{ "episodeId": "SLP674", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "marty_kendall": { "name": "Marty Kendall", "role": "guest", "tag": "MARTY" } }, "segments": [ { "speaker": "stephan", "time": "00:11", "start": 11.09, "text": "Hi everyone, and welcome back to Stephan Livera podcast brought to you by Bold. American listeners, you can buy and sell Bitcoin at the cheapest rates, and you can also get the best Sats back on the Bitcoin debit card that's available over at GetBold.io. Now, joining me on the show today is Marty Kendall. He is From the, well, call it the project or the website microstrategist dot com, and, actually Marty has some interesting stuff both in the nutrition world and also in the Bitcoin and, Treasury companies and LBE space. Full than rabbit holes" }, { "speaker": "marty_kendall", "time": "00:44", "start": 44.31, "text": "easily." }, { "speaker": "stephan", "time": "00:45", "start": 44.89, "text": "Yeah, exactly. Worlds are colliding in all this, but today we're gonna focus on the Bitcoin and, Treasury companies, LBEs, whatever you wanna call it. so, like, yeah, first off, welcome to the show, Marty." }, { "speaker": "marty_kendall", "time": "00:57", "start": 56.92, "text": "Yeah, great, great to meet you and great to chat. Love your work, and, yeah, you've had a bunch of really interesting guests and f- looking forward to chatting about this, fascinating topic." }, { "speaker": "stephan", "time": "01:06", "start": 66.16, "text": "Great. And so let's-- Now, I first saw some of the posts coming from yourself and the microstrategist side of it around power laws and, kind of power law as applied with mstr. So I know you're, you're a bit of a fan, or you're, you're into this whole world of data analysis and visualization also. So can Explain a bit for us, you know, what was your fascination there around Bitcoin and power laws, and then go into the treasury company stuff." }, { "speaker": "marty_kendall", "time": "01:35", "start": 94.88, "text": "yeah, I, I, I played around with- Modeling and, data and systems back in two thousand and eight, and then everything blew up, and I walked away and, said, \"Stuff this,\" and I couldn't find a system that worked, and then I ran into the, Rfk at the Bitcoin Summit last year, and that was fascinating. I went, \"This is really important,\" and just fell down the rabbit hole, sale everything, MicroStrategy, mstr, True North And then started to model it, and I came up with a ballistic acceleration model that had a nice prediction of what happened as, Bitcoin rose and micro strategies sort of rose more because they were using leverage and debt and the ATM and everything that was happening at the time, and then I was posting under my Twitter account and then Jürgen from Microstrategies said, \"Hey, can I put that onto my site?\" And then we sort of partnered up, and yeah, we're in the process now of building dashboards for a few of the major companies in the space, and then trying to get all this analysis that I've been doing in spreadsheets Automated to help people 'cause it's just everybody wants, you know, I want that graph updated every day and I wanna see everything moving, automated all the time 'cause everything's changing rapidly at the moment." }, { "speaker": "stephan", "time": "02:54", "start": 173.82, "text": "Yeah, gotcha. And so I guess zooming out a little bit, in terms of just Bitcoin and the power law, where are you on that? Do you, do you believe in that? Do you see that as a good predictive thing or do you just-- How, how are you seeing that?" }, { "speaker": "marty_kendall", "time": "03:08", "start": 187.88, "text": "Every, everything Everything that grows from a little thing into a big thing follows a log-log trend. It, there's no, nothing magical, it just enables you to extrapolate where it might be going, and the power law tends to Adjust the latest data. So I think it's a really helpful way of knowing where it's going in the future. I don't think we're going parabolic or exponential or, you know, exponentials can't last forever, and anything that does go exponential, which are, is very topical at the moment with the whole- Bitcoin Treasury Company, you know, things can't go exponential forever, they have to eventually tap out 'cause exponential growth just gets extreme eventually, and I think that's something that most people don't quite understand. They draw a Straight line through a exponential plot, and it just, you know, some of those companies are on a path to eat all the Bitcoin by November. And Right. And obviously they can't all have all the, all at once. So what-- That's, that's been the thing that's blowing my mind is, is what happens when all these companies are competing on a trajectory for all the Bitcoin in a matter of weeks? You know, what breaks, who breaks first, and, and, and what happens when they slow down inevitably?" }, { "speaker": "stephan", "time": "04:24", "start": 264.4, "text": "Yeah, and, yeah, there's so many kind of areas we can go into, but maybe, I guess the ballistic model is probably a good spot to start here, right? So kind of, as I understand, you were trying to use, let's say, a power law version of an analysis to look at Bitcoin as contrasted with MSTR and how would they would grow as the Bitcoin price goes up, and then let's say, assuming a Bitcoin price of, you know, a hundred fifty K or two hundred K, where would, where would MSTR likely be? So maybe you can Yeah, exactly." }, { "speaker": "marty_kendall", "time": "04:55", "start": 295.07, "text": "Exactly. yeah, it was just a, on a log-log plot, a, a polynomial regression, and it had a really nice fit. But I suppose, and, and that's when I dove in and, and microstrategy was everything and, Could do no wrong and everything was going up forever, and everybody believed that, and then it didn't after November and EMNAV fell from four to two, and everybody's still bitching and moaning that, you know, my shares that I bought in October haven't- Past my buy price from nine months ago, but now I see, you know, companies at ten and twenty MNAV and people are going, \"This thing's going up forever.\" I was like, \"Yeah, the-- these things are great, they're fascinating, and they're powerful, but, you know, if your company goes from an MNAV of twenty to two or one...\" You're in trouble. So I, I, I think that I, I've been fascinated by how do we, how do we model that? And what I see is MNAV doesn't keep going up forever. Both MNAV and BTC yield sort of follow a power law down. They start high and then drift down as the company gets more and more Bitcoin on its balance sheet, the big BTC yield has to necessarily go down, and that follows a power law as it ages, it sort of tends down to, you know, yield tends Tends to zero and M nav tends to one in infinite long term. So you can sort of use that to model it, and then knowing that Bitcoin tends to go up per the power law at about thirty percent a year, you can bring all those things together and model where it might be in a few days, a few months, and, You know, have a bit of fun and, and manage your risk at the same time." }, { "speaker": "stephan", "time": "06:36", "start": 395.83, "text": "Yeah, and I think it's so much of this, it's, it's very intuitive the way I'm thinking about it because it's like diminishing returns. It's just kind of, yeah, obviously there's only twenty-one million co- or there will only ever be twenty-one million coins or a bit less than that. And obviously they're gonna have to, the pace is gonna have to slow down at some point. But I guess most of us are viewing this like, look, the gold rush is on now" }, { "speaker": "stephan", "time": "07:02", "start": 421.85, "text": "People have not realized there's a, there's a huge fiat arbitrage right now. You can borrow cheaply and buy Bitcoin, and Bitcoin is growing. I mean, on the Powell law right now, it's like forty percent or something, but it's gonna come down to let's say thirty percent over the next, let's say ten years or something like that. and of course, Michael Saylor has his own Bitcoin twenty-four model where he projects out what he thinks the price will be. You know, everyone can kind of argue exactly where we think things are gonna be, but that's kind" }, { "speaker": "marty_kendall", "time": "07:32", "start": 451.83, "text": "It's going up and to the right with some level of diminishing returns, and that's where everybody's gone, you know, not altcoins, not Bitcoin, I'm going, I want a bit more excitement, I want a bit more leverage with these Bitcoin treasury companies, and there it is, you know, I'll watch the Tim Cotsman's thirteen hour, forty-two guest speed, Bitcoin Treasury Company speed dating episode. It was like, this is huge, everybody's diving in and some of them are really well prepared, some of them are like, \"Oh, anybody, anybody wanna join me? I, you know, I just started a Bitcoin Treasury Company, I, I need people, I need to work out how to do an ATM, I need international shares, and, you know, it, it's, it's just a really rapidly evolving area, so, yeah. Yeah. It's fascinating to look at the data" }, { "speaker": "stephan", "time": "08:16", "start": 496.25, "text": "A lot of people will have maybe more of a skeptic question would be, hey, how do you explain this phenomenon of premium to MNAV? So in simple terms, there's a market cap and people are looking at, okay, what's the market cap and based on of this company versus how much Bitcoin do they actually hold? And You know, why would such a, you know, MNAV greater than one be sustainable?" }, { "speaker": "marty_kendall", "time": "08:39", "start": 519.14, "text": "Well, I think the first question is why is there a, an MNAV greater than one, and that's because there's a Bitcoin yield, because every- Every week they're purchasing more Bitcoin and adding more Bitcoin per share. But the thing is, as their stack gets bigger, Sale has got six hundred thousand Bitcoin now If he buys a thousand or even ten thousand Bitcoin in a week, his yield can't be that high, and therefore the MNAV isn't that high, so people don't pay as big a premium for micro strategy now because the yield is lower. Meanwhile, thing-- companies just coming out of the gate buy one Bitcoin this week and then two Bitcoin next week and then four Bitcoin next week and they're going Exponential and people that, that, that is worth a premium if they can sustain that for as long as they can sustain that, but as soon as it starts to top out and that yield starts to slow down, their MNAV will shrink. I think that, that's the fascinating thing for me to model both as an investor and, you know, I went all in on the, ballistic acceleration model and thought it was going up forever, and then went, \"Uh, wait up, it, it doesn't.\" The MNAV does come down eventually as that stack gets bigger." }, { "speaker": "stephan", "time": "09:58", "start": 598.45, "text": "Right. And I guess what we saw maybe is in the, you know, earlier phase of this, MSDR was the only game in town, right? Yeah. And then what's happened now is people are realizing they're starting to do this play. Obviously, people like Nakamoto, their thesis is, hey, let's do this in every jurisdiction. We should have one, a micro strategy or a strategy in every jurisdiction, and then we're seeing this kind of hot flow in every market, every stock, right? Right. And then to your point, it's like a lot of the investors are kind of, let's say, the high time preference investors are sort of quickly chasing for a pump because they realize, \"Oh, hey, if I get in on the ground floor of these other ones, then they can get a very quick return.\" And that's, I guess, that's the-- That's kind of the mindset or driving some of this, this very high M-navs. But I guess my question to you is more like, do you believe it's sustainable longer term? Like, do you believe M-nav Twenty years out, thirty years out," }, { "speaker": "marty_kendall", "time": "10:57", "start": 656.58, "text": "I, I, I think they're all," }, { "speaker": "marty_kendall", "time": "11:00", "start": 659.96, "text": "I see them as like the, the ones that pass through infancy, become teenagers, and then become adults like Meta Planet and MicroStrategy, they'll have a massive collateral and be able to do the, the preferred play and replace the bond market, so that's a really, really powerful position, and therefore they will always be gaining income from that. Due to the arbitrage between Bitcoin and, a-and the bond yield. So, you know, so you're paying ten percent for the bonds and Bitcoin's making thirty, forty percent. You're getting that thirty percent all the time, and you can put that back in to generate a yield which generates an MNAV greater than one. So, yeah, in the long term, the ones that can survive into adulthood and get a massive Bitcoin stack will be able to keep an MNAV somewhat greater than one, but- Maybe that, not that much greater than one, but the ones that can't make it to the point where you'd go, you know, I'm gonna choose XYZ company Over US Treasuries or MicroStrategy, those guys, you know, are they gonna survive? Are they, are you gonna choose to invest your money in them trusting they're not gonna go bankrupt? They're not gonna be able to- Compete with MicroStrategy and MetaPlanet, and therefore, you know, maybe they'll be gobbled up by MicroStrategy and MetaPlanet to get cheap Bitcoin at an MNAV of less than one. Who knows?" }, { "speaker": "stephan", "time": "12:27", "start": 746.6, "text": "Right, and I think, Michael has publicly commented saying that he wouldn't engage in this kind of M&A, but maybe some of the other treasury companies would do this, and maybe for them, it would be accretive, right? Like, imagine a bear market scenario, some of these other, maybe as an example, let's say MetaPlanet, maybe in a bear market, their MNAV is still greater than one, but just not as high as it is now, and there might be some of these other ones, you know, yeah, and there might be some of these other ones" }, { "speaker": "stephan", "time": "12:55", "start": 775.38, "text": "too So we could well see that happen." }, { "speaker": "marty_kendall", "time": "12:59", "start": 779.12, "text": "Yep, yep. Yeah, the biggest companies and the-- with the biggest stack will survive and the ones that are just, you know, start off at a-- there's a lot Booting off with a, a daily Bitcoin yield of ten, which puts them on a collision course with twenty-one million Bitcoin in November, October this year. It's like, that, that can't continue, and eventually that will have to roll over. So that's the The question that's, you know, fascinating me the model at the moment is, you know, what is the likely trajectory and what happens to the MNAV when that does roll over?" }, { "speaker": "stephan", "time": "13:35", "start": 815.19, "text": "Yeah, and I think you made a good point around The, let's say the maturation, the life cycle, right? Like when they start, it's kind of one thing to be able to get, you know, a great Bitcoin yield on your stack of one coin or ten coins, but it's another thing altogether to-- But then as you evolve and you become bigger, once you become like an MSTR and you start being able to offer strike, strife, stride, and let's say Meta Planet will likely do the same thing, and other companies in other jurisdictions will also, once they get to a certain size and scale, they will do that, and To mNav based on that, because hey, they're tapping this, this huge market, so that's, I guess maybe longer term where they're going, but in the shorter term, we're seeing, you know, these big, you know, some of these companies have very high mNavs, and some of that is, I guess, being driven by investor hype, excitement, people are feeling like, hey, they can get in on the ground floor, and some of that is just kind of, I guess Excitement, but I think it's also fair to point out, and maybe you can explain this also, which is that as they get a-- there's a lot of hype as the, as mNavs rise crazy, especially for the smaller ones, that's when they can actually start using their ATM or similar programs to actually accumulate more Bitcoin and actually start to catch up. Totally, yeah." }, { "speaker": "marty_kendall", "time": "14:58", "start": 898.48, "text": "A, a-and they can start, they, they, they get seed funding from investors, and a few investor that gets on the ground floor and it blows up 'cause they just keep hammering it in the first few weeks and get a massive MNAV and a massive yield, everybody, all the retail dives in, then they start to use the, the ATM But then the hype dies off and they can't keep that ATM going, and the ATM will bring it, bring the mNAV down towards one, and then hopefully it'll sort of balance, and people go, \"This is a bargain, I'm gonna buy it back up,\" and it'll, it'll work itself out. But yeah, no, the, the, I, I, I'm totally enthralled by this, and I think there's a massive opportunity, but there's also- We need to understand the risks at the same time as the, you know, that MNAV can collapse quite quickly if people lose interest or there's a, a, another treasury company starts with one Bitcoin next door and, you know, like- It, it's just gonna happen all the time. Yeah. And so the, the, the, the new, the new smaller one will, will be the fastest horse every time." }, { "speaker": "stephan", "time": "16:04", "start": 963.56, "text": "Right. And so I think we're gonna see this phenomenon of kind of like hot money, people will just kind of quickly flip around, they'll kind of sell one and buy another and so on, because they're kind of chasing pumps, but There's also a fair point to be made that, y-y, what's, you know, maybe there's a timeframe question of if, who do you believe are gonna be the long-term winners, right? Like that if you believe that, you know, MSTR is quote unquote the blue chip of this space and maybe Metaplanet is kind of gonna be up there, maybe some of these other big ones, XXI or, some of these other ones who have a large stack that they can, that they can make it work. So in your view," }, { "speaker": "stephan", "time": "16:46", "start": 1005.62, "text": "Different companies across the life cycle. What do you see as the factors that make it work, right? Like where, where, where have they done, where are the ones that have done well, and where are the ones that have kind of, maybe they didn't execute it correctly, you know, how would you distinguish that?" }, { "speaker": "marty_kendall", "time": "17:02", "start": 1021.92, "text": "Yeah, I, I mean, I look at, at MetaPlanet, what Simon's done as the, the textbook example. They've just held point nine percent growth per day, and that looks boring. For the first six months, so nobody takes notice of them, but now they're buying massive amounts of Bitcoin as they continue up that exponential curve, and they can stay on that exponential curve for a whole lot longer before they tap out. And I'm doing logistic regression, which basically models a S curve onto that growth, and there's no stopping them other than the, the limit to the Bitcoin at the moment. They're not rolling over yet 'cause they've just held a A sustainable yield, starting from a very low base, looking at, at Twenty One Capital, XEX, as I mentioned, they booted up with a massive amount of Bitcoin, and their yield is never gonna be high, so they're never, never gonna compete as a Bitcoin treasury company in the same way to, to get a, a big MNAV because they'll never get a big yield, 'cause they've got such a large stack already. Right, because they're starting on a high base. Yeah, yeah, they'll never be able to accumulate very quickly liquid sort of similar thing. They're starting with a hundred and seventeen, that doesn't sound a lot, but they have to put a massive investment in to get any sort of significant yield. I suppose some of the other ones you see jumping out of the gate with ten percent per day, you just go, \"Well, that's fun while it lasts,\" but if you're a, a, a degenerate trader that just wants the quick pump and is ready to jump as soon as it starts to turn over And roll over, they're fun, but if, if you're a long-term conservative investor, you want something that's basically similar to Metaplanet. I think if other companies followed in Metaplanet's footsteps, I think they'd do well long-term to have a sustainable yield that, that they'll be around in twelve months. Gotcha. Not, not over and done within a couple of months." }, { "speaker": "stephan", "time": "19:01", "start": 1141.41, "text": "The lead sponsor of this show is Bold, the banking platform designed for Bitcoiners. 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And I think it's also fair to point out here that not all MNAV is the same, not all BTC yield is the same. Like, we have to understand maybe there's things like the environment they're in, right? Not taking away from Simon or Dylan, but I would, as I look at it as an outsider, to me, Japan looks like an amazing, just, it's just an amazing jurisdiction for this, right? Because sometimes it's the tax advantage aspect of it, it's the, it's a big financial, you know, center, the, the- The rates are very low, so you have this kind of yen carry trade dynamic that's going on there. so maybe they're just in a very good location also, and that's also been part of it, right? So it's not just that they-- All the stars have aligned. You know, like, yeah, so maybe they're just kind of, if you were, if you were to stack rank jurisdictions, maybe Japan is actually one of the best jurisdictions to do it, combined with obviously the skill and the talent of Simon and Dylan and the Metaplanet team, as an example. The UK. So the UK, I-- as I understand, now you tell me if you have a different analysis, but as I understand, there's this phenomenon there in the, I think it's called SIP retirement accounts in the UK, where they aren't actually allowed to hold Bitcoin ETFs. Therefore, many, and I know Bitcoin as I know, who have retirement accounts in the UK, they've told me they, they just went all in on MSTR and things like this, and that's why now perhaps we're seeing so much excitement around Smart Webco because they've just-- Because it's like Offered them an amazing opportunity. So maybe that's a slight counterpoint to your view that, you know, that, you know, going ten percent out, ten percent or whatever, because it's more just like the environment was right for them," }, { "speaker": "marty_kendall", "time": "22:29", "start": 1348.9, "text": "you know? Yeah, yeah, yeah. I, I, I'm just modeling where those companies will go in a few months. it, it, it, they can't continue exponentially forever. So- Oh," }, { "speaker": "stephan", "time": "22:41", "start": 1360.93, "text": "granted, I'm givin', given that, I give you that for sure. But it's maybe more like certain jurisdictions are just so starved for an opportunity that some of these companies, when they start out and they're in the right place at the right time, with the right capital, the right team, they blow up. They blow up. They can just kind of really quickly blow up because there's so much demand for this thing out there." }, { "speaker": "stephan", "time": "23:03", "start": 1382.72, "text": "now of course, you It's gonna diminish over time, but, I guess that's maybe the different philosophies or different ideas, right? Because maybe some people would have this idea, and maybe in Bitcoin land, people had similar debates, should you DCA or should you just lump sum, right? And maybe it's a similar comparison with these treasury companies, should you just kind of maximize your stack out the gate or should you try to actually- You know, is there a sweet spot above a certain size, not too big, not too small, and come out the gate with the right jurisdiction and the right opportunity to then have the nice growth pathway?" }, { "speaker": "marty_kendall", "time": "23:38", "start": 1417.99, "text": "Yeah. I, I, I just see Simon has just nailed Metaplanet at, point nine percent per day and held exponential, growth for fourteen months, and I think that's the secret to longevity is just Having a plan and delivering on it every week, executing, maintaining the exponential growth, and then your MNAV stays high. Yeah. So they'll be able to keep doing that until they hit twenty-one, oh, two point one million or whatever, whatever their natural upper limit is. It'll have to roll over eventually, but it'll be a slow rollover without- A massive MNav implosion at that point. I see." }, { "speaker": "stephan", "time": "24:18", "start": 1457.95, "text": "Yeah, and I mean, the, the thing is, there's so many moving parts here as well because, oh, where, where arguably, obviously, you know, we're in a bull market now or we're going into one, yeah, yeah, yeah, I don't know how people define it, but how would things look in a bear market? You know, like will MNavs all compress at that moment? Will it be kind of a, you know, kind of a Pac-Man, big, big, Funding, I mean, there's so many of these different moving parts. How do you, bring that into analysis? Will the treasury" }, { "speaker": "marty_kendall", "time": "24:49", "start": 1488.72, "text": "companies just keep on buying Bitcoin hand over fist and, and stop the collapse? 'Cause I think in previous cycles it was Retail FOMO, high leverage, they got to the top of the, the power law range, like ninety-ninth percentile, and everybody jumped out at the same time and you got a whole lot of stop losses and, and that leverage collapsed. But really these- People call them leveraged Bitcoin equities, but they're not really that leveraged most of the time. They're just, you know, accretive a-a-and achieving a Bitcoin yield, so that's sort of a leverage, but it's not really a leverage in this-- in the way you usually think of it with a whole lot of borrowings that they're gonna- Have to, I mean, the great thing about these companies, there's no, there's no margin call. You can invest in them, they, they go down, but there's no margin call, you don't have to Sell them when they go down, but there is the risk of the MNAV implosion if they tend to slow down." }, { "speaker": "stephan", "time": "25:47", "start": 1547.08, "text": "Yeah. And I think that's a fair point as well. People like, Jeff Walton have pointed that out, like, I think, yeah, because the naive analysis would be, oh, look, Saylor's, average of buying is whatever the price is, wh- whatever, it's eighty thousand or whatever, and so the naive person might look and be like, oh, so if Bitcoin went below eighty thousand, Saylor's underwater now, kind of, that Yeah, which is, I mean, sort of technically, yeah, but actually for there to be a problem, and someone like Jeff has done, run the numbers and shown, no, for there to actually be a problem, Bitcoin's price would have to go under like, I don't know, eighteen thousand dollars, and it would have to stay there for like three or four years, five years, yeah, before there's even a any chance of a problem for them, because their debt is different. And companies in the" }, { "speaker": "marty_kendall", "time": "26:30", "start": 1589.85, "text": "S&P have got a lot more debt. Their, their debt to equity ratio is much" }, { "speaker": "marty_kendall", "time": "26:39", "start": 1599.14, "text": "A-and you can see Sailor is obviously trying to manage that so he's really highly collateralized so it can run the bond play with the prefers rather than Pushing the debt and the, the converts as much." }, { "speaker": "stephan", "time": "26:54", "start": 1614.15, "text": "Right. Yeah. And I think that's probably, yeah, as we said, that's kind of the longer term. So let's talk a little bit about MNAV erosion, MNAV implosion, like Where do you see the risks then? Like, is it just if they don't execute correctly, if," }, { "speaker": "stephan", "time": "27:12", "start": 1632.35, "text": "yeah, yeah, where do you see the risks there?" }, { "speaker": "marty_kendall", "time": "27:14", "start": 1634.03, "text": "Yeah, I, I mean I see it as a, there's a, there's three moving vectors in, in this play, the, the Bitcoin, sorry, the, the Treasury Company price Is Bitcoin times Bitcoin per share times MNAV, and Bitcoin's going up in a power law up into the right, and the other two are going down into the right. So a little company will start with a massive MNAV and a really high yield And both of those naturally decay. So a smart treasury company is gonna manage, you know, you can't manage Bitcoin's price, you can't really manage the MNAV, but what you can manage is the rate at which Which you buy and the yield you're targeting. So like I said, Metaplanet targeting about point nine percent per day can continue to sustain and deliver For investors, and they say, \"Yeah, this company delivers long term, and I can see this, you know, I'll put my, a lot of my wealth into this company, a-and I'll be able to sleep at night for two years 'cause I know it'll be fine.\" Whereas, you know, the, the, the shorter term plays with a much higher yield that they're targeting, is maybe a shorter term play, and you've got to watch it Like a hawk to see when it, when they can't continue that rate of yield, that Bitcoin yield, and then the MNAV will naturally drop with that." }, { "speaker": "stephan", "time": "28:37", "start": 1716.89, "text": "I see. So in some cases, it's like a high MNAV can be an indicator of excitement, it can be an indicator that this company has now an opportunity to use the ATM, but on the other hand of it, it can also be if the company isn't executing, doesn't have a track record, or some other risk comes to bear, then That can mean sort of, that, that company becomes quote unquote dead in the water, they won't be able to accumulate as, as well or as quickly as they were" }, { "speaker": "marty_kendall", "time": "29:13", "start": 1753.05, "text": "Yeah, and you saw what happened to MicroStrategy a few months back when their MNAV was dropping below two, sales that I can't buy, Bitcoin was dropping, he couldn't buy any Bitcoin, so his yield went to pretty much zero for a little while And you couldn't buy Bitcoin 'cause these MNAV had dropped so far, and then they came out with the pre-fers and, you know, things looking good again. But, yeah, i-if you're gonna start a Bitcoin equity company, you need to have, you know- These are the markets I'm going into, these are the tickers I'm gonna provide all over the world, this is when I'm starting the ATM, and this is when I've got the preferreds lined up. And if your daily rate of growth, your Bitcoin yield is ten percent a day, you better have that lined up in a couple of weeks down the track. You, you can't be going, \"Oh, yeah, we're working on that.\" Otherwise, you know, it's, it all happens very, very quickly." }, { "speaker": "stephan", "time": "30:05", "start": 1804.62, "text": "Yeah. And have you done much analysis on the convertible bonds aspect of this or not really?" }, { "speaker": "marty_kendall", "time": "30:12", "start": 1811.59, "text": "Not so much. Yeah. I mean, MicroStrategy went into that a lot, and then I think they went, \"Everybody's shorting my stock, 'cause they buy it, short it, and this is no fun.\" So I think that the general consensus is that the, the preferred bond play is a better way to, to suck money out of the bond market from more conservative investors rather than letting it be an arbitrage play with the big hedge funds. I see." }, { "speaker": "stephan", "time": "30:39", "start": 1838.73, "text": "And I mean, maybe it's kind of a balance, and people will sort of do some level of convertible bond plays and some level of, you know, preferred share offerings and things like this to sort of balance, things out there, and so- Then, yeah, it comes back to, I guess, the when, when companies are, I guess, you're, you're looking at some of these different companies and trying to understand, yeah, do I believe that they've got what it takes to keep executing, or do I believe this company doesn't really have what it takes? So I, I think what, what I'm getting from you there is that If they really look like they've got a plan on how to execute, then that's, that's a good indicator. If they don't, if they look a bit more amateur or maybe they haven't thought this through, that's on the downside, that's, you know, a, a down marker, or you'd give them, you know, less points for that. Yeah. What else, what, what else are the indicators that you would look at there? Like, you think if they're growing too quickly, that can also be- Oh, that, that, like that's like the eclipse thing. You're, you're trying to fly too close to the sun. Yeah, exactly." }, { "speaker": "marty_kendall", "time": "31:46", "start": 1906.29, "text": "You're fly-flying too close to the sun. You, you, the wax is gonna melt if you get too close to the sun too quickly. but, but, you know, by all means, people should jump into those and have fun. but- But beware that it's maybe not a long term play. and I, I just lived through the, the great MNAV compression of MicroStrategy from four to two, and you see these companies at twenty And you go, somebody's gonna get potentially hurt there. So yeah, just, I, I suppose that's part of my messaging is giving people the data to be aware of the risks and manage the risks versus returns, and just because it's got a ton of hype Doesn't mean, it's gonna go on forever. Might go on for, for a bit longer if it's got a really hyped community, but that's where I frame it on the most popular chart that I publish pretty much every day is that BTC yield versus MNAV and anything down the bottom right with a high yield and a low MNAV is basically a bargain. If you can see a company that's consistently stacking and achieving a high BTC yield with a lower MNAV, then they're, they're a great buy 'cause they're cheap, your risk is low, you're not gonna fall if they, if the MNAV tanks. But anything that's overhyped with a really high MNAV and a low yield, it's like, yeah, maybe, maybe you wanna rotate out of that potentially to manage your risk" }, { "speaker": "stephan", "time": "33:15", "start": 1995.16, "text": "Yeah, interesting. And so basically, you're looking at them as, I guess you can have a, you might be, have a portfolio of these if you're looking at this, and you might look at, okay, how much am I going to weight to these different things? And I guess in this context, mSTR is sort of like the blue chip, they're the big, safe, play, much safer play." }, { "speaker": "marty_kendall", "time": "33:35", "start": 2014.62, "text": "They're stable, but they're not gonna grow as quickly because they've got such a big stack already, so the yield's not gonna go as" }, { "speaker": "stephan", "time": "33:41", "start": 2021.42, "text": "Yeah. And so then, like you're saying, the EMNAV erosion is the big risk, and that would be more like, you know, especially in a bear market, right? Like that could really be-- That could really sting because you might, if you were in it, if you were buying the equity of these companies, we, we could be-- The downside could be EMNAV really drops really quickly and the Bitcoin price drops really quickly. Yep. That could be a really bad double whammy factor if you, you know, i-i-if you're in that situation situation. And so that's kind of, I guess that comes down to like, let's say bet sizing or, position sizing of if you're gonna be looking at those really high risk plays, well then you need to size your position accordingly if you're gonna, you know, do that. And the way, at least the way I'm thinking about it is, you know, I keep You know, most of my stuff is in Bitcoin cold storage, BTC, you know, and then only a small part is where I would think about, okay, you know, I'm gonna look at some of the treasury companies And so I think that's one way to look at it. Of course, everyone has to do their own, you know, what works for one, one of us doesn't work for the rest of us. You have to think about your own situation. So let's talk a little bit about that life cycle component of these, treasury companies. I know we've been touching on it, but it would be good to sort of talk through what is like a typical life cycle for these companies." }, { "speaker": "marty_kendall", "time": "35:05", "start": 2105.25, "text": "Yeah. So as I mentioned, the Bitcoin equity price is a function of Bitcoin MNAV and the Bitcoin per share And, and they all move in a, a separate vectors. So when they're little, the Bitcoin price is, is Bitcoin price, but they'll have a high MNAV and a high yield because they're, they're small and they can stack One Bitcoin, two Bitcoin, four Bitcoin, sixteen Bitcoin, and just grow exponentially, which is very attractive, and that's fairly easy to do 'cause you don't need a lot of money to do to achieve that, you can just do that with the early investor seed funding, and they can get off the ground with a massive MNAV, a massive yield, but eventually as the stack grows, gravity kicks in and they come down the yield curve, And as long as they end up in the bottom left corner like mass, like micro strategy, like strategy with a massive stack that they can then turn into preferreds, they'll be a, a great company for the long term. So in five, ten years, they'll still be here and be the banks of tomorrow, which is Really exciting, and I'm, I'm, I love this area just because I think it's a great way of taking fiat and mining it into Bitcoin, and, and, you know, the sooner the better. For me, because that makes, you know, money fair, and at the moment, money's not fair, fiat's not fair, it starts wars. But, yeah, but they will naturally follow that life cycle, and it's just a matter of having every, all your ducks lined up in a row that you're gonna have your, your early investors, your ATM, your preferreds, and then your, your hype cycle on top of that as well, and just delivering, executing relentlessly as you see people like, like Metaplanet doing." }, { "speaker": "stephan", "time": "36:55", "start": 2215.42, "text": "Yeah. And so then, how are you thinking about this idea of constructing a portfolio of these treasury companies? I know you've done some analysis on that. How are you-- How do you see that?" }, { "speaker": "marty_kendall", "time": "37:05", "start": 2224.6, "text": "Yeah, yeah. Been working hard on, like, for myself and, and sort of our followers as well, to get to a point where there's a, there's a degenerate portfolio looking at just what's the highest risk reward Companies, and if I wanna get maximum returns, you've got the little companies that are just starting out, you're willing to take a risk, and they might blow up, and they've got a really high, BTC yield and maybe a higher MNAV, but they're, they're likely to, to go vertical. And then from the other perspective, it's that what I've been talking about is, you know, when do they look like they might be tapping out? When are they gonna hit a ceiling? And that's sort of the conservative perspective, and that's where you're- Micro strategies and metaplanet and these other things kick in. So as soon as you see it turning over and, and reaching a ceiling, then you need to be more risk adverse, and the data can just give you a, a constant stream of information to be able to rotate. And if you're in the more conservative portfolio, you're gonna be rotating less often, but if you're on the- Aggressive degen portfolio, you're gonna be rotating quite quickly." }, { "speaker": "stephan", "time": "38:13", "start": 2293.24, "text": "Fascinating. And, yeah, I think it's, yeah, it's just such a, yeah, there's so many different- Kind of elements to try and dive into, so it's kind of hard to even kind of understand all the world of" }, { "speaker": "marty_kendall", "time": "38:24", "start": 2304.14, "text": "finance." }, { "speaker": "stephan", "time": "38:26", "start": 2305.74, "text": "Right, and I think what we're seeing is just this- You know, it's this huge arbitrage that most of the world doesn't really understand yet, and most of the world doesn't really have the same conviction about Bitcoin that, let's say, you and I, listeners of this show, have. So I think that's part of the opportunity and, yeah, but I think that also means you need to have the conviction to keep stacking during a bear cycle, right? And I think that, that might be the harder question, like what happens, when a bear cycle comes? Are you gonna be still doing the same analysis and thinking, \"Well, this particular company, they've still been executing, they can still, you know, accumulate BTC yield, and therefore you might be buying some Bitcoin and also maybe buying some of those equities in a bear market because you think it's, you know, good value for money.\"" }, { "speaker": "marty_kendall", "time": "39:17", "start": 2356.57, "text": "Yeah, I, I, I suppose I, it'll be interesting to see what actually happens with the bear market 'cause as I, you know, will there be the same cycles? I think the cycles are different. I think it heavily depends on the, you know, government debt and Trump just deleted the, the debt ceiling basically, so, it's, it's gonna be interesting times for the next few months and years and, and whether the Bitcoin Treasury companies keep on just buying Bitcoin up As, governments keep printing money, maybe they'll get to a point where they'll try to rein it in again, and, and that will be the point where you probably wanna be a bit, bit more risk adverse and move to Maybe the preferreds and, and the Bitcoin Treasury companies will benefit because everybody's moving to preferreds rather than the equity as much." }, { "speaker": "stephan", "time": "40:04", "start": 2403.65, "text": "Yeah, interesting. And so, yeah, I think I'm always cautious about the sort of, \"This time is different,\" because, yeah, yeah, for sure. You know? But I- you know, long term structurally bullish obviously on Bitcoin, and I believe, I believe there is some kind of an edge, a sustainable edge that these companies can have, assuming, you know, good execution and so on, and obviously with higher risk than just holding, you know, Bitcoin in your col-in your gold card, but I, I, I see that as they can access this cheap capital and buy Bitcoin, and so maybe this is also a good spot. I, I'm cur-curious to hear if you've done any analysis on like BTC Talk and these kind of, this concept of like what's dilutive or less dilutive" }, { "speaker": "marty_kendall", "time": "40:49", "start": 2448.63, "text": "not as much. I, I just rely on the, the BTC yield, which I think is the most important factor, and also looking at, you know, the Days to cover MNAV, which I've converted into a, a days to flippening, which is when the, the current value of the BTC on the balance sheet exceeds the, the current share price based on the vector trajectory of, of, of the MNAV and the BTC yield, which is a little bit more subtle than the, pure days to cover, cover MNAV. Yeah." }, { "speaker": "stephan", "time": "41:23", "start": 2483.25, "text": "Well, let's, let's talk about that. So can you just like for listeners who aren't familiar, what is days to cover MNAV, and then we can go into that?" }, { "speaker": "marty_kendall", "time": "41:30", "start": 2489.63, "text": "Yeah, so that's just a function of MNAV and the current yield. So it's, log MNAV divided by log one plus, yield. which just gives you an understanding of how long you'll have to wait until the Bitcoin on the balance sheet will be worth their, their market cap or their share price. So you basically reach a MNAV of one on your investment in X days. So for some of the smaller ones, it's down at thirteen days. So as long as they keep on executing it, what they're doing now You'll be covered, but it relies on them continuing to execute, and if they keep on doing that, you've got a rocket ship. but a lot of those they can't keep going. Meanwhile, strategy is like fifteen hundred days, so you've gotta have to wait a long time just 'cause the yield is a whole lot slower, and therefore people go, \"Meh, you know, I might rotate to a, a faster horse,\" and therefore their MNAV drops a little bit lower." }, { "speaker": "stephan", "time": "42:27", "start": 2547.29, "text": "Yeah, I see. And so I think it's like people can choose to be as conservative or as DeGen as they like, right? Like the way I'm seeing it is kind of like, well, how, how would you explain that? Like if you're on the very conservative side, what would your portfolio look like versus if you're on the full, if you're all like more of a DeGen? Yeah. Great question. How do you see that? Great question." }, { "speaker": "marty_kendall", "time": "42:46", "start": 2566.24, "text": "Yeah, so if you're a more conservative investor, you wanna see a long-term track record of consistent execution at a Consistent level of yield, go back to Metaplanet as the example at point nine percent per day, they're growing exponentially and that can keep going for a very long time, whereas- If you're a DeGen, you're looking for the rapid gains which you might be able to achieve with a smaller company that just came out or, you know, you, you've heard a rumor that this company is gonna be turned into, a Bitcoin leveraged equity through a PIPE investor from some- You know, you know, you can jump onto that before it's even bought a Bitcoin and, and take it for a ride and then jump off when you see it not delivering The, the, there's, yeah, I think things like Metaplanet that are delivering consistently over the long term, they're quite secure, stable investments. Who would have thought that would, you know, six months ago you wouldn't have thought would say MetaStrategy is the, the boring blue chip, but now it is. it's, it's the one that's gonna keep on tracking with a little bit faster than Bitcoin, but not a lot, whereas- The other smaller ones are potentially gonna go up like a rocket for a short time." }, { "speaker": "stephan", "time": "44:00", "start": 2640.48, "text": "Yeah. And do you-- Now, we've been talking a little bit about some of these, you know, this BTC yield and days to cover and some of these metrics. What about like kind of more of a fun-fundamental analysis zooming out and understanding, like, okay, some of these companies, they might become banks or quasi-banks or insurance companies or reinsurers in the long-term future. Yeah. And maybe that's i-in that conversation, that's more like the MSTR and maybe Metaplanet, who are probably, and maybe XXI, who are kind of be- Yeah. Gonna be part of that conversation because once we're talking- Yeah. Ten years out, twenty years out, maybe it does become like these become more like who can become the most, Let's say reputable, sustainable bank or re-insurer, how do you think about that? Who's got the most collateral" }, { "speaker": "marty_kendall", "time": "44:53", "start": 2693.48, "text": "of Bitcoin on their balance sheet?" }, { "speaker": "stephan", "time": "44:55", "start": 2695.32, "text": "Right. Yeah. And so then they can start, and I think MSTR is the most advanced on this conversation, obviously, 'cause they've got Strike, Strife, and Stride, and who knows, they'll probably do more. yeah. So they will be able to just kind of tap these huge, huge markets, and they will be able to generate, you know, BTC yield from that. now, of Of these kind of crazy, you know, early day mNavs, but I think in the longer term scenario, the sort of fifteen, twenty years out, they'll be in a good position, won't they?" }, { "speaker": "marty_kendall", "time": "45:28", "start": 2728.3, "text": "Yeah. Yeah, yeah. I'm not sure I agree with Jeff that they're gonna keep going up with a massive, massive MNAV for, you know, right, for the long term, but I think they'll be Once they get into the S&P, they'll do very well for themselves and they'll be able to keep buying Bitcoin and keep a some level of yield and some level of MNAV above, above one because they're recycling their profits into Bitcoin, which keeps A, a, a positive yield and therefore an MNAV greater than one. So over the long term, MicroStrategy is gonna be a, an excellent blue chip and, and that Bitcoin, they are gonna be the Bitcoin bank. Sale doesn't like to call it a bank, but they're basically collateralizing the world in the future of money Which is gonna be a massive position. I think the market is still open for smaller companies to get in and, and play that game and be the banks of the future. You can start now and, and just sit on one percent a year, a day and Be huge in a couple of years if, if you played it right and had every, all your ducks lined up in a row. And right, yeah, whether the, the smaller ones who just go off like a A rocket straight up, whether they'll be the banks of the future, I, I'm not quite sure. Yeah, I guess the game- Yeah, I" }, { "speaker": "stephan", "time": "46:49", "start": 2809.42, "text": "guess the game is to sort of get past the filter, right?" }, { "speaker": "marty_kendall", "time": "46:54", "start": 2814.05, "text": "Yeah, yeah, yeah, yeah. it's like just fascinating to watch. I can't, I can't look away. It's just, fascinating to see what happens every day to see as they stack more Bitcoin and are they speeding up, are they slowing down?" }, { "speaker": "stephan", "time": "47:06", "start": 2826.28, "text": "Right. Yeah. I think Perhaps that is part of the race or part of the game, because maybe they see it like, \"Look, if we grow big enough, it's like, you know, sort of fake it till you make it sort of idea, like, not exactly faking it, but the point is, if you get big enough, then maybe you can start justifying these preferred shares, and that's maybe the longer term game for, some of these companies.\"" }, { "speaker": "marty_kendall", "time": "47:28", "start": 2848.4, "text": "Yeah, yeah, it, it, it's seed capital, ATM preferred shares, and then long term longevity and s-survivability, but it's survival of the fittest, and there won't be three hundred of these Fighting it out in ten years, there'll be, there'll be big ones that'll consolidate," }, { "speaker": "stephan", "time": "47:46", "start": 2866.1, "text": "right? Yeah, I, I do. Probably in each jurisdiction. Yeah. Yeah, I'm curious how you see that then. Do you see this as like, there'll be a few big ones in each jurisdiction, or maybe one biggest one in every jurisdiction, or maybe the US can justify more because it's a big capital market? Maybe. How are you seeing that?" }, { "speaker": "marty_kendall", "time": "48:01", "start": 2881.26, "text": "Yeah, I don't know, I, I haven't really thought that through, but I think the ones that continue to execute and follow, you know, avoid Saylor's mistakes and follow his successors will, will get there in the long term and survive in the long term. And People will lose interest in the ones that can't continue to deliver, so they won't be able to run the ATM, no one will buy their preferreds, and they'll just probably head to MNAV one or less, and they'll be acquired, they'll be eaten" }, { "speaker": "stephan", "time": "48:32", "start": 2911.88, "text": "This episode is brought to you by Galloy, builders of banking software for the Bitcoin age. After years of risk and uncertainty, Bitcoin and banking are colliding. The regulatory environment is rapidly shifting in favor of Bitcoin and digital assets. Fintechs and crypto-native companies can become chartered banks, and traditional banks and credit unions will launch Bitcoin products. But the legacy core banking software that many financial institutions run on wasn't built for Bitcoin. The Galloy banking infrastructure stack delivers all the key elements of a modern core banking platform. With cloud native infrastructure, event based architecture, and robust APIs coming together to meet the security, scalability, and reliability needs of banks of the future. Whether you are launching a modern financial institution from the ground up, or you are adding Bitcoin backed lending or payments to your product offering, talk to the team at Galloy, visit galloy dot io, or reach out to the team at b i z at g a l o y dot io. Yeah, fascinating. I, I think it's so crazy to see how this all goes. so I guess The, now other people might take a view that, you know, everyone, lots of companies should all be doing this kind of, levered, kind of going all in like strategy, versus there would be other people who say, who see it more like, no, it's okay, like every company should be hodling Bitcoin, but it's another thing to actually try and do this kind of financial operations aspect of it. And so, I mean, the way I'm understanding it is I think, you know, every company should at least hold a Bitcoin, right? Obviously. Agreed. but the number of companies who will survive doing this, you know, treasury leverage kind of strategies, there'll only be a few of those, and I think it might be like a few top ones in each jurisdiction or at least the big jurisdictions That's how I'm seeing it. Is that how you're seeing it or what do you think?" }, { "speaker": "marty_kendall", "time": "50:18", "start": 3018.12, "text": "Oh, totally agree. I, I think every company should move their cash and capital into Bitcoin and the smart one, like, as Sailor said, you, you only-- it, it's only people who realize They've got an emergency that, that do it earlier, and the big ones are going, \"Yeah, we're fine,\" and they'll suffer from that. And, yeah, so every company really should move some or all of their cash to, to Bitcoin. The more you study it, the more you understand it, the more you're motivated and believe and say, \"This is the future, I've gotta be all in.\" Hundred and twenty-one percent all in, like Alexander says. Yeah, I, I, I, he's so committed and so passionate. I've talked to him a few times, and he's just An amazing guy, totally sold out. I think he's, you know, who's more passionate, Sailor or Alexander? you know, I can't decide, but he's unreal. But, Where was I? But it'll be the ones that can continue to deliver consistent BTC yield over the long term that will make it a-and that is difficult, that gets really hard a year in, once you're still stacking exponentially, the Bitcoin buys just get bigger and bigger and bigger and bigger and, you know, it was easy when you're buying two Bitcoin a week and then you're buying four, but when you're buying a thousand and ten thousand and a hundred thousand, and a-m, you can't buy millions, so it has to slow down eventually, but it-it's that consistent delivery and, A slow rollover where your MNAV won't implode rapidly and Bitcoin will rise and everything'll be hunky-dory rather than It just goes up and, and collapses. So, yeah, that's-- I've got the popcorn out and I'm watching it every day, seeing what they'll do and how they play it, and maybe I'm wrong and some of the, the little ones that are going up vertical will, Or become the big ones, but, we'll see how it goes." }, { "speaker": "stephan", "time": "52:17", "start": 3137.33, "text": "Right. And how are you also thinking about the question of an operational business, right? Because this is also another thing that's come up, some people saying, \"Oh, it's a good thing if they've got some operational business, other than the Bitcoin stacking side of it, because they can, maybe they can keep stacking in the bear market or it's a way of differentiation for them, versus other companies that are marketing themselves as, like, \"No, we're a pure play. Like, that How do you think about this question?" }, { "speaker": "marty_kendall", "time": "52:46", "start": 3165.81, "text": "Yeah, I've done a model fit score that looks at the relationship, the correlation between the, the value of the Bitcoin on their balance sheet versus their share price. So The ones that are pure play Bitcoin tend to have a, a much higher correlation than ones that's similar that have something else going on and complex issues and people are, you know Selling them because of some issue with the DOJ, but I think" }, { "speaker": "marty_kendall", "time": "53:16", "start": 3195.57, "text": "looking at similar, I, I just think it might just keep on going up and cruising up because they've got a lot of Bitcoin and they can keep funding it and issue prefers and Maybe they'll, they'll, they won't have the massive yield, but they might still be around in the long term versus the ones that just go, you know, full on sprinting out of the gate in the marathon. And, you know, they either survive or they flame out. So I, I think having a, an existing business versus I'm just one guy in my bedroom and I bought a share ticker and here I am, let's go. yeah, so it, it's a different operation. You've probably got more stability and, and you've got a legal team, you've got a CEO, you've got a CFO, and all the things you need to actually make it through. Right. So, there's pros and cons. You're probably not Growth quickly, but, you might be around in a couple of years." }, { "speaker": "stephan", "time": "54:13", "start": 3253.3, "text": "Yeah. And so the other interesting comparison here is some of the big miners, right? So Marah, as an example, and, I believe there's one or two other big miners. Is it Riot? I think Riot is also on the, let me just pull up the Bitcoin Treasuries. Yeah, Mara have fifty thousand coins and Riot have about nineteen thousand two hundred and twenty five coins. So" }, { "speaker": "marty_kendall", "time": "54:37", "start": 3276.59, "text": "and and CleanSpark, Metaplanet just surpassed CleanSpark." }, { "speaker": "stephan", "time": "54:41", "start": 3280.93, "text": "Correct. Yeah. CleanSpark have twenty thousand six oh eight. Yeah. Yeah. So how are you thinking about those? is it that the Bitcoin mining company, the public Bitcoin mining companies, they've got this other business that is costly or, or like, how, how are you seeing that then?" }, { "speaker": "marty_kendall", "time": "54:57", "start": 3296.64, "text": "They're, they're mining Bitcoin, And that's the main operation. They may be stacking the Bitcoin, but again, they've got such a big stack that the yield is quite low, so people don't value them as a, as a pure Bitcoin treasury play because they've got such a big stack, the yield is low, and therefore the MNAV is low, they just don't move up. people think, \"Oh, big stack good,\" but if you're wanting rapid returns, you, Mara's not gonna give it to you, and Mara- Randomly buy and sell shares so their, their fully diluted share count just moves around and their Bitcoin per share goes down, you go, \"What? What the hell? Like, I can't- model that anymore and throw it out of the mix 'cause it's, it's just not a pure play Bitcoin strategy." }, { "speaker": "stephan", "time": "55:45", "start": 3344.53, "text": "Interesting. And the other element of it could also be Over time, as you become bigger, so I mean, if we think about strategy, now they started as more like a, you know, business intelligence data analysis platform, and then they, you know, did the Bitcoin strategy, and then over time, the Bitcoin strategy dwarfed their BI and data analysis business, so that nowadays, I think it's probably fair to say when a lot of people are looking at MSTR Maybe they're not calculating in as much on the BI and data analysis side of it, they're just looking at like their Bitcoin operations. So maybe it's a similar thing, like that once you, if you do this strategy and you actually do become big, then people won't care as much about your, let's say your non-Bitcoin operational business side of it because it's just very, it's very small compared to the, the bigger" }, { "speaker": "marty_kendall", "time": "56:34", "start": 3393.77, "text": "thing. In a year, Semler could be and Coeur could be seen as a Bitcoin company rather than a medical and a technology company because that's their main business and they yield and they can keep on Stacking at a, a respectable yield, but because they, they started big, like Semler put all their spare cash, like four hundred Bitcoin all at once, so they were never gonna have a massive yield, so they're never gonna c-compete with Smarter web and, and the little guy instead of just blowing up because they start from nothing." }, { "speaker": "stephan", "time": "57:06", "start": 3426.24, "text": "Yeah, interesting. But I guess it kinda does look at, so in a way, it's like, because they started small, they were able to kinda generate a lot of hype and maybe that generally generates a lot of like retail excitement and investors and maybe you get like a, a stronger community around you who kind of like, you know, wearing hats with your company on it and doing podcasts about you and maybe that's Maybe that's part of the dynamic, isn't it?" }, { "speaker": "marty_kendall", "time": "57:33", "start": 3452.79, "text": "Totally. If share price is going up, people get really excited and they build a community, but I think as soon as share price starts tanking, how many true believers will- Holds, you know, just 'cause they love the company, I'm happy to, to see MNav implode to nothing." }, { "speaker": "stephan", "time": "57:51", "start": 3471.26, "text": "Yeah, it's interesting to see that. How much she was a true" }, { "speaker": "marty_kendall", "time": "57:53", "start": 3472.62, "text": "believer in the CEO." }, { "speaker": "stephan", "time": "57:55", "start": 3474.83, "text": "Yeah, well, I mean, it's interesting to see, I, I think, like with the Metaplanet example, right? Like they had the kind of like, I think they had a, an AGM or some kind of shareholder meeting and it was like in a typical corporate room, I think you might have seen the tweet, and then they had like this, it was like a huge conference room with like all these, you know, rabid fans who are like Metaplanet diehards because they got rich off it, right? Like I think people got rich All this stuff. So that's one thing, I guess on the similar side of it, you can see that Eric has, you know, the, the company has made plays to, as an example, they have Natalie Brunell on the board, they have, Joe Burnett now as the director of Bitcoin strategy. So maybe they're trying to start something up there, and who knows, maybe that will actually be successful and they will generate a community around that. But I guess that's the open question, right?" }, { "speaker": "marty_kendall", "time": "58:50", "start": 3529.52, "text": "But because they got four thousand Bitcoin, they won't be a, they won't go vertical like SmartWeb, but I think if you're a conservative investor that wants- A company that'll be around in a few years, they might, might be on, on the cards." }, { "speaker": "stephan", "time": "59:02", "start": 3541.66, "text": "Well, it's maybe it's like the turtle, the tur-- the tortoise and the hare, right? Like that maybe, maybe they'll survive a bear market because they've got the medical business and they will actually survive and, yep, that, that could be part of the, that could be part of the argument, right?" }, { "speaker": "marty_kendall", "time": "59:15", "start": 3555.09, "text": "Yeah, I, I, I often think of that analogy, like the tortoise and the hare, like, but it's gonna be interesting" }, { "speaker": "stephan", "time": "59:25", "start": 3565.31, "text": "Yeah, okay. There's pros and cons of" }, { "speaker": "marty_kendall", "time": "59:27", "start": 3566.63, "text": "both." }, { "speaker": "stephan", "time": "59:29", "start": 3568.57, "text": "Yeah. now you've also got a post on how to spot the next mstr before it moon's. So I think that'll be an interesting one, kind of a recent post from maybe two or three weeks ago, I think to-- Yeah. The second of June. Do you wanna tell us a little bit about what you're getting at here in this post?" }, { "speaker": "marty_kendall", "time": "59:44", "start": 3583.7, "text": "Yeah, I think that was just the model fit score to look at the correlation between the Bitcoin value per share versus the share price. You see MicroStrategy, SmarterWeb, people are valuing that as a pure Bitcoin play, so the correlation is much higher. So if you're in it for the, you know, I love Bitcoin, if Bitcoin goes up, everything else will go up. That's sort of the companies you wanna, you wanna get into, whereas A liquid and similar and those sort of things have got a much lower correlation, cooler, have got a much lower correlation with their Bitcoin value per share. So they don't move necessarily with the Bitcoin price or the Bitcoin value. So that, that's part of my system where it, it's a factor to, to weed out companies that Aren't moving with the Bitcoin value, and people obviously don't see them, they, they see them as a, just a company that owns Bitcoin rather than a pure Bitcoin play like Strategy and Metaplanet and Smarter web these days." }, { "speaker": "stephan", "time": "01:00:47", "start": 3647.73, "text": "Yeah, I, I guess part of that is just, I guess market perception, right? Like it's, you know, it's, is there the perception that they want to really go hard on Bitcoin accumulation, and that they will generate you a good BTC yield? I guess that's kind of bottom line, that's what they're looking for. Now I guess this is another question, maybe more from the cypherpunk side of things or more from the, like, you know, holding Bitcoin self custody, right? Because of course, in Bitcoin, we have this kind of not your keys, not your coins, aspect of it. So there'll be some people who sort of look at it thinking, \"Well, why are you guys talking about all this Bitcoin yield? You don't get the yield. What you're owning is equity in the company.\" And maybe that's something, Now, I think there's different ways to go about that. Maybe the answer is, well, maybe if you really want Bitcoin cold storage, you should periodically take profit into Bitcoin, right? Like if you really are a true believer, then periodically you might be selling some of those share-- the equity you hold in a Bitcoin treasury company To buy more Bitcoin and put that into your cold card or into your multisig, right? How do you think about that?" }, { "speaker": "marty_kendall", "time": "01:01:54", "start": 3714.35, "text": "Oh, yeah, I, I think it's very smart to have a significant portion in Bitcoin and maybe- MicroStrategy preferreds and taking profit out of the Bitcoin equities and putting that back across, 'cause you know, just because it went up Over the last month, it, it may not keep going up forever, so taking something and putting it into safe storage, that if you do get a drawdown, if your company does, for whatever reason, you know, another company starts up in the same jurisdiction and, and eats your market, then, you know, you're not left holding the bag, you've got some funds that, are in safe storage away from the Bitcoin Treasury company." }, { "speaker": "stephan", "time": "01:02:39", "start": 3759.47, "text": "Yeah. Whereas I see maybe there are different schools of thought even here inside the, let's say, the Treasury company investors, because some of them see this like- You know, just keep holding the, the equity or these other instruments or do things like, I don't know, some advanced, you know, options strategy to generate income off of that. Yeah. W-where are you on that? Do you agree or disagree on those kinds of ideas?" }, { "speaker": "marty_kendall", "time": "01:03:04", "start": 3784.61, "text": "yeah, I tried to get into options when everybody was banging on about it with MicroStrategy and everybody's making a ton because it was so volatile, but it went through the last cycle, they, they- Pumped it hard, peaked the yield, and then it really flattened out, and this microstrategy's volatility's gone to nothing. Now it's, and from an option play in there for the converts, it's not a, an interesting plan. I think that's part of the reason that MicroStrategy haven't, strategy haven't gone back to the converts because they can't get a good rate on them because the volatility is gone" }, { "speaker": "stephan", "time": "01:03:42", "start": 3822.57, "text": "Right, but that could also be a timing thing too, right? Like maybe right now with Bitcoin, you know, as we record today, it's the twelfth of July, Bitcoin is about one hundred and seventeen thousand US. Now You know, if Bitcoin does some crazy move later this year to, who knows, one fifty or one two hundred, maybe then the volatility does come back," }, { "speaker": "marty_kendall", "time": "01:04:01", "start": 3841.06, "text": "maybe. Yeah, but I think the volatility might be in the little Bitcoin equities rather than MicroStrategy, like I think they might be able to do High yielding convertible bonds potentially. But I think MicroStrategy is gonna stick with their preferred and stay. They're trying to market themselves to the bond market And the banks and the pension funds and just say, \"We are the safe Bitcoin company, trust your pension fund, trust your preferred equity with us for the long term,\" and they don't wanna- yeah, they're not, they're not marketing to the degenerate anymore." }, { "speaker": "stephan", "time": "01:04:36", "start": 3876.01, "text": "Interesting. And so then it's, yeah, and that comes back to the life cycle point we were talking about earlier as well, right? Like it's, you know, maybe i-investors, seed capital, then ATM, and maybe convertible bonds if you can get a good rate on them and term the debt out. And then eventually you sort of morph into this preferred shares, kind of offering because maybe that's the more mature thing. And then over time, h- we'll see. I think this, seems to be the idea that if credit rating agencies would look more seriously at these preferred shares offerings by MSTR and others in the future, that, that would really start unlocking a lot of, the, you know, these huge debt markets that exist out there in the world. There are so many people who want- On a, you know, who are investing in things like government bonds, what if they started buying Bitcoin Treasury Company preferred shares instead?" }, { "speaker": "marty_kendall", "time": "01:05:27", "start": 3927.63, "text": "You get four and a half percent with US Treasury versus ten, eight percent with Sailors preferred, it's, it's a no-brainer if you trust the company, and yeah, I, I think the way Sailors played it to go from high-risk DGen options converts ATM Now I'm targeting the three hundred trillion bond market. Absolute genius." }, { "speaker": "stephan", "time": "01:05:52", "start": 3952.94, "text": "And that could get even more juicy if there's, there's chatter now with, you know, is Trump gonna try to turf Jerome Powell out? Oh yeah. Or is he gonna leave on his own accord or maybe he just leaves, you know, next year when his term is up? And are they gonna try to lower the rates? And so then up, you know, in the US government bond context, people are gonna be getting even less than this four and a half percent. They might be getting, who knows, two percent or" }, { "speaker": "marty_kendall", "time": "01:06:15", "start": 3975.04, "text": "one What happens if the US government goes bankrupt and can't pay your bond back? And like, that, there's, they downgrade the US Treasury? Yeah, well, I mean, I think most people would argue that if they go" }, { "speaker": "stephan", "time": "01:06:24", "start": 3984.58, "text": "bankrupt, they can just print more money, you know? Yeah," }, { "speaker": "marty_kendall", "time": "01:06:27", "start": 3987.48, "text": "which, which is good for Bitcoin, sad for the world, which is good for Bitcoin holders, of" }, { "speaker": "stephan", "time": "01:06:30", "start": 3990.95, "text": "course. Yeah. Yeah. But, it's kind of interesting to see all these different dynamics. so, yeah, I think we covered kind of a lot of different things. Do you have any, I guess, closing thoughts for listeners on, you know, how to look at this space? where are the opportunities? Where are the risks?" }, { "speaker": "marty_kendall", "time": "01:06:46", "start": 4006.52, "text": "Yeah, I think look at the data and," }, { "speaker": "marty_kendall", "time": "01:06:50", "start": 4010.95, "text": "I think it's groupthink, is dangerous. People like to be part of the herd, but, you know, in retail investing that can- Sometimes be dangerous. People wanna follow the, the big pump and think it'll go up forever, but just because everybody's doing it in your ex-community, just 'cause everybody- In your little space believes this is the truth, then, you know, keep your eyes open, look at the data, look at when things are changing, look at when things are slowing down, look at what other companies are starting up around Your favorite company and manage your risk, have fun. I think there's massive opportunities in this Bitcoin equity, Bitcoin treasury space, I think I think it's gonna be a ton of fun and I'm just fascinated by it and trying to share my learnings and dig into it deeper and deeper and share the data and, so- Micro strategist on X, it's at Bitcoin PowerLaw, is, is, is the handle, where actually we've got mnav dot com and looking at starting up all the analytics tools and dashboards for companies and putting all the graphs that I've got. and automating those. So there's, Jürgen and Owen that are doing the, the programming and, and managing all that. So I think that's a massive area that I'm really excited to To service, 'cause I don't think anybody's really understanding yet, they're coming to terms with how do these work, how do we model them, how do we, how do we manage a risk, how do we pick the best one, how do we- Rotate if necessary when things are, are tanking. I think that's just, gonna be the fascinating question over the next five years. And as you say, there's a gold rush happening, it's, it's, it's on and, Bitcoin's blowing up, there's no US debt ceiling, yeah, Jerome Powell is moving out, we don't know what the timing is, but, Bitcoin's going up, forever, Laura." }, { "speaker": "stephan", "time": "01:08:49", "start": 4129.93, "text": "Forever, Laura. Alright, so listeners, links will be in the show notes. Follow Marty under, so it's microstrategist dot com is the, is the website. I'm a subscriber, I think it's, cool. I've been having a, you know, read of the blog posts and looking at some of the analysis. Of course, follow online at Bitcoin Power Laura. Marty, thanks for joining me." }, { "speaker": "marty_kendall", "time": "01:09:09", "start": 4149.8, "text": "Thank you so much. Great opportunity. Great to chat." } ] }