foreign
I said in this life, we know a lot of pain, we know a lot of sorrow.
So I know you're hoping, I'm hoping it's time for evil, better tomorrow.
Yes, I am because what is the purpose of living in the day when it's in a low?
I know it's hard to get your head right when everything's so wrong.
It's like so wrong, yeah.
When everything's so wrong, yeah.
Woo!
Welcome back.
True North, episode 49.
the investment grade Bitcoin podcast. We are back. This might be one of the last episodes
that we do in 2025. We've got a crew here today. We've got myself. We've got Mason.
We've got Dan Hillary and Ben will join us as well. We've had some technical issues today.
Oh, wait, there's Ben. Let's add him in. There you go. We've got Ben. He's here.
And we're going to go through quite a few things. Hopefully we'll be able to do this relatively
quick. We want to go over Bitcoin Mena. We'll give a summary of what happened there. It'll be myself,
Mason, and Ben. We're all there. We can talk about it. The macro, just macro environment.
Dan's done a bunch of research on this front and we can talk through the landscape, what's going on,
what's going on in the future, what a catalyst look like, where are we? Because there's a lot
of noise happening right now at the moment. Balance sheet valuations. We'll do a little
bit of a reflection of where we were a year ago, where we were two years ago to where we are today
and start to compare not only strategy, but some of the other smaller companies relative to
the other equities that are trading in the current market. So we can start to think about
valuations and if some of these things make sense, because in my opinion, some of these things don't
make a ton of sense relative to the power that some of these companies are holding.
and yeah we'll see where we go we'll get into the holidays and uh we'll we'll chat we'll chat
through it and now ben has a camera issue but that's okay all right i'm here i'll get video
here at some point you're here clear i'm rusty on these you are rusty it's been a while the people
have missed you well if this is your first time joining this is true north the investment grade
bitcoin podcast we hear we are here to talk about bitcoin we are here to talk about securitized
finance, the future of Bitcoin as collateral, and everything that's happening behind the scenes
in the credit market, the credit landscape relating to these types of instruments,
and how these things are fitting into the traditional financial ecosystem.
If this is your first time listening, we've got several people from different backgrounds that
provide different perspectives. Myself, Dan, Mason, Ben, and the rest of our crew all just
come from completely different backgrounds and see the world a little bit differently. So good
conversations on this front and we take a very analytical approach into things and we will get
into some of those stats and details a little bit later. So without further ado, I'll pass it over
to Tim or not. 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.
Perfect. All right. Yeah, none of this is financial advice. We are just really interested
in everything that's going on here. And we've been following this space incredibly closely.
So while I wait for Ben to come back on, then we can talk about Bitcoin Mena. I will just start
with the Ben series in the chat. Oh, there he is. Okay, we got him. Okay, he made it. It's not like
this is his first time or anything. Okay. So maybe we'll start with Bitcoin meta, just some
perspectives of traveling to the Middle East, talking about Bitcoin in a completely new location.
I went to Bitcoin Asia a little bit earlier this year. So I've now gotten perspectives from
the US conference in Vegas. I went to BTC Asia in Hong Kong, BTC Amsterdam. So I've got the Europe
perspective and now BTC Meta, which I think was the most unique conference out of all of them,
just given the general landscape and the capital environment in that area.
First of all, prior to going to Abu Dhabi and going to the Middle East, I had zero,
I'd never thought I would ever go to the Middle East ever in my entire life. It has been just a
blip of desert on a map and I just I've had no desire to go out to the desert I in my mind I
just thought this is oil and hot and dry why would anybody want to go there and I was completely
blown away uh Abu Dhabi is one of the most incredible like places I've ever traveled in
entire life people people said this people have said the same about dubai and i'm looking forward
to going to do dubai next time i go there i didn't didn't make it there but the first thing i noticed
in arriving in abu dhabi just generally the architecture was incredible i stopped over in
qatar the qatar airport was out of this world the abu dhabi airport was incredible and i'm driving
in and you go past the uh the mosque the grand mosque in abu dhabi and this thing is just like
this huge cathedral church that is i mean it's absolutely enormous it just dominates the skyline
you you're driving by it and you could see it from you know a mile two miles away and it's
dominating everything else around it which was incredible and then additionally all the other
architecture and Ben and I and Mason even went to one of the museums there and they've got this
whole cultural area and it's a bunch of these really large uh fancy pieces of architecture
that are housing different types of museums in different locations and the architecture
completely incredible the streets were clean Ubers were available everywhere you could go
the amount of wealth was insane everywhere there's Lamborghinis Rolls Royces Range Rovers
every driving everywhere i didn't see a single homeless person throughout my entire trip
um the fact that there's water infrastructure in the entire city just blew me away apparently
they got like enormous desalination plants everywhere because there's no rivers there's
no fresh water anywhere um and yeah it was just that part just blew me away and before we even
get into economics and thinking about just the the cultural and economic aspect i have very little
desire to ever go back to europe i will be going to the middle east i'll be going to dubai and abu
to spend more time because it was i i didn't get enough time there so maybe i'll pass it over to
you guys mason ben and like your guys thoughts before we even get into like the economic part
yeah i mean all second that i i never thought i would go to the middle east and the second i got
there i was i was like i don't know enough about this place i need to do some history and what was
fascinating was um in 1960 abu dhabi was just a pretty simple fishing village this is before they
found oil they found oil in 1966 and obviously that that place has exploded and and it made me
uh it made me start thinking about energy right and and the analogies that sailor use uses about
you know oil refineries uh obviously the the rockefellers and and and the power of uh
condensed energy in many forms.
And so that was kind of the way I was viewing the trip going into it.
And yeah, I mean, this fall has been pretty crazy for me as well.
I was in Montreal for the Canadian Bitcoin conference.
I went down to Brazil for SatsConf.
And then I went to Bitcoin Mena.
and each one of them was a very unique perspective.
I will say this one was very finance focused.
And I think it was during finance week.
Is that correct?
So there's a lot of money in the region.
There's a lot of traditional finance there.
And I think that came through in the conference
in that I wouldn't say it was necessarily
like a maximalist crowd.
It was maybe people viewing Bitcoin as a part of a diversified portfolio of assets.
And I think it was a particularly good crowd for products like Bitcoin backed debt.
And I think that's really why, maybe not why, but Saylor was obviously on a crusade in the Middle East to spread the word of Bitcoin, spread the word of Bitcoin backed debt.
And I think more than anything, that audience is open to it. And I think we'll go into his talk, but I think that region is looking to pivot, move from oil, physical energy, potentially-
Liquid. From liquid money to digital money.
Yeah. And I think that's the pitch he gave them was this region can be the next Switzerland. And that started, you know, I was talking with some folks there. Shout out to the fellow from Saudi Arabia who watches us and came up to me. That was like, what?
yeah i was like what yeah yeah we've got fans in saudi arabia and kuwait and abu dhabi india yeah
and but we just started talking about what that region would look like on a bitcoin standard if
if they adopt digital energy and the the potential there is massive i'll kick it over to you ben
yeah no i'd echo a lot of what both of you said but what i saw was a region that's in transition
but doing it from a really unique perspective. I mean, Jeff, I don't know how many times when you
and I were looking around and you realize that what you're watching is a country be built with
no debt. This is an entirely debt-free country, huge amount of excess. And now they've been using
the oil money to really develop themselves. And they're looking at how do they diversify past that
now? That created a huge amount of wealth. They're looking for what's that next step.
And a sailor made kind of a funny quote when he was doing,
I know he did it on the enterprise stage.
I don't know if he did on the main stage there,
but he goes, there's a couple of things I've learned
about the people in this region.
It's they like technology and they love money.
And because of that, you know,
they were uniquely interested in what's happening here,
particularly in the U.S. markets
and looking at what's happening with digital credit
and how they can bring that to their region
and effectively set themselves up as a banking center.
And I'm sure we'll talk about this in pretty great depth here in a little bit.
But part of it is just because they have such unique characteristics
in the amount of control that they have to get things done.
Tons of control.
So that blew my mind.
Flexibility.
Flexibility and control.
And they could act quickly.
Correct.
Yep.
And so getting something done in the U.S.,
obviously there's a lot of bureaucratic tape.
And I've spent the better part of this week out talking to governor candidates and congressional candidates and talking about Bitcoin.
And so you see the amount of friction that there is in the system, which I think is good.
You need the checks, obviously. I'm pro-USA here. This is my home. This is what I love.
But when you see a different model, you understand why they can be so effective over there.
And I think that's why you saw Saylor spend so much energy canvassing that region.
right every day he was in another part of that region he was talking to the sovereign wealth
funds he was talking to the banks he was talking to everybody and really taking advantage of that
time that he had there to show them listen there's this revolution and capital happening right now
and you guys have the unique structure and the unique capability to stand up the infrastructure
that the rest of the world is going to use here over the next hundred years and i think that was
the pitch that he was really starting to make. And my hunch is that resonated quite deeply because
it's a natural evolution for that region going from, like you said before, a liquid commodity
to a hard digital commodity here. While you've still got the wealth coming in from all the oil,
you've still got that supporting everything that you're doing within your country. And now you take
the next decade to transform yourself into that next layer where you're now a primary finance hub
for the global economy. And I think that's what you were starting to see. So it was really
fascinating because the energy was just different. They just viewed things different. And I think
they do that because they don't have the friction. They know if they choose to move, they can do it.
And so it's a different type of optimism that you see. So I agree with everything you guys said. We
had a great time in Abu Dhabi. It was beautiful. It was clean. Everyone spoke English so I could go
obscure small cafes and no issues and i had a way better time than i expected to you don't know what
to expect your first time going into those regions but the other thing you reflect back on is you know
look at where all this brought us right like my gosh who would have ever thought that we started
talking on the internet late at night on wednesdays and all of a sudden a bunch of us are in abu dhabi
at these conferences like it's a it's a wild ride you gotta pinch it'll blow your mind it really does
But it's been a really cool experience.
Yeah, I think one one interesting comparison and I've I heard these statistics.
So Ben you hit on apparently that region has no debt I think it very little debt I think they like 20 debt to GDP where the US is like 140 debt to GDP
So the balance sheet of those countries is like completely flipped to the financial strength side.
And when you compare it to the US, I mean, just based on what I've observed in the US, there's a lot of strife everywhere.
But I didn't get that feeling in the Middle East.
And I even I wouldn't play golf.
I got around a golf in before I went and got an airplane to take my 24 hour journey home.
And I got paired up with a couple of local guys.
And the locals were expats.
So one was from South Africa.
The other is from the UK.
Both of them are primary school teachers.
So they teach elementary school.
They both moved their families to Abu Dhabi.
And they're happier than ever.
and they were playing golf on like a wednesday afternoon like in december and meanwhile i'm like
my brain can't compute like what do you mean you moved you moved your entire family here
and you're you're a elementary school teacher and you're getting by and playing golf i just like
my i couldn't my brain couldn't compute that being a possibility like if you're in elementary school
here in the West Coast, like your life is miserable. You can't afford to live. Like you
probably don't have kids, but you're yet you're teaching kids and let alone getting out and going
to, you know, play a recreational sport is probably not a thing because you probably have a second job.
So it was, it was a fascinating perspective on, on the landscape of the area. And additionally,
the ability to move quickly apparently during COVID when all the lockdowns were happening
they just they opened their borders they're like everybody come hang out in the Middle East and a
lot of people fled from like the UK and these different regions and they've just never left
they like they really enjoy the quality of life and it's that there's money to be made there
because there's a lot of wealth there and there's jobs and different opportunities everywhere
also cranes everywhere like cranes absolutely everywhere like the skyline is dominated with
crazy architecture and just building as far as the eye can see so it was just a very very
interesting glimpse of what a modern like more of a hard money society could be built like or what
it could look like backed by prosperity and potentially storing your energy without decay
like in Bitcoin. So, uh, yeah. Okay. Anyway, let's, uh, let's go on to next topic. I think
that was a great overview there and maybe let's switch gears and we'll talk a little bit about
strategy, just statistic update. And then Dan, we'll kick it over to you and go into macro,
think about macro a little bit, and then we'll look at and think through strategy and this digital
money concept and everything that's moving on that front, kind of that presentation in Abu Dhabi.
And we'll go from there. So going to share my screen, and this is what we do nearly every week.
And I'll put you guys over there on the side. So on this column here, column BS, we're deep in the
spreadsheet now, calling BS. The date 12, 17, 25, Bitcoin held strategy holds 671,000 Bitcoin,
Bitcoin price $86,000. MSDR price of 160. Boo, would love to see that go higher, but it is what
it is. The Bitcoin assets held on the balance sheet, $57 billion. The USD reserve, 1.4 billion.
Debt, 8.2 billion. Preferred stocks, 7.9 billion. So the net capital held on the balance sheet
is about $51 billion. If you look at the net capital held on the balance sheet at the beginning
of 2024, it was $5.7 billion. So a 10X growth in the net capital held on the balance sheet.
The leverage ratio around 12% and the amplification ratio around 27%. So again,
balance sheet is incredibly healthy here. Bitcoin price needed for assets to be worth less than the
debt is 12,000. So there would need to be an 86% drawdown in order for the assets to be less than
the debt. And that wouldn't trigger a liquidation, like liquidation doesn't exist. The net capital
would provide 62 years of the PREF dividend payment obligation. So 824 million. That would
take us to the year 2087 with Bitcoin payments, assuming Bitcoin did not move another dollar
from here until then. So incredibly healthy. Then I put these two columns in here to showcase a 50%
drop and a 70% drop from here and what that would look like. And I think this is an interesting
exercise because even from here, if you were to think about Bitcoin dropping 50% from here,
going down to 43,000, the leverage ratio on the balance sheet would still only be 23%.
Still an incredibly healthy balance sheet. And the total amplification would be 53%.
They would then have 27 years of net capital to cover the dividends, which would take us to the
year 2052 of dividend coverage if Bitcoin didn't move up another dollar from 43,000.
So I think this is helpful to look through just continuously understanding the strength of this
balance sheet. And I'm going to share a clip real quick and do a quick look back
based on how we got here. This is one of the original Quant Bros. And we'll talk through this.
This will lay the stage for the next piece here.
I think that's one thing that the investing community on Twitter or X seems to miss is
that they think in the future that MicroStrategy will have to sell their assets or sell the
Bitcoin in order for it to be used or to generate value.
But in the future, they will be able to use that entire portfolio of assets as collateral to generate cash flow to increase operations and increase revenue and increase future cash flow down the road.
That pile of assets is not going to be sold.
It's going to be used as collateral.
All right.
So that's where we're at.
We've got a huge pile of collateral and it's starting to be utilized and we are seeing digital credit expand in front of our eyes.
And, you know, I think it's helpful to take a look back and see, like, where are we today and where were we back in March of 2024 when we put together that video, that presentation?
So strategy held 193,000 Bitcoin in March of 2024. And the market cap or the value of that Bitcoin is about $11.9 billion. And the market cap was 18 billion. And the next closest company was Mara and they held about 17,000 Bitcoin. So they had 11 times multiple over and above the next closest competitor that was publicly traded.
Now, fast forward today, they hold 671,000 Bitcoin. So that's increased about 250%. They've gone from 0.9% of the network to 3.2% of the network. And the next closest publicly traded competitor holds 53,000 Bitcoin. So they have increased the lead over the next closest competitor.
And the thesis is really unchanged here. Like I liked it then. I still like it now. And I think
we're really in early innings of the development of this digital credit model and utilizing this
stuff as collateral. And we'll get into some of the use cases here down the road. And before
anybody says, well, but the dilution, but the dilution, the shares outstanding have increased
81% yet the Bitcoin held has increased 248%. I'm happy with this. I'm holding this for the long
term. This is so deep into my portfolio. It's the furthest thing in my entire portfolio from the
button. I want to give this the time so it can run its course and we can see what the future of this
looks like. Again, none of this is financial advice, but this is collateral, right? You've
got a company that's gone from, you know, $500 million to $58 billion of capital that can be used
as collateral in different ways. And, you know, we've seen them now at banks. We've seen Sailor
running around the Middle East at different countries talking to, you know, central banks.
And this is, we're just getting started. So yeah, I'm happy here. I'm bummed about the stock
price, but I love the fundamentals. The fundamentals look so much better today than they did in 2024.
Yeah. I mean, you're going to go on this emotional roller coaster anytime you're building out a new
industry. And given the volatility that you're going to see in Bitcoin, that's going to play to
emotions over and over and over again. Right. And what I like about that clip that you played,
Jeff, given how far back that was, which actually wasn't all that far back. It just feels like it
now. But, you know, I like I watched it. I'm like, oh, my God, that's your origin story right there.
Right. And, you know, you look back and that was always kind of the thesis. The thesis was over time,
you're going to have more optionality for how to deploy Bitcoin without even having to get rid of
it. The thesis had always been it was going to start getting ingrained in the financial
institutions. And I remember even in some of our very earliest conversations, you're going,
just imagine they build this massive stack and they get 1% bank interest on it. What do you think
Saylor's doing at these banks? This shouldn't be too hard. You don't have to follow that thread
too far to figure out why they're all talking to them right now. The OCC kind of gave them the air
cover and you're starting to see the regulations. They just continue to ease. You're starting to see
more adoption, you're starting to see more global adoption, you're seeing central banks picking up
Bitcoin, right? The financial institutions are going to want to participate. Because if you don't,
you got to think about what happens, right? Right now, the way people are using Bitcoin a lot of
the times is they're using it as an off-ramp from their bank accounts. I no longer want to put my
savings in a savings account that yields me, you know, 0.1% or 0.2% or 1% even. They're offloading
that into Bitcoin. So if you're a financial institution and you're seeing capital move
somewhere else, and that's the capital you depend on to be able to lend, to scale your business,
over time, as you see it start winning and it becomes a $1 trillion asset and a $2 trillion
asset and a $5 trillion asset, you want that asset inside your bank. You want to be able to
provide the services. Now, even at this point, I don't think the banks have clarity in terms of
what the treatment will be from a balance sheet perspective.
I think that's probably what they're pushing for,
to find out if there's a way where if someone's willing to custody their Bitcoin with the bank
and give them the rights, is there a way for them to deploy that?
I think that's probably what they're looking at right now.
But on the path to that, what you want to do is court the largest concentrated position
you can get your hands on in that strategy.
so I think we're entering that next phase here where over the next 12 months you start to see
those services you already know that trading services are coming to the banks right those
have been announced at several of the major financial institutions so that part's coming
they're already starting to trade with it which is good but now I think that they're they're
starting to see that this is happening and they fought it for a long time pretty actively right
I mean, kudos to JP Morgan for the chaos that they sowed over and over again.
They did a pretty good job at that.
But it feels like we're getting to that capitulation point.
And that's going to open up a huge amount of, one, it's going to bring people who aren't
deep down the rabbit hole.
It's going to bring them better capabilities to hold in custody it because they still trust
the traditional financial institutions.
It's where all their checking account cash is held.
It's where most people are going to have their savings account.
A lot of them have integrated brokerages with their banks.
And because of that, it's a very familiar place that they've trusted for a long time.
They're comfortable there.
So if they can buy Bitcoin through that channel, that's probably what they'll do.
And now you've got to imagine if there's a way for banks to deploy and use this Bitcoin
as a part of their balance sheet, and they can actually offer you a yield on it.
Now you're going to entice people who are even probably very staunchly in the cold storage
category right now.
If you've got someone holding a massive amount of Bitcoin and they can just sit at idle in a bank and they'll pay them one or two percent, do you think a lot of people will do that?
Probably.
Right.
Probably.
And so I think you're starting to see that shift.
And that's kind of been the thesis here for a while is pile up capital.
Do this for an extended period of time.
Remain consistent in that.
Continue to accumulate.
and what happens in 20 years when you've got $100 billion, well, that's probably way too low when
you're talking about strategy, but $200 billion of capital. What can you do with $200 billion of
capital? You mean $10 trillion? $10 trillion of capital. Sorry. Embarrassed, I guess. But just
make it a number you can understand. $200 billion of capital. Let's just say that's it, right?
200 billion. What can you do with 200 billion? Jeff, you track the S&P 500 all the time. How
many companies in the S&P 500 have market caps higher than 200 billion? Oh, yeah. Like any idea?
Not many. Yeah, 20 maybe. Yeah. The answer is you can become whatever you want to be. They may not
need to become anything other than what they're doing now. They're becoming a structured finance
company. That's what they're becoming right now. But you have that optionality and that optionality
has value. I don't think it's reflected today, but it's a reality that capital has value in the
optionality it brings you as an organization. And we don't know what 10 years from now looks like
for Bitcoin. Look at the infrastructure that's been built since we started doing this. Look at
all the, like, I think we forget it. Like we need a list of everything that's happened, like the big
developments that have happened since we just started doing True North. Because it has been so
fast that
we're almost not even surprised
by it anymore. It's totally, it's breakneck
speed. I remember the days when I thought
the day that a company gets involved,
oh my gosh, right? Well, now we've
got, what, 200
companies that are involved on
this. You've got central banks
that are involved in this You got countries like El Salvador stacking this You got people in Africa spinning up businesses around this It all over Europe now It obviously massive in Japan
You've got all this regulatory clarity that's come out. You've had banking regulations getting
rolled back. You've had a tax that came on Bitcoin that then went away. You've got a friendly
US administration, which I never in a million years thought was going to happen. It's winning.
Bitcoin is winning. That's what's happening right now. And it's happening so fast that we just look past it at this point. We almost view it now as a foregone conclusion that it's going to win. But when it starts to win and when these regulations pull back and when these businesses get clarity on how they can utilize the asset, that's when the businesses are going to be spun up around this, where they can integrate that asset.
And that's coming in the next one, two, three, five years.
And those rails in five years or 10 years are going to be completely unrecognizable from where we are today.
I believe that deep in my core, that that is what's going to happen here.
That what happened in the last year is going to feel like nothing happened, even though basically everything we could have asked for has happened now.
so you know i i keep getting pumped up about all this because even when i've been talking to these
politicians right and they're all at very different stages of their journey here and some of them come
in and they're basically you know there to talk to you to tell you how wrong you are and how they
need to fight against this and then other ones realize that it doesn't necessarily need to be at
odds with the u.s at all like it can be complimentary it can be a hedge for the united
It doesn't need to be the core of what the United States is trying to build on because the United States right now has the reserve currency.
What you're doing is you're protecting against a future where you might not.
And they're starting to see that, that it's not necessarily an either or.
It's not like Bitcoin has to win at the expense of the U.S. dollar.
That's not what needs to happen.
And so I just every time I have these conversations, I leave when someone seems like they're starting to get it a little bit more.
and realizing that there's a future that looks pretty bright, even though we're on a bleak path,
where you can integrate something like Bitcoin in and you can bring massive value creation that you
can't see today in our current system. You can't conceptualize it from where we're at.
So, you know, yeah. So anyway, so having a massive amount of capital as a business,
as a strategy, one, they're going to be on the front edge of every request. Anytime someone's
thinking about a service, they've got the pool of capital that these businesses are going to want to
tap into, to utilize, to be able to deploy. So if you're thinking there's anybody out there other
than strategy that sees with pretty good clarity where this is moving, you'd be wrong. That is the
targeted pool of capital. You can't go to the ETF providers for capital like this. You can't come
I'm just deposit this and let you do whatever you want because they've got a whole different
charter around that ETF, that structure for what they can and cannot do.
But a business is different.
An unencumbered business is very, very different.
World's moving so fast and everything's just like catching up.
It's like tape delay.
You've got all of these positive things happened and then humanity needs to get itself in gear
to actually build on top of that.
And like that's,
everybody is building on top
of all of this positive stuff
that has happened.
And it's mind numbing
how many conversations we've had.
People coming to us,
like we're not even going to people.
People are coming to us
with business opportunities
and things that are developing
on the Bitcoin rails
and in the Bitcoin ecosystem
around this environment.
Yeah, it's pretty incredible.
Dan, I want to get you plugged in here.
Maybe let's shift to macro for a few moments so we can get some macro landscape.
Can I jump in there, Mason?
Go ahead.
Yeah, I just have one comment.
It's pretty simple.
Yeah, so Sailor has been posting all these pictures at different banks, and it got me thinking to a quote he had in 2023 where he said,
there's three things that need to happen for Bitcoin to go to $5 million. And two of them
happened in 2024, the Bitcoin spot ETF, and then fair value accounting, the FASB rules.
And the third one, which he's now actively predicting that's going to happen next year,
is banks custodian and lending Bitcoin. And I think it's really interesting if you look at
just kind of price action this year.
2024 was, you know, parabolic with the catalyst of the ETF
with potentially fair value accounting.
You know, you had a flood of companies coming in as well.
And this year, there has been a lot of, you know, general adoption.
But as for big catalysts, maybe not so much.
And I really think, and he's calling his shot,
and I think he's actively showing this on X,
is he's going to the banks, he's convincing them,
he's having these conversations, and he's saying,
it's happening, it's going to happen next year.
And I think that's huge for a few reasons.
Number one, the incentive to sell Bitcoin, why?
Like, why would you sell it?
So at the point where you can give it to a bank and take a loan, and potentially the banks are fighting you, fighting each other for your Bitcoin, why would you sell it?
Number two, and this is something he said in 2023, which is if you're Apple and you can call up your bank and say, hey, buy $5 billion of Bitcoin and it's simple and it's maybe not, you know, you don't have to go to an exchange or.
A new company that you've never worked with before, like a Coinbase or a Cracking.
Yes.
You don't have to go interface with that company.
no it's it's again it's just another super highway for capital to move into bitcoin and um
yeah i i think it's huge and and sailor in many ways has been prophetic about these these changes
and i i i truly believe like these three things are foundational for the the next decade
and we will build from there.
So I really love that you pulled that clip of capital
because I think we're all starting to think about that.
Like we're seeing them interact with the banks.
We just came from the Middle East.
He's, you know, his thesis for strategies
is more clear than ever
in that they are issuing digital credit
and he's inviting banks to, you know,
do do the the customer facing the the actual interactions and they are kind of just the
the dealer of that digital credit for it to be implemented in in many ways and it's not only
banks it's it's stable coins it's crypto exchanges etc so i i mean again it's it's more clear than
ever they're they're in a stronger position than ever yet sentiment is at all time lows
And it's simply because Bitcoin has just been in this consolidation range.
Frankly, not much has happened other than positive catalysts.
I will say it's a little weird seeing the disconnect between all the work that's happening behind Bitcoin and the layers being built above it.
So you had Bitcoin, you've got digital credit that's come out.
Now you've got layers being built on top of digital credit.
And so, you know, sitting in the seats within organizations, you know, like many of us are, you hear those conversations.
You're hearing about the businesses that are being built.
You're hearing the ideas people are coming up with for how to utilize this as a real business idea that has real potential for scale.
And so when you go on to X and you see a lot of, you know, doomsday posting and you got a lot of that going on, but you're watching the economy get built behind the scenes.
it puts you in this weird spot almost where there's this total disconnect between what
you're seeing in your day to day. And you're going, listen, price doesn't always reflect
value, right? I can't remember, was it Munger or one of those guys who said all that price
tells you is the price, right? It doesn't necessarily tell you the value all the time.
I think that's where we're at right now. Obviously, things got incredibly euphoric
at one point. We had our blow off top. Probably the only thing that had a full cycle this time
was the treasury space, right? Bitcoin didn't get its massive blow off top here, but the treasury
space seemed to have, but now it's gone the other way. And I think people are discounting
the amount of capital and the amount of man hours that are being put into building industry around
this, which is going to be incredibly important, right? This is that next level of applications
that are getting built on top of all this infrastructure. And it's still incredibly
new infrastructure, right? Bitcoin was the base layer of all this digital credit. There's only
three issuers of digital credit, only two public issuers of digital credit. And so that is still
scaling out. And just the fact of the structure of that security gives you other optionality for
how you're going to be able to utilize this. But now you're hearing everyone building on top of
that layer and how they can utilize digital credit and bring really unique structures out
into the market and serve different industries. And so you see what happens with everyone who's
just focusing on the equities market right now and getting really bummed out, which I get,
right? We all think the prices should be way higher than that. This is one of those
massive disconnects in value, probably one of the largest disconnects in value that I've probably
seen personally in a while. But on the other side, you're going, but this, like all of this
is happening right now. It's all being built. And it's going to take a little bit of time for this to
make it out there and start to scale. But when it does, the areas that it's plugging into the
financial system has massive, massive unlocks for capital that can flow into this. And so to me,
it gives me a huge amount of confidence to just be willing to sit and wait on my personal
investments right like i i can see what this potentially looks like in five years which is
really where i'm looking out to and i don't see a scenario where this doesn't run what you are
learning is some structures are better than others and i think the market's learning that and even
the companies are learning that and you started to see that recently where you're starting to see
some of the breaks with the maturity risk that can be put onto a lot of these balance sheets
You're starting to see that. And so I think that anyone new that comes into this or anyone who scales or anyone who sheds their maturity based debt products is going to be shifting over likely into this perpetual preferred market just because that gives you an enormous amount of operating flexibility without that bullet maturity pressure that people are going to be watching for.
because I think you're even going to start hearing that noise kick up on strategy soon,
even though it's so immaterial to that balance sheet. Right. What was it? 8.2 billion,
something like that, Jeff. But right now, only one of those is beyond the conversion price.
And that conversion price is like 140. What is it? 149.77. So they're in striking range of having
all of those be below the conversion prices. Now it's completely immaterial because you've seen
how much capital they're raising in a week, right?
It's not a problem, but it creates noise and noise gets loud.
We've seen that.
And so I'm not thinking that that's not going to become another one of these topics that
becomes really noisy once again, as soon as you start, if things don't turn around,
people will start focusing on the fact that other treasury companies have had issues with
maturities they had to manage.
Strategy still has maturities out there.
And if they can't equitize them, what do they do?
You know, well, it might take them four days to raise the money to pay it off, I guess.
but like they'll be fine, right?
They're going to be okay.
Yeah. The first put date is 21 months from now.
Exactly. Yeah. It's 2027, right?
Yeah. 27, nine.
Yeah.
So one thing interesting you laid out there, Ben,
is that strategy and these other Bitcoin treasury companies
have plugins of capital that they can plug into the economy
in different ways based on how the infrastructure
and everything's being designed around it.
But meanwhile, you look at all of these AI companies
and they're getting all of this investment on a promise.
Now they have to go deliver on the promise.
And it's interesting seeing the bifurcation of these multiples
expanding on a promise of an opportunity.
Not to say that AI isn't incredibly valuable.
It's going to change the way the world works and all this other stuff.
But there seems to be, and Mason, you've probably watched this
on Jordy Visser's podcast.
like we're going to see a shift into hardware.
Like we've almost reached the maximum capacity of what the software can do.
Now we need more chips and hardware and infrastructure.
And in order to do that, we need capital, we need money.
And so we're probably going to see a lot of IPOs in 2026 of these companies
that look coming out to raise capital in order to build the hardware,
build the infrastructure and deliver on these promises.
And there might be a gap in time between when they what they say they're going to do and when it actually can occur because of all of the hardware that needs to be put into place over time.
So his his thesis, which I love Jordy because he's he's like a meta podcast, right?
He listens to all of these podcasts and he provides you an overview of all the podcasts that he listens to.
And so it's like one source for a ton of information.
and uh his he just continues he doesn't bring up strategy all which it which is i think is
fascinating would love to get his take on it but he just hammers on he just hammers on balance sheet
balance sheet balance sheet balance sheets are going to matter in 2026 and it was it was cool
hearing him say that because you know these companies are balance sheet companies they have
money they have capital and people are looking for capital so dan i gotta get you involved let's do
this let's yeah what's cooking here mason were you referencing the natalie burnell um podcast
that he was on he actually just gave his take on strategy recently oh really burnell episode yeah
it was pretty good i mean it's the same layout he thinks like the digital economy if ai is in fact
inflationary which like i think a lot of us believe there was a dylan patel um interview this week
that came out he's essentially arguing that open source models are going to completely take the
market from these kind of big frontier labs And if that the fact the case right like they not going to get a return on these on their investments and multiples will compress across the board And that inflationary environment should theoretically be matched with a deflationary environment should theoretically be matched with a deflationary monetary source
And so like that's where Bitcoin comes in.
And then, you know, we already saw the transfer payments to U.S. soldiers.
I don't know if you guys saw that come out today, but U.S. soldiers all got, I think it was $1,667 or something in payments that are already being shipped to all U.S. soldiers.
So you're starting to see transfer payments back into the works.
I have a couple of charts of quantitative easing.
This is QE5, which started last Friday.
So the thesis around monetary policy and fiscal policy continues to be exactly the same.
And we've been in a period of tightening.
So, yeah, I'll show you my screen, Jeff.
That's cool.
I have a couple of docs I want to.
Throw it up.
And I think, you know, we should all talk on this doc a little bit.
I'll just give an overview.
Can you zoom in a bit?
Yeah.
Expand.
Enhance.
That's going to do.
There we go.
So the quote is a Hal Finney quote from Bitcoin Talk Forum.
Actually, there's a very good reason for Bitcoin-backed banks to exist,
issuing their own digital cash currency redeemable for Bitcoins.
Bitcoin itself cannot scale to every single financial transaction in the world,
be broadcast to everyone, including in the blockchain.
There needs to be a secondary level of payment systems,
which is lighter weight and more efficient.
Likewise, the timing for Bitcoin transactions to finalize
will be impractical for medium to large value purchases.
Bitcoin-backed banks will solve the problem.
They can work like banks did before nationalization of currency.
Different banks can have different policies,
some more aggressive, some more conservative, think leverage ratios. Some would be fractional
reserve while others may be a hundred percent Bitcoin backed. Right now we're, you know,
we're actually, if we're not fractional reserve, we're less than a hundred percent backing.
20% of, yeah, not even one-to-one. Interest rates may vary. This is, I mean,
this sentence in itself is quite interesting. You look at the rate on SATA versus stretch,
right interest rates may vary cash from some banks may trade at a discount to that from others based
on the collateral they hold essentially um i believe that this will be the ultimate fate of
bitcoin to be high powered money this was used in sailor speech at bitcoin mana that serves as
a reserve currency for banks that issue their own digital cash most bitcoin transactions will occur
between banks think atm issuance buying of bitcoin to settle net transfers bitcoin transactions by
private individuals will be as rare as well. Bitcoin-based purchases are today.
So, I mean, this I think is an uncanny
relative to exactly what's going on in the market right now, right?
This idea of cash issued by banks is effectively what Saylor has created and what you guys have
created with these kind of digital credit stabilized, you know, floating interest rate
notes preferred products so love to get your take there guys
yeah absolutely and the so effectively what we're seeing is that the like strategy is issuing
digital credit and digital credit can be almost effectively the engine that powers a a stable
like a high yield money supply. And that's what, uh, that's what the sailor had talked about on
stage of Bitcoin men. I think it's a really fascinating concept. Like, um, right now,
for example, stretch has a volatility of something like seven. So it's difficult if you wanted to use
it in payments because there's volatility. Okay. Well, it also has a 10.75% yield, which is so much
better than anything else in the market. I've got room. I've got like excess yield where I can
take some of that yield off the top and manage the risk associated with stabilizing the volatility.
just effectively what strategy is doing with Bitcoin, you know, taking a 50 vol asset and
turning it into a seven vol asset with digital credit. Somebody can take digital credit and turn
it from a seven vol asset into a zero vol asset. And that could be done with a large balance sheet
from an institutional bank. This is the iPhone moment, right? This is, you have an iPhone and
you have an application on your iPhone. You have Venmo, you have PayPal, you have Instagram.
These are all applications that were built on a platform. Digital credit is a platform
that can be built upon. And I think that's kind of what's come through here with this quote from
Hal Finney, but also what it was very clear in what strategy and Saylor were presenting in Bitcoin
a minute totally agree yeah i mean i have a little bit of a different perspective because
i do see a world in which um people are transacting peer-to-peer with layer twos like
the lightning what lightning network but um yeah i i mean i i i see what i see these
preferred their Bitcoin-backed debt as just a way of easing people into the benefits of Bitcoin
and stripping the volatility and allowing very smart companies who want Bitcoin to
execute this trade at scale, which is short fiat, long Bitcoin.
So I think it's interesting. And today, Dan and I were talking about the end game of like, if you believe in Bitcoin backed debt, why would you ever buy a treasury?
What happens there? But I think at this point right now, they're not even in the same market.
I think sailors stated that what Bitcoin backed debt is competing against is junk bonds or private credit or just shitty corporate bonds at this point.
Yeah, high yield credit, which is a bit different than being like a transactional layer.
And I really like this slide and I screenshotted this.
And this is something that I think would be discussed at a bank, right?
If you've got a company that's got a very large balance sheet, you can start to offer
very attractive savings products that are powered by digital credit.
So on the left-hand side, you see the asset side, right?
You've got the orange bar, which is digital credit.
You've got a currency, so that red block, let's just assume that's a money market fund.
And then you've got a cash reserve, something that sits on top of it.
So if your liabilities are over on the right-hand side, that green bar, you've got some excess
buffer where you can mitigate the volatility of the digital credit instruments.
I think they're going to try to get that volatility as possible, and maybe he'll be successful
in that.
But I think that there's going to need to be some risk taking that occurs behind the scenes to offer attractive products.
So for example, I have a bank account.
The current rate on my savings in my bank account is like 0.01%.
A bank can now offer me 4% if they have some infrastructure like this.
They can now offer me just greater than they can offer me to, uh, if they offered me, if
a bank offered me for, maybe I'd move my savings.
Um, or, you know, I believe in stretch, so I'm fine with that.
But, you know, if you interface with JP Morgan and all of a sudden they come out and they're
offering 4%, uh, 4% savings account.
And they have some infrastructure that's sitting behind it and they're taking on the risk of
delivering you that 4%, but they understand that stretch is going to give them 10 points,
you know, 10.75. They got a buffer with the currency, the money market, the money market
fund, and they got a cash reserve on top of that. They're fine because they have a buffer in that
risk that they're taking. So I think this is a very attractive opportunity to
offer a high powered savings account backed by some of this stuff.
Yeah, I think he's swinging for the big idea, obviously, right? When he was pitching this at
MENA, he had the big idea, the biggest, bigger, biggest, bigger idea and the biggest idea. And
this was the biggest idea. And I think it is because he's, he's targeting this effectively
on a nation state level, right? He's not suggesting that a community bank go try to put the structure
in place and offer bank accounts, right? He's trying to say, listen, for, we'll just use the
UAE as the example here, right? So when he's out here talking to Abu Dhabi, he's going, you guys
have control of a country. I don't have control of a country. You have a bank that you own. I don't
have a bank that I own. You have influence over the regulations and the policies within your country.
Great. You have a sovereign wealth fund for your country. Great. With that recipe, you can build
this model. You can build the fund within your borders that backs this idea for a digital bank.
And it's a really massive idea that he threw out there. And it is unique, I think, to that region
largely, because I don't think a lot of other countries have that type of control. But that
That being said, this type of a model that he's displaying here is going to funnel down
to smaller applications.
Like one of the things that I've-
Hundreds, hundreds, thousands.
Like the state level is thinking about how you can work digital credit into revenue bonds
and start finding ways to generate additional capital for the state where you can now offset
things like property taxes.
You can do property tax cuts, but you can offset that revenue with these revenue bonds
where maybe you're paying seven and a half, you're getting 10 and a half on a blend and you've got a
1% cost and you're collecting the net revenue out of that spread at the state level and continuing
to fill the coffers, right? Like there's ideas for how you can integrate these and that's just
one, but there's a ton of ideas. And so this digital credit layer on top of this, when you
strip out, you know, the volatility and a lot of the risk profile opens up a huge amount of
applications, people will be more comfortable implementing on a short timeframe. Yeah.
And ultimately, Bitcoin will become a part of all of this, right, natively.
But in the early days, it's a lot easier to go sell a committee using securities than it is this commodity that they're unfamiliar with.
They all understand what a fixed income product is.
Totally.
Right. That makes sense to them.
They can underwrite the risk on the company.
You still have to underwrite, you know, the Bitcoin risk at the balance sheet level.
But if the state was going to do something like this, they're effectively creating their own policies for the strength the company would need to be at in order to be included in something like a revenue bond at a state level, where they would say the company would have to be three to one over collateralized, blah, blah, blah.
Right.
But all the whatever conditions you want so they can have control.
So there's a huge amount of applications that you're going to be able to bring to market with this.
and the one that sailor pitched, which is effectively, Hey, you want to recreate,
you know, the Swiss banking system in a digital age. Here's a way that you can do that. And you
can attract capital, you know, from sovereigns, from massive corporations, from high net worth
individuals, because you'll be able to offer them 8% everywhere else. They're going to get
sub five. Right. And that's a massive idea to attract trillions of dollars of capital into your
borders. Yeah. Huge. And this, this, I, this idea is so massive and you said maybe a community bank's
not going to do it, but why not? Like a community bank could, could also run some similar type
infrastructure and the, the, the people that integrate this stuff are going to succeed and
prosper more than their peers. And then the question is going to be like, well, why are,
why are those companies prospering more than my why is insurance company a you know running a
95 combined ratio when all the other insurance companies are running a 101
what are they doing like we all have the same underwriting algorithms like it's the balance
sheet that's performing better okay so what are they doing differently for all 80 20 bonds and
equities. It's like, well, we actually have this high performance digital credit on our balance
sheet. And that success starts to snowball and it gets integrated in many places. And I think it's
going to take some time, but there might be infrastructure behind the scenes in the future
where we don't even know this stuff is plugged in. Yeah. I think the limitation that you see
within the U.S. when you're talking about is that they would need to relax
the requirements for how much you're allowed to hold on the balance sheet.
So like right now, it's an incredibly small percentage that a bank would be able to hold
in these types of equities. Unrated. And so you can't, yeah. And so you can't
really get that full benefit. Yeah, 100%. Having even like a, say you had a five or a 10%
position, maybe it's only aligned to one specific product, right? They might be able to charge a
higher annual fee on this type of account because we're going to give you a higher yield because
that's the one that's tied to this asset blah blah blah but so i think there will be ways to do it
but those types of regulations would need to be removed or relaxed first yeah i think that would
be the main hurdle and it's not a big one but i think there's going to be a huge amount particularly
given the weakness that we had you know within recent memory in the banking system even though
it was a while ago, you know, people are going to be hesitant to relax regulations on banks,
particularly when it comes to opening up and allowing, you know, Bitcoin or Bitcoin derivatives
to make its way in there. Have you heard of mortgage-backed securities? Yeah, we're doing it
with Bitcoin. No income, no job approved. You know, it's close. Do you guys see the Besson quote
from today. These 2008, 2009, 2010 financial rules were too tight. They hamstrung the American
financial system. It was time for a change. We're going to be safe, smart, and sound
in terms of our deregulation.
but we we have to take the financial system out of the straight jacket this substantial increase
in private credit which is outside of the regulated banking system that tells me the
regulation regulated system is too constrained so they're doing exactly as you said
i think training wheels wow let it spin let it go
what yeah something i was thinking about was you know we've had conversations about what are the
the company is most likely to add Bitcoin to their balance sheet or go on a Bitcoin standard.
And it's these founder-led majority stakeholder companies. And the same thing is true with
countries, right? If you have a majority shareholder country or some kind of monarchy,
they can implement this so much faster and without the bureaucratic headache or red tape that
otherwise would be there and if they do do this the the first mover advantage like sailor is
absolutely right if they listen to him they will be set up for you know it will be the next global
financial head hub generational reigns yeah like for for centuries yes yeah everybody will want to
to do business there, it'll be the Switzerland of the new world. And I think Bahrain is already
kind of treated like the Switzerland of the new world. A lot of the UAE companies set up in Bahrain
because they're like a little bit more flexible and a little bit easier to do business there.
So, you know, it doesn't take much. And just knowing that there's all of these regulatory
hurdles in the way elsewhere, like in the United States, like these companies, these countries can
get so far ahead so quickly. Yeah. Oh man. These are really big ideas. And meanwhile, you know,
Ben's having conversations with somebody that's like, how do I buy a Bitcoin? You know, it's like,
how much time do you have? I need to update you of like how far along this entire industry is.
It's like a $2 trillion industry, but you know, there's all this other stuff that's happened in
the last two years and you should probably be aware of all of it and here's where we're at.
It's really interesting though and I am not a politics guy right and I'm sure that comes across
when I'm talking to some of these guys that I've got to speak on like what's going on but
when you're having those conversations it's an interesting balance because you're really
balancing the desire for sovereignty at the individual level and the ability to protect
yourself and not have them come after you because you choose this asset you choose to hold it this
way right so there's one aspect where you want to say what i really need from you is to get out of
the way right just don't be an adversary that would be enough in a lot of states don't become
an adversary but then the second layer is you've got to start thinking creatively about how in their
position how does this benefit them and the agenda that they're trying to push forward right how can
can you integrate some of these solutions where it becomes a positive output or impact at the state
level, at the federal level, where it puts them on a trajectory where they can make some real change,
which is why when you find ways where you can potentially generate additional state-level
revenue, that has a long-term compounding ripple effect if they can pull it off. And so you can
kind of help to paint a vision for why incorporating this and taking the bold move to be one of the
first movers to try to do something novel and unique on the back of an emerging but not small
industry, right? This is still a $1.8 trillion asset right now, right? It's hardly this obscure
thing anymore. You know, some of these politicians that are really looking for ways to make change
and to nudge the course in a different direction, because states have the same problem a lot of
individuals do. States don't control the currency. So they're the recipient of the outcome of the
monetary policy. So they also have to look at ways to protect. And what you're trying to do
is come up with as many ways as possible to make sure that value and wealth is retained within your
state. You don't want capital flight. You want companies to want to domicile there. You want to
bring products that you can bring that generate the revenue that the state needs to do the
infrastructure projects to make it a desirable place to live. They're looking for a lot of those
solutions. And so you can't just go hit them over the head with, you know, government's bad
and the Fed, right? Like that, that's not the way to talk to these guys. You've got to,
you've got to work Bitcoin in as productive solutions that they can grasp. They could see
a tangible benefit to, and then ultimately they can stamp their name to as someone who pushed
something novel forward that made a difference. Yeah. You don't need to teach them how to split
the atom no you just need to teach him how to plug in i got two hours with him i'm not gonna
you know walk through setting up the multi-sig and you know like no it's not gonna happen
right right it's tricky this is complex stuff and i mean
yeah especially you see if if you if you just think everything's crypto you just type in crypto
and you see the DGENs online that are, you know, max leveraging on hyper liquid at 50 X and getting
liquidated. And, you know, all of the videos of people wanting to throw themselves off the
balcony is what gets all the views. So you're like, it's easy to get lost in crypto and say,
like, this is just bad. Like, I don't, I don't want to do any of this, but the Bitcoin conversation
is fundamentally different. Yeah. But I think you got to look at the asset and you have to
acknowledge this is kind of v1 of how it enters the markets and the first thing that's always
going to happen in an asset like that is who's going to show up the trading firms right because
it's not big enough that it's not susceptible to being moved around with large amounts of capital
it's still got the adoption curve in front of it so you've got this long growth trajectory so it
gives them this avenue to trade it was the same thing that happened with the convertible bonds
with strategy and how all of a sudden those were you know the largest convertible bonds being
issued and they were the ones that were the most competitive with the best terms that the company
was able to get was because it was a unique and novel structure on the back of a really volatile
asset. Volatility is really valuable from a trader's seat. And because of that, they're going
to use that volatility as much as they can. And I think now you're seeing it get almost overused
at this point. I think there's so many people harvesting volatility right now that it's just
sort of throw in a wet blanket over top of it. But as that volatility starts to draw down on a
temporary period of time, the incentive shifts, and that's no longer the trade, and that'll take
that pressure off of it. And then I think you see Bitcoin reset higher again. But you're in this
first phase where when people look at it, they go, is the real utility of this asset that it's
great for trading right now? And you go, in the early days, kind of, when you're getting into the
traditional financial markets. That's what most of the capital is looking to do. It's looking for a
home to generate returns. And when Bitcoin made its way to Wall Street, their eyes lit up because
it moves like crazy. They can do all kinds of trades. I'm sure there's all kinds of shenanigans
to nudge price and incentivize it. And we see all of a sudden you've got one week where
now Zcash is the hedge against Bitcoin for some weird reason. And then one week later,
You've never heard about Zcash again, right?
Like these narratives come out.
And so it gets caught in that environment for a little bit, but then it reaches the escape
velocity because you start to create these products that are more broadly applicable,
that are getting into the credit markets that become more systemic.
And then it starts to really ingrain the asset and the derivatives around the asset into
the economy.
And that's a massive shift.
You know, that's the zero to one moment for an asset like Bitcoin.
And I think you're starting to see that. And I think in people's mind, when they start to understand these types of products and these types of services that are going to get built around them, that's when it starts to become real to them. Because I think right now they just see Bitcoin and then the next word in their mind is speculative.
right it's a speculative asset everyone told you that forever right people just speculate on it it's
a get rich quick scheme you know like that was the narrative that was out there forever and now
you're starting to see structured products tailor-made to solve problems real people have
you know what problem every person has the ability to make more money and if i've got idle money and
I can park idle money in something yielding 10% or 12% or whatever it is versus the 2%
and I compound that difference out over 10 years, that's a massive difference in position
at the end of 10 years.
So like now you're taking, yes, that volatility is really attractive and it still can be used
for trading and the big institutions can continue to use it.
But now we can harness it a different way where it becomes really applicable to you
as someone who's managing a personal, your personal treasury, your corporate treasury,
whatever it may be, it's starting to evolve. And that's when you're going to start to see it
really get ingrained in the system. People are going to start to understand that there's value
to it beyond what they've heard about people, you know, YOLOing their weekly paycheck and
things trying to get rich in the crypto ecosystem. Yeah, there's... Go ahead, Mason, you got something?
I was wondering if Dan had anything else.
We kind of got derailed.
No, I think that was a good convo.
One other thing I want to hit on is,
and I was chatting with my buddy earlier today.
He called me.
He was like, what's going on with MicroStrategy?
And we were talking about valuation concepts of,
at different points in time, it's high,
at different points in time, it's low.
And he actually runs his own small business.
And I was talking to him. I'm like, okay,
what if your business was marked to market every day, 24 seven.
And some days your business would be valued at $0.
And he chuckled, like he couldn't stop laughing.
And he's like, absolutely.
Like my business would some days be valued at zero and some days it'd be
valued at a billion. You'd think like, you know,
like your company is going to be around forever. And that,
that concept was a pretty eyeopening for him. You've got this, like,
you've got this infrastructure that's just marked market every day, 24 seven, you know,
like what it's worth, like in the market, what the value of the equity is worth in the market,
but the true value of like the infrastructure and the vehicle and everything that's building,
you can still have a different perspective on what that's valued at into the future.
And I think it's helpful to just continuously compare these to the rest of the market and
everything else that's out there. This is why I continuously look at it every single day.
You know, strategy being what's like the 220th largest company in the US stock market. It's
probably like 500th in the global stock market. And yet they have more Bitcoin than the entire
mag seven combined multiplied by like 30. And so if we really think this is a true store of value
and other companies will start to adopt even small bits of this as a store of value, as banking
infrastructure gets built, et cetera, they're going to have a tough time catching up and storing
their value. If they start to become a little bit more balance sheet companies as opposed to cash
What do you guys think of them buying Bitcoin aggressively down here at these MNOWs?
And I'll preface this by the first chart that Jeff showed of the distribution rate of Bitcoin.
Can you pull it up?
Yeah.
I think it's interesting to look at, right?
Strategy right now has 670,000 Bitcoin, right?
And if you zoom in there, the remaining Bitcoin supply unmind, yeah, in 2028 is 800,000.
So for the rest of eternity, the amount of Bitcoin to be mined is $800,000.
And if I was a betting man, I would guess that strategy has more than $800,000 Bitcoin by then.
And what does that actually mean?
That's what I've been pondering.
But back to my original question, what do you guys think about them adding down here?
I think it a really good tactic because I mean during 2022 and 2023 I was talking to Dylan and he was saying like we all forget that they were hitting the ATM during 2022 and 2023 to buy Bitcoin at like technically sub MNAVs but like it was more complicated because the enterprise value mattered a lot at those lower valuations So like this isn something that you know unheard of But then two like you actually have a lot less MNAV collapse risk down here
So if the market's buying it under a dollar, I'm sorry, under one MNAV, why not?
Like the big institutions, the big players, why not have and there's massive liquidity in the equity.
Why not put a huge bid on Bitcoin while it's low, expand your collateral base?
You know, it's healthy for the Bitcoin market.
Use the liquidity and volume which you've developed in your equity.
And then all the while, expand your capital stack in your collateral base so you can issue more press in the future when and as demand continues to increase.
So I don't think it's detrimental in any way, shape or form, unless like, you know, they were doing it at MNAP's sub 0.9 or something like that.
Yeah, I would agree with that. I'll say that I was a little surprised at the scale.
Me too.
I mean, that definitely caught me off guard.
Somebody tapped me in the shoulder and Abu Dhabi like, hey, strategy is about 10,000 Bitcoin.
I was like, what?
Yeah, yeah.
Where?
10,000.
Someone asked me how, like, they were like, oh, what's your guess? What's your guess?
I was like, maybe like 100. And then it was 10,000. I was like, I feel like an idiot.
Yeah. And now you get the speculation running, right? Like, does he know something? And so he's trying to, to Dan's point, expand that collateral base while it's effectively a neutral raising tactic at the moment, right? Obviously, they still have a positive MNAV from an enterprise value perspective. But I think what a lot of people are focusing in on right now is the market cap relative to the Bitcoin NAV.
But I think Dan probably nailed it.
I think it is more of a play on expanding that collateral base at this point in time while you've got the advantageous prices and you build that balance sheet.
It's going to give you massive capacity to be able to raise through the preps in the future so you can really put the gas on here, particularly if they're having conversations where they're getting massive demand.
And I mean, one thing that can happen with these that I don't think a lot of people really understand in the background for how this stuff can work is people can just reach out to you asking for massive chunks of a security.
Yeah.
It's called a reverse inquiry.
And they just come to you and someone could go to strategy and go, I want a billion dollars of stretch.
And they'll say, you know, what pricing they're willing to take it at.
And strategy can decide yes or no.
and so it's possible that they get a huge amount of demand for that for some massive block
that would have to come into discount which they don't really do right that's not really their
their game i don't think it doesn't seem like they do much of that you're not seeing it shown
in the figure so i think it's just pure atm market price what they're doing but i wouldn't be
surprised if they're starting to see that type of demand come through and if it is then they know
that they're going to have the capacity to issue a significant amount of the prefs.
And so at this phase, they want to scale up.
And then any increase in Bitcoin is going to expand that balance sheet in a massive way
and give them huge capacity to put amplification on.
So it puts them in a better spot here in the future to keep this rolling in a big way.
So that would make sense to me.
And it could also come in on the common equity as well.
Blocks can come in at any time.
Yeah.
And they may not want it to hit the tape.
they wanted to happen behind the scenes, whether it be a block,
dark pools or somebody, you know, wanting to rebalance their,
their exposure in a ETF or something like that.
So yeah, keep going. Go ahead.
So they might've just got the order is what you're saying.
Like that, that abnormally large purchase last week or whenever could have,
could be several. Yeah. It could be, could be four, $250 million block trades.
Right. That makes sense.
Yeah, you might as well take that.
I mean, they've got the volume to support that kind of a raise all the time.
You saw it when they built the reserve, right?
And they only used, what was it?
4.6% of the weekly volume.
And they raised a billion for in a week.
Like they've got that type of volume to just do it as a normal course of business here.
So one thing that's just been continuing to blow my mind and is just the liquidity.
Like this company has been a top 20 publicly traded company since October 30th of 24.
Like that's insane.
The company is ranked 220th largest U.S. company, but they're the 19th largest by volume.
Like make that make sense.
I mean, I think I like that Tom Lee.
I really do like that Tom Lee kind of talking point he's got on repeat now that the MSTR market is, you know, or has been over the past year, the most liquid options market related to Bitcoin in the public.
I think it's because the Ibit options market was just, quite frankly, not liquid whatsoever.
So, you know, a lot of the hedging pressure, especially with the advent of the ATM and the massive ATM issuance, anyone who wanted to hedge aggressively was able to get cheap borrow, right?
It's a very, very cheap borrow on the stock and had an options market that was extremely liquid.
So couple that with all the traders, the Gamma traders, the Delta hedgers.
I mean, it's a playground for anyone looking to interested in Bitcoin's volatility.
So I would say it's structurally important to the Bitcoin ecosystem.
And I like that point that Saylor said at Meno that was like, we'll keep buying or we'll exhaust the sellers by continuing to buy.
It was something along those lines.
We can buy more than you can sell.
yeah but he complaining stops or something like that wasn't that one of his posts yeah yeah yeah
but he's becoming like sign like structurally important right like there will come a point
at some point where like this does flip the whole like if he gets to five percent of the supply and
six percent of supply and like there becomes there comes a point where this is structurally relevant
to the entire bitcoin market and you know he's really leaning on every lever he has so kudos to
I also think from like a sentiment and narrative perspective, buying this much Bitcoin down here from maybe an outsider's perspective who maybe isn't in the weeds.
I think there is something to buying it at these levels, right?
And, you know, I think that post, the buying will commence until the complaining stop.
It is kind of a nod towards that, that they are buying regardless of the price.
And it's not a price thing.
This is accumulation.
I'm not going to let them totally off the hook on a lot of this, because I do also think
there's a downside to the level and frequency of transparency that strategy really set the
trend for.
And the downside to that is it forces an investor base to reflect on new news and new information every single week and try to draw new conclusions every single week.
And that incentivizes short term behavior.
So everyone had kind of got comfortable with the fact with Bitcoin, it's going to go up, it's going to go down.
You got to take a long time horizon on this.
A short outlook is four years.
You should really be looking much further out than that.
You know, people were comfortable with that with Bitcoin.
But now with equities fully capitalized on Bitcoin, they're trying to have pivots happen every week based on whatever the trading is doing that week.
It's incentivizing really short term thinking from an investor community.
Whereas in a traditional company, you get information once a quarter.
That's what you're digesting.
That's when you get the financials.
That's when you see the standing.
So like if strategy, for instance, was doing all this raising throughout the quarter and nobody found out until they released their year-end financials and then all of a sudden you're going, oh my God, look at how much Bitcoin they bought.
And if it's a net positive number, you got a positive yield at the end of it.
I know right now it's a negative yield.
Like you can smooth out a lot of noise and continue to execute there.
But right now what's happened is they've put themselves under a microscope.
And I think that's good.
I think that it brought a level of transparency, but it started to change.
Oh my gosh, I'm just looking at that ramp up. That's crazy.
But it causes a change in the behaviors of investors.
A lot of people are looking for you to make changes based on one week of stock performance
or two weeks of stock performance or one month of stock performance.
And that's not what these companies are structurally built to do.
and if the companies are run well they're here to weather volatility right i mean they're
structured in a way where they're low risk they've got capital to continue the operations they have
sound balance sheets if you don't have yourself in a position where you've taken on unfavorable
debt terms that leaves you with some type of collateral trigger margin requirement or something
like that that causes an issue for you you can ride out these periods and if your thesis is that
Bitcoin is going up over a long period of time, well, then that company that's putting on a long
term carry trade, Bitcoin relative to the US dollar is going to win over a long period of time.
But you have to be willing to allocate for that. You know, I've even seen plenty of criticism for
us around the strategy stuff going, how can you still be bullish? It's way down. You guys can only
do this because your entry point was so low. And you go, well, yeah, that's a long time ago.
and we've been sitting on it ever since. And so you can ride out these ups and downs because
you're watching the long-term thesis play out and the things that we thought were going to happen
have started to happen now. And you're starting to see like, oh my God, I don't think people are
understanding what's developing in front of them. They're just focused on the value of that asset.
They're ignoring the entire ecosystem that's being built up around this. The other businesses
that are being built that are going to be dependent on that as the core infrastructure
port.
Like, I think they're missing that completely.
And they're just looking at, you know, how it's trading relative to its MNAV.
And I think in a year or two, that's going to be a totally irrelevant conversation for
the companies that managed to emerge into something bigger than what the industry has
been right now.
Yeah.
You know, I've been talking about MNAV for years now.
It might be your fault.
I know. I think it might be my fault, which, damn it. Because the main reason I looked at MNAV was to try to compare it to other companies in the equity world.
I think you were comparing it to, or it came around with the ETFs, didn't it? Wasn't that when it really got popular?
Yeah, around the ETFs, it got popular. But also, it was interesting for me to compare it to price-to-book ratios of other top 10. When I saw strategy, I immediately thought, this company is going to be the largest company on the planet back when they held 100,000 Bitcoin.
You know, and here they are. And all this infrastructure is being built. I still have that same thought. Like, I think they're going to be the largest company on the planet. And like, how do you value that? Like, how do you value the company that has the most money? And if all equities are forward looking, there's got to be some sort of multiple that you put on top of it.
but you can only compare that multiple relative to other equities in the market.
At the end of the day, the only thing that you can compare that's homogenous is market cap.
All of the other companies in the entire market have completely different financial structures,
different cash flow, different revenue, different industries, different businesses,
different leaders, and it's all just so different.
so then you start to think about well market cap is really the only way to compare like
the the mag 7 or the the elite companies in the world you're like okay is nvidia worth more than
apple yeah sure you know like make the multiples make sense it's you can't compare you can look at
all the multiples on the entire industry and see like how that number is kind of trending but
like you can't compare any of this other stuff with the exception of market cap
That's why it doesn't really bother me at the moment. We're in the infancy of this entire sector of the market. Most of these companies haven't really achieved real scale yet, been able to really get products out there deployed that they're able to scale their business alongside of.
So outside of strategy, strategy is kind of the one that's far and away ahead of everyone.
I don't think there's probably a way to catch them, although a lot will all be trying.
But when you look at where this is evolving to and everything being built around it,
like there a mass amount of value creation that going to come out of these corporate structures backed by Bitcoin that I don think is getting much appreciation or attention in the broader market We live in a tiny echo chamber by the way
What's happening on X, when you watch your X feed, you probably see 20 people talking on there most
of the time. Right. So it's like this small echo chamber that we're all plugged into that's just
hyper focused on this one obscure sector in the market that most people have no idea even exists.
the number of people i've talked to just this week and i'm like yeah well you know like strategy they
got like 70 billion dollars worth of bitcoin i've never heard of it i'm like oh my gosh like it's
all i've heard about for a couple years now like it's that's the world we live in so within that
it also means that you likely have a fairly small investor base that's being active out here really
you're seeing a huge amount of institutional capital that's found these plays that understands
the volatility around these plays and they're doing the vast majority of the trading out there
you know we used to have this view that we thought in the early days that strategy was likely
primarily driven by retail investors i have a totally different perspective on that now
i don't think that's the case look at the volumes there's just no way even back then it's three
billion dollars trading a day that's not that's not retail no no and so what's happening you know
with the retail market trading on working with the derivatives and buying the spot like maybe on the
super micro caps when they come out initially maybe but even then right even then it's a huge
amount of institutional capital they were the participants and all the capital raises so they
were the major holders in these equities as soon as they hit the public markets it was like all
institutional capital and even on the rotation of that capital you get a lot of institutions that
come in immediately after one of those events and they buy when things are at depressed levels and
they start participating in that market now they've got the ability to use the volatility
like it's a it's a different type of investor than we all originally thought it was which can only
come with you know being able to kind of see behind the scenes and watch more of these play out
from inception right with strategy they were a little ways down the path before they started
getting any real coverage but now we're looking at what happens if you organically stand one of
these up yeah what does that structure look like who are the market participants in what size are
they playing what type of terms are they looking for right and then you see after the fact when
it's just trading in a steady state who's still in there you start seeing those 13 f's come out
you start to see who's holding all of these equities who's the market participants here and
in what size and you quickly realize there's a lot of institutional capital that realizes there's
value here, even in the small place. The volatility is valuable to them, whether it's up or down,
right? They've got strategies for both directions and they're going to continue playing that game
because this is a very unique market with equities that are specifically structured
to have more volatility than Bitcoin itself, which means it is a trader's playground.
You can have all the algorithms bouncing between all of the prefs and the small Bitcoin treasury
companies and strategy and Bitcoin and the options market and hedging in dynamically in all these
different locations. You could just have a million pair trades you can put on now. There's ARBs
between all the different products you can put on now. This is becoming a pretty big ecosystem.
Yeah, absolutely. Go ahead, Mason. I'm going to pull up a chart.
Yeah, I had, yeah, Ben, what you're really speaking to, or at least the part about strategies, transparency, leading to investors to continuously thinking about their investment, maybe re-evaluating.
It has its pros. It has its cons. But what I've been really thinking about is we're kind of like the first generation of social media native investors, right? I think that epoch in history started with the Wall Street Bets, Reddit, which Jeff was a part of, I was a part of in some ways. I'm sure Ben was in there.
Dan Hillary, I don't know, maybe driving a boat at that point.
But what I've been really thinking about is social media.
And a really good quote I heard today was, we now have freedom of speech, but we might not have freedom of reach.
Right. And what that's really talking about is the algorithm, the the bubbles in which we live in.
And Ben was referencing the the bubble in which we live in.
But on social media, you really create your own bubble in that it's showing you the things that it thinks is going to make you stay there the longest.
And usually that's negativity. And usually that's, that's things that, you know, instinctually as humans, it makes us fearful, and we're more likely to react to it. It's like if you get a, if someone says something mean about you, right, you're way more likely to focus on that than any sort of compliment.
So the algorithms really deeply want to scare us.
And when you mix that with a mission of long-term investing, of holding something for 10 decades, in some ways, you're making it unnecessarily hard, right?
And in some ways, it might not be sustainable.
So that's something I've really been starting to ponder.
I've had it on three separate occasions that I can specifically remember where I'd went out
you know did my old diligence thing came up with a thesis that I thought was pretty rock solid
made an allocation and then I started seeing noise on social media about the stocks
and I exited those positions because it started to just you know give me too much doubt about it
Like, you know, maybe I'm blatantly missing something.
I don't know what it is, but like, I'm just going to go on the sidelines for now.
And then within three months, the thesis played out entirely.
And I was sitting on the sidelines because I let noise from, you know, anonymous accounts
on the internet, you know, shake me out of that position, which I never should have.
Right.
I had a thesis that was a longer term thesis.
I was willing to sit on it until I got on the internet and just started reading all these
panic comments.
and you quickly realize that if you're going to be effective you've got to be able to detach
from that to your point it is the negativity that gets the engagement and that gets it amplified
you know i even see it with the personal stuff right if someone wants to go out and
chirp me about something right that that's what gets bubbled to the top of the algorithm and you
got to go you know like mute whatever's chirping you so that you don't waste your time chasing you
mean comments on the internet around when you got things to do but like that's what bubbles up in the
algorithm so you've got to learn the difference between being willing to do your own due diligence
and form a thesis that you're willing to stick to long term and in doing that you can use social
media as a great tool there's a ton of research that happens out there sometimes the accounts are
hard to find but you can find them after a while i mean dan's found a ton of these you know obscure
small accounts that are putting out pretty good information that you know he reshares every once
in a while and so if you use social media like a tool and not necessarily as a i'll call it a
conviction community yeah all right you can't do that because everyone's starting from a different
position than you are they've got different capital levels than you have they're putting
a different percentage in each trade right they've got different cash flow than you have and so like
Their ability to get nervous about something is different than yours, but it's every bit as loud
because you don't know. You don't know if that person has $300 in something or they've got 3
million or 5 million. How many people have you met from Twitter that are making just these massive
investments and things that you would never guess? You don't know. And so you can't filter and weight
those responses because you don't know what that individual's circumstance is.
So I view it as a great way to fast track research into equities. But once I decide to make an
investment, I'm basically shutting it off. I'll mute the tickers for things that I own.
I'm not going to follow it because I don't want that noise. I've got a thesis. I'll watch the
financials myself and keep an eye on things that are happening. That I'm willing to do. That's a
part of me managing my portfolio. I can use it in the exploratory phase, but I can't keep and build
my conviction around that. That doesn't work because then you abandon your thesis much too
early. The reason why we've all been able to, for the most part, hold our strategy positions from
way back in the day is the thesis is still playing out that we all built on. Over time,
this is a learned and practiced skill, the social media thing, right? Yeah. Nothing's changed. Oh,
man, it goes through waves, right? Sometimes it's great and people like you and they like to,
you know, pat you on the back. And then the next day, oh my gosh, right? It turns on a dime. And
the biggest thing that I think that this group I would give a lot of credit to is the consistency
to just continue showing up through every phase of that market cycle all the time, because the
thesis still hasn't fully played out for us the way we've been talking about it now for a couple
of years. And that's still developing. And so I hear all the noise. I watch the market price. I
don't love when my portfolio goes way down during these. It sucks, right? It's not great. But the
thesis is still playing out and everything I could have possibly hoped to happen to open up the gates
to allow this to truly materialize and generate a mass amount of value, that's still in front of me,
not behind me. Yeah. Which is why I'm not going to get shaken out of these, right? People can be
upset with the model and say that they don't like them. They have a different thesis than I do.
My thesis is I want to collect this capital. Like my life depends on it because I believe that this
is playing a significant role in the future of finance. And I want to be a part of shaping that.
And to do that, you've got to be able to block out noise and just execute out strategies for a
long period of time. Sometimes that means sitting and doing nothing. And sometimes that means moving
incredibly fast. And it's all just dependent on where you're at in any given week and where your
company stands. I've got to stop you right there because this is a perfect place to say that we
have a True North Insight event happening in February at Strategy World, Monday, February 23rd.
if you want to come out and come hang out with us and talk about strategy we this is going to be an
exclusive event where we plan to have a lot of fun this will be very interactive about four hours
of content and interaction plus a networking event that will happen in the evening where there will
be food and drinks and everything so please if you're if you're interested in in a intimate event
where you get to interact with us and our team and likely some of the strategy folks i think we'll
have some special guests there as well. And it will be a great time and we'll have a great night
and look forward to having people there. So if you are interested, this is on Luma. We will put the
link in the chat. It is also available on the MSTR True North website. If you go on events,
there's an events tab and you can see MSTR True North Vegas in partnership with Strategy World
2026 and there's all of the links down there so there are different tiers of tickets there are
only four left of the first tier and we will move on to the second couple of tiers here over the next
few tickets that are sold so boom come join us i'll kick it over to mason back to you yeah last
thing to add is um the the financial incentive by large institutions or anyone in the market to
scare the shit out of retail so high via via bots via whatever and in the world of ai the
the marginal cost of this is zero right you can send a million different negative messages
all the time. And it's really effective. So I think it's just something you have to be
conscious of. Yeah. I'm going to share a couple more. 100% agree with you, Mason. This is exactly
what happened with Wall Street bets with the GME craziness. It was very clear as that blew up,
like the wall street bets thread went from 600 000 people to 10 million people in like two days
and it was very clear that all these bots were coming in with brand new accounts um and
bear posting on everything it was it was crazy how quickly it was infiltrated Um once they recognized how how in deep of a position that they were So that can continue to
happen. That will continue. We've seen it. Like we've seen the reason my posts have verified
users only on them still. Right. Cause we went through that weird period where there was,
It was brutal. It was disgusting.
And because we had just entered the public markets,
we were apparently one of the tickers that they were spinning up around.
It would just be hundreds of them.
And it's bear bots, but then it's also threat bots.
Yeah, like literal death threats.
Death threat bot.
Yeah.
There's tons of them.
Totally.
Yeah, it was a big deal for a couple of weeks.
And it becomes a real issue.
And then there's also, you know, people out there that are, you know, unstable.
I'll say I had some weird experiences, you know, right away when I took the job and had some weird things happen, but won't get into that tonight.
But yeah, it's, it's real.
Like what happens out there is real.
You don't really see it until you're all of a sudden the target of it for a period of time.
And then you go, what is happening?
And you got to find ways to shut that down and minimize it as best you can.
completely agree so let's go back to a couple graphs and think about valuations a little bit
um i i pull up this chart here this is s s p 500 price to book value which is the blue line
and the s p 500 p e ratio which is the green line and i think this is a fascinating perspective
just seeing the divergence here in and guru focus sends me ads all the time uh seeing the
divergence between price to book and the PE ratio. So it's effectively saying the multiple
is increasing over and above the balance sheet, but the earnings, the relative earnings aren't
increasing. The price relative to the earnings is not increasing. Just an interesting phenomenon to
watch play out. You look at 23, 24, there's a lot closer multiple between the PE ratio and the
price to book ratio, but effectively like the strength of the balance sheet. So is this
overheated i have no idea is there going to be a bigger focus towards balance sheet in the future
do these multiples contract on balance sheet multiples who knows but just an interesting
data point to look at the m nav of the entire s p 500 is 5.5 the p e ratio of the s p 500 is 28.8
strategies MNAV is 1.1 and their PE ratio is like, I don't know, six or seven,
something like that. Maybe a little bit less now that Bitcoin's down a bit. So I don't know,
maybe it's like, or maybe it's more, probably maybe it's 10 or something like that, but it's
still significantly lower than the rest of the market. The other thing that I thought is
interesting, I've been looking at some of the smaller Bitcoin treasury companies and I won't
name names. But I was looking at companies that are around $750 million and looking at other
companies around that market cap to look at different balance sheets and different financial
structures of some of these smaller micro or small cap companies and how they compare to some
of the Bitcoin treasury companies, thinking about balance sheet strength and revenue, etc.
And one of the ones that came up here that was just interesting to see is like Krispy Kreme
donut, right? Krispy Kreme donut is a $750 million market cap. And just for fun, I'm like,
let's just look at their balance sheet. Let's see what Krispy Kreme looks like.
And donut MNav. So actually funny enough, their price to book ratio is 1.1. Okay. So you can think
of their MNAV as being 1.1. And so then I was like, okay, that's interesting. You can look at
the total assets. You're like, wow, you've got $2.6 billion of assets, right? Let's do a little
bit of math. You got $2.6 billion of assets and you've got on the liability side, total liabilities,
you've got $1.9 billion of liabilities. Okay. So you've effectively got about $700 million of net
assets which makes sense and then i was like well what what are crispy cream's assets like
i think i got 700 like they what you know what's what is this what is two like crispy cream's
holding 2.6 billion dollars of assets let's dive into this a little bit like what what makes up the
assets sprinkles and so i looked i looked at the financials and this this is um this ended up uh
triggering a analysis into a bunch of these small, small cap companies. And I've got a bone
to pick with most of them, but okay. So this is their 10 Q. This is the most recent quarterly
balance sheet report. So you can see in here, the total assets, $2.6 billion. And you look at their
cash, cash and cash equivalent, 30 million bucks. Okay. So that's their liquid cash,
it's 30 million dollars accounts receivable 53 million dollars okay so you're like okay on line
three you're talking about credit risk you got 30 million dollars of cash you're right now you got
line three 53 million dollars now you got credit risk then you've got inventory of 28 million
dollars it's just sugar uh taxes receivable 19 million prepaid expense 29 million you're like okay
the the current assets is 161 million now where where this gets a little weird is the second part
uh goodwill this is the part that really pissed me off goodwill and other intangible assets
make up 1.5 billion dollars okay let's think about how crazy that is what is goodwill
goodwill is like if you and if you acquire a company and you pay more for that company than
the you know market cap of that company that delta is technically considered goodwill
so that's intangibles it's like brand value or uh you know an email distribution list or
it's something that is not liquid it is an illiquid thing that you can count as an
asset on your balance sheet. Okay. That's crazy. And then you have this other line,
which is other intangibles. What the hell is that? That's $800 million.
What is, you have $800 million of other intangibles that you're counting as an asset
on your balance sheet? Well, that's crazy. And then you've got property and equipment. Okay.
that's valued at $491 million. That's, well, that's not liquid, right? If you wanted to sell
that property, like who's going to buy the, the Krispy Kreme donut shop, like maybe Chick-fil-A
buys half of them. Uh, and then the other half, like maybe they sit vacant, who knows? And then
what about all the, all the equipment? Uh, like do people want all that machinery and infrastructure
to create Krispy Kreme donuts? Like what if Krispy Kreme donuts cause cancer and all of a
The asset side of the balance sheet, the 2.6 billion is actually, if you just pull out the
goodwill and other intangibles, because you're like, this isn't liquid and they're intangible,
the asset side of the balance sheet goes to a billion dollars.
Okay. Now let's go back and look at this, right? You've got total assets. It says 2.6,
but it really should be more like a billion because none of this stuff is liquid.
And the total liabilities are 1.9 billion. You're like, okay, well now that price to book ratio
is way off. It should be negative. The company is trading at a multiple
of some inflated number of goodwill and intangibles on a balance sheet. That number
is just wrong. Maybe not wrong. It's technically right based on the accounting rules.
But you start to rethink what is the value here. You look at the earnings and the earnings are...
okay on top of that krispy kreme has lost 55 550 million dollars in 2025.
like can you do a search for the goodwill and intangibles and see if they itemize those out
and see what's actually in there it's got to be hilarious like brand value yeah there you go yeah
well so are they like acquiring small donut shops at a premium and
rolling them and converting them to crispy crepes i have no idea we'll have to look into this
yeah we can look into it we don't need to do this here i just want to yeah it's uh
it just seems like and i was i was talking with our account accountants about goodwill a little
bit just because I'm just trying to get some history here. Basically, companies should take
an impairment charge. If this is valued too high, you can write it off. You can and you probably
should write it off, but there's incentive to not write it off. Your accounting firm or your auditor
will pretty much agree to whatever you say because they want you as a client and they can continue
to be there. But the point of doing this exercise is just backing up and looking at the actual
balance sheet and looking at the vehicle, like the investment vehicle that exists here with this
company that's worth $750 million. Like why? Why is it worth $750 million? It's worth $750 million
because there are market cap weighted index funds that buy everything.
and so when you start to compare this to companies that hold 750 million dollars of liquid bitcoin
that proposition starts to look a lot more attractive compared to a company that's lost
550 million dollars half the assets on the balance sheet are inflated and all the assets are illiquid
and this isn't the only this isn't the only place another most of these other companies i looked at
a couple of insurance companies and a few other companies. But another really interesting line
item that is generally a large number of the assets on the balance sheet is receivables,
like accounts receivables. And when you think about accounts receivables, it's like, okay, well,
that's credit risk. And a few companies I looked at, they had like 50% of the assets on the balance
sheet are receivables. Okay. Well, who are the receivables from? Are they from retail? Are they
from companies? And they have to take some sort of assumption on the credit risk associated with
getting those receivables in the door. So they are taking a haircut on them. Generally, they're
pretty hot. Like the, uh, the haircut is very small, but there's, there's so much asset value
sitting on like huge balance sheets everywhere that is credit risk that might just be completely
disrupted in the next five years. And that's being accounted for as an asset, even though it's
intangible and it's not actually real and they don't actually have the money, yet it's being
counted as an asset and flows into price to book values, flows into valuations. And like, whereas
the companies that have the Bitcoin on the balance sheet, they have the assets on the balance sheet.
They are real. They are liquid. They're not intangible. The asset itself trades $60 billion
a day. That value proposition is so much better than all this other garbage that has all these
inflated values. And we also only include one asset in those valuation metrics that we're doing.
yeah like strategy's now got 1.4 billion dollars sitting in cash that's not going to be included in
any of the metrics people are looking at right we just look at bitcoin value exactly right
boys i'm getting kind of to take my rope here yeah yeah we're i'm still on abu dhabi time so i
should be asleep um well with that we can end it there and uh i appreciate the time if you're
you're interested in joining us at strategy world, uh, please buy a ticket and come support us.
It will be a good time. I promise. Um, and maybe we'll get some sort of nightclub thing happening
later in the week. I don't know. We'll have some fun down in Vegas. Also, Jeff, we're telling
people to like, and subscribe. Oh yeah. Please like, and subscribe, uh, true North. We've never,
we've never done that before, but wow. We should probably do that at the beginning.
smash that
only subscribers
369 people
on live I guess on YouTube
we're going to have to get Tim to record another video
yeah exactly
well thank you
everybody an hour 56 in
and appreciate the time we'll catch you
probably not next week because that's Christmas
enjoy the holiday if we don't have another one of these
have a happy new year and we will see
you in 2026
awesome
thanks guys
talk soon