Are Bitcoin Treasury Companies Safe? Tim Kotzman Breaks It Down

0:00It was a Ponzi scheme that was just really like the market was just scratching their heads. And then when you traded below one people went the other way and they were like, okay, well this is doomed to fail. Extremes of trading at, call it 40 times what your Bitcoin is worth all the way to trading at pennies on the dollar. Drink water, stay calm and buy Bitcoin. Welcome to Honest Money. I'm your host Anya and today's episode is brought to you by High Block. Welcome back to another episode of Honest Money. Joining me today is Tim Kotsman. Tim is on a mission to become the world leading expert in Bitcoin as a Treasury Reserve asset. Welcome to Honest Money Tim. Thank you. Thanks for having me and pleasure to be here and it's definitely a journey with that sort of introduction. So thank you. You're very welcome.

1:01Maybe let's get started with the Clarity Act because that's kind of the biggest news in Bitcoin right now. Obviously the Senate declined it. Do you want to tell the Australian audience a little bit about that? Yeah, the TLDR is it failed yesterday. Yeah, really many of the analysts in the space, the Bitcoin space, the crypto space, digital assets, viewed it as America remaining competitive and leading in the crypto space. Maybe a slight tailwind for Bitcoin itself, but really more just as a title suggests more clarity from a regulatory standpoint in the United States for digital assets. And we saw on social media today the Commissioner of the SEC, the Commissioner of the CFTC come out with statements that they are continuing to along in the process of rolling out their own pro digital asset, pro crypto,

2:16guidance guidelines within their authorities. And so that will be great, but could technically be overturned by the next administration. So it'll be interesting to see how that develops for the next two years. Of course, we have the midterm elections coming up in November, the United States. So yeah, it's unfortunate that the Clarity Act did not pass, especially at least through social media. You saw Senator Cynthia Alamos and several others, including representatives from the White House, Patrick DeWitt and others before him really trying to garner support and working tirelessly to get that done. So yeah, it's interesting to see just how pro innovation and pro digital assets pro crypto, the Securities and Exchange Commission and the CFTC will be as they

3:20continue to roll out guidance here. I have seen some criticism online that this was done to score essentially political points, but what is the impact on corporate treasuries, specifically why this bill is not going ahead? Corporate treasuries, meaning Bitcoin treasuries, I don't see an impact, the executives at the leading treasury companies that I talked to on a weekly basis have said for some time that it was more guidance rulemaking around crypto and not necessarily Bitcoin. So I don't see any, I mean Bitcoin has been clarified by the IRS as a commodity since I believe 2013. So Bitcoin, when Michael Saylor and others tweets out that Bitcoin doesn't need clarity, that is very clear to me that Bitcoin stands alone and then we were looking for competitive and

4:25America first sort of reasons to clarify the rest of crypto outside of Bitcoin. So we'd like Bitcoin treasury companies, obviously that's a very new concept. What have we learned in the last four or five years? How long has it been since it started? Yeah, so halfway through 2020, August of 2020 is when micro-strategy at the time now strategy announced that they were acquiring $250 million of Bitcoin for their balance sheet and it's been quite the iterative journey since then. They continued to buy Bitcoin from their cash reserves, they did a tender offer to give existing shareholders an exit if they did not want to continue with the company as a shareholder with this new Bitcoin strategy.

5:30Strategy then took out convertible debt. So it's an instrument that converts from debt into equity at different price points. They used that instrument to acquire additional Bitcoin and then with the invention of the preferred equity products, they're literally IPOing a product and then selling additional shares into the market at $100 buying Bitcoin with that $100 per share and paying out a yield currently strategies at 12 or 12.5 percent, sorry 12 and then 12 or 12.5 strives at 13 percent and the bet is that Bitcoin's going to go up more than 12 or 13 percent a year so you can pay out that dividend in strives case they're paying it out daily every business day

6:31and buying Bitcoin with it and then yeah as we kind of get into the financial engineering, it's becoming clear to me that there may be just a few leading companies that have really large Bitcoin balance sheets like strategy where they have you know I mean by the end of the year they could potentially have a million Bitcoin with their balance sheet and so it's just becoming clear to me that the preferred products as they're beginning to really take hold and mature and season that you could continue to see what strategy has done in the past and what strive is currently doing which is buying you know some weeks billions of dollars some weeks tens of millions or hundreds of millions of dollars worth of Bitcoin with the intention to largely never sell the Bitcoin so you see different concepts several additional announcements from companies that are

7:39going to acquire cash flow positive businesses or similar strategies to then use that cash flow and and buy Bitcoin and that's an excellent strategy but I don't think it has the scalability that something like digital credit might have so yeah it's been really interesting over the past several years to see how all this is developing so far and you know which companies are sticking with the strategy and which companies for different very you know reasonable and legitimate reasons are saying you know maybe we need some of this capital for our operating business and so we are no longer in the Bitcoin game so yeah it's it seems to be very early. It most certainly does and like I'm noticing this criticism is kind of coming from all ends there's criticisms coming from Wall Street who may not understand Bitcoin very well and this is just kind of this play is you know blowing their mind and then there's also criticism coming from the Bitcoin

8:44community who basically you know that tension between Main Street and Wall Street they never wanted Bitcoin to enter Wall Street essentially so how have you seen that space evolve and where do you think it's headed? Great question the Bitcoin purist or Bitcoin maximalist view of not wanting Wall Street to enter Bitcoin I can understand from an ethos perspective and a cypherpunk perspective but I think it's short-sighted to not realize that for Bitcoin to continue along the adoption curve that you're going to have companies and countries and institutions very slowly at first but adopt the asset and as far as Wall Street looking at it and not understanding it

9:47I think we are early but you know during the peak into last fall of last year 2025 I remember walking down the street in the evening here in Manhattan and hearing you know finance people talking about debts right digital asset treasuries and almost like the meme subjective like the cool thing of the moment so I think the more products that retail investors and institutions see from ETF products to the the public equities you know the better for Bitcoin because I mean of course the digital credit aspect of it when you're able to tap into the fixed income space and they just want that call it 10 to 15 percent yield if you can give that to them and take those proceeds and buy Bitcoin then it sounds like it's a win win for everyone but it is fairly complex and it is

10:55extremely early as I talked to some of the you know executives at these companies it's it is something that they have their teams looking at while the markets are open every moment of every day and just you know we can talk and broad strokes about you know issuing a additional shares or not but it really does for some of these things take that very traditional finance background and mindset to be able to think through all of the different players in the traditional markets that may be trading your stock on a very you know high frequency might be shorting your stock and so there's a lot of game theory that is really interesting to dive into that we talk about on the hurdle rate that I do with the couple of the executives strive that the guys on the true north podcast talk about you know it's you know sometimes an hour or two of just putting a spreadsheet

11:59up on a screen and talking through it which some of it you know is like you know I have to listen to it twice to really kind of think through the mechanics of some of it so it's really really fascinating and maybe more fascinating the more that you enjoy finance and the engineering aspect of and the technicals of game theory and finance and everything coming together in this very fast-paced digital economy. Quick one for the Aussies listening hardblock is offering a $10 sign-up discount right now and if you're with another exchange ask yourself this are they Australia's longest running Bitcoin only exchange because if not maybe it's time to switch head to hardblock.com.au forward slash join forward slash honest money and start stacking stats today. Yeah I'll definitely drop that in the show notes for any finance nerds that want to geek out but I want to talk a little bit about

13:03like the the customer of so someone an investor who is not necessarily wants to own Bitcoin as a bearer asset but they just want price exposure to it. Why would someone choose a Bitcoin treasury over over like a Bitcoin ETF? Great question the ETF gives you one-to-one exposure to the price but not the asset so if you buy a share in the fidelity or black rock or bitwise or other ETF product you're really just one-for-one matching the price action of Bitcoin for that time period that you're holding that share whereas what the Bitcoin treasury companies are targeting is and it fluctuates they are looking to have what they call amplified Bitcoin so skids a little bit

14:05into the weeds because you also have two X Bitcoin ETFs which mimic twice the return to the upside or the downside on a daily basis of Bitcoin which not you know we're not talking in a way that we're getting financial advice here but you know that's more of a trading vehicle not necessarily a long-term buy and hold vehicle especially when the price goes against you but what the treasury companies are endeavoring to do is to have something around twice the volatility and amplification of Bitcoin itself and that I remember Jeff Walton the chief risk officer at Strive recently describing I believe it's between 1.5 and 2.0 something maybe 2.2 X what Bitcoin is doing on a one an amplified basis so

15:09if you think about someone that really enjoys volatility they enjoy trading volatility they don't even care about the asset or you think about someone that maybe bought Bitcoin a decade ago and really enjoyed the ups and the downs of an 80 volatility asset and now they're seeing that the volatility has gone down on Bitcoin itself as an asset one of these treasury companies might be interesting to them from an amplified volatility perspective let's talk about the book value of the company and how the value of these companies is measured essentially sure yeah it's very interesting both to the upside and the downside because of the the amplified nature of these companies that it's not an exact

16:10science and exact book value of we have a billion dollars of Bitcoin and so our stock price is trading at a billion dollars we've seen everything from companies in the United States in the UK in Japan trading below book value all the way up to 2 3 4 10 20 30 40 times book value at the peak and so of course that attracts speculators traders and in some ways looks like crypto which is kind of interesting meaning the things that just have wild volatility to the up and down side during the past year you've seen companies that what Bitcoin was going up they went up and when Bitcoin went down I mean the the equity stock prices went down over 90% and so that amount of extreme has been

17:16really interesting to follow because you have analysts watching and and trying to game theory through you know depending on which jurisdiction and which exchange these companies are listed on are they going to be delisted if the stock price on the NASDAQ for example is under a dollar for a certain amount of time the NASDAQ exchange will send a letter to the issuer and say hey you need to remedy this or you might be delisted and different exchanges have different rules and protocols around how they treat that from more of a conversation to an official letter so the the extremes of trading at call it 40 times what your Bitcoin is worth to all the way to trading it pennies on the dollar 10 cents 5 cents on the dollar of what something's worth has been

18:20very interesting to not only see but try to think through because the reality is if a company had a billion dollars of Bitcoin but it's only trading at market cap a book value of a hundred million dollars or fifty million dollars well of course if they went into the open market and sold that billion dollars with a Bitcoin then they would have a billion dollars and but that's not what the what the market is valuing in that so it reminds me of the phrase the market can stay irrational longer that you can stay solvent or something to that effect which is so it's it's been really interesting from an analytical point of view you know obventary point of view and and having the opportunity to interview a lot of the executives in the space all the way from how they think about some of the new terms that have come about like Bitcoin per share

19:26M Navajo is a big one all the way to how they think about their treasury strategy versus their operating business to potential mergers and acquisitions you know if they get to a certain size would they be willing to entertain purchasing another you know acquiring another company whether it's for the Bitcoin strategy or for the operating business and so yeah I mean the true north podcast really has been focused on just analyzing for the past I believe two years just what micro strategy now strategy is doing so even if you multiply that by the top 30 or 50 Bitcoin treasury companies that there's just almost an endless amount of analysis that you could do and and a lot of like okay is the market giving any value to the operating business and how much

20:27value are they giving to the Bitcoin and again that's not necessarily a negative or positive statement because we've seen the extremes of both just over really the last two years so let's take strategies in example because I didn't even know that some of these companies traded like 20x at a premium I thought it was more around three or four percent what was the top that strategy did strategy um I remember being interviewed for a an article a publication and I believe they were around three x their book value right they were they were um printing printing money and and buying yeah I forget what the exact phrase was but buying uh buying like three dollars of Bitcoin for every share that they were issuing more or less uh so it was very creative to shareholders um and maybe we'll get into it later but um yeah this is really becoming a two-way market

21:32um especially with strategy coming out and selling some of their Bitcoin toward the bottom of the market to really show um everyone from shareholders to credit rating agencies um to other stakeholders that this is a two-way trade and they are you know viewing it that way so that everything that they do at that any moment in time is a creative and positive to the shareholder and it's not something where um you know with their strategies credit rating they've received right now when you really look down the details of that the credit rating agency has given them zero dollars in value for the Bitcoin or their balance sheet so um when that's um really the focus of your business that's kind of a a tough place to be so we maybe were early yeah I do remember when they sold 32 Bitcoin they made like news around the world and that was kind of at the bottom of the bear market pretty much so and you think that was more of a like an

22:33optics exercise to signal to their shareholders that they can do that yeah I think it was really important to not only show the the the market participants that they are now viewing it as a two-way trade um but also to show it was important for strategy to show both the market participants the shareholders the credit rating agencies that they're now viewing this as a two-way trade um as well as it had become uh a narrative in the market that strategy was basically holding up the market by continuing to buy Bitcoin and so that narrative largely went away when they sold Bitcoin and within the same day or two the price of Bitcoin went up um substantially so you know not by a hundred dollars but it was it was going up while strategy was

23:35selling so I think it was important to both uh to away with that false narrative um and also to again signal to all of the market participants that um they're willing and able to sell Bitcoin and the you know the price of Bitcoin was not gonna fall by 25% because they were you know having an and outsize influence in the market um so it showed that that was not the case which was good in your opinion now that you've you know spent quite a few years monitoring this space like what makes a good Bitcoin treasury company and what makes a bad one lack of conviction makes for a bad strategy um just because the volatility of Bitcoin even though it's decreased over time um both from holding for a long-term

24:36perspective as well as messaging to the market um it it's just in the same way that personally if you're not looking to hold Bitcoin for at least four or five or ten years um it may not be appropriate to act to buy it right so we're not here saying everybody should buy Bitcoin and Bitcoin's answered everything it's like well with the volatility maybe it should be a part of your portfolio if it's something that you um are able to just hold for four or five preferably ten years or more uh that's same idea for one on the corporate level we've seen some examples of corporate boards of directors not being one board and so you know you can have an excited um employee or CFO or even CEO and if the board is not going to approve that's sort of a corporate action then

25:44that's that's not really of course gonna become part of the company strategy um I think the best strategy that we've seen so far is to have a a clean balance sheet without convertible debt um and without any debt whatsoever um making the story really easy for shareholders and credit rating agencies and other stakeholders to understand and the best example of that right now at the market is strive they went public less than a year ago they made a very thoughtful decision not to um take on any debt including convertible debt and something that I've seen over the past few years is that um sometimes you'll see a certain financing and see the effects of what it might be

26:49doing to the stock and wonder well why did that executive choose to take that financing and often times it was the best financing that was available at that time um and so in many cases you're able to um just kind of wait and do nothing and refinance out of some of those uh you know convertible debt financing and other financing as the market comes back and turns in your favor um but again I think having a clean balance sheet uh and in strives case you know similar to strategy having that preferred product there where you can issue additional shares um by additional Bitcoin that seems to be a very powerful message to the market where you can hold one share one equity share of a company and have more Bitcoin attributed to that share over time by being able to accretively purchase Bitcoin and I think about it as not printing money but it it's certainly the

27:56arbitrage of you're paying out a yield and if Bitcoin goes up more than that then you're able to hold the Bitcoin and and maybe in the future um do something more active with it but I know that strategy and strive have both made the case that uh through utilizing their Bitcoin balance sheet coupled with the digital credit preferred equity product that is how they're mobilizing and really viewing their balance sheet as now an active strategy um as opposed to taking on counterparting risk um Michael has said time and time again you know you don't want to get wiped out you don't want to take on you know short-term um leverage of some sort um and so the the interesting thing about these corporate treasury plays is the ones that are structured

29:00to be able to both withstand the the downside volatility to Bitcoin and also have that amplified nature on the upside without um as you see often on social media being liquidated is really out of the um keys um and it's something that you know I think a lot of shareholders value along with the companies that are out there um on a regular you know monthly or even better weekly basis continuing to buy Bitcoin which very few companies have been able to do um consistently over the past you know six to twelve months need a way to sign verify and secure your Bitcoin Australia's one-stop shop for Bitcoin has has you covered from signing devices nodes and backup solutions to bid access dacoel and apparently is it shopbitcoin.com.au

30:02so how many companies do you believe they will exist in the future are we talking about like large specifically large ones are we talking about a dozen less than a dozen or hundreds. I think you'll see a growing sector and you'll see dozens and hundreds of uh Bitcoin treasury companies defined as companies that hold Bitcoin um of a significant size or they're about sheet meaning you know hundreds of Bitcoin or thousands of Bitcoin with that said it it appears at present that if the the strategies and the strides of the world and you know several uh companies outside the US have also launched preferred products or or in the process of launching preferred products um I believe that digital credit preferred product strategy will be taking those call it five to ten

31:03companies over the next few years and really setting them apart from the follow on or the next kind of level of companies. So I think you'll see maybe five to ten very large balance sheet Bitcoin treasury companies and then you'll kind of have the second wave or um you know it'll be interesting to see what the numbers actually are but you know maybe five to ten companies that within the next year or two can have 50,000 to a hundred thousand plus Bitcoin or their balance sheet versus a class of companies that maybe have hundreds to thousands of Bitcoin and of course we're talking about you know Bitcoin it you know seventy thousand dollars a hundred thousand dollars um it's really interesting to think what will happen when it's you know multiples higher than that as well. What do you think is holding back really big players at the moment who

32:04have every opportunity to buy Bitcoin but aren't necessarily doing that? There was a narrative and a meme maybe a year ago over the past several years that sailor in particular was always buying Bitcoin at the top and he has set himself I'll be buying Bitcoin at the top forever you know I'll be up buying Bitcoin at seven seventy thousand and seven hundred thousand um etc and I think the reality of that is that you can make financial moves when the market is open to you and when the market's open and the price is going up of the commodity of Bitcoin itself you're able to have more access to the capital markets so to the extent that strive has had their product sata at a hundred most days and they're able to buy more Bitcoin

33:13through that program in what I think we would all agree is a down market a bear market um is really constructive the really interesting thing is that we have not seen well we have seen strategy by sometimes over a billion dollars a Bitcoin in a week with their both issuing common stock shares and preferred equity shares but not really in a uh raging bull market if you will so we really have not seen digital credit um in an up market we've certainly not seen multiple issuers of digital credit referred equity products in a in a bull market and when you start thinking through the amplification aspect when you have the price of Bitcoin going up

34:14and their balance sheet is becoming de-amplified and they have access to the capital markets and just how quickly they might be able to start buying a billion dollars or call it 10 billion dollars a Bitcoin a week then you multiply that over even five or ten companies that could get pretty interesting um not only for the companies and their financial performance but um you know as as the coins market cap grows of course it will need larger pulls of capital to you know not just retail buyers in order to continue to have um what people are seeing as a as a really attractive call it 30 to 50 percent return per year over time with a lot of volatility yeah yeah on that whole volatility angle um I know this we haven't had a raging bull market

35:17at least not since I've been in Bitcoin and I keep telling my friends I was like I just want one just give me one um to so that I can experience um the thrill that they've all had the chance to experience in the early days but do you think this last bull market being so disappointing and underwhelming do you think that's made some CEOs nervous I think it's probably caused some CEOs to maybe put some Bitcoin under balance sheet um but not really double down yeah I think that's a reasonable um argument and and and also you know the whole narrative of hot money and you know the hot item of the moment there maybe can only be one hot trade at the moment and so you know if this past year was all about the AI trade and SpaceX going public and and things of that nature um you know

36:26when when Bitcoin becomes the hot thing again with this hot money quote unquote coming into it um I think that I think that could be a something that with the advent of these preferred products could have more upside um that what we saw last year yeah I think we'll be really interesting to see what heights Bitcoin will reach this cycle because if we get to like three hundred thousand dollar per coin a little slightly above mark that means we'll just be second in terms of market cap will be just behind gold so we'll be in front of Nvidia and in front of all of like you know obviously silver so that would be very interesting I think that's going to make people a lot of people very bullish again if if we get there um but yeah yeah I think it'll be

37:27interesting to see which companies continue their existing playbook which companies go from more of a passive strategy whether that's in capital markets or in the messaging of it through media or both um and what new players come on to the scene because during the last Bitcoin treasury season you had some companies announced that they were going to put Bitcoin on their balance sheet their stock went up then they never put Bitcoin on their balance sheet so it really takes a certain amount of time to really see right okay we have an announcement are they going to actually do it and then you know really are they going to message um on a regular basis not just through quarterly reports about what they're doing and if so you know is there conviction there is there thoughtfulness

38:31there and so there seem to be several different buckets that Bitcoin for corporations actually did uh some analysis on you know different segments of the industry uh that could be as just like two examples one would be they're just buying and hoarding some Bitcoin it's not an active strategy versus a company that's endeavoring to buy Bitcoin every week using digital credit let's go back to strategy a little bit because i want to go back to mnav and for listeners who don't know what mnav stands for it's multiple of net asset value so i vaguely recall in current member what month it was below let's say mid 2024 strategy was trading at mnav of three around there and then it dipped to below one um and i remember when it was it was trading at three

39:38that it was people were getting like nervous what this premium was about they thought it was a Ponzi scheme they were just really like the market was just scratching their heads and then when you traded below one people were went the other way and they were like okay well this is doomed to fail how like how do you explain this to retail investors great question um i think it's really important and a lot of the individuals that i've worked with especially in media over the last few years have been very uh deliberate in saying we own Bitcoin whether it's in cold storage or on an exchange what we own Bitcoin the asset itself and then in addition to that you know we are interested in these equities that are holding Bitcoin so i think that's an important distinction to just start with

40:39and then from there there's several different schools of thought one is that there's a lot of value in buying an equity below book value and selling it when it goes above book value you might think of that more as a trade um and then there's this school of thought of someone that would buy microstrategy stock and they want to hold it for 10 years or 20 years as an example because they understand the volatility and maybe even the cycles if you want to use that term of Bitcoin and their thesis is that the amount of Bitcoin per share you know the value of Bitcoin per share of that equity is going to only increase over time and the um the equity the common stock is going to trade wildly you know as far as book value goes from

41:48in some cases again pennies on a dollar to three x or above and so um yeah there's a lot to kind of analyze and be thoughtful about um and of course i i view Bitcoin the commodity as something that i can buy and hold and then the equities as as further out the risk curve um it's Bitcoin you know they're additional things to consider um because there is a management team because um you know the management team of a company can decide that they're no longer pursuing the strategy they can double down on the strategy they can issue additional shares to protect the credit rating of a company even if it's short-term dilutive and not technically accretive to the current shareholders so there's um just a lot to sift through and understand and i

42:50think um my hope is that as we venture into what you might call Bitcoin Treasuries 2.0 that there's more and more education around it from hopefully not a completely boring but somber sober point of view of here's here are the tools here are the you know available on ramps to different flavors of Bitcoin not your keys not your coins if you're holding Bitcoin yourself custody setup needs to be done right mine racks delivers paranoia grade security so that you can sleep at night knowing that your money is protected take control and secure your money the honest way head to minerax.com forward slash honest money and um i don't think it serves anyone in the community to um you know kind of hype something up when you know it's like wow it went from

43:56x to y and this is so exciting i mean for myself personally i've always found that even just buying you know one dollar or one share of something then it's on my screen and i'm gonna pay attention to it and it's up it's down and so you know everyone has a different way that maybe they feel is appropriate to learn about these things but i think the more that i think there's a a way to have fun with it and be educational about it and even try to make money with it and be a capitalist while still being a big pointer but i think there's uh you know of course a lot of uh colorful personalities that in the space and in and definitely in the visible public media side of it so um yeah that would be my hope is that we can continue to have like very

44:58constructive conversations and and sometimes that's easier said than done if you don't know like who should i be listening to and how does this all work i think the fact that over the past week or so you see strategy coming out with these um not white papers but almost like institutional quality uh investment decks presentations um about bitcoin as an asset it's extremely constructive because then you're speaking to whether it's a retail investor uh institution it's you know leveling it up to that institutional sort of feel and you know hopefully along with that comes a seriousness of you know we want to understand this because no commodity investment or financial what have you it's going to be appropriate or attractive to everyone and so you know it reminds me

46:01of i have a background in land and energy and a little bit on the private equity side of of managing capital and when i was uh presenting one of my projects to a chief investment officer of a family office and was asking for some early feedback he said you know i think that was you know your presentation was good but if you're going to talk about the benefits of it of what you're doing you also need to call out at least a few like during your presentation of the risk factors because if you don't it just comes across as disingenuous like you're you're maybe you're trying to sell something and maybe you're doing it in good faith but you know if we're you know we can talk about memes and how volatility is vitality um and that's great but you know i think it's important to to be balanced in in in a way that people can

47:04see the professionalism or at least the thoughtfulness around an answer instead of something that more so resembles um speculation or or or something on that end of it and i you know there's a there's a place for for everyone from very conservative investors to speculators um and i think that's what's really interesting as you have these different factions of big coiners right store of value versus using it as a medium of exchange you know maybe it will be all of those things and more as it uh continues throughout its adoption curve and adoption journey but one thing that i find really interesting is um do you have any insight and knowledge in terms of how these internal investment teams like the CEO the CIO the the CFO how do they have conversations around Bitcoin are there particular models that they're looking at um how are they actually

48:09how are they looking at Bitcoin internally to value it that's a really interesting question i'm not as thoroughly experienced in you know what like several different data points to really thoroughly accurately answer your question um but from you know what strategy is just put out um i know notes and and uh reports analysis from uh traditional banks from companies like galaxy you know institutions in the space uh that you know really looking at the historical volatility and modeling that into the future is something that um several of the strive executives have talked about when they're modeling out even if we buy Bitcoin as an example and would have to sell some of the

49:11Bitcoin in order to pay the dividends you know well would that model uh work and you know step through it sometimes on a podcast and say you know even if you slice off a little bit of the Bitcoin to pay out dividends in that digital credit model that it uh it actually still does work um with your thesis being that Bitcoin's going up by 30% to 50% per year um with volatility so i think uh yeah i'm not entirely sure how every single um treasure or cio views it but um i see especially with the strive team that uh and and uh hopefully all of the Bitcoin treasury companies that you know you have executives that have conviction in in Bitcoin and i think it is very apparent when

50:14you're able to sit down and talk to somebody's executives that um like michael sailor that they don't just have conviction they have deep conviction in the long-term store of value um aspect of of the asset and they've taken the time to study the history of money study history itself study macro study uh interest rates and the financial markets um in the us and and beyond to try to be thoughtful as to you know what can we do in the us markets um how how is that most advantageous but also how do we export it whether it's um going and launching a product in a different country or whether it's a company in one of these jurisdictions in europe or australia or be launching one of

51:17these Bitcoin treasury companies yeah unfortunately in australia we had one launch in 2024 and our Australian stock exchange has this weird cash box for all which doesn't allow you to hold cash like products up past a certain threshold i think it was like around 30 percent so the company which is locate the technologies i interviewed they cio in one of my podcast episodes actually had to move to the new zealand stock exchange because the environment was a lot more favorable to them continuing to do what they wanted to do with bitcoin so that can be a great lead um into the question it's like obviously the us is leading the way globally do you see any other countries as kind of worth looking at that are interesting i think there's many jurisdictions um that will have bitcoin treasury companies that are doing the right things for the right reasons and may even you know have a great story over time

52:23largely because of bitcoin itself i mean uh i've heard several times that uh you know if you want to start a business you know maybe take out some additional you know financing raise some additional capital and buy bitcoin with it that way the joke kind of goes if the bit if and when the business doesn't work out at least you still have the bitcoin so you know i think uh you know my view is bitcoin such a powerful commodity such a powerful asset and technology in and of itself that even if some of the operating businesses um these of these public equities um you know don't grow the way that the executives want or they go sideways or something crazy or unfortunate happens um you know i think the i think it'll be still a great story in so far as um not only is everybody a genius set an up market

53:23we've all heard that phrase but um bitcoin itself will will really do a lot of the heavy lifting as it continues to um appreciate and value let's talk about tokenization of stocks what trends are we seeing there tokenization is super interesting because you have the tokenization of real world assets that right now is standing around 38 billion dollars but the actual um equities uh meaning stocks and and similar products there's only about three billion dollars uh of that that are traded on a daily basis which of course means we're extremely early to tokenizing um some of the observations and research that i've seen tends to lean toward uh companies that tokenize their stock and then the owner of the stock

54:32takes self-custody of the stock and it it seems to be good for the performance of the stock because in that situation and it gets a little technical um so i'm not going to do the best job explaining it but basically if you take self-custody of your tokenized stock it eliminates the ability for market participants market makers um whoever the institution is to short the stock so i think one of the themes that we'll see um to the extent that these Bitcoin treasury companies um elect two tokenizer stock could be that they really um rally their community around the aspect of self-custying their tokenized stock in order to help the performance of the equity itself which could be really interesting can you explain that in a little bit more detail how would it eliminate the possibility to short the stock if it's tokenized i thought shorting was more related

55:38to like your betting on price certain prices so when someone shorts a stock they need to acquire the stock in order to short it they need to have that position and so um investors that i know that have larger positions in uh certain equity they will sign agreements with their brokerage house in order to earn an interest on their shares being lent out and if the shares um are not returned to them then they get that amount of cash um deposited into a designated bank account um but most of the time the majority of the time the the stock is lent out and then return to them and they earn sometimes a pretty outrageous interest rate on one lending out their stock so from that aspect if um you have and i don't know what would make a meaningful difference but if

56:40you had a lot of shareholders um not allowing the stock to be uh to be lent out either um because they're disallowing it or because they're taking self custody of it then they can elect through that process um to not allow their stock to be lent out which would decrease the amount of shorting of the stock so i think there are probably dozens of other implications potentially that we haven't really seen um and even if it's just you know impacting the um the amount of shorting that can be done on a stock i mean that um could create just a very different market environment specifically for um the bitcoin treasury companies and other digital asset so you've mentioned i think twice

57:43during this conversation you've mentioned the word money printing and i know some of the criticisms that come from people in the bitcoin community is that what these bitcoin treasury companies are doing is akin to money printing what are your thoughts and comments on that i think more so of the phrase it's like they're printing money over there you know one of the um firms i used to work for one of our colleagues came in and afterwards he said wow you know that business is doing so well they're just printing money over there so i think of it more as um you know it's an interesting opportunity it's um it is an actual uh financial opportunity um less of printing money from a looting um or stealing value from someone and more so of if someone is in the market and once

58:46a yield of 13% and they're willing to accept that income as an investment and on the other side of the table is someone that that is willing to wait several years maybe even four or five 10 years or a longer time frame for the appreciation of an asset that they're able to acquire in that trade that's that's more so um how i think of the and i think to answer your question directly um you know printing money it's you know when you when you're issuing stock and you know capital is flowing in it can kind of feel like wow how did this company raise a billion dollars in a week to buy more bitcoin it's like they're printing money i think it's more of a turn of phrase than anything um at all similar to the government printing money and devaluing

59:48a fiat currency um before we finish up do you want to tell me or my audience why you started your podcast sure it was very much um meeting people and one thing leading to another so the gentleman who introduced me to bitcoin um encouraged me to interview a few of the uh individuals that were really studying and and commentating on my christiangy back in 2024 um and when i had started the podcast in september october of 2024 so about two years ago uh there was a lot of interest and so the first couple of episodes um led to more guests and and it was just kind of like one thing led to another so um it uh you know at that time there were really only one two maybe three companies

1:00:53that were really uh talked about in the space and so i don't know that i thought in the beginning that it was something that was going to take hold and and be something that um we would really be um i thought we'd be following it but i don't know that i realized that it was the you know the beginning of the very early endings of the next frontier of finance between the bitcoin treasuries and the and the digital product innovation thank you so much for your time Tim love this conversation um let me know if you've got any final thoughts for my audience drink water stay calm and buy bitcoin thanks so much still here you're one of the good ones we'll be back next week with a brand new episode if you enjoy how we cut through the noise consider supporting us directly via the lightning QR code got a question or a thought to share comments are wide open we'd love to hear from you for bonus content and updates follow us on

1:01:56socials at honest money show until next week take care of yourself and your money and stay decentralized