1 00:00:00,000 --> 00:00:09,820 here's how you 70x your money do you want 7 000 returns or here's how you 29x your money 2 00:00:09,820 --> 00:00:18,680 do you want 3 000 returns i mean they sound great right buy my equity and you can outperform bitcoin 3 00:00:18,680 --> 00:00:24,800 these are just some of the terms i've heard thrown around recently who's saying them why 4 00:00:24,800 --> 00:00:29,420 and how can we actually get involved in this opportunity well that's what i'm going to dig 5 00:00:29,420 --> 00:00:35,460 into in this episode. It's the latest hot take in the market and it's Bitcoin treasury companies. 6 00:00:35,960 --> 00:00:40,900 So I'm going to do a bit of a review. What have I learned? What did I do? Run you through an 7 00:00:40,900 --> 00:00:47,600 analysis framework that is new to equity investing due to the innovation that is Bitcoin and take you 8 00:00:47,600 --> 00:00:53,020 through why I consider things always from the perspective of portfolio allocation and paint a 9 00:00:53,020 --> 00:00:58,420 bit of a picture on the future and where this is all going. My name's Jake. Thank you for joining 10 00:00:58,420 --> 00:01:03,020 the podcast. I've been investing my own money for over 10 years. I love sharing what works. 11 00:01:03,400 --> 00:01:08,160 I also love sharing what doesn't work. And it helps people make the right decisions as well. 12 00:01:08,520 --> 00:01:13,900 So if you like this, give us a subscribe, get in touch, hi at jakewoodhouse.io if you have any 13 00:01:13,900 --> 00:01:20,160 questions at all. And I always encourage people, flick over to Nostra, chuck us a zap, get on 14 00:01:20,160 --> 00:01:25,060 Fountain to listen to your podcasts and get involved in the uncensorable social media platform 15 00:01:25,060 --> 00:01:31,660 or protocol that NOSTA actually is. So what are we doing here today? We are going to run through 16 00:01:31,660 --> 00:01:38,420 how I am currently looking at Bitcoin treasury companies. Now, what are they? Like, what is a 17 00:01:38,420 --> 00:01:44,580 Bitcoin treasury company? What are you actually buying? So a little historical recap here is, 18 00:01:45,020 --> 00:01:50,100 since I've been very closely involved in Bitcoin, and I've now almost owned Bitcoin, this December 19 00:01:50,100 --> 00:01:59,160 It'll be 10 years since I first bought some, but it's really from 2020, the last five years that I went headfirst into this as a profession, in a sense. 20 00:01:59,900 --> 00:02:04,760 And when I rewind five years, there was no such thing as a Bitcoin treasury company. 21 00:02:04,760 --> 00:02:16,600 And one of the reasons I got into Bitcoin was the announcement that Michael Saylor made when MicroStrategy decided to reallocate from US dollars as a treasury reserve asset into Bitcoin. 22 00:02:16,600 --> 00:02:32,660 And if there was such a thing as a sailorite, I would be someone like that. Someone who has been investing for a long time, is following people that they believe are making great decisions and understand when, oh my gosh, that's a big deal. 23 00:02:32,660 --> 00:02:53,420 And so when a stock listed public company took Bitcoin on the balance sheet, that was a big deal. How many accountants are going to say you can't do that? How many lawyers are going to say you can't do it? How many shareholders are going to say you can't do it? And there it was, MicroStrategy. Boom. We've just bought 200 million, 300 million dollars worth of Bitcoin. And here's why. 24 00:02:53,420 --> 00:03:03,260 Now, I'm not going to go fully into that story, but there were other versions of that prior, which was, for example, Daniel Pickering running a business called Listed Reserve or Brian Estes. 25 00:03:03,460 --> 00:03:06,120 Both guys I had on my previous podcast, Bitcoin with Jake. 26 00:03:06,220 --> 00:03:08,200 You can go back and find those episodes. 27 00:03:08,440 --> 00:03:11,060 But they were like digital asset funds. 28 00:03:11,700 --> 00:03:20,740 In some ways, they were also front running what was the regulatory clarity required for the ETFs, which all launched in kind of January of 2024. 29 00:03:20,740 --> 00:03:23,880 and have been the most successful financial products 30 00:03:23,880 --> 00:03:26,220 that businesses like BlackRock have ever created. 31 00:03:26,700 --> 00:03:27,980 I mean, it's absolutely extraordinary 32 00:03:27,980 --> 00:03:30,240 what the ETF story is as well. 33 00:03:31,240 --> 00:03:32,820 Basically, there's a different way 34 00:03:32,820 --> 00:03:34,520 of getting exposure to Bitcoin 35 00:03:34,520 --> 00:03:36,800 that isn't Bitcoin in self-custody. 36 00:03:37,380 --> 00:03:40,320 Now, you could own equity in a Bitcoin treasury company, 37 00:03:40,400 --> 00:03:41,520 like we'll discuss today, 38 00:03:41,660 --> 00:03:43,300 but you could also own an ETF 39 00:03:43,300 --> 00:03:46,040 or you could own a part of a digital asset fund 40 00:03:46,040 --> 00:03:46,780 like what I mentioned. 41 00:03:47,140 --> 00:03:49,180 Or of course, you can have Bitcoin 42 00:03:49,180 --> 00:03:52,360 as a derivative on a exchange, which I don't recommend, 43 00:03:52,520 --> 00:03:54,900 or you can have it in a different type of self-custody of your own, 44 00:03:54,960 --> 00:03:56,760 whether that's a single SIG or a multi-SIG. 45 00:03:57,100 --> 00:04:00,820 There's a whole different array of processes of owning Bitcoin. 46 00:04:01,800 --> 00:04:04,700 But to specifically focus on Bitcoin treasury companies, 47 00:04:04,800 --> 00:04:07,280 like this year there's been a proliferation of them, right? 48 00:04:07,920 --> 00:04:09,220 And what are they? 49 00:04:09,840 --> 00:04:11,440 So what's the performance been like? 50 00:04:11,440 --> 00:04:14,820 And, you know, over one year, over five years, 51 00:04:15,580 --> 00:04:17,720 definitely buy yourself a TradingView account 52 00:04:17,720 --> 00:04:23,240 and subscription because it's the only way that I've found to be a straightforward process for 53 00:04:23,240 --> 00:04:27,720 actually analyzing these things. And beware the timeline, like are you choosing the daily chart? 54 00:04:27,800 --> 00:04:32,340 Are you choosing the weekly? Are you measuring over 12 months, over six months, over three years? 55 00:04:32,340 --> 00:04:39,140 You'll get different answers every time. And what are you actually comparing against? Well, 56 00:04:39,280 --> 00:04:45,320 in some ways, these are equities and they're publicly listed. So the comparison that most 57 00:04:45,320 --> 00:04:51,300 equity investors will be using is some kind of benchmark to the general equity market performance 58 00:04:51,300 --> 00:04:57,300 like the MSCI. Now, you could just say, okay, how's the FTSE 100 performed? How's the ASX 59 00:04:57,300 --> 00:05:03,000 performed? How's the S&P 500 performed? What are the index tracking funds you can buy and do some 60 00:05:03,000 --> 00:05:07,640 kind of passive investment play? Or you might be a sound money advocate, but you're still fixed on 61 00:05:07,640 --> 00:05:13,420 gold as the solution. So you're looking at gold as a return. Or what I do, which is Bitcoin as a 62 00:05:13,420 --> 00:05:20,280 hurdle rate. In my opinion, owning Bitcoin in self-custody is the new risk-free rate of return. 63 00:05:20,820 --> 00:05:26,780 Now, the extraordinary thing about it is it's not a US government bond creating you a percent 64 00:05:26,780 --> 00:05:32,240 as a fixed income product each year that if you actually calculate it effectively against 65 00:05:32,240 --> 00:05:39,800 the money printing is net negative real yield. The real inflation rate is faster than the return 66 00:05:39,800 --> 00:05:46,560 you get on a bond the bitcoin hurdle rate is 30 40 50 60 cagr depending on what time frame you've 67 00:05:46,560 --> 00:05:51,760 taken so you need to find other assets that are going to potentially beat that it's quite difficult 68 00:05:51,760 --> 00:05:57,520 as we'll find out but first of all as i think of this as a portfolio it's okay you've got a few 69 00:05:57,520 --> 00:06:04,640 different tranches that you want to think about your net assets in and you know number one cash 70 00:06:04,640 --> 00:06:09,460 right so you're likely to be sitting in some form of fiat currency aussie dollar pounds 71 00:06:09,460 --> 00:06:16,660 whatever it might be then it's cash flow so okay what what businesses do you own or what strategies 72 00:06:16,660 --> 00:06:21,780 do you have in place to generate income with your capital then you've got a capital growth bucket 73 00:06:21,780 --> 00:06:26,560 like how you're actually growing the purchasing power of your net wealth and finally people have 74 00:06:26,560 --> 00:06:32,420 a bracket similar to like a precious metals they might have had before you know like a gold or 75 00:06:32,420 --> 00:06:39,080 whatever. Now, the interesting thing with Bitcoin specifically is it hurdles a cash, like 24 hours, 76 00:06:39,180 --> 00:06:46,200 365 days, it's liquid, but also very volatile short term, so up and down. So it absolutely 77 00:06:46,200 --> 00:06:51,300 smashes the capital growth bucket as well. And what I've tended to do is I actually just buy 78 00:06:51,300 --> 00:06:57,240 Bitcoin, hold, ride it for the capital growth, and as I need cash flow, sell down and pay the CGT. 79 00:06:57,720 --> 00:07:02,400 So that's one way of doing things. But perhaps you could allocate to something that's specifically 80 00:07:02,400 --> 00:07:07,380 a cash flow generating tool. And ultimately, it's like, okay, how do I make my money? How do I 81 00:07:07,380 --> 00:07:11,640 manage my money? How do I multiply my money? Shout out to Laura Tynan that came on the show that has 82 00:07:11,640 --> 00:07:17,400 that really nice framework. And so what is a Bitcoin treasury company? Now, for me, they 83 00:07:17,400 --> 00:07:22,400 currently sit in a bracket, which is okay, let's think about this for a second. It's capital growth. 84 00:07:22,400 --> 00:07:29,280 But within that subset, it's actually speculation. Like to me, these are highly speculative bets. 85 00:07:29,280 --> 00:07:31,460 and I'm willing to make them 86 00:07:31,460 --> 00:07:33,780 with like a very, very small percentage of my net wealth 87 00:07:33,780 --> 00:07:38,520 because if it does do a 10, 20, 30x, happy days. 88 00:07:38,740 --> 00:07:41,640 If it disappears, well, what's the downside? 89 00:07:42,100 --> 00:07:44,660 It's a small percentage of your allocation. 90 00:07:45,500 --> 00:07:49,700 Meantime, I like a large allocation to Bitcoin, 91 00:07:49,700 --> 00:07:52,540 which with a CAGR of 40%, 50%, 92 00:07:52,540 --> 00:07:55,600 it's just crunching away for you in the background 93 00:07:55,600 --> 00:07:58,000 from a wealth growth tool. 94 00:07:58,180 --> 00:07:59,100 It's unbelievable. 95 00:07:59,280 --> 00:08:05,460 what did I actually do about this well I took a position in a company called Matador so the stock 96 00:08:05,460 --> 00:08:12,380 ticker M-A-T-A and I got in at the pre-IPO price which was 50 cents Canadian and what's happened 97 00:08:12,380 --> 00:08:18,760 over the last nine months has been very very interesting at one stage I was going oh god I'm 98 00:08:18,760 --> 00:08:22,980 really pleased with that bitcoin treasury company I bought you know I'm three four x my money 99 00:08:22,980 --> 00:08:30,400 but the the mindset i had on enter on entry was like this is speculative kind of like a an early 100 00:08:30,400 --> 00:08:35,400 stage angel investment in a way but it's always liquid so i saw it as less risky which was great 101 00:08:35,400 --> 00:08:40,260 but it was still it was like this is a five to ten year hold for me like it's it's like maybe 102 00:08:40,260 --> 00:08:45,780 this goes to the moon maybe it doesn't and that's okay but what you'll find out through this episode 103 00:08:45,780 --> 00:08:51,820 is my my thinking's really evolving as to what these companies actually represent and today you 104 00:08:51,820 --> 00:08:58,600 can now buy MATA at less than what I paid in December. Now, the question is, is that a good 105 00:08:58,600 --> 00:09:04,480 price? And price and value are very different things. The concept of investing in lines, not 106 00:09:04,480 --> 00:09:09,180 dots is something I like to talk about. So the initial data point, the initial entry point was, 107 00:09:09,320 --> 00:09:14,040 okay, what was the team doing in December? What was the stock price in December? What progress has 108 00:09:14,040 --> 00:09:28,604 been made since It like okay well there been a product that they released I don really love the idea of like getting gold on the blockchain like just use use bitcoin for what it actually is um and they accumulated some some bitcoin so okay that 109 00:09:28,604 --> 00:09:33,144 interesting i really liked the founding team because of their banking background and their 110 00:09:33,144 --> 00:09:39,464 capital markets background i didn't love it so much because of the kind of crypto lens so am i 111 00:09:39,464 --> 00:09:46,464 happy with performance well not really because matador 21 down from the price i paid shit 112 00:09:46,464 --> 00:09:51,044 okay well that's not quite the headline you might have heard a couple of months ago about how amazing 113 00:09:51,044 --> 00:09:55,904 these treasury companies are what does that really mean it's like okay well for me i'm going to hold 114 00:09:55,904 --> 00:10:00,444 it and see what happens should i be buying more because that's a decision i could make like if i 115 00:10:00,444 --> 00:10:06,044 thought 50 cents a share was good value and it's now 21 below that then why am i why am i not adding 116 00:10:06,044 --> 00:10:11,384 to the position and thus far my thought process is simple it's like you made a small allocation 117 00:10:11,384 --> 00:10:13,404 as a speculative bet, something long-term. 118 00:10:13,564 --> 00:10:15,464 So just let it run, let it do its thing. 119 00:10:15,944 --> 00:10:17,084 But maybe I'm missing a trick. 120 00:10:17,204 --> 00:10:19,244 Maybe I should have exited at the three or four X. 121 00:10:19,524 --> 00:10:21,484 Maybe I should be paying closer attention to this 122 00:10:21,484 --> 00:10:24,684 and monitoring it much more and using my time 123 00:10:24,684 --> 00:10:25,864 and building some kind of system. 124 00:10:26,644 --> 00:10:27,404 And so maybe in the future, 125 00:10:27,404 --> 00:10:29,864 I should implement some kind of sell-side strategy 126 00:10:29,864 --> 00:10:32,424 where it's like, okay, if you buy Bitcoin Treasury Co 127 00:10:32,424 --> 00:10:34,804 and it does a certain multiple, just get out. 128 00:10:35,184 --> 00:10:37,124 Like it's a speculative position, three, four X. 129 00:10:37,184 --> 00:10:38,604 If you've beaten the Bitcoin hurdle rate, 130 00:10:38,964 --> 00:10:41,004 be happy with that, pay your CGT 131 00:10:41,004 --> 00:10:41,944 and get out of the position. 132 00:10:42,964 --> 00:10:44,624 And that's where these Bitcoin treasury companies 133 00:10:44,624 --> 00:10:46,804 are interested because to me, that's pure speculation. 134 00:10:46,804 --> 00:10:48,104 It's like trading an altcoin. 135 00:10:48,364 --> 00:10:50,644 I don't want to own Solana for 10 years. 136 00:10:50,824 --> 00:10:51,444 Like, forget it. 137 00:10:51,824 --> 00:10:54,904 And I actually don't play any altcoin trading games at all. 138 00:10:55,024 --> 00:10:56,944 But I do have some friends that play in that space 139 00:10:56,944 --> 00:10:57,984 and some have done very well. 140 00:10:58,544 --> 00:11:01,364 I would argue that it's going to be much harder 141 00:11:01,364 --> 00:11:03,424 to do that going forwards, but who knows? 142 00:11:04,344 --> 00:11:05,844 I mentioned the 21% down. 143 00:11:05,964 --> 00:11:06,564 That's hopeless. 144 00:11:07,184 --> 00:11:09,584 And Bitcoin from 20 December last year 145 00:11:09,584 --> 00:11:15,584 through to spot market today 12 up wow well that that business has really got a lot of work to do 146 00:11:15,584 --> 00:11:20,144 now to get back up and over that that bitcoin hurdle right and for that reason like this is that 147 00:11:20,144 --> 00:11:26,624 classic concept like action leads to clarity take some risk get some skin in the game and and make 148 00:11:26,624 --> 00:11:33,264 a bet and see what happens and you learn so much as you go along right now in terms of like past 149 00:11:33,264 --> 00:11:37,264 performance i think it's also really important to just point out that obviously bitcoin is the 150 00:11:37,264 --> 00:11:43,104 the hurdle rate but why is this happening with with bitcoin treasury companies and in some ways 151 00:11:43,104 --> 00:11:50,104 like right now august and september is a very quiet period and that's because markets are driven by 152 00:11:50,104 --> 00:11:57,124 people and guess what august is the height of the holiday season so the leading investment decision 153 00:11:57,124 --> 00:12:03,064 makers across the northern hemisphere are on holiday enjoying time with their kids and not 154 00:12:03,064 --> 00:12:07,684 we're trying to take a break right that these guys are and you know guys and girls they are 155 00:12:07,684 --> 00:12:11,864 absolutely active investors and they're following the markets really closely all the time but you 156 00:12:11,864 --> 00:12:17,264 have to take a rest and so what a surprise is a bit of a lull in the market everyone gets back in 157 00:12:17,264 --> 00:12:22,264 september okay what's been going on not sure what are our targets for the end of the year what do we 158 00:12:22,264 --> 00:12:25,644 actually need to get achieved all right we've got two or three month window here to make it all 159 00:12:25,644 --> 00:12:30,604 happen before christmas or even in the u.s thanksgiving which comes a bit before so basically 160 00:12:30,604 --> 00:12:32,864 there's some market fatigue going on right now. 161 00:12:32,964 --> 00:12:34,244 We're like, ooh, Bitcoin treasuries 162 00:12:34,244 --> 00:12:35,524 haven't done quite what we expected. 163 00:12:36,044 --> 00:12:38,084 In fact, I should have just held Bitcoin in some cases, 164 00:12:38,124 --> 00:12:39,344 like me with Matador. 165 00:12:40,144 --> 00:12:41,384 And it's just boring, right? 166 00:12:41,444 --> 00:12:43,864 It's just crunching away, like when's the blow off top? 167 00:12:43,984 --> 00:12:47,604 You know, I've already extended my all-time high prediction 168 00:12:47,604 --> 00:12:48,984 to something like end October, 169 00:12:49,484 --> 00:12:50,904 having originally thought August. 170 00:12:51,404 --> 00:12:52,484 So what's happening here? 171 00:12:52,584 --> 00:12:53,984 And just the market and this cycle 172 00:12:53,984 --> 00:12:56,264 just feels different to before. 173 00:12:56,704 --> 00:12:57,584 What a surprise. 174 00:12:57,864 --> 00:12:58,724 Things are changing. 175 00:12:59,624 --> 00:13:00,564 So the question then becomes, 176 00:13:00,604 --> 00:13:02,444 what happens with Bitcoin treasury companies 177 00:13:02,444 --> 00:13:03,804 between now and going forwards. 178 00:13:04,784 --> 00:13:07,284 Now, I'll get to that in a bit, 179 00:13:07,364 --> 00:13:09,564 but let's just continue this idea 180 00:13:09,564 --> 00:13:11,384 of what has happened thus far. 181 00:13:12,464 --> 00:13:14,844 MicroStrategy, in the last five years, 182 00:13:14,904 --> 00:13:17,464 since they announced their Bitcoin treasury strategy, 183 00:13:17,924 --> 00:13:22,104 they've gone from 31 bucks a share to $330 a share. 184 00:13:22,224 --> 00:13:23,884 That's a 10x in five years. 185 00:13:24,544 --> 00:13:25,884 Well, that's absolutely excellent. 186 00:13:26,464 --> 00:13:28,424 Why wouldn't you want to own some of that equity? 187 00:13:28,424 --> 00:13:30,404 Like, that's a brilliant result. 188 00:13:30,604 --> 00:13:33,924 Now, of course, always peg that back to what Bitcoin has done in the same time frame. 189 00:13:34,644 --> 00:13:42,424 But you've also got MetaPlanet, a business that took on a strategy very similar in April of 2024 through to the spot price of today. 190 00:13:42,904 --> 00:13:50,264 Their Japanese yen price of 27 bucks, 27 Japanese yen, has flown to 596 yen as of today. 191 00:13:50,344 --> 00:13:53,364 That's a 2000% increase, 21x your money. 192 00:13:54,204 --> 00:13:54,544 Wow. 193 00:13:54,924 --> 00:13:59,744 Now, of course, be very careful of the timelines that these prices are quoted against. 194 00:13:59,744 --> 00:14:04,004 Because when I started this podcast, I mentioned a 7,000% return. 195 00:14:04,184 --> 00:14:09,404 Well, that was actually in relation to MetaPlanet that at one point was 70x your money. 196 00:14:09,684 --> 00:14:12,324 Had you got in at the right time and exited at the right time. 197 00:14:13,084 --> 00:14:16,704 But would you have known that that was the right time to get in or the right time to get out? 198 00:14:16,924 --> 00:14:21,244 Did you have the lens and the analytical skills to know where you were actually at? 199 00:14:22,064 --> 00:14:23,624 Well, perhaps not, right? 200 00:14:24,444 --> 00:14:27,064 And that's where this gets really interesting. 201 00:14:27,204 --> 00:14:28,404 So what are we dealing with here? 202 00:14:28,404 --> 00:14:33,404 We're dealing with an investment scenario that hasn't really existed before. 203 00:14:34,024 --> 00:14:35,964 So what the hell is going on out there? 204 00:14:36,884 --> 00:14:43,164 And the typical lens that a value investor would take to these equities, they don't work. 205 00:14:44,104 --> 00:14:46,664 They do not see value when there might be. 206 00:14:47,064 --> 00:14:48,264 And so how do we find that? 207 00:14:48,924 --> 00:14:50,284 A huge shout out to Mark Moss. 208 00:14:50,304 --> 00:14:55,804 If you're a follower of his content and newsletter, you know that he's part of the Bitcoin Opportunity Fund. 209 00:14:55,804 --> 00:14:59,744 and is also raising a fund in the Bitcoin treasury space. 210 00:15:00,564 --> 00:15:05,004 And he had an excellent PDF that I got my hands on at one point 211 00:15:05,004 --> 00:15:07,804 that I was able to run through that helped to identify 212 00:15:07,804 --> 00:15:12,244 how professional investors are starting to analyze these companies. 213 00:15:12,424 --> 00:15:14,704 Like, why has MicroStrategy performed like that? 214 00:15:14,804 --> 00:15:16,604 Why has MetaPlanet performed like that? 215 00:15:16,924 --> 00:15:20,764 And why have other companies like Assembler Scientific not performed like that? 216 00:15:21,784 --> 00:15:25,184 And my feel here is what I want to understand is, 217 00:15:25,184 --> 00:15:29,584 like who are the grifters out there they're like oh my equity is just not doing very well i tell 218 00:15:29,584 --> 00:15:32,924 you what should we jump on this bitcoin bandwagon and see if we can make a bit of extra money and 219 00:15:32,924 --> 00:15:39,784 then you know tin the whole thing you know how am i going to um not get into some kind of pump 220 00:15:39,784 --> 00:15:44,844 and dump scenario like an altcoin how do i actually look at this in a serious manner 221 00:15:44,844 --> 00:15:52,864 versus what the rest of the market might be doing and the the the sell is so obvious right in terms 222 00:15:52,864 --> 00:15:54,844 of, oh, you want to outpace Bitcoin? 223 00:15:55,484 --> 00:15:58,044 Yeah, maybe you're a bit scared of owning Bitcoin in self-custody. 224 00:15:58,404 --> 00:16:01,404 Why don't you buy my equity and I'll do it for you? 225 00:16:01,744 --> 00:16:03,764 And I can see a lot of people getting tripped up by that, 226 00:16:03,844 --> 00:16:09,564 especially with the issue with the unit bias of Bitcoin. 227 00:16:09,684 --> 00:16:12,584 They're like, oh, shit, Bitcoin's at $115,000 of Bitcoin. 228 00:16:12,724 --> 00:16:13,724 I can't afford that. 229 00:16:14,064 --> 00:16:15,824 Maybe I'll just buy some of these companies. 230 00:16:16,324 --> 00:16:18,044 And that happens all the time, right? 231 00:16:18,724 --> 00:16:21,144 And my main fear is what happens in a bear market? 232 00:16:21,144 --> 00:16:29,444 Like it's all very well launching a Bitcoin treasury company in the middle of a bull market where everyone's super excited about where the price is going of the underlying asset Bitcoin. 233 00:16:29,904 --> 00:16:33,224 And they think they can trade at a multiple that is attractive. 234 00:16:33,404 --> 00:16:35,104 It's like, OK, cool. Good for you. 235 00:16:35,664 --> 00:16:38,024 What happens when the momentum shifts? 236 00:16:38,304 --> 00:16:40,244 And that's my main fear with these things. 237 00:16:40,604 --> 00:16:47,944 But the point is, is what we've got to figure out is what is the market's confidence in the equity's ability to accumulate Bitcoin? 238 00:16:47,944 --> 00:16:56,164 and so there's a seven metric framework that mark has identified and i'm just going to run them 239 00:16:56,164 --> 00:17:00,844 through you run you through them all because they they basically when combined you can create a 240 00:17:00,844 --> 00:17:05,544 scoring system and that scoring system helps you identify whether or not this is an equity that 241 00:17:05,544 --> 00:17:10,384 you should look more closely at monitor it buy it or like this is an excellent buy you know get 242 00:17:10,384 --> 00:17:17,504 involved now the first is the m nap so the multiple of net asset value this measures the confidence 243 00:17:17,504 --> 00:17:21,044 of the market in the Bitcoin strategy execution. 244 00:17:21,824 --> 00:17:23,084 So for example, I already mentioned 245 00:17:23,084 --> 00:17:26,164 the idea of similar scientific. 246 00:17:26,364 --> 00:17:27,644 Well, they've got Bitcoin on the treasury, 247 00:17:28,064 --> 00:17:29,064 in their treasury, that's great, 248 00:17:29,144 --> 00:17:30,184 but they're still actually considered 249 00:17:30,184 --> 00:17:31,724 a medical business by the market. 250 00:17:32,344 --> 00:17:34,384 So is this a pure Bitcoin treasury play 251 00:17:34,384 --> 00:17:36,324 or is it some other morph of that? 252 00:17:37,304 --> 00:17:38,624 And a sustainable premium, 253 00:17:39,004 --> 00:17:41,144 so you want to be following this MNAV over time, 254 00:17:41,564 --> 00:17:43,064 indicates that the market believes 255 00:17:43,064 --> 00:17:46,224 the company will generate more Bitcoin value per share 256 00:17:46,224 --> 00:17:47,924 than holding Bitcoin directly. 257 00:17:48,764 --> 00:17:49,764 Now, it's a really important thing. 258 00:17:49,824 --> 00:17:52,104 You've got to think about how many Bitcoin per share 259 00:17:52,104 --> 00:17:55,604 the company has. 260 00:17:55,664 --> 00:17:56,984 So when you're buying these equities, 261 00:17:57,524 --> 00:17:59,464 what percentage of the business do you own? 262 00:17:59,544 --> 00:18:00,824 How many shares are outstanding? 263 00:18:01,124 --> 00:18:02,804 And how many Bitcoin are on the balance sheet? 264 00:18:02,804 --> 00:18:05,624 And are they actively increasing the amount of Bitcoin 265 00:18:05,624 --> 00:18:07,424 you're exposed to or decreasing? 266 00:18:07,784 --> 00:18:09,024 You've got to be really careful about this. 267 00:18:09,504 --> 00:18:11,324 Unsupported premiums often collapse 268 00:18:11,324 --> 00:18:13,124 when execution fails to meet expectations. 269 00:18:13,124 --> 00:18:22,584 So if you can see a sustained MNAV in an equity that claims with Bitcoin treasury company, that's really interesting starting place. 270 00:18:22,704 --> 00:18:28,144 OK, well, these guys have managed to sustain a multiple over the net asset value for this period of time. 271 00:18:28,444 --> 00:18:32,204 Cool. Then it's the Bitcoin holdings transparency, the BHT. 272 00:18:32,984 --> 00:18:36,564 This evaluates the disclosure quality and strategic commitment. 273 00:18:36,564 --> 00:18:48,508 So it like okay what is the quality What the frequency And what the accessibility of a company Bitcoin disclosures Are they actually telling everyone how much Bitcoin they have and how often are they doing it 274 00:18:49,108 --> 00:18:55,548 And so it basically evaluates the effectiveness with which companies communicate their Bitcoin strategy and updates on holdings to shareholders. 275 00:18:56,408 --> 00:18:58,908 It's like, okay, because I could just own Bitcoin in self-custody. 276 00:18:58,908 --> 00:19:00,888 I know exactly how much of the network I own. 277 00:19:01,208 --> 00:19:02,248 I know exactly where it's stored. 278 00:19:02,388 --> 00:19:05,408 I know no one can take it from me or debate it on the back end. 279 00:19:05,408 --> 00:19:14,868 So if I'm buying an equity, I want to know exactly what they're doing with the Bitcoin that they have on the balance sheet, because to me, that's the main driver of the equity price over time. 280 00:19:15,608 --> 00:19:19,108 Next is the MTR, the management track record. 281 00:19:20,008 --> 00:19:23,208 So obviously, the management drives every aspect of a Bitcoin treasury. 282 00:19:23,748 --> 00:19:30,008 So the strategic vision, the execution capability, the stakeholder management, capital allocation discipline. 283 00:19:30,008 --> 00:19:38,908 And if they're poor business operators, then of course, the equity value is not going to go up over time versus the hurdle rate that is Bitcoin. 284 00:19:39,768 --> 00:19:42,348 You're looking for exceptional leadership. 285 00:19:43,188 --> 00:19:46,908 And again, that's why so much of investing in decision making comes back to the team, the talent. 286 00:19:47,568 --> 00:19:49,288 Who are you investing in? 287 00:19:49,588 --> 00:19:58,808 And is it someone that you've seen creating Bitcoin content for five years plus that you know is like ultimately a hardcore Bitcoin maxi, can see an opportunity that others don't? 288 00:19:58,808 --> 00:20:02,248 because they're simply already heading where the puck is, 289 00:20:02,568 --> 00:20:04,468 they're already seeing round corners 290 00:20:04,468 --> 00:20:06,508 because their information is just better than others, 291 00:20:06,928 --> 00:20:08,128 well, that is a good bet. 292 00:20:09,048 --> 00:20:12,668 Next up is the BTCCR, which is the Bitcoin credit rating. 293 00:20:13,568 --> 00:20:16,608 So debt structure determines Bitcoin treasury sustainability 294 00:20:16,608 --> 00:20:18,928 during market downturns, 295 00:20:18,928 --> 00:20:20,748 aka are they over leveraged? 296 00:20:21,708 --> 00:20:23,868 Poor credit profiles force liquidation 297 00:20:23,868 --> 00:20:25,428 at disadvantageous prices, 298 00:20:25,868 --> 00:20:27,408 creating strategic constraints, 299 00:20:27,408 --> 00:20:34,788 generating refinancing risk and limits operational flexibility the opposite applies obviously with a 300 00:20:34,788 --> 00:20:38,128 strong credit profile enables companies to maintain strategies throughout volatility 301 00:20:38,128 --> 00:20:44,088 now i saw a stat at one point that microstrategy's net cost of debt is under one percent 302 00:20:44,088 --> 00:20:51,288 holy shit that is an unbelievable statistic it's like hang on so you can borrow at one percent and 303 00:20:51,288 --> 00:20:57,128 you can accumulate an asset that's growing at 40 a year that is a great play and it's one of the 304 00:20:57,128 --> 00:21:01,508 reasons why public market equities are so interesting in this instance because you can 305 00:21:01,508 --> 00:21:07,548 use financial engineering and someone like a sailor is an absolute wizard financial engineer 306 00:21:07,548 --> 00:21:13,908 that spent 30 years as a founding CEO of a business running a company as a publicly listed 307 00:21:13,908 --> 00:21:20,748 business like what a guy to be able to invest alongside and I as a retail investor like what's 308 00:21:20,748 --> 00:21:26,048 the best cost of debt I can get well very recently I've been doing a real estate transaction and my 309 00:21:26,048 --> 00:21:32,428 interest rates are like 9%. Now, perhaps if I fit their loan profiles a bit better, I might get a 310 00:21:32,428 --> 00:21:38,428 7% or an 8%. But still, you get the point. It's not under 1%. It's part of the problem, in a sense, 311 00:21:38,468 --> 00:21:42,328 it's close to the money printer, right? The Cantillon effect, absolutely in play here. But 312 00:21:42,328 --> 00:21:50,048 that doesn't mean that you cannot exploit the system if you see opportunities. Next up, the BTCYP. 313 00:21:50,048 --> 00:21:55,268 So this is the Bitcoin yield performance. So Bitcoin yield distinguishes genuine value creation 314 00:21:55,268 --> 00:21:56,768 from simple Bitcoin accumulation. 315 00:21:57,728 --> 00:21:59,748 So companies can purchase large amounts of Bitcoin, 316 00:22:00,128 --> 00:22:02,168 but they destroy shareholder value at the same time 317 00:22:02,168 --> 00:22:06,988 if they issue shares at prices below the Bitcoin net asset value, 318 00:22:07,148 --> 00:22:09,248 or they just deploy the capital inefficiently. 319 00:22:09,888 --> 00:22:13,108 So a positive Bitcoin yield means shareholders gain Bitcoin exposure 320 00:22:13,108 --> 00:22:14,288 without suffering dilution. 321 00:22:14,868 --> 00:22:15,788 Really important, right? 322 00:22:15,828 --> 00:22:17,248 Are you being diluted or not? 323 00:22:18,028 --> 00:22:21,108 Next up is Bitcoin talk, which is basically capital efficiency. 324 00:22:22,068 --> 00:22:24,508 So I think this is a key driver of like, 325 00:22:24,508 --> 00:22:27,128 whether or not you're betting on a good team. 326 00:22:28,228 --> 00:22:30,488 But superior operators from companies 327 00:22:30,488 --> 00:22:31,868 that simply spend money on Bitcoin 328 00:22:31,868 --> 00:22:33,608 without creating shareholder value. 329 00:22:34,528 --> 00:22:35,148 I'll say that again. 330 00:22:35,668 --> 00:22:38,408 Capital efficiency separates superior operators 331 00:22:38,408 --> 00:22:41,028 from companies that simply spend money on Bitcoin 332 00:22:41,028 --> 00:22:42,788 without creating shareholder value. 333 00:22:43,828 --> 00:22:46,568 So high Bitcoin talk indicates strategic leverage, 334 00:22:46,988 --> 00:22:49,168 effective market timing, execution excellence, 335 00:22:49,168 --> 00:22:50,628 and sustainable growth capability 336 00:22:50,628 --> 00:22:53,188 without diluting existing shareholders. 337 00:22:53,188 --> 00:23:01,688 now finally it's the r2 it's the model fit correlation high model fit correlation indicates 338 00:23:01,688 --> 00:23:05,628 market recognition of bitcoin strategy price predictability based on bitcoin performance 339 00:23:05,628 --> 00:23:11,908 strategic validation and pure bitcoin exposure for investors low correlation suggests the market 340 00:23:11,908 --> 00:23:17,228 still values companies primarily on legacy business performance i touched already on the 341 00:23:17,228 --> 00:23:21,768 idea of semi-scientific still being the medical company in the eyes of the market that's what this 342 00:23:21,768 --> 00:23:29,428 identifies right is this an out and out bitcoin treasury code play yes or no and the higher the 343 00:23:29,428 --> 00:23:36,028 correlation the better the answer and at the end of all this you get a score so and i'm not going 344 00:23:36,028 --> 00:23:42,508 into any more detail with these metrics right now but this is a quite sophisticated piece of equity 345 00:23:42,508 --> 00:23:49,168 analytics that requires someone to spend you know 10 to 100 hours going through the different 346 00:23:49,168 --> 00:23:53,888 Bitcoin companies that exist and figuring out this model and then figuring out which company 347 00:23:53,888 --> 00:23:59,028 fits well to the model. I am going to try and figure this out myself because I like the learning 348 00:23:59,028 --> 00:24:06,348 process. I'll touch on this in the conclusion. So one thing I've tried to highlight here is 349 00:24:06,348 --> 00:24:11,748 basically the different types of Bitcoin corporate exposure. And think of it in kind of tiers, 350 00:24:11,868 --> 00:24:16,068 essentially. So at the very bottom, it's like companies that put Bitcoin on the balance sheet. 351 00:24:16,808 --> 00:24:19,528 Now, this is what MicroStrategy did initially, right? 352 00:24:19,528 --> 00:24:22,068 They literally just bought Bitcoin instead of earning US dollars. 353 00:24:22,728 --> 00:24:24,808 And then you saw the likes of Tesla come out and buy some. 354 00:24:25,248 --> 00:24:28,028 There's Bitcoin mining companies that are accumulating Bitcoin all the time. 355 00:24:28,628 --> 00:24:31,748 But this is kind of the lowest level. 356 00:24:32,288 --> 00:24:35,188 And MicroStrategy, absolutely not that any longer, right? 357 00:24:35,208 --> 00:24:36,548 They have moved up in a sense. 358 00:24:37,008 --> 00:24:41,268 The layer above that is then a Bitcoin treasury with a legacy business. 359 00:24:41,868 --> 00:24:43,268 So MicroStrategy is that now, right? 360 00:24:43,268 --> 00:24:46,608 They have a very small operational company, but mainly a balance sheet plate. 361 00:24:46,748 --> 00:24:47,828 MetaPlanet as well, right? 362 00:24:47,888 --> 00:24:52,648 They have a hotel, I think, underneath all of their now Bitcoin plate. 363 00:24:53,448 --> 00:24:57,268 And then the top level is literally the Bitcoin ETF, right? 364 00:24:57,688 --> 00:25:03,388 You basically need to understand what tier of corporate exposure the Bitcoin is at. 365 00:25:03,948 --> 00:25:06,068 And so it's Bitcoin on the balance sheet, number one. 366 00:25:06,368 --> 00:25:08,768 Number two, above that, Bitcoin treasury with a legacy business. 367 00:25:08,868 --> 00:25:10,808 And then number three is a Bitcoin treasury strategy. 368 00:25:10,808 --> 00:25:16,588 and these businesses as they evolve in their strategies are moving up and down in between them 369 00:25:16,588 --> 00:25:21,588 and that's something you just need to be really careful of right now of course as part of this 370 00:25:21,588 --> 00:25:26,908 episode i've done plenty of my own um study and i love obviously there's a certain there's a handful 371 00:25:26,908 --> 00:25:32,228 of podcasts that i regularly tune into but so i listened to preston pish a couple times shout out 372 00:25:32,228 --> 00:25:36,988 to preston i was very grateful to meet him briefly i'd love to meet him again and be on a panel with 373 00:25:36,988 --> 00:25:42,768 him at cheat code in sydney uh almost this time last year actually but he described what micro 374 00:25:42,768 --> 00:25:47,108 strategy is building is a transmission and for engineers out there they're immediately they'll 375 00:25:47,108 --> 00:25:51,208 get this but i'm not an engineer and he then referenced it to a bicycle and i said oh that 376 00:25:51,208 --> 00:25:55,928 makes more sense and when you have a bicycle that's got let's say five gears and you've got 377 00:25:55,928 --> 00:26:01,728 a bunch of cogs around the the pedals and you've got some cogs on the back wheel you have an ability 378 00:26:01,728 --> 00:26:05,648 to increase the power that you put into the bike 379 00:26:05,648 --> 00:26:07,888 and then increase the output 380 00:26:07,888 --> 00:26:11,308 or decrease the output and decrease the input. 381 00:26:12,208 --> 00:26:14,708 And what he's describing MicroStrategy as 382 00:26:14,708 --> 00:26:16,748 with the blend of ordinary shares, 383 00:26:17,128 --> 00:26:18,528 preference shares and debt 384 00:26:18,528 --> 00:26:24,848 is a company that is able to supply a transmission 385 00:26:24,848 --> 00:26:27,828 to wealth in the public markets. 386 00:26:28,028 --> 00:26:29,648 And so as the market heats up, 387 00:26:29,948 --> 00:26:31,188 they can shift things around. 388 00:26:31,188 --> 00:26:34,428 And as the market cools off, they can shift things around again. 389 00:26:35,368 --> 00:26:39,948 And that's an extraordinarily simplified version of what, you know, Saylor is actually doing. 390 00:26:40,268 --> 00:26:42,248 Again, like what a guy, right? 391 00:26:42,268 --> 00:26:47,028 Are you going to bet against Michael Saylor 30 years of managing his own founder-led business? 392 00:26:47,628 --> 00:26:54,448 Like to be able to sit alongside a master financial engineer like that as a retail investor is an incredible opportunity. 393 00:26:54,688 --> 00:26:57,468 And that would be the one business I'm looking at probably the most closely. 394 00:26:57,468 --> 00:27:03,268 but what Preston highlights what I hadn't previously understood is maybe the Bitcoin 395 00:27:03,268 --> 00:27:08,908 treasury companies aren't actually an out and out speculative play for capital growth over and 396 00:27:08,908 --> 00:27:15,848 above Bitcoin maybe they're a cash flow play and he highlights it's like it's all about the bond 397 00:27:15,848 --> 00:27:22,228 market like what's this guy talking about and essentially the boomers they want to retire and 398 00:27:22,228 --> 00:27:26,348 let's say they've got a net wealth of a million bucks well you give that to the US government 399 00:27:26,348 --> 00:27:29,828 on a five-year or a 10-year or a 30-year yield, 400 00:27:30,088 --> 00:27:31,708 you're making a couple of percent. 401 00:27:32,108 --> 00:27:32,888 So what, so you're going to, 402 00:27:32,988 --> 00:27:35,308 your million bucks is going to give you 10 grand a year, 403 00:27:35,748 --> 00:27:37,188 20 grand a year, that's going nowhere. 404 00:27:37,588 --> 00:27:40,188 Whereas micro strategy is pumping out seven, 8%. 405 00:27:40,188 --> 00:27:42,528 So, ah, that becomes a lot more interesting 406 00:27:42,528 --> 00:27:43,728 from an income play 407 00:27:43,728 --> 00:27:45,868 because the dividends are so attractive 408 00:27:45,868 --> 00:27:48,208 and there's different forms of micro strategy, right? 409 00:27:49,288 --> 00:27:50,968 You know, spend a bit of time figuring out, 410 00:27:51,148 --> 00:27:52,288 okay, do you want preference shares 411 00:27:52,288 --> 00:27:53,688 or do you want to own debt 412 00:27:53,688 --> 00:27:55,528 or do you want to own the equity itself? 413 00:27:56,348 --> 00:27:59,388 The ordinary shares or common shares, they might be called. 414 00:27:59,928 --> 00:28:16,192 So there more complexity here This episode is not about diving into micro strategy as an out and out discussion Maybe I can save that for later if you interested let me know and i can run through it the point here is to is to rejig my thinking it like ah maybe this isn a moonshot play maybe this 415 00:28:16,192 --> 00:28:22,212 is a cash flow play and then going back to mark's report what they highlight is the addressable 416 00:28:22,212 --> 00:28:29,612 market for bonds 300 trillion dollars right and it's like okay the fixed income markets are 417 00:28:29,612 --> 00:28:35,812 absolutely ripe for disruption because we know that owning these products is not beating real 418 00:28:35,812 --> 00:28:40,312 inflation now they're good from a liquidity perspective and they're good from a downside 419 00:28:40,312 --> 00:28:46,812 risk perspective in that most people believe that the capital risk is very low right they don't 420 00:28:46,812 --> 00:28:51,852 expect the US government to not pay them back the money now they they won't not pay them back because 421 00:28:51,852 --> 00:28:55,772 they can print their money but the question is what are those things actually worth in real 422 00:28:55,772 --> 00:29:02,032 purchasing power terms in 20 years time in 30 years time well my bet is that they are pummeled 423 00:29:02,032 --> 00:29:08,192 absolutely pummeled so actually why not own a company that pays an excellent dividend 424 00:29:08,192 --> 00:29:15,252 because their balance sheet is unbelievably strong and you're not buying an operation 425 00:29:15,252 --> 00:29:20,612 so it's not a mining company that's got to get shit out of the ground ship it to a port send it 426 00:29:20,612 --> 00:29:27,212 overseas sell it, it's literally holding Bitcoin and then using financial engineering, which is 427 00:29:27,212 --> 00:29:34,372 available to public companies and public offices, such as convertible loans, such as ordinary shares 428 00:29:34,372 --> 00:29:40,012 and preference shares. And it's like, wow, this is actually a very different play. And Mark's 429 00:29:40,012 --> 00:29:47,012 report suggests that if you look at the size of the Bitcoin treasury market today, and you look 430 00:29:47,012 --> 00:29:49,112 at the total size of the fixed income market, 431 00:29:49,212 --> 00:29:52,472 you've got a 6,000x potential in market size. 432 00:29:53,272 --> 00:29:56,452 So, okay, well, this catches my attention 433 00:29:56,452 --> 00:29:57,012 because you're like, 434 00:29:57,352 --> 00:30:00,772 are you batting in a market that's small 435 00:30:00,772 --> 00:30:02,612 compared to what it's disrupting? 436 00:30:02,872 --> 00:30:05,172 And the answer is absolutely emphatically yes. 437 00:30:05,572 --> 00:30:06,772 And if that's the case, 438 00:30:06,772 --> 00:30:08,592 then you can jump on board something 439 00:30:08,592 --> 00:30:10,612 with an excellent tailwind 440 00:30:10,612 --> 00:30:12,632 because the market's massive 441 00:30:12,632 --> 00:30:13,852 and that gives people the opportunity 442 00:30:13,852 --> 00:30:15,932 to get it wrong a bunch of times, 443 00:30:15,932 --> 00:30:20,172 but still it's like actually what you're competing against here isn't necessarily other bitcoin 444 00:30:20,172 --> 00:30:26,332 treasury companies it's fixed income products and what are they paying so okay well there's a value 445 00:30:26,332 --> 00:30:30,632 of the loan itself of course underneath it all but then what's the yield and those yields well 446 00:30:30,632 --> 00:30:34,972 they're crap compared to the dividend that something like a micro strategy is actually 447 00:30:34,972 --> 00:30:40,972 able to play yeah whoa okay so for me this is a big learning maybe i've been thinking about this 448 00:30:40,972 --> 00:30:46,492 all wrong. Now, I'm still very concerned about how do these things perform on the way up versus the 449 00:30:46,492 --> 00:30:52,972 way down. And that remains to be seen, right? Maybe we hit an all-time high towards the end of this 450 00:30:52,972 --> 00:30:58,552 year, and then we're going to crunch back down, I'm pretty sure, for kind of 12 to 18 months or so 451 00:30:58,552 --> 00:31:04,632 until the next rally. My entry point is likely to be at the bottom of the next bear. I think that 452 00:31:04,632 --> 00:31:09,672 makes the most sense. Watch and wait and see what happens. How do these equities actually perform? 453 00:31:09,672 --> 00:31:13,512 Who is to again discuss investing in lines, not dots? 454 00:31:13,632 --> 00:31:15,532 Who's really making progress? 455 00:31:15,832 --> 00:31:18,352 Who's truly figured out what these things actually are? 456 00:31:18,872 --> 00:31:24,212 And of course, with that seven metric framework, you already have an excellent position on 457 00:31:24,212 --> 00:31:27,592 what's going on because it will filter out a lot of companies. 458 00:31:27,712 --> 00:31:32,992 I've got a list on my trading view of companies that have announced that that Bitcoin treasury 459 00:31:32,992 --> 00:31:33,572 strategy. 460 00:31:33,792 --> 00:31:36,352 You can go to the website, bitcointreasuries.net. 461 00:31:36,432 --> 00:31:36,992 I think it is. 462 00:31:36,992 --> 00:31:41,232 there's lots of businesses out there that have bitcoin on the balance sheet now but which ones 463 00:31:41,232 --> 00:31:45,652 are bitcoin companies and which ones are like oh buy my equity because i've got a little bit of 464 00:31:45,652 --> 00:31:51,272 bitcoin what's happening is maybe i'm going to have to shift from this speculation lens to actually 465 00:31:51,272 --> 00:31:55,892 cash flow and the boomers out there that are thinking about how to allocate their retirement 466 00:31:55,892 --> 00:32:01,552 well they're definitely looking for cash flow and so maybe these bitcoin treasury companies are 467 00:32:01,552 --> 00:32:06,332 teeing themselves up to hammer into that market and i think that could well be a good bet 468 00:32:06,332 --> 00:32:11,932 so a final thing I want to talk through before I wrap this up 469 00:32:11,932 --> 00:32:14,932 there's been a situation that popped up recently here in Australia 470 00:32:14,932 --> 00:32:20,172 there was a business called Locate that announced a Bitcoin treasury strategy 471 00:32:20,172 --> 00:32:23,412 and they were an ASX listed 472 00:32:23,412 --> 00:32:28,092 it was a logistics technology company 473 00:32:28,092 --> 00:32:32,652 now what's happened is the ASX has certain guidelines for the type of business 474 00:32:32,652 --> 00:32:34,652 that can register on their index 475 00:32:34,652 --> 00:32:43,972 and one of the subsections of it is it requires the business to not have a 50% or more cash or 476 00:32:43,972 --> 00:32:52,832 cash-like balance sheet and it considers Bitcoin to be cash-like. Now the irony of this is the ASX 477 00:32:52,832 --> 00:32:59,392 considers Bitcoin as cash-like but the ATO, the tax office in Australia, still considers it a capital 478 00:32:59,392 --> 00:33:05,692 asset for capital gains. So that's a clear contradiction. And ASIC, the securities regulator, 479 00:33:05,692 --> 00:33:11,252 has another opinion. So it's a mess in a way. But the reason that we're not seeing a proliferation 480 00:33:11,252 --> 00:33:16,812 of these kind of companies on the ASX is because of this ruling. Now, are they going to change it? 481 00:33:16,892 --> 00:33:21,792 I hear they might reconsider it. But the company Locate, I heard, is actually going to go to the 482 00:33:21,792 --> 00:33:30,772 NZX where that doesn't exist. And so what this highlights is there are local geographic driven 483 00:33:30,772 --> 00:33:40,672 market nuances that drive the arbitrage opportunity on stock prices. So why did MetaPlanet rocket the 484 00:33:40,672 --> 00:33:46,692 way it did? Well, it unlocked a load of capital in the Japanese market that didn't have access to 485 00:33:46,692 --> 00:33:51,672 Bitcoin. So what we as investors that have an ability to bet on these globally listed 486 00:33:51,672 --> 00:33:57,412 public markets is find those opportunities. And that I think could be really good fun. 487 00:33:58,432 --> 00:34:04,412 And you're like, oh, right. OK, so the ASX right now, for me, there's no point. Right. But 488 00:34:04,412 --> 00:34:11,112 the day that they update that term to say, OK, 50 percent cash is no longer a requirement of ours 489 00:34:11,112 --> 00:34:15,772 or 50 percent cash like because of Bitcoin's requirement, or they might make a subsection 490 00:34:15,772 --> 00:34:20,892 specific to Bitcoin? I don't know. Shout out to the guy that the Australian Bitcoin industry body 491 00:34:20,892 --> 00:34:25,052 that highlighted this issue for me recently in the work they're doing. So do go and check that out. 492 00:34:26,012 --> 00:34:31,092 But you're like, OK, so where else might this happen? You've got to be super careful about the 493 00:34:31,092 --> 00:34:36,952 timeline, right? You hear 7000% return, 3000% return, but they're over specific timelines and 494 00:34:36,952 --> 00:34:40,852 those prices, they've come off. They've really come off. So those opportunities aren't quite 495 00:34:40,852 --> 00:34:43,432 as sexy as people might have made them sound. 496 00:34:44,272 --> 00:34:45,692 But I think you can say like safely 497 00:34:45,692 --> 00:34:47,772 that past performance has been extremely interesting. 498 00:34:48,612 --> 00:34:50,812 And so has your mindset shifted? 499 00:34:50,932 --> 00:34:52,852 Well, yeah, mine's shifting as you can hear. 500 00:34:53,112 --> 00:34:54,572 The next step is where's it going? 501 00:34:55,252 --> 00:34:58,172 So what's going to happen between 2025 and 2030? 502 00:34:58,632 --> 00:35:03,072 And that's really what I think I want to bet on going forward. 503 00:35:03,072 --> 00:35:05,752 It's like maybe back into 2026, 2027, 504 00:35:05,972 --> 00:35:08,472 there's going to be some interesting equity positions to take 505 00:35:08,472 --> 00:35:14,432 where you know that they've taken really, really fascinating Bitcoin treasury strategy positions 506 00:35:14,432 --> 00:35:17,512 and are a good bet over the kind of medium term. 507 00:35:19,712 --> 00:35:24,572 More recently, we're obviously hearing that the interest rate environment is shifting 508 00:35:24,572 --> 00:35:26,752 and central banks are starting to loosen. 509 00:35:27,472 --> 00:35:29,472 So big meeting in the Federal Reserve this week. 510 00:35:29,712 --> 00:35:31,132 I record on a Thursday morning. 511 00:35:31,412 --> 00:35:34,252 This will be out probably Monday next week, so after the weekend. 512 00:35:34,252 --> 00:35:38,332 and it will not surprise me in the slightest if there's been a rate reduction. 513 00:35:39,012 --> 00:35:41,512 I think I saw a 90% probability of that happening. 514 00:35:41,952 --> 00:35:44,192 And with that, is that going to be immediately priced in 515 00:35:44,192 --> 00:35:46,912 or are we going to see asset prices start to pump? 516 00:35:47,332 --> 00:35:50,032 My recent experience with the real estate market here in Australia, 517 00:35:50,032 --> 00:35:53,392 lots of the sales agents are talking about interest rate reductions in Australia. 518 00:35:54,052 --> 00:35:58,792 Again, the cheaper the cost of capital, it's got to find somewhere to go. 519 00:35:59,532 --> 00:36:00,792 Often it's into asset prices. 520 00:36:01,512 --> 00:36:03,052 So over the next, where are we now? 521 00:36:03,052 --> 00:36:08,012 mid-September, October, November, December. People back from work, interest rates coming off. 522 00:36:08,712 --> 00:36:12,572 It's going to be a very, very, very exciting couple of months to see what actually happens. 523 00:36:13,532 --> 00:36:17,652 And so let me summarize. Where am I actually at as an investor in Bitcoin treasury companies? Well, 524 00:36:18,532 --> 00:36:24,152 number one, I need more time to learn. Absolutely. Even just creating the content for this podcast 525 00:36:24,152 --> 00:36:29,392 episode, I've learned some things. And it's like, oh, that's just okay. I hadn't thought about that. 526 00:36:29,392 --> 00:36:29,932 You know what I mean? 527 00:36:30,512 --> 00:36:33,392 Number two, I just want to watch, witness what actually happens. 528 00:36:33,652 --> 00:36:35,512 See who are the winners, who are the losers, 529 00:36:35,852 --> 00:36:41,272 who are the team that strike me as actually having a high-level integrity, 530 00:36:41,772 --> 00:36:46,252 genuinely understand Bitcoin and have a maximalism philosophy. 531 00:36:46,252 --> 00:36:51,272 I think about the speech that RFK Jr. did, 532 00:36:51,652 --> 00:36:54,352 which included so much about Bitcoin mining 533 00:36:54,352 --> 00:36:57,372 and the ability for Bitcoin as a sound money to improve the world 534 00:36:57,372 --> 00:37:01,512 versus Mr. Trump at the conference's pre-election. 535 00:37:02,312 --> 00:37:07,312 And, you know, Mr. Trump has released a number of his own coins and stable coins. 536 00:37:07,472 --> 00:37:11,132 And it was just so obvious, right, that there was a guy that had really gone out 537 00:37:11,132 --> 00:37:14,352 and looked at the base layer problem of money. 538 00:37:14,932 --> 00:37:17,212 And Bitcoin was an unbelievable solution to that 539 00:37:17,212 --> 00:37:19,612 versus someone who was throwing out buzzwords 540 00:37:19,612 --> 00:37:23,372 and basically was just absolutely buying votes. 541 00:37:23,812 --> 00:37:24,692 And, you know, OK, interesting. 542 00:37:24,812 --> 00:37:27,352 So the same will happen with CEOs of Bitcoin treasury companies. 543 00:37:27,372 --> 00:37:28,132 Right. 544 00:37:28,176 --> 00:37:32,256 guys that come out and they just like yep well look it turns out i'd actually been reading 545 00:37:32,256 --> 00:37:36,436 ludwig von meisies for the last 20 years and i've been a sound money advocate but i just 546 00:37:36,436 --> 00:37:41,056 never looked into bitcoin i was also the ceo of the stock listed company and it's actually so 547 00:37:41,056 --> 00:37:45,376 clear to me that this is the best way to protect the purchasing power of the company for the 548 00:37:45,376 --> 00:37:52,576 shareholders it is a it is a responsibility of mine as the official leader of this business to 549 00:37:52,576 --> 00:37:58,076 protect the capital of the shareholders i'm buying bitcoin versus shit guys our business is really 550 00:37:58,076 --> 00:38:01,496 not doing great. Should we just like throw out the word Bitcoin and see if we can pump our retail 551 00:38:01,496 --> 00:38:08,016 price a bit more and let's maybe try and fold the company. You just don't know, right? So number one, 552 00:38:08,776 --> 00:38:12,836 need more time to learn. Number two, keen to witness performance. Number three, aware that 553 00:38:12,836 --> 00:38:16,976 the opportunity might be closing. So yes, I'm looking at point number four, the bottom of the 554 00:38:16,976 --> 00:38:22,516 next bear, check out the chances. But like maybe this opportunity is closing. I don't yet know. 555 00:38:22,516 --> 00:38:28,656 there are people out there that would like to say that it is hence buy my equity or invest in my 556 00:38:28,656 --> 00:38:34,636 fund but i i don't i don't know like bitcoin's so early right look at net assets globally bitcoin 557 00:38:34,636 --> 00:38:39,796 two trillion okay we've got a long way to go right so for me this still is a speculative thing 558 00:38:39,796 --> 00:38:48,636 like nothing beats bitcoin in self-custody go and figure that out first once you figure that out 559 00:38:48,636 --> 00:39:00,561 Okay maybe it appropriate to take a bit more of a speculative position with some of your wealth So point number five yeah for me it remains a speculative bet And point number six finally is nothing beats Bitcoin in self 560 00:39:01,261 --> 00:39:04,361 Now, I want to caveat these conclusions with a couple of things, 561 00:39:04,361 --> 00:39:10,121 which is I think I might be wrong about Bitcoin treasury companies 562 00:39:10,121 --> 00:39:12,581 representing a speculative play. 563 00:39:13,301 --> 00:39:16,141 And actually, I should look at them more as a cash flow play. 564 00:39:16,141 --> 00:39:34,881 And therefore, instead of comparing the equity position to Bitcoin, the hurdle rate, perhaps I should be comparing it to the S&P 500 index returns or the real rate of inflation in terms of monetary debasement and the ability to return a dividend, aka a yield. 565 00:39:35,101 --> 00:39:44,561 So it's kind of like instead of owning Bitcoin itself, you own an equity in a company that understands how to use financial engineering, which therefore pays you rent. 566 00:39:44,561 --> 00:39:49,861 so it's kind of like you know the traditional real estate play in terms of like the model and 567 00:39:49,861 --> 00:39:54,801 the capital growth and the yields um so that's definitely one i need to spend some more time 568 00:39:54,801 --> 00:40:02,101 thinking about caveat that number two with well if the if the yield on an equity is 10 percent and 569 00:40:02,101 --> 00:40:06,001 you owned a million bucks of it and therefore you've got a hundred grand a year just to play 570 00:40:06,001 --> 00:40:10,881 on that example i gave earlier that sounds nice from an income perspective but if that equity only 571 00:40:10,881 --> 00:40:13,741 goes up by the same as the S&P index over 12 months. 572 00:40:13,741 --> 00:40:18,221 So 12% so it's suddenly 1.12 and you make another 100 grand the next year. 573 00:40:18,541 --> 00:40:29,285 So okay so you made yourself a net gain of let call it 1 1 but Bitcoin might have doubled And so you could be sitting on two and you send sell down the 200 grand 574 00:40:29,285 --> 00:40:32,665 and you still have 1.8 million bucks worth of capital. 575 00:40:33,305 --> 00:40:34,885 So it needs to be played with, right? 576 00:40:35,265 --> 00:40:37,025 And some more thinking. 577 00:40:37,565 --> 00:40:39,265 One other thing this has thrown up 578 00:40:39,265 --> 00:40:42,485 is I love spending time with my kids. 579 00:40:42,985 --> 00:40:44,185 I'm a homeschooling dad. 580 00:40:44,765 --> 00:40:46,825 My time during the day 581 00:40:46,825 --> 00:40:49,685 is best spent focused on playing with them. 582 00:40:50,565 --> 00:40:52,745 And for me to go and spend hundreds of hours 583 00:40:52,745 --> 00:40:54,725 analyzing Bitcoin treasury company opportunities, 584 00:40:54,925 --> 00:40:56,525 yes, it would be a fantastic way of learning, 585 00:40:57,145 --> 00:41:00,245 but maybe it's just not what I want to do with my time right now. 586 00:41:00,385 --> 00:41:02,625 And another opportunity is to invest in a fund. 587 00:41:03,065 --> 00:41:05,865 And that is what Mark's building, the Quantum Wave Fund. 588 00:41:06,225 --> 00:41:07,585 So do go and check that out as well. 589 00:41:08,285 --> 00:41:10,225 It might be just a simpler process. 590 00:41:10,225 --> 00:41:14,805 Okay, just allocate a percentage of your portfolio 591 00:41:14,805 --> 00:41:20,025 that you feel comfortable with to make a speculative bet slash a cash flow play and let someone else get 592 00:41:20,025 --> 00:41:24,325 on with the hard work of figuring out how to actually do that. So I'm trading off this idea 593 00:41:24,325 --> 00:41:28,005 of like, do I want to learn more myself or do I let someone else get on and do it for me? And what's 594 00:41:28,005 --> 00:41:32,605 my time worth and what's important to me? And that, of course, is a lens that everyone should take. 595 00:41:33,225 --> 00:41:36,925 I saw something recently that was very interesting when I was researching the power law in relation 596 00:41:36,925 --> 00:41:41,685 to Bitcoin and someone described, if your understanding of Bitcoin is good, then you're 597 00:41:41,685 --> 00:41:43,785 1% of the population currently. 598 00:41:43,785 --> 00:41:57,510 If you understand that the power law is the pricing trajectory of Bitcoin then you 1 of the 1 So your 0 of the population has understood that Bitcoin is important and that Bitcoin is following the power law Now the power law could be broken 599 00:41:57,630 --> 00:42:02,050 of course, but that was an interesting lens. I'm like, if you're understanding Bitcoin, 600 00:42:02,230 --> 00:42:06,790 you're 1% of the population. If you understand Bitcoin treasury companies as an opportunity 601 00:42:06,790 --> 00:42:12,630 with this level of sophistication, i.e. I've got to run every Bitcoin company that's claiming to be 602 00:42:12,630 --> 00:42:19,830 treasury company play through those metrics, I would argue also 1% of the 1%. So probably 0.1% 603 00:42:19,830 --> 00:42:24,830 of the global population is currently looking in this much detail at what a Bitcoin treasury 604 00:42:24,830 --> 00:42:31,110 company might be. That's mad, right? What do I know? Well, Bitcoin's inevitable. Everything I've 605 00:42:31,110 --> 00:42:36,070 studied about it, it's just going to do its thing. The question is, what part do I want to play in 606 00:42:36,070 --> 00:42:41,650 that? And which area do I want to focus my time and attention? And if it's doing a 30, 40, 50% 607 00:42:41,650 --> 00:42:47,930 CAGR on its own maybe you just kick back and go and enjoy being a dad and it's funny because I find 608 00:42:47,930 --> 00:42:52,030 that I find that so hard to go and do there's something that's so deeply conditioned within 609 00:42:52,030 --> 00:42:57,710 me to be always hunting for these opportunities working quote unquote but I guess that's just me 610 00:42:57,710 --> 00:43:01,690 so let's see where it all goes I'd love to hear from you if you found this valuable reach out 611 00:43:01,690 --> 00:43:07,930 hi at jakewoodhouse.io drop me a message and equally jump onto fountain send us some zaps 612 00:43:07,930 --> 00:43:14,690 boost and I'd love to hear from you so with that awesome enjoy your day and that is my latest take 613 00:43:14,690 --> 00:43:16,590 on what Bitcoin treasury company is