Thank you.
SILENT F HISPANIA
Grab that cash flow
we're going to get after it. October, we made it. We're finally in October. Q4. Let's go.
A lot of excitement here. And yeah, can't wait to get into it. So topics for today.
October, off to a hot start. We're going to go into strategy statistics and a little bit about
the preferreds because we saw some nice action there today. Get into some macro. We've got some
of our macro research analyst, Dan and Dan Hillary, both Dan's on stage here today.
Going to get into some macro, talk energy, precious metals, AI and Bitcoin and the convergence
of all of those things.
Talk a little bit about AI productivity, CAMT, corporate alternative minimum tax.
I've got a new series that I'm starting here today called the bad bond of the week.
So we're going to look at just a bad bond and compare it to the strategy perhaps.
I think that'll be a good time.
Bitcoin treasury companies, have we seen the bottom?
And what is the end of Q4 look like? So obviously a lot to talk about here. Everything's moving. I
feel like there's a lot of frenzy happening all over the place and everybody is looking to buy
as much Bitcoin as humanly possible. So yeah, let's get cooking. A lot to talk about. Let me
pull this screen down here. So for those of you, if this is your first time watching True North,
the investment grade Bitcoin podcast, what do we do? We are here every week or as many weeks as
possible to talk about the front edge, the cutting edge of the Bitcoin security landscape. So
everything happening in the securitized world of Bitcoin, we're talking Bitcoin equities,
Bitcoin treasury companies, Bitcoin backed fixed income, how these things compare,
thinking through valuations, thinking about market impacts, and how all this stuff fits together.
So a lot of this is really novel. Many of the people on the screen work in the industry and
have a unique perspective into what's going on behind the scenes.
And I think that's where we add a lot of value to what's happening here.
So yeah, let's get into this.
First off, we've got a word from Tim Kotzman.
Ladies and gentlemen, what you're about to hear may be amazing, but it is not financial
advice.
It's for informational and educational purposes only.
Jeff, back to you.
There we go.
So none of this is financial advice and Tim was just in BTC DC.
He may join us here a few minutes later and give us a rundown of what's happened in DC
just at the front line there.
And then next the, I've got a quick word from our unofficial sponsor.
ATM is safe.
Your banks are safe.
There's enough cash in the financial system and there is an infinite amount of cash at
the Federal Reserve.
An infinite amount of cash at the Federal Reserve.
I have an infinite amount of cash at the Federal Reserve.
Yeah, we totally sold out.
We've got the Federal Reserve as our unofficial sponsor, and we're ready to rip here.
Okay, without further ado, we are going to get into strategy statistics because I think this is good.
We cover this every week, leverage profile, what's happening in the market, and how this has changed over time.
So as of today, the Bitcoin price is at $118,560, somewhere around there.
Bitcoin held, strategy holds $640,031 Bitcoin on the balance sheet.
They've got 75.8, almost $76 billion of assets, $8.2 billion of debt, $6.5 billion of preferred
stock. So if you just take the assets minus the $8.2 billion of debt, you get $67 billion of net
assets. This is a ton of capital, an absolute ton of capital. The net assets on the balance sheet
by itself would be close to top 150 companies in terms of market cap on the planet. So this is just,
It's a ton of money. One of the largest treasuries in the equity market. You think about
the exposure here to the net capital after four years of the preferred dividend payments,
you're still talking about $64 billion. So we've got tons of coverage on the liabilities that
they've got in the balance sheet. You look at just general nominal leverage ratios, taking the sum
of the debt and the preferred stock around a 19.5% leverage ratio. Debt coverage multiple,
this is just taking a pure, the debt, $8.2 billion of debt relative to the 75,
about $76 billion of assets. You've got a debt coverage multiple of 9.2.
In order for the Bitcoin price to be less than the assets on the balance sheet,
or in order for the Bitcoin price, or in order for the assets on MSTR's balance sheet,
to be worth less than the debt and the liabilities on the balance sheet. The price of Bitcoin is to
go down to $23,166 and stay there for an extended period of time before there even
remotely becomes any issue. So about an 80% drawdown would be necessary from here.
So thinking this is a very, very, very healthy balance sheet and continues to be a very healthy
balance sheet. So yeah, it's all exciting. Also, what did, oh, here we go. We just finished Q3.
So Q3 closed yesterday on an earnings per share basis. We think the Q3 estimate earnings per
share is around $10, maybe plus or minus a dollar or two as a function of tax deferred liability
and where that hits the balance sheet. And then obviously the operating business
and any one-off expenses that happen here and there. But what do we know? The last day Bitcoin
has gone from 114,000 to 118,000. So already looking at Q4, strategy is sitting on a $2.4
billion gain on Bitcoin held from Q3. And that would be so far one day through Q4, around a $6.4
dollar earning per share estimate for Q4. Off to a great start. October is hitting. We've got
some guidance from the IRS on corporate alternative minimum tax. So that very one-off piece of FUD
where if a company has more than a billion dollars of net income a year, they have a corporate
alternative minimum tax, which is around 15%. That would apply to any net income that a company
experiences. So that has gone away, which was causing some concern and FUD within the industry
because strategy was sitting on significant, quote unquote, net income from FASB fair value
accounting, yet they were unrealized gains. So the concern was they would have to sell Bitcoin to
pay off the corporate alternative minimum tax, which was a Biden era tax inflation reduction act
measure. So all really positive guidance. Everything seems like all of the roadblocks
are removed. FUD is just getting out of the way. It seems like things are like rare and ready to go.
So yeah. What do we think, guys? How are we feeling? We're bullish. Things feel good. What's
cooking. Dan, I know both Dan's feel some kind of way. You guys, on Monday when we were talking
through everything, you're fired up on energy, you're fired up on precious metals. Things are
ready to rip. What do you think? Okay. Yeah. Well, first, I think we got to take the over-under
on if we're going to break 120 in this live stream here. Ah, that's a great point earlier.
So, I mean, that's the real news. That is the real news. 120 on the live stream. Yes,
or no and then 150 by end of year yeah end of october end of end of 150 end of october you guys
see the log pilot if you overlay the 23 and 24 fractals over the current pricing it gets us right
to about 160 170 180. aps k32 is power law for your cycle a cycle cloud average is like october
november is the sweet spot uh equities markets absolutely ripping no sign of slowing down
copper breaking out gold already had its move i mean literally everything is absolutely perfect
for a move in the next 60 days like everything in my opinion prime culture stock market's ripping
there's a wall of worry right now and cmc exactly you can see fear greeds at 40.
what is going on this is the most bullish setup i've ever seen
government shut down government can't do anything like uh the only more bull shut up was last fall
in the fall before that
it just seems like everything is getting set up dan can you share any of those images those fractals
that you pulled up let's take a look let me go let me go yeah while he's fetching that i do
want to say like the dollars in decline we've got sitting president who's openly saying that that
he wants a weaker dollar um i mean debt surging feds you know compromised in quotes um so i i
think it's just all leading to a debt super or a bitcoin super cycle um we've got yeah i think on
the hurdle rate you guys were chatting about that too yes there's a there's a multi-decade uh decline
in the DXY.
And I'll pull it up here.
And when you put it in log format,
it...
Yeah, you guys are looking at 2008 and 1992,
I believe, for the macro setup.
And then how this one's exponentially greater.
Yeah, you can see it pretty clearly here.
Maybe if I pull...
This is like a structural,
like multi-decade decline in...
In the dollar.
Got it, got it.
Yeah.
Yeah. So this is something that Matt has been watching for the last 15 years in his career as a fixed income guy. He's been watching the dollar and consistently hitting up against resistance and then coming down. And you've got this multi-decade structural decline.
And we're, I think, getting to a point here, looking in the last couple of years, 18 or 21, where effectively the DXY, if it fails to see support here at the 2018 or 2020 bottoms, it could fall drastically.
drastically, like to the 70s, 60s or 70s, thinking about just fundamental support levels.
And that could be very, very similar to some of these large declines that have happened in history.
So like 2001, large decline in the dollar to 1984, large decline in the dollar. And that would be a
mega setup for a super cycle in the price of Bitcoin. And what does a super cycle mean? It's
just, it's up and to the right with very little room or opportunity for like good entry points.
And we talked about looking at the history of Apple, the price of Apple over time experienced
a super cycle from, what was this? It was from 2003. Yeah, here it is. From 2003 to where we are
today, Apple has effectively experienced a super cycle in and of itself. Maybe I can make this a
bit bigger and speak for yourself jeff i would have i would have entered uh call options in the 2008
bottom you would have went really long right here yeah and i would have entered long there
sitting in cash and entered bottom do you guys remember that uh that sailor interview where he
where he calls people who are trading apple in 2011 from like two dollars a share to two dollars
and 30 cents a share he said it's a sign of sign of lesser intelligence sorry honey is in front of
the steamroller for sure jeff i'll throw my screen up here um yeah go ahead
yeah these are so these are the two
two fractals that
Can you see that?
Okay.
Yeah, this is...
So if you believe in sort of a decreasing...
Make it bigger.
If you believe in a decreasing CAGR for Bitcoin from like 50 down to 40 down to 30,
and you extrapolate that average trend out forward,
and then you look at kind of the deviation from that average trend above and below,
you get this kind of overlay.
And so what the cloud represents are the past cycles moved forward and then adjusted for the decreasing CAGR or decreasing volatility of Bitcoin over time.
And the red line is how we've shaped up over the past kind of couple of years relative to the averages.
So the average is represented by this dark blue line here.
And I was looking at this chart and structuring my options call spreads in the hedge fund right for this peak.
And I'm like, I don't know if this is going to hold.
We need to start moving on October 1st.
And today is in fact, October 1st, we start moving.
So this may just be folklore, but we'll see what happens.
It'd be quite remarkable if this continues to hold.
And then I have one more that I think is of interest to people This is more of like a general kind of TA thing seasonality thing but this is the fractal that log pilot did this he kind of man um so this is the current kind of yeah this is the
current price we're sitting on october 1st and these are the two fractals from 23 and 24
overlaid uh from the current move uh which is quite interesting considering those price targets so
What is that put the price? What are we thinking on price targets for end of,
end of the year based on this?
Okay. So here is one fifth, this is one 51. Well, this is one 96.
Yeah.
So these fractal patterns are saying we could get anywhere between one 50 and
one 80 by end of year. I mean, the other cycle cloud said the same thing.
That's at least my target, like something, something above one 50,
something low on 80,
I think would be like a pretty good local top for the next short term.
period of time. And then it rips your face off and keeps on going.
It keeps on checking away. Maybe it goes to a million dollars.
That would be a bad scenario, I think, for a lot of people.
11-8-2025-444. Exactly.
As the prophecy says. Mason and I
had a little convo with Josh.
There's credence to what he's saying. Bitcoin, we forget how quick it moves, but it
does move quite quickly. I think the interesting point is like you look at the move in 23 from 25K
to, you know, 75K, that was a quite, quite a short period of time, right? That was, what was it? I
think it was October to March was that triple and the market cap wasn't materially that different
from where it is today. So that's what I would say. Yeah, it can move quickly. It's like 50 days,
right? And most of the action happens in 10 days, 10 to 15 days, like 80 or 90% of the action
happens in a very short period of time which is kind of throws credence on it's really difficult
to find good entry points on these things like it in and out at any given time because it can move
so quickly against you i mean just just looking about i know before the stream adrian and i were
talking that it seemed like a lot of people were shaken out of just mstr a couple days ago and it
you know bottomed out to 294 or 296 or something like that and what after market today was at like
340. And it's like two days, two days, two trading days difference. And it's a completely
different story. So it's difficult to find really, really good spots. So it's helpful to just take
that long-term perspective. Think about like, why am I holding these things? What's the purpose of
holding an equity? How quickly do you need it? Be careful with leverage. Think through positioning
and sizing. And that's what we're here to kind of think through all of this stuff.
Yeah, I think position sizing is an underrated portion of just general like retail and personal
investment portfolio construction. But people don't talk about it enough. It's just like this
asset, this asset, Bitcoin, this asset, this auction, whatever. But like position sizing is
actually how the money's been. Like in poker, like the only thing you can do in poker is decide how
much to bet and if to bet. And, you know, investing is much the same thing. So how much do you put in
this position how much do you allocate in msdr versus bitcoin how much do you allocate in asst
how much do you allocate in this and the next thing and i think uh that's like a really hard
question and everyone has to answer that themselves i agree i actually rotated a lot of my nvidia
and palantir profits into mstr below 300 that was the move i was waiting for and it's working out so
far um i don't think that we're going to hit 444 though i think that's virtually zero chance of
happening but that's just my opinion but i do think we could hit like 180 eventually oh eventually
absolutely this year no one of the one of the funny things i think about with this is just like
yeah we talk about price targets what it might go to and then it's like okay then what
you know and then what like all the the the plumbing the infrastructure of this game has
completely changed like you've got corporations that are buying bitcoin forever all of the lettuce
hands are getting shaken out they sold for billions of dollars 80 000 bitcoin getting sold for
nine billion dollars or whatever and okay boom that's gone how many of those guys are left
or gals i guess that could be holding bitcoin that chinese lady that stole all the bitcoin from
those people but uh the like how many of those people are left and the the game and the structure
of the game has changed and where does that capital flow like what's the next four years look like i
mean i'm not gonna just delete unless bitcoin goes to 10 million tomorrow i'm not just gonna
like delete my twitter and walk away and get out of here like you know i've got i've got work to do
and it takes all of us to you know push this monetary system forward and you know if it goes
to 180 great like i'm not gonna exit to dollars um anytime soon if bitcoin has 10 million though
i'm gonna be belligerent as i'm not going to be held responsible for what i do online
i mean i think that's a cool thing
bitcoin is a reminder that time is the only scarcity because you've got infinite time you
could theoretically have the smallest one satoshi would make you rich on an infinite timeline
but right i mean we don't have infinite time but bitcoin is time yeah
Bitcoin is time. Bitcoin has created its own version of time. Each block has created its own
version of time. But anyway, this concept is interesting thinking about valuation. And one
thing that has happened in the last month, there was a lot of noise about S&P 500, strategy
potentially getting in the S&P 500, them getting snubbed, Apple and Robinhood got in,
And StrategyNow has had their second positive quarter in a row.
We know this because the books closed yesterday and the Bitcoin price is high.
So we know that they're going to have two positive quarters in a row.
And it was pretty fascinating.
I did a quick analysis.
I'm just going to share my screen on this too.
I made a Twitter post on it.
The comparison of Apple Oven to MSTR on just some general metrics.
Actually, first of all, let's look at Apple Oven.
Apple oven in the last 25 days is up 49%. Robin hood in the last 25 days is up 46%
since the announcement that they're in the S and P 500. So some significant movements there,
which is pretty wild to see. And then I wanted to look at Apple oven next to MSTR,
just for some comparison, because at one point in time, Adrian, we talked about this. This was like
last June, July, Apple oven and MSTR were like the same market cap. And they were going back and
forth. It was like Apple and MST, Apple and MST are. And now Apple oven is at like a $250
billion market cap. And so I just look, I wanted to look at some of the metrics, given that the
performance has been pretty high since they're including the SB 500, the PE ratio, Apple oven
PE ratio, 91 versus MST are six and a half. So 13 times different. Obviously Apple oven holds zero
Bitcoin. So a hundred percent different, uh, the price to book ratio or the technical M nav. So
like, uh, the multiple market cap, multiple relative to the assets, the company holds
Apple oven has 194 X price to book ratio. And MSDR has a one and a half X price to book ratio.
So 132 times different debt to equity ratio, 300% verse 15%. So hyper leverage versus not
very leveraged and trailing 12 months net income 2.4 billion versus 14.4 billion so
it seems like there's a massive disconnect here uh in the market and just how things are valued and
how uh things are seen and it's been very clear like you go into different avenues you look at
different places look at linkedin look at uh you know even what's happening on instagram or tick
talk and the conversation about the technical value or what companies hold is just non-existent
that's not really there and it's just an interesting dynamic when you actually look under the hood on
some of those stuff what do you guys think no i agree so the disconnect you're talking about is
kind of what i've been touching on with like the um earnings for share calls that we've had last
last quarter now that we're waiting to see where the market's gonna say this quarter the fact that
um a lot of people are essentially discounting the bitcoin business shows that it's going to take a
little bit more time for the market to i think the market understands what's going on but it's
a matter of acceptance i think bitcoin has been i think it's been validated but i don't think it's
been legitimized and the difference between those two is legitimized means strategies in s p 500
and bitcoin based earnings are considered a valid metric that the entire market recognizes and then
once that happens i think the floodgates open i think we talked about this last week um but there
is a wide disconnect in the fact that app 11 of all companies can have that high of a multiple
while mstr is at 1.5 and people are calling it overvalued that's a wide disconnect in the way
that the market views valuation the way the market views bitcoin and i think that's going to reconcile
itself but until then that's when we make hay and that's when we make money that's when we build our
positions and yeah i mean i mean i'll hop in there i completely disagree because i don't think m nav
over a commodity like bitcoin is anything like a pde over a potential growth equity right that's a
that's a future expectation of cash flows whereas with bitcoin btc yields a future expectation of
btc per share and then you could argue maybe the treasury operation should have a should garner a
a much higher multiple because BTC gain is a forward-looking US-denominated equity or US-denominated
figure, USD-denominated figure that could garner a growth multiple on it. But if the company's
willing to issue equity aggressively at certain prices above MNAV, they're essentially valuing
their business for the market. So that's the part I don't understand. You look at the way Berkshire
Hathaway and Warren Buffett did equity issuances when they believe the book value plus the
value of the entity was above the fair value of the tire package, they'd issue equity into the
market. So I think prices at which equity is issued is a huge kind of important factor of
this whole equation. Yeah, it's like a supply and demand thing. You've got more supply coming into
the market, which does impact like all of these metrics, right? You've got more just general stock
that's trading in the market. So that should theoretically drop multiple. I think that math
and the logic definitely makes sense.
I think one of the interesting components
to thinking about this though
is like what's terminal velocity look like
and does the company get valued
at less than its market cap
or less than the value of the value that it holds?
You know what I mean?
And what about that rate of change
of the value that it holds?
and is should like revenue should capital raised on the preferred equity instruments should that be
thought of as revenue and should the net gain on every single one of those equity instruments sold
should that be income and what is the growth of that income i think that's a really interesting
way to think about it. And I've thought about that too, Jeff. And I completely disagree. Like,
I don't think that's the way you would value it, but I totally see how you could make an argument
for it. So I'd be willing to get into that a little bit. Yeah. It's just, it's novel, right?
Like, and I know people yell at me about this all the time. It's just totally novel.
But the reality is you've got some of this architecture of the existing market that's
playing into it as well, right? So you've got all of the passive index funds that are funneling all
this capital into in the door so if you have this passive bid you know why don't you why don't you
capitalize on it and buy the asset that's going up at 50 kager in a gold rush and i think that's
an under underappreciated part of the whole story and i think from day one you've been right on that
yeah yeah i i think um this is reminding me of the the poll sailor did at the conference where
he asked people who owns equity almost everyone raises their hand right dano um and i i think
that's kind of a sign of the times uh you know the status quo or culturally we've been taught
that you take your money and you put it into equities not only taught but it's ingrained in
the system 401ks your roth ira etc and i think this is what this is just a symptom of broken
money. When you have broken money, you monetize things or you monetize assets, which cannot be
printed. Equity is real estate, et cetera. And I think equities right now, at least to me, it's
the easiest one to show how overvalued they are because there are fundamentals. There are PE
ratios. Something like real estate, it's a little bit more questionable, right? It's not as
there's no, there's not necessarily, it's a little bit more subjective, I guess, is what I'm trying
to say. Yeah, totally. Totally. And I don't think any of that architecture is going to change
anytime soon, right? Like all of this is innate. And this is something we've talked about a lot is
that, you know, money, this concept of money and storing your money in equities is just, it's
innate. It's what you do. You start a job. They're like, let's sign you up for a 401k. You're like,
great you don't even think about it it's just automated and like these people are you know
zombies moving through the world and there's a lot of society that's kind of structured and
built like that it's going to be hard for those people to change like they won't change unless
there's pain and i think we're starting to see a little bit more pain in in the market just in
general thinking about all the jobs report revisions and things like that you could see it kind of
everywhere. So yeah, it's an interesting concept. But let's go ahead, Adrian.
So what are we saying the core issue is between that comparison then? Just that I'm sure. What
is the core issue between how the market is valuing or should be valuing strategy versus how it's
Yeah, I've been so I think when Bitcoin goes up in value, you can't place an equity multiple
specifically on that gain in price.
If you have a company and they don't accrete Bitcoin per share, it's a holding company,
would you expect a multiple to be placed over the value of the Bitcoin?
Well, you're describing like an ETF, so no.
But so all right so totally flip the script right Operating company Now that collateral That power Right Right Like that power to do anything to do anything Future opportunity
Yeah.
So it's a huge expectation of the amount of collateral they will have in the future, right?
Because an equity is a call option by future assets of a corporation.
So, yeah.
Yeah.
I mean, I would just say the market may be discounting the future value of their Bitcoin holdings.
And that's why I would say, like, I think, yeah, MSDR price is low.
I don't know if the market is discounting the future value.
That could be part of it, but I think the market is still largely discounting Bitcoin.
I don't think that Bitcoin's hit the escape velocity that it needs to hit in terms of
market perception for this kind of a strategy and this kind of a structure.
Yeah, I do want to say on that, so let's say you believe Bitcoin will go up 30K into
the future.
The proper market response to that expectation would be Bitcoin price rising today.
So I think a lot of times we think like, oh, that means if we believe Bitcoin is going
to be going up 30 KG for 10 years, then strategy should have a higher multiple over the Bitcoin
as a future expectation of the Bitcoin going up.
But in my mind, if you believe Bitcoin will perform that way, then the Bitcoin price is
too cheap now because official market hypothesis says Bitcoin should now perform like S&P
kind of idea.
How do you account for the passive flows that, you know, as they get bigger?
That's a good point.
I'm not saying no premium by any means.
I'm just saying I don't think you can use a traditional PDE on a non-cyclical business as an accurate comparison to the PDE on MSDR.
I'm just saying MNavi is a good valuation metric.
I agree with you, but where I am struggling in just thinking through this myself is PEG ratios, price earnings to growth ratios.
and if you think just you put like a base metric on strategies compound bitcoin yield moving into
the future like what do you think the what do you think the next decade kager on mstr's bitcoin
let's just call it 10 for ease of argument cool i use seven and a half and in the year 2030
if they had seven and a half compound annual growth rate bitcoin yield
they're going to yield 68 000 bitcoin in 2030 at a bitcoin price of 788 000 it's incredible
yeah that's that's 54 billion of net of yielded yielded net income yeah no that's insane like
that's that's not even that's not even factoring in the existing uh balance sheet completely but i
think there's a difference in saying pdes on traditional equities are too high versus pde
on mstr is too low and i'm in the camp if you're a coin believer that pd's on traditional highways
are too high they're probably they're probably both they both both probably need to move
uh so the the here here's why i differ from everyone in the way i think of it
i all multiples in my view just based on what i've learned from mark and so what i've what i've been
able to lean for markets all multiples are forward-looking right i think we can agree on that
and if multiples are forward-looking that means that sentiment and expectations are driving those
forward multiples because there's no fundamental valuation or there's no fundamental reason to
value something above a ratio or multiple of one past its value you're talking about forward-looking
expectations so i think what we need to talk about is is the market appropriately valuing
what strategy can do with their bitcoin holdings in the future no yeah i i i do not think so because
like what's the what's the value of a company that has 11x more value than anybody else right
like the next closest publicly traded company is uh has 11 times less bitcoin than msdr has let's
let's just say for like concept wise um nvidia comes out and converts 100 of their net income
from the next quarter into Bitcoin. They're still going to have 50% less Bitcoin than MSTR would.
And the price is-
I think we're confounding two things here. The value of Bitcoin, I think we all agree
on this call that Bitcoin is one of the best assets ever, right? I think we would all agree on that.
But I think we are maybe making the wrong assumption that the market is going to appropriately value
that i i think the market needs to accept bitcoin needs to accept bitcoin acceptance and bitcoin
adoption and needs to hit a certain trajectory on that curve and i think then everything starts to
fall into place right now what we're saying is we we assume we all agree that bitcoin is the best
asset therefore strategy has the most of it therefore strategy should have an appropriate
valuation i don't think that's the right framework my view is it's about what they can do with it
just having on the balance sheet doesn't really matter i think the future multiples are going to
come from what they do with it yeah and how they're what do you prefer i'd argue
dealer has said specifically that the entire business model is predicated on the preferred
stocks right now so we propose yeah and that's what that's what they're doing that like they've
just raised six billion dollars and like i'm in the team i'm in the camp of like waking me up when
they're doing something else but if the c the chairman of the board and ceo said we're just
doing preferred stocks i think they're just doing preferred stocks
shall we get into the bad bond of the week because i think this might be a good time
i mean they're gonna they're gonna have to change that but yeah okay i want to talk about the bad
bond of the week and i'm gonna try to do one of these every week we'll see how it goes and maybe
i'll get a little sound bar and it'll be like bad bond of the week like bad bond um okay let's look
Let's look at this.
This is the Hertz 12 and five eights, 715.29.
So this Hertz bond,
so Hertz is the rental car agency company.
They sold this 2029 bond last year in 2024.
So it was a five year bond.
They raised $1.25 billion.
This is currently rated by Moody's at B and B plus.
Moody's is B, S and P is B,
Fitch and composite is B plus.
The current yield on this instrument is around 10%.
Okay, 10% yield.
The leverage ratio of the company is literally over 100%.
So the total liabilities on their balance sheet
is 23.5 billion.
The total assets held on the balance sheet is 23 billion.
The net income over the last seven quarters has been negative.
They've lost over $2 billion over the last seven quarters.
And the liquidity in the very middle here is the two, this is the two bids on this instrument in
the market. So basically there's like zero, there's just zero liquidity on this instrument. There are
no trades happening on this instrument. So this is one and a quarter billion of debt that's
outstanding with a five-year duration that's trading at a 10% yield. Okay. Let's look at,
let's look at stride in the credit stack okay you've got stride which is currently paying
12.25 percent yield so it's paying 225 basis points higher than the hertz five-year bond
on a credit basis you're 5x over collateralized like the price of bitcoin is going to fall
what is that 80 80 percent and stay below it before the notional goes to zero you've got a
duration of eight years so i mean it's a little bit longer but strategies capital stack here
they've got ability to pay this dividend for like a hundred years from just the if the capital didn't
move at all and this btc risk column which i think is interesting maybe we'll dive into this a little
bit more later but this is the cumulative probability based on a bitcoin arr assumption
of 30% and a volatility assumption of 40%. This is the cumulative probability
that at the end of the duration, 8.4 years, the value of the collateral held on balance sheet
is less than the total summed notional value of preferred equity on balance sheet.
So 0.56%. So incredibly low risk. It's paying 225 basis points above the Hertz bond. And
It's just like so glaringly obvious that these instruments are significantly better than some of the other stuff in the market.
And the other thing I'll point out is Stride today had trading volume of $18 million.
So it's somewhat liquid.
And I think this can grow tremendously.
The scale, the size and scale of this stuff is just enormous.
you've got a 300 trillion dollar market like this is one bond i think that's the other thing oh i
don't have my other computer up but you could go you could go look at the high yield etfs and go
pull all of the the list of all the securities and the high yield etfs and all of the 144 bonds
i had to scroll like 20 of them before i found a company that i even recognized like there's stuff
that that's you know 10 to 12 you know 8 to 14 percent yield that you've never heard of and the
balance sheets are crap the business model is crap negative net income and there's just a ton of risk
associated with it so it's uh it's pretty crazy when you when you really start to pull the string
on some of this stuff like i get why they're focused on the prefs this opportunity is enormous
and that entire market is mispriced.
It's like completely off.
Okay, that's it, bad bond of the week.
What's next?
You were talking about app love
and I don't wanna go backwards too far,
but while we were on the topic of S&P,
sending the group chat earlier,
just about EA games going private.
So I know-
Oh yeah, listen on that.
Yeah, I haven't looked into it,
but as I understand, they're not dropped right away.
It's when they rebalance.
But when that happens, that would open up another spot. It's definitely more bullish because it's not just simply on the inclusion factors. There's an empty seat plus the normal rotation. And I mean, they're in IT. So there's, there's alignment, sector alignment within the overall 500. So I think it's, it's bullish. It's interesting.
yeah so so for those are unaware ea sports was purchased by uh i think it's like a saudi arabia
company and they went private today so that is one less company in the s p 500 index so i think
technically there is a spot that is open for inclusion and sometimes there are companies that
included get included in the s p 500 and a one-off and uh i think we saw that i think it was apple
been one of them no um no it was somebody else a couple months ago i forget who it was but
it was another kind of bigger name so yeah that's exciting and and i know both dan's you guys are
interested in miners right now too can we talk through that thesis like what what's going on
there on the mining front yeah i think we're looking at it more from like a macroeconomic
kind of leverage upside perspective so we're by no means experts in the miners but we've been
We've been looking at kind of the American miners that are still mining Bitcoin as opposed
to the fully transferred to the HPC side of the business and the data center build out.
So we're looking at Mara and CleanSpark and we hold small positions and call options on
those two.
I kind of like the exponential increase in Bitcoin profitability based on higher and
higher Bitcoin prices, just because it's kind of that asymmetric upside if Bitcoin does
go to crazy prices like we've been talking about.
And then I also like the energy contracts, like thinking through the idea of like, okay,
what are these energy contracts worth in six months time, 10 months time, when the demand
for energy has just continued to increase based on the bottleneck and the data center
build out and just energy shortage across the country.
And people will be bidding up the corporations that have that cheap locked in contracts on
the energy front.
So that's kind of the way we're thinking of it.
Yeah, plus that coincides with, you know, just the push for more energy expansion in America, American Bitcoin bringing more and more hash rate onshore and just being the absolute dominant leader in that.
So, I mean, there's even Mara's, again, not necessarily an endorsement, but they've had several campaigns.
I think one was BlockSpace as a strategic resource that they were campaigning for and Mara for America.
So they're really trying to align with the Trump admin, the new energy bills.
I mean, U.S. miners control blocks of Bitcoin.
blocks of Bitcoin are like the monetary equivalent to energy credits. So I think that fits both the
narrative of the energy sector, AI expansion, and just this huge boom we're in there. So again,
we're not holding a long-term spot. We're just kind of playing the cycle. Bitcoin miners are
rallying right now. They have rallied and we think they'll continue to lead and do so
just in the Bitcoin beta sector.
Yeah, and because there's a huge demand for energy just across the board,
because all of these AI centers are popping up left and right.
Elon Musk is building a new AI data center,
and it just requires absolutely tremendous amount of energy.
So the thought being that there's a huge demand
and a limited amount of supply and infrastructure that can withhold it.
I mean, that's the general theme, right?
yeah totally exactly yeah
so i mean adrian how do you how do you feel about this so you've you're following ai i know you've
got like nine computers under your desk uh pulling through this like how how do you view this how do
you view this energy space energy relative to ai um is that is that on your radar like how are you
how are you thinking through this well yeah so that's why i'm ben myself and dr rest in peace
were talking about miners last year.
We thought that like Iron, Cypher, Terawolf,
a few others were really more diversified energy plays
and that their future would be with compute
and that our bet was that they would make a pivot
over to be more HPC AI dedicated plays
specifically because of the energy
and specifically because of the GPUs
and how much compute they can house.
And that's largely playing out.
We've seen Cypher run.
We've seen Iron really run.
Terawolf has had some good returns as well.
I had positions in Iron and Cypher since last year.
They've performed very well.
It was a long hold, but the Dan said the thesis right.
I think Ben, myself, DR had a thesis right.
A few others had a thesis right.
A lot of the miners, their ability to become profitable
is going to be bore out from a pivot to HVC AI in full.
Even CleanSpark now is talking about HVC and AI
when at one point they were a dedicated pure play miner
that didn want to dabble in HPC and AI whatsoever So it good to see that the mining pivot into energy has happened and it playing out I think that only gonna speed up
if I had to take a wild guess.
I know Ben and I talked about this a while ago
that we could even see hyperscalers coming in
and buying out some of these miners
specifically because they have the ability
to house the compute.
So the future is bright for that.
I think that the race for energy
and the race to be able to house these massive data centers
is gonna be huge.
Tier three data centers are a very, very niche product.
It's not just a matter of building it out.
You have to have everything systematically planned out.
So it's not something you can just decide to build tomorrow.
And a lot of these miners have the headstart right now,
especially Cypher and Iron.
So I think that it's gonna be very, very profitable.
very, very profitable. I honestly think that, ironically enough, Bitcoin mining is going to
have a very large role of play in AI. And I don't think the AI play, quote unquote,
is slowing down anytime soon. I do think that we're probably going to see some consolidation.
I think we're going to see a lot of projects that are just pure hopium kind of blow up. But the need
for the data centers, the need for the compute and the need for housing the different models that
coming to scale is not going to debate anytime soon i'm going to ask the dumb question hpc
high performance computing that's as simple as that just computers okay all right they're
running around all over the place yeah yeah the ability to be able to um have high performance
data centers with the energy needs requirements and the compute needs at scale that's high
performance computing in a very very simple nutshell got it so the one problem i've got with
the whole mining side of things is really just the opex like the the capital expenditure because
you've got the mining equipment is continuing to improve and you've got to go replace that equipment
over time and generally at bad times in the market you want to go replace that equipment so
it's just a it's a tricky compared to like uh these treasury companies that are leveraging
their balance sheet with teams of five people uh and not the continuous overhead of having to
you know, rotate all of your, uh, mining equipment and infrastructure and having to deal with that.
So that's, um, yeah, it's, uh, yeah. And that's, and so that, that's why, and that was a thesis
that Ben and I had last year, the miners, miners know it is a CapEx intensive business, right?
Everything you just called out is well known that the fact of the matter is, is that the
miners that weren't really going to be miners the miners that were really pivoting to hbc and ai
they just can come right out and say it that's what we were trying to identify and i think that
um now with with like with mara and some of the other miners are being more open with it from
from the get-go because the narrative the trend is now hbc that the trend is now ai the trend is
compute so it makes sense to do so but like in february to april of last year miners that were
talking about being pivoting into hbc and ai were kind of being disparaged in the mining community
because they weren't pure play miners for every reason you just called out yeah pure
pure play bitcoin miners precisely yeah they they for everything you just called out you buy the new
equipment by the next cycle it's already obsolete you you have you entirely are reliant on bitcoin's
price running and when bitcoin's price didn't run as much as people thought it would last year and
it's having more of a steady ascent that spooked a lot of the miners so everything from and this is
just my opinion but like iron cypher iron was always being more aggressive with their energy
play cypher was being more coy in my opinion you have bit digital that got out of it almost entirely
you have marathon that's being more diversified in hbc and ai now you have american bitcoin you
have all these other bitcoin companies coming into it for those very reasons it is capex intensive
So I do think that, you know, the Bitcoin mining industry is not going anywhere, but I do think
it's going to become more diversified and it may even become far more decentralized with a lot more
smaller players in the space. So the trend right now is compute and the miners that are able to
capitalize on that are seeing those returns, especially with iron and cipher.
Okay. So what's the risk of these companies that are not, just trying to wrap my head around this.
what's the risk of these companies that are not bitcoin miners that are shifting towards this ai
compute um power play like corralling the power what's the what's the downside risk
so when you say not bitcoin miners are you talking about bitcoin miners that are pivoting or
yeah that were bitcoin miners and now are like ai energy plays what's the what's the risk is it
like energy innovation is the risk where you've got some increased computing power
that can be done with less energy or is it like global energy compute you know is it is it cross
border energy costs you know i don't think it's a matter of demand the i i did a breakdown this
last year the the rise and then the need for data centers was already increasing long before this ai
trend habit so the ai trend just kind of exploded the trend so i i don't think that we have any
any real risk of there being decreased demand for data centers and high capacity tier three data
centers now to your point about innovation the only real energy innovation is going to be something
like you know broad scale nuclear adoption that's going to create a bit of a i don't need time yeah
it takes so much time and all those other things yeah right and then renewables they're there so i
think uh what was it uh was it fermi for i think fermi a company just ipo today they are diversified
energy play they have um nuclear wind yeah uh solar um i think the ticker is f f r m i i think rick
perry actually is actually behind that one but i mentioned it because that's another that's another
energy play right and they're going specifically into ai and high power compute so the energy
innovation i don't think that's that's a risk right now because they still have to scale it
so even if we have some some massive innovation tomorrow this is still needs to be scaled so
that's not a risk the biggest risk could be they are not attractive to hyperscalers in in sufficient
scale. A hyperscaler is going to want massive amounts of power for compute. If they are not
attractive to one of these hyperscalers, then they have to go do kind of what BitDigital is
doing and get several deals. And if they can't justify the number of deals to use up the level
of compute that they can have, they're now kind of stuck with Bitcoin needing to rip and them not
having the sufficient demand on the HPCAI side because they can't garner the right deal.
So the way you can offset that is by going cloud.
So a lot of them are saying that we're not looking for one deal.
We'll just be a cloud host of HPC and high-powered compute for everyone.
And then that's a way that they can offset that risk.
But that's the only real risk I can see,
that they don't get the deals in time to justify the CapEx that they put out
to be able to scale the compute.
okay well this is this is uh that's interesting um and we can go ahead and pull it way back up i
mean we were talking mara um we'll put it in more like strategy terms um but i mean their their
bitcoin stack the 50k bitcoin on the balance sheet using simple math every 10 000 dollar move
in bitcoin adds 500 million in value which is more than most of their peers market caps
so we're just looking at the current cycle of miners leading with all of the energy buzz around
them and then bitcoin's price lagging and sideways chopping and then what happens when bitcoin starts
to rip here in q4 and we're just looking for the asymmetric upside there again not long-term plays
like it's not a core holding but playing the options market on it into this rally we think is
I'm getting not financial advice, but it is the edge there.
Yeah.
And also their cost of mining is substantially lower than their peers.
I think they're around 33K per Bitcoin versus, you know, 40 to 50K Bitcoin for some of the
others as well.
So how would you weigh IBIT calls relative to minor calls?
You want to take that?
Yeah.
I'll take that.
I think calls.
we got to say too we saw pigeons in the in the chat shout out his research is awesome we've been
following we've been studying up on poker uh national equilibrium and all of that as well
um the push fold strategy so shout out we did a research piece on mara and uh it's heavily
influenced by pigeon so there you go keep it up man but in terms of ibic calls versus minor calls
i think the miners have the exponential like convexity at higher higher bitcoin prices
because their profitability increases exponentially with higher and higher Bitcoin prices.
So if you get Bitcoin at $250, I think you could get some of these miners at just heinous prices,
temporarily, not long term, but temporarily.
And so-
Yeah. Because they have the negative convexity on the way down.
So you get burned on the way down, but you get that upside. So really small, naked long
miner positions. And then the Bitcoin, the IBIT calls, we have all call spreads. So you're making
like maximum payoff for us we have it set up at like 150k ish bitcoin like really high returns
right in that kind of middle band of price then higher higher those miners are world
capture the upside so how we do yeah locked in you're like you're structuring and designing a
portfolio now it gets a little bit more complicated than just longing uh one i think it's interesting
because you can create like for anyone in the market even if you just had a portfolio of bitcoin
in cash or mstr and bitcoin right the percentage allocations to any of those asset classes created
a completely different risk return profile for you oh and then forget the press talks right
you've got stretch you got strength you got strike how do you create the uh it's the frontier
so super interesting yeah and then looking well yeah and now i was gonna say looking at some of
the treasuries too like the potential as many have approached uh one m nav some below some you know
just over um we're looking at the potential for like the three to five x m nav multiple within that
that cycle so we're all believers in a potential super cycle here we think bitcoin's gonna rip
we're looking at q4 we know how fast it moves in those 10 days um in that framing within the 50 days
we've seen it before um so yeah when you apply that just to the landscape of treasuries and how
complex their capital raise structure is and the rate of acquisition of bitcoin and timing the
market versus timing all the deals and then the bitcoin that's just on the company's balance
sheets now for miners like mara and then um i mean it's just all mapped out uh so so we feel uh
you can get that three to five x um potentially quicker within this cycle of q4 in some of the
miners and then we'd rotate back out and over the treasury companies you think you think miners over
the treasury companies because in the very short term why uh cycle here just because of their
existing bitcoin their uh consistent acquisition of uh bitcoin we've got i mean we've got all their
metrics mapped out as well so you can clearly see that where introduction i mean if you take meta
planet prefs when are they happening lock appear like unlocks pipe deals everything across the
board there's so many other variables that you can't equate for that might miss time
the rally in bitcoin timing correct timing timing might be weird exactly but that's not to say we
don't like i think long term i'd rather personally long term i'd take uh treasury 100 yeah if we're
talking spot like a 10-year hold the long bags absolutely treasuries um it's it's like the value
it is the it is the value play but it's also the growth play it's like the growth and value play
where there's like uh you think about these other alternatives like mining or and it's just it's a
different time risk and i mean dan to your point on thinking about the efficient frontier you've got
like you've got probably a three-dimensional model here where it's like efficient frontier but with
a different time as your third dimension of how long you hold any of these instruments as well
because you know it's not a typical portfolio construction mark what's modern portfolio theory
you've got like a timing third element. So none of this is financial advice. Like anybody listening
now that doesn't know what a call option is, I'm sure the last 20 minutes haven't made any sense.
Sailor says just buy Bitcoin and forget timing the market. So take that advice.
You know what? I think let's come back to that because there's risk associated with all of those
different analyses. Not to say that they're wrong. I think all of that analysis is great analysis.
It's like, it's, it's not, uh, I'm going to YOLO 25% of my portfolio on my deep out of the money,
minor calls, because I just think they're going to go up. Like you have data and information
and theory that sits behind it. So there's, there's a lot, there's a lot to that. But that
being said, for most, for 99.9% of people, it's probably really, it's, it's really hard to beat
Bitcoin and with the same amount of risk.
Like, I think that's the biggest challenge.
Like if you just buy Bitcoin, like the risk you have, if it's with a custodian, like Ibit
or something, you have very little risk.
You're paying, you know, 25 bps annually for them to hold it for you.
But there's very little risk associated with it.
But like any of these other timing element plays where you've got options contracts or
anything like that. Like your, the risk profile increases, not linearly, it's like exponentially
because your, your max loss is a hundred percent. Whereas if you're just holding spot Bitcoin,
one Bitcoin is one Bitcoin. So if you, if you have a Bitcoin, you could just sit on your hands
and wait, which I think is what, you know, all these treasury companies can do as well. Like
depending on the time in the market, let's just say Bitcoin doubles from here. Every individual,
one of these Bitcoin treasury companies that has Bitcoin on their balance sheet has capacity to
take on leverage. Their capacity to take on leverage is just doubled. Maybe with different
risk profiles, but they can go take on 30% leverage with four people in their company, no OPEX
Right. Like the capital expenditure is very little.
And they're able to yield additional Bitcoin, additional value by just leveraging their existing stack.
So it's a.
Interesting. It's just crazy times.
I think everything is going to do really well, like just taking a zoom out.
I think everything is going to do really well.
Like if you hold assets here, you're probably going to be OK, but it's just, you know, conceptually, how do you think about all these other things in conjunction with each other?
yeah and dan brought up some really good let's parrot grain on that because he said that on quite
a few live streams here uh where he's like congrats if you're here if you're listening
if you're in this space if you're in these equities um if you're holding bitcoin you've
already won um so just a matter of time um and not being shooken out like all those guys who's
had their stop losses hit at 300 bucks and uh adrian scooped them all up here
yeah so the one word of caution with the miners right now that i'll give though is that a lot of
them that have been moving recently been moving because of the hbc ai narrative not because of
mining so the the move that people are expecting with bitcoin for some of these miners may actually
not come and it may come after and now the the mine some of the miners that are still more you
know quote-unquote traditional miners that are still in bitcoin mining i think they'll see they
probably see disproportionate returns but it's all about capital rotation who's moving from what
um we i definitely note saw that the second the news second within when nvidia started running
again when palantir started running again there was a distinct move into like iron and then cypher
and the money just kind of flowed into it and then it just started outperforming after being dead for
like damn near a year so i think that like like mara and other miners they can do well also um
it's just a matter of where's your position what's and what your overall thesis is i don't know if
it's going to play out the same way that it has in last cycles they're going to perform it's just a
matter of when yeah i think the challenge and what i just pulled up on my screen is uh this is the
last two years um so this is going back to october 2023 and just plotting mstr relative to mara
to look at performance and like mara is up 118 since this time horizon i just i just picked this
time horizon i just went two years back um which if you're holding any other stock in a traditional
framework like if you're holding any other energy stocks like mara outperformed probably every
single one of your energy stocks over that same horizon but then you compare it to something like
MSTR where it's up 876% and they're leveraging Bitcoin. And at the same time, you know, ATM
accretion dilution, they're, you know, selling stock and buying more Bitcoin, which is making
the whole thing worth more. So just an interesting perspective, right? Like this is the risk. The
risk is you're holding something with a different risk profile than underlying Bitcoin itself.
and you miss face-ripping rallies at different points of time.
Yeah, well, there's also value in having a position.
So if you want to look up, just look up what Iron has done year-to-date.
300% last week or so.
Yeah, Iron's crushing it.
Mike Alfred, does he listen to the stream?
No, he's probably sipping a $1,000 bottle of wine somewhere,
taking his mom out to dinner.
Or he's drinking some Aquatana.
He's probably drinking that too.
Definitely steak.
ironed up 356 yeah yeah now so the reason why i bring this up is i had to hold it all through
last year all into this year to see that move so i people that i think they're just going to get
into it and get a run to jeff's point there's there's a lot of risk and what you're going to
have to experience so if you have conviction to hold more power to you but once you get your move
it doesn't hurt to take something off the table because this entire run has been the ai narrative
this has had nothing to do with bitcoin correct and that's why we're levering up for the bitcoin
run now and to clarify we all know spot miners and don't plan to uh right now as well it's just
just sniping uh the opportunity here as as it aligns with the bitcoin thesis so again not
financial advice but framing framing some of that move a little bit but you've got people in the
chat saying long mstr short i think the the other interesting point here is like what's what's iron's
market cap now like five billion six billion i forget pretty small like on a relative basis
so yeah getting a getting move like this it doesn't take a ton of capital to get a huge move
like that once these once these what does it say right here yeah oh 13 billion oh my god yeah i
guess it's 47 13 billion yeah i mean that's a lot it's moved really quickly i mean what it's up
just in the last month it's probably uh it's gone from a four billion dollar market cap to
a 12 billion dollar mark yep it's cooking totally cooking okay we got uh we got soleil backstage
adrian uh is it time to walk the dogs just about you're gonna jump off too all right go for it
final thoughts adrian mason before you head out um i hope everyone bought mstr in the 300
dollars like i was screaming he backed up the dump truck um but no besides that i think q4 is
gonna be great i think that we are you know i think bitcoin is going to be well i think msr
is going to do well i think that the um bitcoin treasury is going to do well i think the miners
are going to do well i think we are in the the part of the market right now where we're going
to see most of the returns for the year um just give the the words of caution i gave with the
miners is that the moves that we've seen with some of them have been ai related not bitcoin
related so don't assume that there's a bitcoin move coming right after the ai move with some of
them not saying any names just throwing it out there because i held a lot some of these for a
while and it's been painful um but besides that i think everyone that's held that's um maintained
their positions that's gone through the ups and downs we're about to see the returns that's my
guess for q4 i think liquidity is lining up i think seasonality is lining up i think that we
have everything lining up with regards to commodities like everything that dan mentioned
um i think everything is lining up right now for a good q4 so let's let's enjoy the ride
let's enjoy the ride mason over to you if you're a long-term believer in the bitcoin treasury thesis
right now there's some amazing opportunities out there i bought most my mstr when it was trading at
a discount to its bitcoin and and that and the operating business was you know valued as nothing
zero as well so yeah so i think um i think those opportunities are out there right now if if you
do your research if you're actually going through the filings and looking at the financials and
and looking at the management team and they're out there and and i think uh i think some
institutions later this year might wisen up to these if bitcoin really starts to heat up and
there's a you know general fomo in the market so um but yeah i would say i would say if you have a
long-term thesis now now is the time to take a look at these companies because there's some deals out
there yeah i think looking long term at a lot of these things right there's uh if you're long bitcoin
you can take the same exact approach hold it for four years hold on for dear life right and uh
dead guy portfolio always wins. You just long the equities, sit and spot, don't take on leverage,
and go live your life, touch grass, get out there, and make the world a better place.
I think there's a lot to that. Well, keep cooking, Mason. I know you got some competitors in the
Brazilian space now, and you're out there talking to Capitol in New York and going to high rises
outside of central park and convincing people to buy equity and doing all that jazz so uh
mason you are a really good example of what just putting yourself out there and talking in the
space can really do because like you're you're now working for one of these companies you're
connecting to people you're seeing for yourself can you give like a no-name basis anecdote of
the conversation you had this week um yeah i what i'll say what i'll say uh broadly
and this relates to digital asset treasuries not bitcoin treasuries i will say that these
it is very true that there is a ton of uh capital allocators in the world who have to buy equity
in very you know very niche sectors you know they they can't just buy the s p 500 and um
A lot of these capital allocators are very interested in companies in other regions or companies within the U.S. buying cryptos, any cryptos.
Because believe it or not, there's a lot of cryptos that have more attention, more volatility, are essentially more interesting than XYZ company in XYZ country.
so um that's really that's really eye-opening and what i would generally say is that these guys are
kind of oblivious to what bitcoin actually represents what's happening here with bitcoin
on the fundamental you know paradigm shift level of this is an invention equivalent to fire
electricity etc to them no it's it's it's just digitizing something volatile and and and or
securitizing something volatile and they don't care what it is so that was that that's that's
what i sent into the chat i was like man these guys do not know what's going on and yeah they
very confidently do not know what's going on very very confidently yes yeah it's uh it is crazy that
you start to see when you when you're working in the space and i i could say this with certainty as
well like everybody like i'm working full time i'm working overtime i'm you know on the computer until
12 midnight, one o'clock in the morning, like doing stuff. And it makes sense that these people
aren't grasping what's happening here because they're just in la-la land working on something
else, working on 10,000 other things, or their equity investors focused on 200 different things.
And they can't go deep on one thing. They can't find the best thing. So they're like,
let's just shotgun a bunch of, you know, uh, high volatility, uh, differentiated equity plays in the
market. And you're one of them is going to hit and the other nine of them are going to be duds
and we're still going to win. Whereas what everybody here on this screen is doing is
incredibly focused on like this sector. Like this is the, this is the best sector. This is the space
to be. We know everything about this space and what's going on. And then you go talk to these
outside people and you expect them to know like you know and it's it's like so glaringly obvious
immediately that like how far how far ahead we are and like one year in this space is like seven years
and it it it feels uncomfortable it feels really uncomfortable having to start from scratch yeah
and what i will say is there is so much capital out there that literally needs to to find something
to be invested in that add bond of the week 1.2 billion dollars in hertz 12 and 12 and and again
this goes back to my earlier point this is a symptom of money fundamentally being broken
where they need to cram it into something you can't hold dollars yeah yeah and right now a lot
of it's there's actually a lot of money holding dollars treasuries and uh a lot of money getting
shoved into ai because they're like that's the thing the ai is the thing how much did the people
ask about ai when you when you're talking about you know it was it was crypto and ai i was the crypto
you know like you're my crypto guy you're young you're wearing a suit okay i like you
you yeah right on okay well keep us updated i i want more new york updates next time
cool okay thanks adrian thanks guys
one quick tag on that jeff um i was talking about like the
how uneducated hold on is anybody else hearing that is that weird
dan restart plug unplug your mic and plug it back in
what's up so what's up i can't replace either one of those guys but let alone both of them
yes that's bad it's horrible that's that is horrible i don't know what is going on there
what up ben what's up guys is this where we come for mining drew north
my mining true north yeah both dan's both dan's are long short-term calls mining uh
Bitcoin mining, energy mining.
We just like talking about like, you know, that kind of stuff.
I think it's interesting to look at.
Oh, it is.
Oh, dad comes in.
Oh, we just like talking about it.
It is interesting.
I mean, I'm not going to rehash it.
I was listening while you guys were talking about it for a while, so I won't rehash it.
But have you guys been finding it fun running a hedge fund now?
I mean, you have to look at the market entirely differently.
And I think that's one of the biggest things that people probably don't understand about the shift.
that you guys made is yes, in the early days, while we all got to be incredibly, you know,
myopic and just focus on one security and we just needed to be right about the one security
when you're running somebody else's capital, it's very different.
And you guys have a charter for how you need to perform.
Has it been entertaining to be able to branch out from just kind of the treasury plus Bitcoin
space and have to look more broad in the ecosystem?
Yeah, I think it's a good mental exercise, but I mean, we're just a lot more conservative with everything.
And we also looking at like if we going to take risk outside of Bitcoin it got to have asymmetric payoffs But I mean I think it just heightened what we all been trying to do in our personal accounts but we using smaller position sizing with like you know potentially higher expected payouts like i remember thinking early on i think that why we all got together in this group right
we were like oh like if we're going to outperform bitcoin believe it has a 30 40 50 kegger then the
thing's got to rip and we got to do it intelligently we have to not lose money so i think mstr at one
point in time it still continues to be like that kind of outperformance play and there are other
opportunities out there is what we've been kind of finding but i actually think it's really worthwhile
even just for other investors when you go and explore all of these other sectors that are out
there looking for opportunity because the one thing it does is it grounds you in just how hard
it is to beat bitcoin i mean you're turning over every rock you're going into every you know sector
that people are hyping up and looking for opportunities there but you you quickly realize
how hard it is to just simply beat spot bitcoin yeah exactly so it i found the same thing i've
been all over the place in the markets and i know we've talked about this you know on our internal
calls and stuff but you know i've been all over the markets you know looking for things that are
exciting because i'm one of those guys that believes if you're going to pay any attention
to something you've got to have some skin in the game right that's what really grab makes you focus
and pay attention to what you're looking at there but what it taught me over time was that my
allocation to bitcoin wasn't high enough and it just continued to creep higher and higher over the
last several years because i figured out just how hard it was going to be to beat that hurdle rate
it's very difficult and you have to use a lot of times if you're out in other sectors you have to
be using leverage and things to outperform so it's it's difficult and it's high risk and you gotta
to really train that muscle to manage that and be ready to cut leverage at the right
times and can't get greedy with profits.
It's a fun exercise because it completely refines how you invest over time.
Totally.
It's definitely going to be hard.
I also appreciate Bitcoin.
Sorry.
Yeah.
And even if you do find someone that is beating Bitcoin, there's going to be other
entrepreneurs that try to copy it or are just eager to disrupt it and and do it, you
know cheaper or faster or just in some way disrupt it so it's kind of like the people who are beating
bitcoin might not be beating bitcoin in that way for very long so it's yeah there's a time exactly
even even when i look at gold right like uh i know a lot of people have gold in their portfolio
I've got a little bit of gold in my portfolio, but I, I just look at the relative sizing.
And I think about this a lot.
I just, I like to compare and like sort things, uh, in terms of size and scale and like relativities.
That's kind of how I see the world.
I try to make it simple because I don't have the time to do, uh, like the Dan Hillary crazy
exercise and like blocking out the time risk.
and I look at gold as a 26 trillion dollar asset and you're like okay well there's nothing ahead of
it it's the largest it's it it could keep going but like how much how far does it keep going
and what's its terminal velocity does it have a terminal velocity is there a better opportunity
and I think like digital gold catching up to gold is a better opportunity so if my if I have
more than 10, 12 year time horizon risk, why would I not be a hundred percent YOLO'd Bitcoin
relative to gold thinking about that horizon? And I know a lot of older people think the
complete opposite. Why would I take Bitcoin risk when I'm 65 years old and I just want to
keep my money and live the rest of my life? So there's a little bit of a dynamic shifting
population dynamic and this time horizon. Good news is now they've got products for both of those
people. That's right. You have the Bitcoin or you can have the product that's powered by the Bitcoin.
You don't necessarily have to take on the volatility anymore. You can be senior in a
capital structure and get average E500 returns while you're over collateralized, you know,
many times over with the ability to monitor that position in real time. I mean, that's what's so
powerful about digital credit and these coming into the market is it's going to make that possible
on the back of the one certainty that we've all come to know which is the constant devaluing of
the dollar which is going to drive the constant raising of the hard assets and so but now you've
got products that will appeal to people that feel like they're still going much too far out the risk
curve on something like Bitcoin, even though for all of us, you know, we view that as the safety
play, right? You're betting on the one certainty we all know is coming over the next decade,
which is massive printing and devaluation of the dollar.
Yeah. So Ben, I know you speak with your father about this. I mean, how's he view it? You've
talked to him about the Bitcoin backed bonds, the STRC, the preferred equities, and obviously
older than you. He's got a different perspective. How do you communicate with him
about these instruments? To be honest, he got fascinated by them pretty quickly,
but he's been in a regulated industry. So he was a financial advisor, still is a financial advisor.
And he was at one of these firms that was blocking Bitcoin investment. So they had access
for the last couple of years to the Bitcoin equities, which was effectively micro strategy,
but that was the only way to get exposure to bitcoin but when you start seeing these fixed
income products come out it solves a really massive need for a lot of his clients and so
you know one of the things he told me early on was he realized that being a financial advisor
you're not in the wealth creation business you're in the wealth preservation business
and you're not allowed to take risk effectively right so with all the compliance that you have
playing over top of you if you try to do anything farther out the risk curve or you start
concentrating in single equities you know you start getting calls pretty frequently
but at this point in time a lot of the clientele that's using financial advisors is reaching
the later stage of life now and they're shifting to the need for stability right they've got fixed
expenses not everyone's been able to accumulate you know millions millions of dollars and they've
got fixed obligations that they have to meet and so you've got a lot of people looking at what do
i have coming in from social security and then what do i need to live beyond that so fixed income
products that are effectively providing you the yield like you stayed in equities is massive it
takes time certainly to get people comfortable with the products i mean these these products are
less than a year old right so obviously there's going to be a curve here but the conversation's
start now because there's options even if it's a part of diversifying out the fixed income
component of your portfolio but you're able to do it at a higher yield when you can get comfortable
with collateral positions i mean these are amazing products for people that are reaching retirement
so i think these over time are going to catch up and where they might get a lot of market
penetration is through that financial advisor route because these are securities that they'll
be able to offer their fixed income which is very comfortable from a compliance perspective
and once the analysts start covering them and providing insights into that over collateralization
component to these showing that this is not going far out the risk curve to achieve these high yields
these are products that are really going to enable people to meet all their financial goals in
retirement so you know we look at these from our point in life where we've all you know still got
got a lot of years to work left and, you know, try to accumulate. We're still in the accumulation
phase where we haven't shifted over to the preservation phase. Although arguably you could
say we've been in the preservation phase for a long time now because we flipped over to Bitcoin,
but it's one of those things where, you know, it's like Saylor says, people find Bitcoin when
they need to. I think that same thing is going to be applicable for these prefs. I think you're
going to have a lot of people that need to find these prefs in the next, call it five years.
you have a huge population that's aging out of the workforce that's going to be going down to a fixed
income that creates a need to find these types of products so i think just being able to screen down
and find things providing this high a dividends is going to attract a lot of interest here as
people are shifting their portfolios from growth to preservation so what what it would take i'm just
just trying to put this in different words, what it would take is because you've got monetary
debasement, some fixed income need calculation that you had calculated, let's just say you needed
$5,000 a month. And now on a real terms basis, that's now $6,000 a month. You can't
buy those same amount of bonds to cover your $5,000 a month. You've got to look for higher
yield. You got to go further out of the risk curve or change your 60-40 portfolio to 50-50
or do something weird.
The other thing that happens to a lot of people too
is when you get into that last year or two,
when you're coming into the end of your career,
a market correction can scare the heck out of you
because you see your base dwindle.
So like right now,
if we started getting a major market correction,
I'm not seeing one coming, but you never know, right?
They always show up when you're not looking for them.
But if you got one and you've got this huge cohort of people
that are leaving the workforce now, that is what causes people to panic into cash, right?
They can't take the risk anymore because they've got a point where the math stops working for them.
And usually the math that they're using is, you know, you need to generate four to four and a half
percent out of your portfolio. And that's kind of what you're going to live on in retirement if you
don't want to run out of money. Well, if you can plug in, you know, nine, 10% into that equation,
And even if it's blended with other assets that are paying you four, four and a half, that's a massive difference in where that bottom is.
So it is one of those interesting things because you have to think through all these investments from the perspective of all these different generations.
Because while our generations are becoming very aware of the issues with the money and how Bitcoin solves those problems, most of the people in that older generation are never even going to look at it.
but they will look at equities that have high yields.
And if that helps them stabilize,
and it might even be able to allow them
to keep a larger component of that in growth equities,
or maybe they end up in strike and you get the blend of both,
but you get the 8% or whatever it is now
on the actual cash yield, 13%, something like that.
I mean, there's interesting products now
that they can start to slot into that portfolio.
And I think that's going to end up
helping a lot of people. So the demand we've seen for these so far, I think is minuscule
relative to what's probably coming over the next five years, because that is the type of investor
that's going to be rotating out of growth equities and more into fixed income products.
They're like the rotation magnet. If anything's overvalued and there's any fear,
yeah, people are going to rotate into dollars. That's just going to happen.
but a larger, larger portion of people are going to be rotating into these types of Bitcoin backed
fixed income equities because of the yield and the security. Both pieces, the yield and the security.
Yeah. I mean, it's a way to stabilize too. So for instance, with the higher yields now
in these products relative to everything else that they're holding, I can look at my overall
portfolio and go, all right, I know what I need to live within a range. If I take all of my fixed
obligations here, right, my mortgages, my bills, all the fixed obligations that I'm going to have,
I can carve off a smaller piece of that portfolio and move it earlier into these fixed products
that are going to provide me the stability that my capital base is going to be there and the yield
that I'm generating is sufficient to cover everything I need to day-to-day live my life,
which can allow me to leave the other part still out there for growth.
And so you may actually be able to improve your capital base here.
So not to make this a financial advisor type discussion here,
but I think it's interesting to look at all of these products from the
perspective of different investors,
because most of the investors we come into contact with want 3000% a year
returns and they're willing to go way out the risk curve for it.
But that is not most people.
So if you're looking at where do these products fit in for most people and why are these products powerful, just go model out retirement for someone that's achieved a million dollars, which sounds like a lot of money.
But after all the money has been debased for so many years, it's not nearly as much as it used to be.
And add in mortgages and health care costs and the rising price groceries and all these things, it doesn't last you as long as you'd think if you are only gaining, say you're making five or six percent and drawn four and a half.
you know the purchasing power erodes out of that portfolio really really quickly
so you have to start being a little more creative if you weren't fortunate enough to inherit money
or make a bunch of money during your career where you could save you know you've got to start looking
for what other products provide me the opportunity without drastically ramping up my risk profile
and these do that in a really big way because like we've talked about they're effectively
triple a credit if they'd get rated so triple a but i think it's largely up to financial advisors
to learn that and they'll be slow to it right it's not gonna happen fast but i think there's
two three four years here where as these continue to perform they'll start to get highlighted more
and more and as digital credit becomes more prevalent and bitcoin continues to perform
it'll become a very normal part of the conversation over time because it's a
home run product if they can get comfortable with what it is and how it
works.
And they will.
We're in year one.
Like this is a,
this is year one of the next hundred years is,
you know,
Bitcoin back digital,
digital credit on digital cryptography.
It'll only take a few financial advisors to start the ball rolling,
you know,
Because once people that have financial advisors, they all talk to each other and they talk about the performance.
And are you happy with your financial advisor and money transfers from parents to kids And then they starting to have those conversations And if you got somebody that took these types of steps and helped stabilize a portfolio for someone that word gets out And if they outperforming and generating higher yields and that person has
more income to live off of from someone else that had a relatively similar standing,
it makes a massive difference. And that message gets around and capital starts to concentrate
to those types of advisors. So it'll happen, but it'll just take some time.
Yeah, it's the, how'd you buy a new BMW? Well, my financial advisor has these new Bitcoin backed digital yield products. Have you heard of them? And they're like,
They wouldn't even talk about it like that. They would just say, I got into a fixed income product that makes me 10% and is eight to one over collateralized.
Yeah.
Right. Like that's the conversation in, you know, normal land.
And there's a lot of normies out there.
Yeah.
Almost everyone you know.
a lot of zombie there's a lot of zombie normies out there um it was funny i uh i got a message
from one of my friends today and uh i was like okay it's it's it's happening i i got i got a
message can you explain like i'm five what you're doing with bitcoin i've watched a few clips on
linkedin and i don't understand it and it's funny funny enough he got me to buy bitcoin in like 2016
And so he's like familiar with what's happening here, but it's just,
this is not on any, this is not on anybody's radar, like whatsoever.
Um, especially if you're just not working in finance and you just living your life.
My mom was texting me questions about the hurdle rate podcast today.
So, you know, there's like super cycles.
I hear this super cycle.
I think this conversation is going to get a lot louder.
And I think a lot of that's going to be driven by these products because these have the familiar structure that people can understand.
Right.
Equities backed by Bitcoin is tough for people to understand, but collateral and dividends makes clear sense to people.
They understand those terms.
So these are products you can talk about in normal terms.
And it ultimately leads to the discovery and research of Bitcoin.
because for some, not for very many, actually,
most will just take the yield and go good enough
and they'll put money there.
That's how a lot of that works.
But for some people, it'll spark that curiosity
about the actual asset that's backing all this
and they'll want to go down that rabbit hole
and that'll bring a lot more people into that ecosystem.
But I think where it'll become very powerful
is you'll now have a product
that serves the need of the generation
that's hitting retirement and aging out of the workforce now.
But when that money transfers down to the kids
who still have time,
that money may find its way
to actual Bitcoin at that point.
So there's a lot of interesting things
on the horizon.
Sorry not to monopolize this discussion.
Oh, that's good.
Can you hear me okay, Jeff?
Yeah, much better.
I don't know what's up with the other one.
But yeah, I was just saying
all these different equity instruments
are very important
towards the adoption of Bitcoin.
I was at a wedding in Michigan
here in the neck of the woods, Ben.
just this last weekend. And I was sitting at a table with a financial advisor,
five mil and up. He said average 10, 12 million dollar portfolios, 50, 60 clients
that he personally managed. We were talking about Bitcoin and just all this stuff. And
I asked if he owned any, because he seemed to understand it pretty well. And he's like,
what are we, 110 per Bitcoin? He's like, I don't think I could do that. That's expensive.
And I'm like, he had no idea you could buy $100 of Bitcoin and it's divisible.
But yet he had allocated Ibit to some portfolios.
And that's why he was like, well, yeah, I mean, I can get the equity and then I can buy shares that are pegged to Bitcoin.
So if I have $1,000 to invest, why wouldn't I do that versus put in spot Bitcoin?
And he had no idea that you could just do that.
So I was like, dude, we got to download an app right here at the wedding.
Like, let's install it.
But to that point, like, there's just so much education that still has to happen.
And you can be a professional in this space and even have an allocation to iBit and still not understand because you've never interacted with Bitcoin.
You've never set up a wallet.
You've never opened a Coinbase account or whatever else, Gemini.
And you just have no idea how it works.
But they wanted exposure to the asset.
class through ibit through an etf which they understood and again this is a guy who's been
i mean he's about my age he's been doing it for a while good career and again like sizable
portfolios in the space and quite a large book that he managed and had no idea so that that's
interesting for whatever that's how early we are my mom won't buy stretch because it's too risky
like it's fixed it's pegged you know it's supposed to be pegged and interest
i don't know it's scary it's a stock ticker so it's
it's an equity it's a it's a scary equity ticker did you talk to her about collateral did you even
like it was it was it wasn't worth it you're like i can't let's buy this thing it's good
you get a better yield than let's just play parcheesy and have a good night
yeah um i i am going to shout out one of my friends i bought this book uh blood of the
bourgeoisie and by michael sullivan and i'm like 40 pages into it but it's like turning
bitcoin education into like fiction so if you know anybody that likes murder mysteries
like it's this tech it's an advanced technological monetary ecosystem like woven through
uh a fiction narrative and uh like my my chiropractor is bitcoin curious and i'm going to
bring this book to him and he's like oh yeah i love fiction books i'd happily read that he's like
he wants to learn about bitcoin and uh but he's like i don't want to spend too much time and like
I think this is going to be perfect.
And I think it fits right in with trying to teach people about Bitcoin easily through like a medium that's very adaptable.
Shout out Michael Sullivan.
That's a lot of work into creating a fiction book.
And it like captivated me a lot really quickly.
It's going to take me a while to get through it just because I've got so many other things going on.
But it was a fun and exciting read.
to get off the ground pretty grab it amazon on the website just amazon okay yeah amazon guys i'm
gonna jump here it's been a great convo as always yeah i guess later dan so did you guys already
talk about where everybody's at with the treasury landscape right now no not really i've got a
question for you ben i'll put you on the spot but um you guys sequins did a buyback and i as far as
I understand as the first within the treasury space. I mean, MSTR had done one a while ago,
but it wasn't Bitcoin acquisition related, right? So they authorized a buyback. Yeah.
Yeah. So actually there is a company that's been doing buybacks already.
So Empory Digital, I think they've got about 4,000 Bitcoin. They've been buying back for
a couple of weeks now already, I believe. And part of this is when you're running these companies,
what you want to make sure you have is every tool at your disposal that you might need,
because you don't know when you're going to need it. And a lot of people read it. So like when we
launched the ATM, right, even though the stock was trading through all of the pipe selling at the time
and people freaked out, right?
Because you see an ATM get launched.
You know, it's not always about
deploying the tools immediately.
A lot of times it's about making sure
that every tool in the tool chest
is at your disposal all the time, right?
So you've got flexibility to be able to operate.
And so for sequins,
they've got that issue right now
where right now the stock is trading
below the net asset value of the Bitcoin.
And part of the answer can be
you can just do nothing right you don't have to do anything you're not forced into it and for sequins
they've got some benefit because they've already got leverage so part of the capital raise it
wasn't just a pure pipe it was a pipe plus a convert and so you know leverage on them is it
ranges but 49 to 50 right now so they're a very levered long play to bitcoin and when i look across
across this landscape. And when you listen to a lot of the feedback that comes out of the investor
community, there's a lot of interest in the defense of net asset value. That's a common conversation
because it's been viewed that it takes away your entire ability to operate.
And I think part of that is, is we've been a little conditioned for frequent activity.
like if you don't see activity every day or week it the markets decided there's no activity
forgetting that if you go back and you follow the journey of strategy and the build-up there were
almost full quarters where nothing would happen right you'd just be in a waiting period you put
the leverage on you want to be a levered long proxy to bitcoin when the leverage is in place
you can continue to wait until you've got the next move to make but now you know metrics have started
getting tailored to reward short-term execution, which is good because it keeps the attention
of management, but it can also be bad because it can incentivize you to do things that you
might not want the companies to do over the long-term.
And that's one of the things that concerns me with these is people are going to, they're
going to remove actions that benefit the long-term strategy for frequent actions that benefit
short-term trading activities. There's a reason sailors always said we're not going to make moves
for traders. So if you're looking for me to optimize for your options expiration, I'm not
going to do it. And I think that becomes important for companies that are going to endure
over the long period. So when I look at a company like a Sequans or an Empree Digital
or any of the companies that's trading below NAV, what I want them to do is I want them to put
the structure in place to be able to self-correct if need be. So if it turns out that you've got a
long period of time and you had no leverage, now you've got a real problem. So for a lot of
companies, and I know I'm going sideways here, but for a lot of companies, say all you did was
raise equity capital. That was it, right? You've basically got an ATM or an ATM-like product.
That's the extent of your treasury operations.
In those scenarios, I'd be far more concerned when a company dips well below the net asset value, because that's your only tool at that point.
If you have no other leverage on, you haven't had anything else authorized, all you have is the ability to raise equity.
Well, the market's going to sniff out that when you're below NAV, even if Bitcoin runs, if they don't see any upside, they can keep you below NAV forever.
if you apply leverage to the balance sheet and Bitcoin runs, you now get the outsized
impact of that appreciation in Bitcoin value, which is why having leverage is so important.
There's a reason why strategy continues to highlight that they think they're under levered,
right? Because they want that exposure to Bitcoin price over the long term.
For Saquon's, they have that, right? They're plenty levered already, so there's no real rush there.
but what you want is you want to be able to show your shareholder base we're ready if we need to
you know all okay but stocks buybacks can be very impactful so if you're a company that has cash
like sequins does and you have a buyback program and the market gives you a really deep discount
you have to define eventually what deep means because i don't think at 0.99 you should be
buying back stock i think that would be a knee-jerk reaction the market gives you 0.6 or 0.5
you should probably definitely be buying back stock right so there's a wide range here and
this is all in untested waters at the moment because this is the first time we've had this
many companies out there in the market where capital has options to rotate through these
companies and you're seeing all different setups on the balance sheet a lot of them right now are in
the scaling phase and the scaling phase is typically almost fully reliant on equity raises
and there's others that you know have leverage on the balance sheet they've already achieved some
level of scale. They're in position for a Bitcoin run. Bitcoin goes to 150 by the end of the month,
which I heard someone say earlier, just following normal cycle dynamics. The ones with leverage are
in a better position to outperform. The other thing I look at as an investor in the space
is I think currently people got too scared. So you see all these anomalies happen across this
industry. And I think it scares a lot of people out of investing in the market at what's probably
not financial advice, the best risk reward time to make investments that we've seen in a very long
time. When premiums get compressed out of a lot of these equities, that's the time because all the
froth has been out of Bitcoin, even though we didn't really drop that much in Bitcoin, right?
Went down to like 110. That was fine. But now that the froth and the excitement came out of the
market, you see those premiums compressed. And when you have companies that are below nav,
if you look at those companies and I wanted to go make a position for just exposure, right? That
was all I was looking for. I was going to go make an allocation to IBIT. Right now I've got options.
I can look at these other companies and go, if one of these companies has a structure that gives me
a realistic chance of just achieving one multiple to NAF, one times NAF.
If that's all I think it's going to achieve if Bitcoin heats up, I could take what I was
allocating to Bitcoin beta exposure, buy in to some of these companies at a 0.8, 0.85
multiple to net asset value. And if Bitcoin goes on a run and the excitement in that market just
brings that valuation back to just the value of the assets they actually hold already, I'll have
greatly outperformed Bitcoin during that period of time. So you have to look at these as opportunities
because these are the scary times to allocate. Most people, like I said earlier, where market
correction causes people to go to cash and then they won't re-enter the market until the excitement's
back and everyone thinks that it's going to go up forever again. That same thing's playing out here
in these treasury companies, but it's going to happen on a more frequent basis,
right?
Because of high voltage investing in equities.
Yeah, I will also say that
leverage also increases vol because there more uncertainty about operating business There more people that hate it There more people that are shorting your stock and yelling about it Like this doesn make any sense It like there this crank up crank up the
dial of what the valuation should be when you do have leverage on your balance sheet
because of those things.
And there's a big, you know, the community and there's a tribal aspect to what's going
on right now too, right? It's like, we've got the NFL out there and everyone's picking
their team and you know everyone's rooting for their team and their team's great and your team
must suck because their team's great you know we've got a little of that going on out there
and i we all saw it happen you know when met meta planet went on its major run and we were getting
people in the comments yelling at us that you know we were damaged we were damaging shareholders by
not telling them to go from micro strategy to meta planet i like meta planet my own meta planet
a lot more over the last couple of weeks because now it's at just such a good you know value risk
reward value proposition here you know but you have to detach yourself from the emotional response
right everyone gets excited when they're winning we do too all the time but there was a lot that
dove into meta planet the same way a lot dove into micro strategy last november when everything was
spiking and going vertical and you know instinctually these things aren't going up forever
And so you've got to control those emotions during these cycles and just play the math and start looking at the comparisons across the industry.
And if one thing's starting to greatly outperform everything else, you've got to ask yourself, is this real or is there a rotation that's going to happen here?
Because for a while, while these were all very low float stocks, capital could rotate from name to name to name and just keep pumping name after name after name.
and you started to see a lot of these names with the exact same pattern. You go look at any of
these charts right now, they look almost identical. So this is one of those really painful, you know,
they say investing's got expensive tuition. That's true. It really does. And this was one of those
mini cycles. It feels like a full cycle, but one of these mini cycles where people now have to
reevaluate and look and go, has the thesis broken for me or not? And if the thesis hasn't broken,
then you've got a great opportunity that probably doesn't stick around for that long if Bitcoin
starts ripping here because excitement starts coming back. People start looking for those
opportunities for the high voltage plays and the names will start to move again. But these are the
times you position and then you sit on your hands and you wait. This is how most of us did it with
strategy, right? We bought when everyone was writing obituaries and telling Saylor that he
gambled everything and lost. And we were all looking at it going, I don't think that's the
case. So you bought in and we sat for years, right? Which is why we're able to absorb all
these drawings. It wasn't a quick win. We didn't all just make money on a month long option
contract. Like this was years of sitting on an equity, right? It was the dead man's portfolio
approach. And I think that for the names that you see that start to separate themselves in the
space, there's going to be opportunities to do that, but you've got to time it right. There's
reality of investing where there are bad entries. The strategy can be good. The value proposition
can be good and you can get a bad entry. That's the emotional part of investing and controlling
your emotions when you're buying it because the entry matters a lot.
Yeah, a hundred percent. Ben, I'm sorry. I got to break your focus here.
Somebody posted strategy or STRC is on Robinhood. I just checked. It looks like it is available.
confirmed here as well i've got it pulled up yep which is which is huge and it hit an all-time high
in after hours so it's trading at 98.31 the robin hood pump uh the robin hood pump how many people
are in robin hood you might get that atm turned on soon oh my god like anybody that's like just
holding S&P 500 or, you know, like that wants some exposure.
This is just, that's a huge, I feel like this is huge.
The amount of capital that could go and potentially buy SDRC now,
like has got up drastically.
Where are the young people investing these days?
It's on Robinhood and Webull and, you know,
these digital platforms that we've kind of grown up with.
so i am super excited for their investors did meta planet no that would be oh that's gonna be
crazy when that happens because you ask who's on who's on robinhead well they're not really buying
preferred equities we're uh you know wall street but you gens yeah the most part actually you know
what i'm curious to get your guys's take on this i mean some of these um like kraken and galaxy have
of tokenized platforms now.
So they're doing like tokenized equities.
On a Solana or Ethereum blockchain,
what's your thought or take on having a Bitcoin treasury company
on a tokenized Solana or Ethereum chain?
It's a Bitcoin treasury company or a crypto treasury, a Bitcoin,
a Bitcoin treasury company like MSTR.
On a tokenized Solana chain.
Like, is that okay?
I don't get it.
It sounds shitcoinery to me.
It sounds shitcoinery, but it's like it's another pool of capital.
Like, people, it's just, it's like, imagine, imagine Dave Portnoy is on his Kraken account
and he's like going in and out of the shitcoin of the week.
and like when he enters or exits trades like he goes in and out of mstr maybe mstr is his
like base um and but it's tokenized and sits on the kraken platform and the shares are held by
kraken and it's just another pool of capital that can access like it's another pool of capital that
access your stock so in theory it should be really good because it's more demand that can potentially
buy your stuff yeah who cares what the race that you bring them it still all flows up to bitcoin
and that's right you're right but you're also supporting another crypto ecosystem i that came
up that came up this week and i was just like damn this is this really plays with uh my ethos here
but I feel like you can't not do it.
Yeah, I don't know.
That gives me the heebie-jeebies
because I won't even own a cold storage device
that supports anything but Bitcoin.
It has to be Bitcoin only.
You know what I mean?
And I refuse to trade on Coinbase anymore
because they're not Bitcoin only.
So I buy on any of the Bitcoin only exchanges.
You only buy guns that shoot Bitcoin bullets.
I get it.
you're just full on bitcoin okay but what about the gen z that's growing up and they're like all
right well i want to hold all of these have fun staying poor i play with oh my goodness that
financial advisor is talking about he had some wallet on his phone because his friends started
something and sent him like a thousand sats of whatever like tokens so he even had that he had
idea what it was or where to get it but that was just a funny anecdote too that he had some fraction
of some coin that his friend was involved with on his phone he didn't know he could go buy a thousand
bucks of bitcoin yeah it's wild crazy okay well that's big news um looks like
jeffy's right now too they're not supported yet like you can't trade them yet but they're at least
on the platform and they weren't before are they who strife and uh strike nice okay there's
sdr oh yeah it literally wasn't a couple minutes ago yep sweet stuff's happening wow oh my gosh
that's so big oh my god fixed income is about to go so hard oh my gosh fixed income god candles
exciting time to go further in the risk curve yeah this is this is what this is what sailor was
talking about at unconference he's like okay who here holds equity and it's just like it's so easy
it's so easy to put money in robin hood and like gamble and the platform's just like so sexy like
Like the interface is amazing and it's just so easy to put money in there.
And even like automatic drip in there.
And now you have a savings,
like you have a savings account with an equity ticker in front of it. It's like,
oh my God, this is like, it's so big. This is so big.
Didn't they have like their, what is it?
Gold or whatever that was paid and you're like 5% on your cash balance.
Is there something? Yeah. Right.
Gone.
Yeah. Why, why, why would you hold any cash? And like, uh, same with riverhead, some sort of a
platform that it's like, Oh, if you hold cashier, you get, you know, X percent or something. But
it's like now, why, why would I even do that? I just made that product. Obviously it just makes
all these little savings accounts just completely obsolete. Yeah. Take your 10 and a quarter and
your cash and then go buy Bitcoin with that interest. The other thing, it's so easy to
take money off of there too it's like it's like just as easy as already one corporate holding
it podcast right you got a dollar and now you're now it's hood come on yeah you're not gonna i know
sir but true no true north got sold to coinbase for two dollars
yeah to be fair super easy to buy bitcoin on robin hood too just click on crypto by bitcoin
and you could send it out of there you could send out of there too which was not available
a year ago or whenever it was but if you're 10 and a quarter dividends by bitcoin send it to your
wallet there you go i was one of the first 10 000 people to sign up for robin hood in 2014
because i was super pissed off when i was making trades on e-trade in college and i had to pay
ten dollars a trade for it and i was just poor and i'm like ah this is so stupid why do i have
do this and then it was like oh robin hood we're gonna let you trade for free i was like this is
great uh so i signed up for it i was on the wait list for like two years before it came out and
it like 2016 it came out i'm like all right this is cool um but yeah anyway i'm i'm long robin hood
from the interface perspective and they're doing a lot of uh integration and i'm like everyone got
mad at them but like their options setup is really good on there it's really weird oh just the
The interface, like, just see everything.
I was stealing Soleil's brain and turning it into a computer overlord and trading.
I was using their APIs because it was really easy to automate it.
Yeah, and there's really good.
Oh, here we go.
Yeah.
Yeah, let's get people started here.
Yeah.
Decent and fixed equity play.
To move your five minutes.
It's a Dan Ellery special right there.
That's a Dan Hillary special.
Do not tell Dan he's going to be obsessed with that.
Yeah, just the arbitrage.
Holy cow.
Okay.
Well, we're about two hours.
That's all great news.
October started strong.
We've got CAMT has been removed.
Bitcoin's up $5,000 in a day.
And now stretch.
We're getting jacked about fixed income being on Robinhood.
So it's a great day to be alive.
All right.
Final thoughts.
We'll pass it around.
Maybe over to you, Soleil.
Yeah.
When Ben was talking about some people switching over to MetaPlanet, and I just thought it was kind of funny that not only did they switch, but the ATM bears swapped over to MetaPlanet too.
and as soon as their price dropped it was the same damn complaints that people started making
when you know mstr oh i gotta switch over to a faster horse and it was just like recycling all
the same old you know fud bear arguments let it talk to a few of the guys doing the podcast over
there and i go you guys have never understood us better than you do right now while everyone
these are the cycles you go through this is why you know it's people underestimate what it takes to
you know like hold shows like this together while you're just getting berated because
you know there's this desire for that they want your conviction to come to the level where they
lost theirs and they just want you to agree with where they're at that day and it's i think it's
frustrating to people when you just hold your conviction going look this is a really long-term
play for us like i don't really have anything to do i've been allocated for a while you know
i'll adjust once in a while but this is a this is sit on my hands time i'm not going to do anything
drastic going into the historically most bullish quarter for bitcoin if we get an elongated cycle
like this is sit and wait time it's going to fluctuate now it's painful if you chase you know
and there is a lot of value you know there's been expensive lessons because you have to learn
about all these new financing transactions that's been i think really eye-opening for people where
and i know that you know there's there's a lot of hatred that's come for all the pipe deals and
things because you started to see kind of the dynamics there of what can happen and i mean you
never know what's going to happen because you don't know what any individual investors can do
with their shares but once you have some data to work with you can start drawing conclusions and
find good entries on the back of all these events, right?
There's such a category called event-driven investing.
Well, this is one of them.
And you realize how important it is to get into the details
and understand the pricing of any financing.
That's kind of what just happened with MetaPlanet as well.
They did a massive financing and you saw the price kind of
magnet to that pricing and that financing.
And you've seen that a few times.
So these are the learnings that are going to set people up
to be able to find really, really good entries
because you've completely de-risked positions.
And if you believe in how those teams can execute
and how they can operate,
you position yourself for the long-term
and you sit on your hands
and throw your mouse away for a few years
so you can't click any buttons.
Yeah, you see the sailor image on your cell button.
Sorry, Soleil, I totally took over your final thoughts.
No, that was the final, final.
Next.
The final, final.
Yeah.
over to you dan um yeah just macros looking great um as we were talking the dollars in decline um
debt surging gold's ripping where gold goes bitcoin usually follows and a lot harder and faster um so
that go Ben too. I mean, make sure you find your own conviction,
allocate. Dan was talking about just portfolio sizing and percent allocation.
Make sure you're aware of that and have your eggs in whatever basket you're
comfortable with. And then, yeah, allocate, go touch grass. It's October.
We're going, we're going higher.
And be willing to do the research on your own.
There's not always going to be someone to do it and people want transparency and
there's been a narrative out there that there hasn't been a lot of transparency in all these
private financing. But the reality of that is, is that literally the legal document that everybody
signed that has every single term is out there on the SEC websites. You can comb through them,
take your time, do your research, understand the terms, and then allocate when the timing's right.
So that's how you create edge. Being willing to do the research is what creates the edge.
so if you're if you're hunting for edge and you want to find ways to outperform other people you've
got to be willing to go to the next step that most people won't go to and that is diving into
the details so don't skip that step plus you learn an absolute ton when when you do that it's well
worth it to go and spend the time doing that so don't just copy trade hard to read tons of followers
it's not how this works you shouldn't copy trade anybody there's a reason right i've said it for a
long time People get really mad that I don share what I holding on to but it for that exact reason because I know people will try to copy trade and your risk tolerance won be the same as mine Your financial standing may not be the
same as mine. For those reasons, I made the choice really early on just to stay out of that business.
It's fun enough to just cover all the things happening in these markets and talk about it
because it is a sector that I'm an investor in and I'm very bullish on for the long term.
but there's no shortcuts to finding the right positions for your portfolio portfolio you are
the portfolio manager of your portfolio and you need to treat it that way and because of that
that comes with doing your own research and not copy trading you can go look for ideas i love
watching the trades you make every week it's fun because it tells me where to look but i don't use
it to pick what I'm going to buy, but it can fast track where I start researching.
So if I follow you into something, I followed people into trades before and I've gotten smoked
and that was on me. I mean, nobody made me click any buttons. But it taught me a valuable lesson,
which was I had missed something. There was something that would have been blatantly obvious
if I'd gone to the next step and done that research. And ever since then, I won't buy
anything that I haven't gone to that level because if I'm buying something,
I want to sit there and be able to hold it for a very long time.
That's my style of investing. It's pretty boring. Yeah.
I do options once in a while because I like to feel something too but for the most part I just want to allocate and then go outside it nice this time of year you know i reposition in the winter when it sucks outside so do you want maybe final thoughts jeff yeah is that is that your final thought i
mean you're you're it's like final thought from soleil and then like ben's kind of wrapped around
12 40 myself ben sailor workman monologue here people like to go to sleep so if people are
listening we've probably got at least half of them to sleep by now so yeah jeff we didn't break 120
or 118 8 right now what do you guys think yeah one eight 120 by week send
any thoughts absolutely 120 by market open send it no send it
send it yeah a lot to be excited about here ben go ahead final thoughts that was it rip it you got
all my thoughts on that okay let these four people go to bed all right i've i've got some final
thoughts uh and it's kind of on what you were saying ben here the uh our the opportunity for
me when I look at this landscape. One, everybody here is learning
every single day and we don't know the answers to everything, but we're trying to figure it out.
And this is everything we're talking about is novel
and almost every single one of these episodes hurts my brain because I'm just trying to
figure it out in real time comprehend and then communicate it It pretty difficult But one thing that I keep coming back to and what makes this space so exciting and one of the reasons we here is because this movement is so enormously large it deafening This is like a mega trend of
Bitcoin disrupting money on top of a mega trend. You've got a digital Bitcoin backed credit,
another mega trend disrupting the largest capital pool, a $300 trillion market,
like the largest capital pool on the planet. So you've got a mega trend on top of a mega trend
disrupting the biggest pools of capital the world's ever seen. And that's huge. And it's
painfully large and it's gravitational pull is so heavy. I like can't focus on anything else.
So that's why I'm here. That's why I left the reinsurance world to come work in this space
is because this is the biggest opportunity probably of our lifetimes, reframing the monetary base
layer and the credit base layer. And I am just super excited to be here. And I hope to be here
for decades into the future, just making, making hay. That should be good. Let's, let's all,
let's all you know make a ton of money and make our lives better and make the world better
and uh works for me that's it that's all i got cool all right guys thanks for the time
we'll catch you probably next week yes see you