hanging out.
Episode 39, the investment grade Bitcoin podcast.
We are signing off. Take it easy. Have a good one.
And we'll catch you next week. See ya.
See ya.