Latest / What Bitcoin Did / Liquidity, Deficits & the Real Bitcoin Signal | Sam Callahan

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Liquidity, Deficits & the Real Bitcoin Signal | Sam Callahan · What Bitcoin Did

• 0:00
  The fiat system steals time, which it's a terrible thing to have to just suddenly break the promise that they made to these people.
• 0:10
  It just goes parabolic in terms of the interest expense.
• 0:14
  And then you're in this situation where, I mean, massive currency debasement will probably happen at that point.
• 0:21
  97% of institutional capital, almost $100 trillion, have investment mandates for equity and bonds, right?
• 0:29
  And that's trapped capital. We love Bitcoin and we want to drive its adoption because we think it's the most important technology of the 21st century. These positive developments keep coming every single week. And so you have this divergence of like improving fundamentals and depressed price. And typically that's a good opportunity, right? It's like zoom out the cliche and think long term because Bitcoin's value proposition has never been stronger.
• 0:55
  I think those price predictions that you hear that we're all wrong are eventually going to be right.
• 1:00
  But it's just the time rising and that's the hardest part to predict.
• 1:06
  Sam Callahan.
• 1:07
  Hey.
• 1:08
  How you doing, man?
• 1:09
  Great.
• 1:09
  It's been a little while since you've been on the show.
• 1:11
  Yeah, thanks for having me.
• 1:12
  Things have changed for you?
• 1:13
  Yes.
• 1:14
  Go on, tell everyone about your treasury company.
• 1:18
  So I'm the director of strategy and research at Orange BTC.
• 1:22
  We're the largest Bitcoin treasury company in Latin America.
• 1:26
  So we have 3,720 Bitcoin.
• 1:29
  We went public about eight weeks ago on the B3 stock exchange in Sao Paulo.
• 1:35
  Our mission is to accelerate Bitcoin adoption in Latin America and Brazil
• 1:39
  in a place and region that needs Bitcoin the most, right?
• 1:43
  They have so much currency debasement and instability there.
• 1:47
  They also have like high rates of digital asset adoption broadly,
• 1:51
  but still, there's a lot of work that needs to be done
• 1:55
  in terms of education,
• 1:56
  in terms of building out infrastructure,
• 1:59
  you know, Bitcoin financial services,
• 2:01
  Bitcoin products.
• 2:03
  We think Orange could be a leader in this
• 2:06
  and be like the Bitcoin hub,
• 2:08
  both improving Bitcoin access
• 2:10
  for pools of capital that can't buy spot Bitcoin,
• 2:14
  as well as, like I said,
• 2:15
  building out Bitcoin financial services
• 2:17
  and products over time
• 2:18
  and being kind of that...
• 2:21
  educational powerhouse for Bitcoin.
• 2:23
  Because, you know, it's kind of amazing.
• 2:25
  It's like two to three years behind
• 2:27
  in terms of like the Bitcoin understanding there.
• 2:29
  And even just writing like a Bitcoin 101 report
• 2:31
  that we just put out in Portuguese,
• 2:34
  you know, maybe some of the content
• 2:35
  is familiar to US audiences,
• 2:37
  but we released it and it was wildly popular
• 2:40
  because like, wow, I never thought about, say,
• 2:44
  like Cresis's total addressable market chart
• 2:46
  that everyone knows.
• 2:47
  Like we put that in Portuguese
• 2:48
  and they're like, oh, I never thought of it like that.
• 2:50
  So it just shows like how they're a little bit behind,
• 2:53
  but that presents a lot of opportunity
• 2:55
  for a company like Orange.
• 2:56
  Oh, there's massive opportunity there.
• 2:58
  Like especially the amount of stable coin usage there,
• 3:00
  like educating people about Bitcoin,
• 3:02
  why that's important.
• 3:03
  I think it's very cool.
• 3:05
  Congratulations.
• 3:06
  Thanks.
• 3:06
  I'm going to give you some shit about treasury companies.
• 3:08
  I'm going to ask you some of the hard questions
• 3:09
  because I'm still on the fence a little bit,
• 3:11
  but can we start with some macro stuff?
• 3:14
  Because you do a lot of macro analysis.
• 3:17
  You do reports with Lynn.
• 3:20
  What are the things that you're keeping an eye on most closely at the moment?
• 3:23
  Well, Lynn and I wrote that piece on Bitcoin's correlation with global liquidity.
• 3:29
  And so I always keep an eye on global liquidity conditions.
• 3:34
  And I think there was that chart going around that looks at Global M2 and Bitcoin.
• 3:38
  And there was a lot of disappointment because Global M2 was going up and Bitcoin's price has decoupled from it.
• 3:44
  And there was like, this is broken. This relationship's broken.
• 3:47
  It wasn't correct.
• 3:49
  But in the report, if you read it, there's an entire section that we wrote about how Bitcoin decouples from global liquidity conditions at times.
• 3:59
  And I think we're in one of those moments right now.
• 4:01
  So why do you think it would be decoupling now?
• 4:04
  Well, in the report, we talk about how a couple of things.
• 4:07
  When there's internal market dynamics, like within Bitcoin itself, it can override what's going on with liquidity.
• 4:14
  And that like, so for instance, like the FTX collapse, that was unique to Bitcoin, didn't matter what was going on with the Fed or the money printing. There was a lot of chaos going on in the Bitcoin market itself, and it got wrapped up in all that chaos. And so the Bitcoin price suffered despite liquidity conditions being either unchanged or actually improving. So that was one example, or like a good example would be the launch of the ETFs. You know, that added a lot of demand, even though interest rates were going up.
• 4:42
  So that decoupled to the upside.
• 4:43
  Yeah, exactly. So that's unique factors that can... idiosyncratic events that can lead to the
• 4:49
  decoupling. But then there's also supply-side dynamics. So think about liquidity as a demand-side
• 4:55
  dynamic. Well, supply-side dynamics can also override the liquidity conditions. And when I
• 5:01
  say supply-side, typically that means when you talk about the long-term holders. We probably
• 5:06
  talked about that in your show with other guests of how they've been taking some profits, which is
• 5:12
  normal behavior in a bull market. But when you see a lot of that, sometimes those dynamics can
• 5:16
  override the liquidity conditions too. And so I think lately that's exactly what we've been seeing.
• 5:22
  And so I don't think the relationship is broken. I think we're just in this temporary period
• 5:27
  where these other dynamics are at play, but they're temporary. And eventually,
• 5:33
  liquidity takes the wheel again. And right now what we're seeing is liquidity conditions in terms
• 5:38
  of 85% of global central banks
• 5:41
  are cutting rates already.
• 5:43
  Fed's obviously cutting rates.
• 5:45
  You're seeing some of these moves by the Treasury
• 5:48
  indicating that there's some tightness
• 5:52
  in liquidity conditions,
• 5:53
  which means they're returning to, say,
• 5:54
  like they're stocking QT.
• 5:56
  The Treasury's talking about issuing on the short end
• 5:59
  or the Fed's starting to buy T-bills.
• 6:02
  They also tweak the bank capital reserve requirements,
• 6:07
  which is to create more demand for treasuries
• 6:10
  because they know they got to do these trillion dollar deficits still, right?
• 6:14
  So like liquidity conditions will take the wheel again
• 6:16
  and they're actually going to be easing, it seems like,
• 6:19
  over the next year or two years, which is good for Bitcoin.
• 6:22
  So you think this is a temporary thing for Bitcoin?
• 6:26
  You don't think it's like four-year cycle type thing playing out?
• 6:29
  No, no.
• 6:30
  Because I mean, look, I look at the fundamentals.
• 6:33
  Like I always looked at the fundamentals.
• 6:35
  You look at the price, you're going to get wrapped up in the volatility.
• 6:39
  But when you look at what's going on over the last year, like I just wrote this other report and it was about major milestones in Bitcoin adoption.
• 6:47
  And I had to do two separate timelines because so much has happened in 2025 alone in terms of all the regulatory changes, all these institutional adoption, all these major news stories.
• 6:58
  It seems like every week we get something that it's like, wow, this is wild.
• 7:02
  So like last week, it was like Bank of America, right?
• 7:04
  Or like Vanguard pivoting.
• 7:06
  You know, these are like, they just keep,
• 7:08
  these positive developments keep coming every single week.
• 7:11
  And so you have this divergence of like improving fundamentals
• 7:15
  and depressed price.
• 7:17
  And typically, that's a good opportunity, right?
• 7:19
  So I think, I've never been more bullish on Bitcoin.
• 7:26
  I think it's an amazing entry point.
• 7:27
  Not financial advice or anything,
• 7:29
  but it's just, I've been in this for eight years now, and I've never seen such positive fundamentals
• 7:36
  for Bitcoin. So I don't follow macro anywhere near as closely as you do. But the thing that I
• 7:41
  always think, and this might be super simplistic, is the midterms of next year, the economy is
• 7:46
  incredibly important to the midterms, therefore economy is going to be good. And generally,
• 7:51
  if you have additional liquidity into the markets, Bitcoin is probably going to perform better than
• 7:56
  most things. But it's interesting that over the last few years, maybe the last two years,
• 8:02
  Bitcoin's not really had like an influx of new people coming to it. It doesn't seem like at
• 8:05
  least. And certainly not like in 2017 or 2021. And my kind of take on that is they're probably
• 8:12
  going to like AI stocks, which are running like crazy. I mean, weirdly gold has had more retail
• 8:16
  interest than Bitcoin, I think this cycle. Do you think that's coming back? Or do you think we're
• 8:21
  missing a narrative in bitcoin at the moment well you said i don't think more people are getting into
• 8:26
  bitcoin more retail maybe like it's not like this like speculative fervor that you've seen before
• 8:32
  like i mean you could have google searches but i think anecdotally you just feel it there's not like
• 8:37
  i mean you you worked at this podcast for a long time and so it's different right yeah um and you're
• 8:43
  right i think i think the casino over in the ai world and the returns over there and it's making
• 8:48
  Bitcoin not look as attractive or as exciting for people. And so that's probably part of the story.
• 8:55
  But that doesn't mean not a lot of people are going. It's just, it's more institutional,
• 8:58
  which is more money. Honestly, there's going to be more demand flowing from those institutions
• 9:03
  than the retail investors. And so it's just kind of different. It's like a different cohort coming
• 9:09
  in. But I think eventually the retail will get back in. And then maybe it's a different entry
• 9:15
  points. So obviously the ETFs kind of changed the game. And so BlackRock's ETF, most profitable now
• 9:22
  and almost $100 billion in AUM, probably a little bit lower now, but they might be going there,
• 9:29
  right? Instead of going into spot Bitcoin, they might be going through their financial advisors
• 9:34
  who are getting into Ibit for them. So I think it's just like a different market than it was
• 9:39
  in 2021 or 2027.
• 9:42
  But I think, you know,
• 9:43
  when Bitcoin starts running,
• 9:44
  number go up.
• 9:45
  I think they're going to come back.
• 9:47
  I totally agree.
• 9:48
  Because I think one of the weirdest dynamics is
• 9:50
  over the last year,
• 9:51
  I think Bitcoin has not been volatile
• 9:52
  enough for people.
• 9:53
  Yeah.
• 9:53
  And I think that's why you've seen
• 9:54
  loads of people go to treasury companies
• 9:55
  and like AI stocks.
• 9:57
  As soon as Bitcoin starts running,
• 9:59
  that might completely change.
• 10:00
  Yeah.
• 10:01
  And the volatility,
• 10:02
  if you look at like 90 day rolling volatilities,
• 10:05
  it was like historic lows for Bitcoin.
• 10:07
  You know, it's partly,
• 10:08
  probably because of, like I said,
• 10:11
  the changing investor base
• 10:13
  of more institutional investors coming in.
• 10:15
  And they kind of behave differently than retail
• 10:18
  is one thing,
• 10:19
  but also they use like hedging strategies.
• 10:21
  So they can like sell covered calls,
• 10:23
  which kind of dampens the volatility
• 10:25
  with those different hedging strategies.
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  And so those option markets
• 10:30
  are more liquid than they were before.
• 10:31
  There's just more options for them to do those.
• 10:34
  And so I think those dynamics are at play here,
• 10:37
  but I don't think Bitcoin's volatility is like gone.
• 10:41
  I think when you have a fixed supply asset like this,
• 10:45
  it's never existed before ever.
• 10:48
  And so I think the next wave of demand,
• 10:50
  I do think you're just going to see volatility
• 10:52
  start to creep back up a little bit.
• 10:54
  I mean, maybe there's this secular trend of going down,
• 10:57
  which is going to continue,
• 10:58
  but I do think we're going to kind of see some more volatility.
• 11:01
  That's what we've seen, right?
• 11:01
  Over the last month, volatility came back.
• 11:04
  Maybe that's the direction that everybody wanted.
• 11:05
  Yeah, definitely came back.
• 11:08
  So I think that's going to happen again.
• 11:11
  Yeah, I hope so.
• 11:13
  And this year, I feel like no one predicted what the price was going to do this year.
• 11:17
  I don't know anyone that said.
• 11:19
  So from the day I started the podcast, it was a year, three days ago.
• 11:23
  The price was lower after a year.
• 11:25
  And I don't think there was any Bitcoiner that would have called that.
• 11:28
  No, no.
• 11:28
  I mean, myself included.
• 11:30
  I mean, because of these fundamentals, I thought it was going to be higher than it is right now.
• 11:35
  But at the same time, it's almost impossible to predict Bitcoin's price.
• 11:40
  I think that's the lesson here.
• 11:41
  It's like nobody actually knows in the short term where Bitcoin's going.
• 11:45
  But it's like zoom out the cliche and think long term because Bitcoin's value proposition has never been stronger given the macro environment that we're in.
• 11:56
  So over longer periods of time, I think those price predictions that you hear that we're all wrong are eventually going to be right.
• 12:03
  But it's just the time horizon and that's the hardest part to predict.
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• 14:55
  feeling pretty optimistic about like macro world for the next year or two but we've been talking
• 14:59
  over the last few days and you said something that kind of surprised me you were saying that
• 15:04
  you think social security and is it medicare as well yeah i'm kind of cooked well they are i mean
• 15:11
  it's just math it's just the arithmetic so this is something i've never really paid much attention
• 15:16
  to. So tell me about this. Well, look, so Lynn and I wrote that piece on fiscal dominance. She's
• 15:23
  been talking about nothing stops this train. And we wrote another piece on that topic.
• 15:29
  And at the end of the piece, I talked about how Doge was going to fail. And this was before
• 15:33
  everyone was really hyped up on it. And I tweeted, I said, two things can be true at once. Doge
• 15:39
  won't put a dent in the fiscal deficit, but it will maybe raise some awareness about fraud. And
• 15:44
  And so I think that aged pretty well.
• 15:46
  And it really, why we knew that was we just ran the numbers.
• 15:49
  Like we looked at what we actually spend the money on
• 15:53
  in terms of the fiscal deficits.
• 15:55
  And 70% of the spending occurs on mandatory entitlement programs.
• 16:01
  So by law, these are promises that they have to pay.
• 16:04
  So it's Social Security, Medicare.
• 16:06
  And then the last one was interest expense, right?
• 16:08
  Which is huge.
• 16:09
  Which is huge.
• 16:10
  And so that increased a lot when the Fed jacked rates.
• 16:12
  that's a little different.
• 16:15
  But so these,
• 16:15
  and basically,
• 16:16
  if we want to try to bring down
• 16:18
  the fiscal deficits,
• 16:19
  like DOGE's goal,
• 16:21
  you have to touch
• 16:22
  the entitlement programs.
• 16:24
  And the problem is
• 16:24
  DOGE didn't have
• 16:25
  any authority to touch it,
• 16:28
  that to change any
• 16:29
  of the eligibility requirements
• 16:31
  or the benefits
• 16:32
  takes an act at Congress.
• 16:35
  And so we knew that
• 16:36
  most of the fiscal deficits
• 16:38
  was mandatory
• 16:39
  and that really,
• 16:40
  when you break it down,
• 16:41
  if Doge couldn't touch any of that,
• 16:43
  then they weren't going to do anything.
• 16:44
  And so that's exactly what happened.
• 16:46
  So when Elon was saying,
• 16:47
  hey, we're going to cut a trillion dollars here and there,
• 16:50
  it's like, you run the numbers,
• 16:51
  you're like, how are you?
• 16:52
  You can't do that.
• 16:52
  Like, you can't do that.
• 16:54
  And so it's concerning because, you know,
• 16:58
  when Lynn and I, at the end of that report,
• 17:00
  we had a very balanced take.
• 17:01
  We were like, this isn't going to be dramatic this decade.
• 17:05
  You know, everything's going to run hot.
• 17:06
  So inflation's going to run hot.
• 17:08
  GDP's going to run hot.
• 17:09
  deficits will continue to be very large because they're structural. When you say structural,
• 17:14
  I'm talking about those entitlement programs, basically. And so it's going to continue. But we
• 17:18
  said the end of the decade. And when I was writing that, what I had in mind was that there's
• 17:26
  projections from the CBO that Social Security and Medicare are going to go insolvent by 2032,
• 17:34
  which means for the first time, they're going to bring in not enough money to service all of the
• 17:39
  beneficiaries And so that a huge problem that coming down the horizon And so yes it not going to be dramatic at the end of this decade but when that happens things can get really dicey in terms of how we manage that
• 17:52
  problem. And it's coming. It's seven years away. And nobody's really come up with real solutions
• 17:59
  to how to address this. And you think about, I think about the foreturning a lot, because they
• 18:05
  say that the climax is going to happen in 2030 to 2032. And so I don't think it's a coincidence
• 18:10
  that were going to come into this period around that time
• 18:13
  right when these social security and Medicare go insolvent.
• 18:17
  And so we can get into like what that means and stuff.
• 18:20
  Yeah, I mean, and that's the longest timeframe.
• 18:22
  Like there's a reality where that happens earlier than 2032.
• 18:25
  But what does that exactly mean?
• 18:27
  Like is this, actually maybe a better question is,
• 18:29
  is this happening because of aging demographics?
• 18:33
  Yes, yeah.
• 18:34
  So it's a mix of, it's basically we have the workers
• 18:37
  that are funding these entitlement programs.
• 18:42
  And so we have a shrinking workforce,
• 18:44
  and that's because of falling fertility rates
• 18:45
  and all these different dynamics,
• 18:47
  as well as an aging population.
• 18:49
  And so next year, we're going to reach
• 18:52
  what they call peak 65,
• 18:53
  which is when you become eligible for Social Security
• 18:56
  and Medicare in the United States.
• 18:59
  And we have over 4.1 million Americans
• 19:02
  that are going to become eligible next year.
• 19:04
  It's going to be the largest retirement wave
• 19:07
  in U.S. history. And so the costs are going to really increase over the next four years as all
• 19:13
  these baby boomers finally become eligible for these programs. And at the same time, these
• 19:18
  projections, they don't take into account like any kind of war, any kind of financial crisis
• 19:24
  that would blow out the deficits even more. And then at the same time, the projections,
• 19:29
  they don't take into account like rising healthcare costs due to inflation. And so a lot of the
• 19:35
  projections have actually been lower than what's actually occurred because some of these changing
• 19:43
  rules around the healthcare system has actually increased the Medicare cost much, much more than
• 19:48
  they projected. And so each year, they project the insolvency actually like a year earlier,
• 19:54
  a year earlier. So like, if we think that they're going to keep spending it actually more than they
• 19:58
  project, then this could be like 2030, which is like five years away. And what I think about is
• 20:04
  like for me, I think about the pandemics like five years away and how like it just feels,
• 20:10
  it kind of feels like it was yesterday. And so five years from now, it's going to come up fast.
• 20:14
  It's going to come quick.
• 20:15
  And the worry is that there's only two ways to really solve this. So when we get to that point,
• 20:21
  it's not like suddenly it's like bankrupt and there's no money. It's more like
• 20:25
  the benefits are going to get cut by 25% overnight. And so you got older retirees who are
• 20:33
  dependent on Social Security. And so I just saw a fact that over 75% of retirees depend on their
• 20:43
  benefits for 50% of their income. And each one of them are cutting essentials because they feel like
• 20:50
  the cost of living doesn't keep up with their benefits. And so I have a lot of sympathy for
• 20:55
  these retirees because they're on fixed incomes. A lot of them, they depend on these and they're
• 20:59
  is suddenly going to get cut by 25%.
• 21:01
  And then on the flip side,
• 21:04
  you have the young people
• 21:05
  who have an affordability crisis,
• 21:08
  you know, asset prices have inflated,
• 21:10
  they feel like they can't get ahead.
• 21:11
  And then suddenly,
• 21:12
  if they have to get taxed even more
• 21:14
  to pay into this program
• 21:15
  that they're not even going to receive
• 21:16
  the benefits from,
• 21:18
  you have this system where you can,
• 21:19
  you have this dynamic where if you,
• 21:21
  if you cut the benefits for the old people,
• 21:23
  that's going to hurt them.
• 21:24
  That's one solution.
• 21:25
  Or if you raise the taxes for the young people,
• 21:28
  that's going to hurt them.
• 21:29
  And so you have this really terrible situation where it can lead to like a lot of generational
• 21:37
  conflict.
• 21:37
  Totally.
• 21:38
  Right.
• 21:38
  And so that's like the foreturning.
• 21:40
  It's all coming to a head and there's not really a great solution on the table yet.
• 21:44
  And so they're the two options that you see that's either tax young people or cut benefits.
• 21:50
  Yeah.
• 21:50
  Is there not an option where they will increase the age required to actually receive those payments?
• 21:55
  They could.
• 21:56
  Because that happened in the UK.
• 21:57
  Yeah, and that happened in France too.
• 22:00
  But that happened in France and there was riots on the street.
• 22:03
  I don't mean they riot over anything.
• 22:04
  Yeah, that's true.
• 22:05
  That's true.
• 22:06
  But I actually think about that a lot because it's like the fiat system steals time.
• 22:12
  Yeah.
• 22:13
  Which it's a terrible thing to have to just suddenly break the promise that they made to these people.
• 22:19
  And you're paying into it your whole life than saying like, actually, you got to do it two more years.
• 22:24
  Right.
• 22:24
  And so that would take an act of Congress to do.
• 22:26
  and and so they could do that um but the other thing they could do is try to print the difference
• 22:32
  yeah try to fill that hole and that's where it gets kind of worrisome because we're talking about
• 22:37
  to fill that hole would be about i ran the numbers you know anywhere from it's like another trillion
• 22:45
  or so on top of the fiscal deficit that they're already running crazy right could blow out the
• 22:49
  debt pretty large like very large and there's actually precedent for this so there's another
• 22:54
  smaller trust in the United States called the Highway Trust. And it helps fund transportation
• 23:01
  and highways and things like that, infrastructure. And it went insolvent in 2022. And that's exactly
• 23:09
  what they did, was they basically did what they call a general transfer. Well, they just took the
• 23:14
  money from the tax receipts, try to plug the hole for another five years, and it just added to the
• 23:19
  debt. And so now that's going to go insolvent in 2027, and they're going to have to do the same
• 23:23
  thing. So kicking the can down the road. But that trust is only like $75 billion. Social
• 23:29
  Security is like $2.4 trillion. And so I'm worried because if they don't come up with any kind of
• 23:35
  real solutions going up to that, that they might turn to that, like they did before with the Highway
• 23:40
  Trust. And if they try to feel the difference, deficits will blow out. And then even the CBO
• 23:46
  or the CFRB, which is another organization that follows us closely, they did a projection of what
• 23:54
  that would happen if they did try to fill it. And they're trying to warn them, don't do this with
• 23:57
  social security like you did with highway. Because if you do that, and interest rates rise because
• 24:02
  there's worries about the debt blowing out when they do that, it just goes parabolic in terms of
• 24:08
  the interest expense. And then you're in this situation where, I mean, massive currency debasement
• 24:15
  will probably happen at that point.
• 24:17
  And so it's all kind of coming to a head.
• 24:20
  The train is, nothing stops this train,
• 24:22
  but it's headed towards this cliff.
• 24:25
  It's a cliff.
• 24:26
  I wouldn't say cliff.
• 24:27
  It's just like, it's an obstacle.
• 24:30
  Like, it's like right there
• 24:31
  and everyone knows it's coming,
• 24:33
  but it's a long-term problem
• 24:34
  that they've kicked down the road
• 24:35
  over and over and over again.
• 24:37
  But finally, this is like the real time
• 24:39
  where it's going to come to a head
• 24:40
  and we have to do something about that.
• 24:42
  Yeah, and the problem is like
• 24:44
  taxing young people more or reducing the payments for the older people, like both massively
• 24:50
  politically unpopular. Like pressing the button is a much more subtle way. Like not everyone will
• 24:54
  be paying attention to that. People will still think they're getting their money, even though
• 24:57
  their cost of living might be increasing to a degree where they'd have been better just to take
• 25:00
  a haircut on their payments. Yeah. And it's literally like a, it's kicking the can because
• 25:04
  I mean, they'll fill the hole if they decide to do that for like another five years until it's the
• 25:10
  same problem again. And you could kind of see the way the political system is and the gridlock
• 25:16
  and nobody wants to deal with this stuff. It's like a likely scenario in my mind. Like they'll
• 25:23
  turn to that or like a combination, right? They'll fill the gap. They'll maybe drop benefits a little
• 25:28
  bit, tax a little bit more, but it can just lead to a big increase in the debt and a lot more
• 25:35
  currency debasement. Yeah. I don't know if this is just because I'm in my little Bitcoin echo
• 25:38
  chamber, but I've not really heard anyone talking about this. I mean, Lynn has mentioned on the show,
• 25:42
  I think a couple of times over the past few years, but I've never heard, I've not really seen people
• 25:48
  talking about this on Twitter much. And it seems like maybe the biggest like upcoming macro event
• 25:52
  that we have. It's the biggest because everyone talks about the sustainability of the fiscal
• 25:56
  outlook and the debt problem, but the debt problem is Medicare and social security. Like
• 26:02
  if you don't touch that and it's such a, like you said, it's like so politically charged
• 26:07
  and um i think there's gonna be it's gonna be the political topic over the next four or five it has
• 26:14
  to be because if like stan druckenmiller gave a talk like three years ago in 2022 to usc
• 26:20
  to the kids there i there's a transcript of it he gave this great speech and if you read it you can
• 26:26
  just through his words like how terrified he is of this this fiscal outlook and for for the children
• 26:33
  and how we have to start thinking about it.
• 26:36
  Each year that we don't come up with any solution,
• 26:39
  it gets worse and worse and worse.
• 26:41
  And so this has been going on for a long time,
• 26:43
  but again, it's like five to seven years away.
• 26:48
  And we have to start thinking about it.
• 26:51
  So potential solutions, like I said,
• 26:53
  is cut benefits, raise taxes.
• 26:57
  There's a couple other ones.
• 27:00
  So Dr. Judy Shelton,
• 27:02
  She's like an economist.
• 27:05
  She's a sound money advocate.
• 27:07
  She recently wrote a Wall Street Journal op-ed
• 27:10
  that talked about gold-backed bonds.
• 27:14
  And so it's basically you would attach gold
• 27:17
  to like a treasury bond
• 27:18
  to add some like inflation protection.
• 27:21
  And then they would be probably really popular
• 27:23
  so the government will be able to issue those
• 27:25
  at a lower interest rate
• 27:27
  and maybe like a 10-year note.
• 27:29
  Because you're sharing in the appreciation
• 27:30
  of the gold at the end of the...
• 27:32
  Yeah, and you get gold at the end of the maturity.
• 27:35
  And so you got that inflation protection.
• 27:37
  So you could issue those more cheaply.
• 27:39
  And so that would be a way for the government
• 27:40
  to kind of finance itself in a way
• 27:42
  that's less expensive for them.
• 27:45
  Now, the problem with that is that's been done before.
• 27:48
  And it was done during World War I.
• 27:50
  They were called liberty bonds.
• 27:52
  And there was a promise made in 20 years
• 27:55
  that they would pay out in gold.
• 27:57
  And so they were extremely popular.
• 27:59
  They raised a ton of money for the war effort.
• 28:01
  uh americans were willing to give them the money because they had that inflation it could be
• 28:06
  redeemed in gold in 20 years and what happened though was fdr you know banned gold ownership
• 28:13
  in 1933 and then there was a massive devaluation the next year and then when these bondholders
• 28:20
  finally tried to redeem them they said well well it's illegal for you to own gold so you can have
• 28:25
  the cheap dollars instead and then one of those liberty bondholders said like wait like
• 28:29
  I just lost like 40%.
• 28:32
  You just devalued the currency
• 28:34
  and you're not going to give me gold like you promised.
• 28:36
  This is like illegal.
• 28:38
  And so it took them to the Supreme Court.
• 28:40
  And the court said that,
• 28:41
  yes, this was unconstitutional,
• 28:44
  but we're not going to give you the award.
• 28:46
  You get the dollars.
• 28:48
  And so, you know,
• 28:50
  it shows that there's two things wrong
• 28:52
  with the gold-backed bonds.
• 28:53
  It's you have to trust that the government
• 28:55
  actually has the gold to pay out.
• 28:57
  And you have to trust that they're actually
• 28:59
  going to follow through on their promise. And so that brings me to a potential solution,
• 29:03
  which is like the BitBonds. And like, we should be very open-minded to every single solution out
• 29:09
  there because like I said, this is a big problem. And so if people are like, well, Bitcoin solves
• 29:14
  this, like they should really keep an open mind because BitBonds is like a Liberty Bond,
• 29:19
  but obviously a Bitcoin instead of the gold. And Bitcoin has outperformed gold over that time. So
• 29:25
  but probably even better inflation over like a 10-year, 20-year timeline.
• 29:30
  But it also is, it's like programmable money.
• 29:33
  And so what you can do is like, you can put it in an address
• 29:35
  and you know that they have the Bitcoin and they're not going to,
• 29:38
  you don't have to trust that they have it in Fort Knox.
• 29:41
  You can trust they have the Bitcoin.
• 29:42
  And then you can actually do something like the mini scripts
• 29:45
  and have it programmed so that it sweeps the Bitcoin unilaterally
• 29:50
  at the end of the maturity so that the government can't rug pull them
• 29:53
  like they did with the Liberty Bond.
• 29:54
  and so and it's a way for they they could raise money at cheaper interest rates so
• 29:59
  bit bonds were brought up by brian estes and perry and boring and eric weiss originally and
• 30:06
  they there you can do different um structures with a bit bond but theirs was like a zero percent
• 30:11
  interest rate so the government raising at zero percent that's pretty good um or like andrew
• 30:16
  hones and matthew pines wrote a long report on their structure of a bit bond um it was a little
• 30:23
  bit different, but it actually, the way they structure it where the government would actually
• 30:27
  get some of the Bitcoin upside itself and it would go into the strategic Bitcoin reserve.
• 30:32
  And then that's actually even a long-term solution to the debt problem because the government's
• 30:36
  acquiring Bitcoin in the strategic reserve. And then over time, it can be used to extinguish the
• 30:42
  debt. And so that's a solution that they should consider for this big, big problem that's coming
• 30:47
  on the horizon. Yeah. And I mean, I really like the idea of Bitbombs. And I think it makes
• 30:52
  potentially more sense doing it in the way
• 30:54
  the government are sharing the upside because that
• 30:56
  gives them an incentive to do it. I think
• 30:58
  it's still a massive stretch to actually get them to do
• 31:00
  something like that. Especially if you're
• 31:02
  then going like, and also you can
• 31:04
  do this mini script thing.
• 31:06
  Yeah, I know. I think they're going to
• 31:09
  if they did this, they would take custody
• 31:10
  of it and then you do have the risk of
• 31:12
  not actually getting paid out. True, true. I know.
• 31:14
  But it's a good idea.
• 31:16
  It's a solution. Yeah, no, it's a solution.
• 31:18
  But yeah, you're right. It would have to be
• 31:20
  designed the right way for investor protection, basically.
• 31:24
  But it would probably be the most oversubscribed bond
• 31:26
  the US government has issued in a very long time.
• 31:28
  I would guess so.
• 31:30
  Every Bitcoin product seems to be the most popular thing
• 31:33
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• 31:36
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  more, which is I-R-E-N.com. We should talk about the treasury company. We've got limited time today
• 33:41
  and yeah, let's do it. You were one of the influencers that moved across to a treasury
• 33:46
  company. I've been skeptical. I've told you this before. So I want you to explain what you're doing.
• 33:52
  And my big question, like, so you're with Orange set up in Brazil. There's a lot of talk about
• 33:59
  like jurisdictional arbitrage with treasury companies and the fact that like MetaPlanet's
• 34:03
  in Japan, there's like different tax rules there. So there's an incentive to a meta planet if you're
• 34:06
  in Japan. I've always been skeptical of that apart from like the very edge cases only because like
• 34:13
  I live in Australia, I'm from the UK. And if I wanted to buy a treasury company, there's nothing
• 34:19
  stopping me buying strategy. So like, why does that jurisdictional arbitrage exist in your opinion?
• 34:24
  Well, it is like, it might be easier for somebody in Australia versus Brazil to access the US equity
• 34:30
  markets, first off. And then, you know, retail investors, they do like to be supportive of their
• 34:38
  own country, like a company that's building in their own country. So there's a bit of like a
• 34:43
  nationality, a pride there. But there's also like institutional investors there. They have buckets
• 34:49
  of like, they can only invest a certain amount into like foreign assets. A majority, they have
• 34:54
  to invest domestically. So like the state pension funds, for instance. And so it's just a matter of
• 35:00
  they can't just only invest in strategy or US equities. They have to allocate a significant
• 35:06
  amount of capital into their own country. And so even that could be like if Orange BTC gets included
• 35:13
  in the indices or different things in the Brazilian stock market, we'll benefit just from those flows.
• 35:20
  So yes, they could access some US treasuries around the globe, but still there'll be a
• 35:28
  significant amount of capital that has to be invested locally And that where we orange BTC would benefit Okay and so you got a little over 3 Bitcoin so far 3 Which is a lot of Bitcoin
• 35:41
  How do you see this playing out in terms of the strategy?
• 35:45
  They're almost in a different league to everyone else.
• 35:47
  They've got so much Bitcoin.
• 35:48
  The smaller treasury companies,
• 35:49
  do you think they have any shot of catching strategy?
• 35:53
  Or is it now everyone's playing for the second tier of treasury company?
• 35:57
  Well, I think there's going to be a winner in every major capital market.
• 36:04
  And even if you look at Brazil, a lot of the biggest banks are Brazilian banks.
• 36:10
  It's hard to break into that market and build a big business there.
• 36:16
  It kind of takes a local player who understands the regulations and has the connections to build a big business there.
• 36:23
  And so strategy, I mean, strategy is in a league of its own.
• 36:27
  I mean, they have more Bitcoin than all the other companies combined, all of the public companies combined.
• 36:34
  Probably times two.
• 36:35
  Yeah.
• 36:35
  But 3,720 Bitcoin, we're the largest in Latin America by far.
• 36:41
  By far.
• 36:42
  And when you look at Latin America and compare it to the United States, in terms of getting Bitcoin exposure through publicly listed vehicles, there's really only three options in all Latin America.
• 36:56
  It's orange BTC, there's an ETF, and there's Mayluse, which is the smaller Bitcoin treasury on B3. And that's it. In the United States, there's like 11 ETFs, there's all the public miners, there's Coinbase, there's all these infrastructure plays.
• 37:14
  There's a lot of ways to get exposure, but not in Latin America. It's very underserved. And so that leads to a lot of demand for any kind of Bitcoin-backed security, whether that's equity, whether that's fixed income products down the road or anything like that. It fits into these institutions' investment mandates.
• 37:35
  And so each capital market's really interesting because it has its different quirks.
• 37:41
  Like Brazil, the pension funds and the insurance companies are restricted from owning spot Bitcoin.
• 37:46
  They cannot do it.
• 37:48
  And they only have investment mandates for securities.
• 37:51
  So if they want any kind of Bitcoin exposure, they have to go to something like Orange BTC.
• 37:58
  And so even Saylor talks about this.
• 38:00
  97% of institutional capital, almost $100 trillion, have investment mandates for equity and bonds.
• 38:08
  Yeah.
• 38:08
  Right? And that's trapped capital. It's completely trapped. And, you know, in my opinion,
• 38:14
  every single portfolio is better with Bitcoin in it, whether it's real Bitcoin or whether that's
• 38:19
  Bitcoin exposure to these securities. No Bitcoin is a lot worse.
• 38:26
  I agree with that.
• 38:27
  Yeah. So like if we can improve accessibility and allow them to get exposure to it,
• 38:32
  that benefits the pensioners, that benefits those insurance companies.
• 38:37
  We're just trying to improve access there.
• 38:39
  And so that's just a unique work of Brazil.
• 38:43
  And then there's other things like it's a little bit more, there's some tax advantages.
• 38:50
  There's a similar dynamic in MetaPlanet.
• 38:52
  In Brazil, spot bitcoins tax, the capital gains is progressive.
• 38:57
  The highest bracket's like 22.5%.
• 39:00
  Domestic equities are flat at 15.
• 39:03
  So there's a little bit of a tax advantage
• 39:05
  from going to a domestic equity.
• 39:07
  And so these little quirks are just more structural tailwinds
• 39:11
  for a Bitcoin-backed security that we ultimately benefit from.
• 39:16
  And so, you know, strategy,
• 39:19
  you know, they did Stream, which is out in Europe now,
• 39:22
  and they announced plans to expand to Canada.
• 39:24
  and they likely will go to other capital markets.
• 39:28
  But Brazil's probably pretty far down the list
• 39:31
  because it's a little bit more complex
• 39:34
  from a regulatory standpoint, being able to navigate that.
• 39:37
  So it really does take a local player.
• 39:40
  And our team's full of born and bred Brazilians
• 39:44
  who have significant experience.
• 39:47
  Our CFO ran a public company.
• 39:50
  He was a C-suite executive of a public company there
• 39:52
  for over a decade.
• 39:54
  Our chairman ran BD for Bridgewater in Latin America.
• 40:02
  And BlackRock, he stood up the alternative assets business.
• 40:06
  He has a significant experience in Latin America.
• 40:09
  Our CEO, Guy Gomez, grew up in Brazil, has a lot of contacts there, and has significant Bitcoin experience.
• 40:18
  And so I think it's the right team to actually execute this.
• 40:22
  and it's going to be different.
• 40:24
  There's bigger, low-hanging fruit, let's say,
• 40:28
  for strategy to attack other capital markets
• 40:31
  and expand into other capital markets
• 40:33
  before they think about coming down to Brazil.
• 40:37
  And so that, again, is a significant opportunity for us
• 40:41
  because Latin America is a huge market
• 40:43
  and they really need Bitcoin.
• 40:46
  And so that's where we're going to step in.
• 40:47
  And it's all accretive to Bitcoin when it comes down to it.
• 40:52
  So when you look at like the type of investors that are investing in Orange, is it retail or is it the institutional type clients?
• 41:00
  Well, we just listed like eight weeks ago.
• 41:02
  Okay.
• 41:02
  And so we're talking with all those institutional investors.
• 41:06
  Their investment process is longer.
• 41:09
  It takes them a long time to actually pull the trigger.
• 41:12
  And there's a lot of education that needs to be done.
• 41:13
  And so our focus right now is educating the market about not just who Orange BTC is and what a Bitcoin treasury model is, but also what Bitcoin is.
• 41:24
  And so we did the first institutional focus Bitcoin event in Brazil's history about a month ago.
• 41:35
  So we had this.
• 41:35
  How many people did you get?
• 41:37
  It was about 300 to 400 people.
• 41:39
  But really, the representation from the largest banks, largest asset managers and family offices, we were very, very happy with the turnout. And there's a lot of excitement from them. And I think they realized that Bitcoin's not going away. And they realized that they're maybe behind some of the United States, and they need to start moving into this asset class. And so the excitement from those big players in the market was really good to see.
• 42:06
  And so we're having those conversations. We're educating those institutional investors. I think a lot of demand has been retail from the start, but we expect the institutional investors to come in over time because everyone needs Bitcoin.
• 42:21
  And so what are you trading at compared to MNAV right now?
• 42:24
  We're like right around one. I don't have to look, but it's been fluctuating from a little bit under one to a little bit over one. So we're pretty much like at MNAV right now.
• 42:33
  Okay. And so do you think there's always going to be a gravity to one? Or do you think these multiples are going to expand again, like when Bitcoin price starts doing better?
• 42:42
  Yeah, the way I think about it is, you know, all these debts, so to speak, all these Bitcoin treasury companies, they got to like earn the premium.
• 42:52
  It comes down to execution. And there's different ways. Taking on leverage, large corporations with really strong balance sheets can get better terms on debt. And if you take on the debt and has good terms, and then you buy the Bitcoin and the Bitcoin outperforms the currency that it's denominated in, that's a creative share that'll increase Bitcoin per share.
• 43:17
  And so if you bet on the growth of Bitcoin per share, that should have some kind of premium. Because if ETFs just flat at one and it's just a passive vehicle, and we're doing treasury operations and taking on good leverage to increase Bitcoin per share, that deserves some kind of premium.
• 43:35
  them. The other thing is you can say buy Bitcoin at a discount. So for instance, when the MNAP
• 43:42
  dropped below one, we have share repurchase programs. And so we buy back our shares that
• 43:48
  is actually like buying Bitcoin at a discount and that it increases Bitcoin per share as well.
• 43:53
  And so if you can acquire the Bitcoin at a discount, if you could take on leverage
• 43:58
  that increases Bitcoin per share, both of those reasons are probably why Bitcoin or Bitcoin
• 44:04
  treasury companies should trade at a premium to MNAV. Now, how do you sustain that? And that comes
• 44:10
  down to execution. The other thing you could do is derivative strategies, for instance. That's
• 44:16
  another example of something that an ETF doesn't do that could lead to more Bitcoin per share.
• 44:21
  And we have very talented traders that have been trading for 20, 25 years, trading vols,
• 44:27
  trading derivatives, to help us not only lower our cost basis and acquire the Bitcoin in a way
• 44:34
  that it's more efficient,
• 44:36
  but also generates some premium
• 44:40
  and so allow us to acquire even more Bitcoin.
• 44:43
  And so all those three things even right there,
• 44:46
  probably reason why we should trade at a premium.
• 44:48
  And then there's another one,
• 44:48
  it's just this optionality of having a large Bitcoin.
• 44:52
  So there's all kinds of things
• 44:53
  that we could do in the future.
• 44:55
  And one of the things that's been surprising,
• 44:56
  even after eight weeks of being live,
• 44:58
  is how many Bitcoin companies in Brazil
• 45:03
  have reached out to us about potential strategic partnerships,
• 45:07
  as well as companies abroad who are looking to expand into Brazil,
• 45:11
  who want to partner with somebody who's there,
• 45:13
  who, again, understands the market, understands the regulators,
• 45:17
  has relationships already to find out strategic partnerships
• 45:21
  to maybe launch some kind of Bitcoin financial services
• 45:24
  or products in the future.
• 45:26
  Now, it's early in our story, so we're listening,
• 45:29
  we're building relationships,
• 45:30
  but there's so many opportunities
• 45:32
  to build out products and business lines.
• 45:35
  So that optionality of the future,
• 45:37
  it's just like you have to maybe,
• 45:40
  if you're positive on that,
• 45:41
  that should also create like a premium to the MNAF.
• 45:46
  And then it comes down to execution, right?
• 45:48
  And so that's another reason why there's risk
• 45:51
  with these treasury companies as well,
• 45:54
  which is why they should maybe trade at a discount sometimes
• 45:56
  because if the management team doesn't manage risk well
• 45:59
  and doesn't maybe takes on bad leverage,
• 46:03
  they should be penalized for that
• 46:05
  and maybe trade at a discount.
• 46:08
  And so it works both ways.
• 46:10
  And so there's risks where it can trade at a discount,
• 46:12
  but if they execute
• 46:13
  and they accumulate more Bitcoin per share
• 46:15
  in a way that's faster than any kind of individual
• 46:17
  and that's accretive to the shareholders,
• 46:20
  then they should probably trade at a premium.
• 46:21
  And so even strategy right now,
• 46:25
  they're tapping the ATM,
• 46:27
  they're doing all these things,
• 46:27
  but their MNav is not going down to one.
• 46:29
  It's at like 1.15, 1.17.
• 46:34
  Now where that MNav is like going to stay
• 46:36
  and that range,
• 46:37
  are we going to see like 3, 4, 5, 7?
• 46:40
  Like, I'm not sure.
• 46:41
  Like it was definitely like a speculative mania
• 46:45
  a little bit in the earlier of the summer
• 46:46
  where you saw these crazy MNav expansions and premiums.
• 46:49
  I don't know if we'll see it get way up there.
• 46:51
  Like maybe if we see this like another wave like that.
• 46:55
  But it probably should be above one
• 46:58
  if the team's executing well and accumulating Bitcoin
• 47:01
  with their treasury operations or other business lines.
• 47:06
  I think we're just starting to see
• 47:08
  where this treasury market's going to go.
• 47:12
  So you saw like Fong Li, the CEO of Strategy,
• 47:15
  just talking on television last week,
• 47:18
  talking about large counterparties and banks
• 47:22
  and how they might consider partnering with them,
• 47:25
  whether like lending Bitcoin out to these counterparties
• 47:28
  who are building out their own services
• 47:30
  and they just need Bitcoin collateral.
• 47:32
  And so it's like,
• 47:33
  he who holds the Bitcoin makes the rules.
• 47:35
  It's like Max Keiser.
• 47:36
  Yeah.
• 47:36
  It's the same thing.
• 47:38
  And so these are all opportunities
• 47:39
  that these treasury companies have
• 47:41
  just because they have large,
• 47:43
  like a lot of Bitcoin.
• 47:45
  That's what it comes down to.
• 47:47
  Yeah.
• 47:47
  It's funny.
• 47:48
  I was, Fong was on the show a couple,
• 47:49
  like a month or two ago.
• 47:50
  Nice.
• 47:51
  And we were talking a little bit about,
• 47:53
  like strategy obviously went through a really hard time.
• 47:55
  They went, they started trading at a big discount.
• 47:57
  three or four years ago.
• 48:00
  And I wonder if it's almost like
• 48:02
  the market is waiting to see
• 48:03
  if people survive
• 48:04
  a bear market in treasury companies
• 48:06
  before they get full confidence
• 48:08
  to invest in them.
• 48:10
  And paper Bitcoin summer
• 48:11
  is definitely over.
• 48:12
  We're deep in paper Bitcoin winter.
• 48:14
  A lot of these newer treasury companies
• 48:16
  are trading at a very steep discount.
• 48:19
  Do you think it's kind of
• 48:20
  amount of time that people
• 48:21
  are trading in the market
• 48:22
  before the confidence is there
• 48:24
  that these teams are going to survive?
• 48:25
  They know how to do it.
• 48:26
  They know how to operate.
• 48:27
  and then we see like growth in multiples again.
• 48:31
  Yeah, I think when market conditions turn
• 48:33
  like how they have like in the last month,
• 48:36
  it's actually an opportunity for a treasury company
• 48:39
  and the management team to prove
• 48:40
  that they've been thoughtful about their capital structure,
• 48:44
  about the type of debt they take in,
• 48:45
  about their ability to weather the storms.
• 48:48
  That's one thing that strategy has
• 48:49
  and maybe MetaPlanet that others don't
• 48:51
  is like more of a track record.
• 48:53
  And that just takes time to prove out,
• 48:55
  to prove to the market and to shareholders
• 48:59
  that you are a team that executes
• 49:01
  and manages risk appropriately.
• 49:04
  And so I think each treasury company
• 49:06
  should be analyzed on a case-by-case basis,
• 49:09
  and you really got to dig into the weeds
• 49:11
  of their cap structure,
• 49:12
  what kind of debt they've had,
• 49:14
  what is their plans, what is their vision,
• 49:16
  what is their access to the capital markets.
• 49:19
  And each one should be just analyzed on its own terms.
• 49:22
  And it's a way for the best ones to kind of separate themselves from the pack.
• 49:29
  And so I actually see it as an opportunity.
• 49:31
  You know, even right now, as Bitcoin has gone down a downturn, like Orange BTC has actually
• 49:37
  continued to buy almost on a weekly basis.
• 49:40
  And so we're proud of that because even during times of market stress, we're still accumulating
• 49:44
  Bitcoin for our shareholders.
• 49:46
  And, you know, we've been very thoughtful about how we structured the company and about the
• 49:51
  type of leverage.
• 49:52
  very clean balance sheet, low leverage ratio right now. And so we were built to last. This is a very
• 49:59
  long-term gain. And so we have conviction in Bitcoin. We know that it's not going away. We
• 50:05
  have a very strong balance sheet full of the best reserve asset. And so again, I think bear markets
• 50:13
  and cycles, it's an opportunity for the best treasury companies to really show that we're
• 50:18
  resilient and we're here to stay. How do you think about buying Bitcoin now? Because it feels like
• 50:23
  the business model from the very early strategy days have changed a little bit. Like it's not
• 50:27
  necessarily just selling common stock to buy Bitcoin now. Like strategy have all the preferreds.
• 50:33
  What do you see the future of this being? Well, it's kind of like what I talked about before. I
• 50:40
  I mean, so strategies farther along in that whole process.
• 50:45
  But finding ways to get leverage that is,
• 50:51
  that's in a way that's accretive to shareholders,
• 50:54
  but also is a line where it's a long duration liability
• 50:58
  with a long duration asset.
• 51:00
  Like the preferreds are so interesting
• 51:02
  because you never have to actually repay back the principal.
• 51:05
  And it's just more of a dividend obligation over time.
• 51:08
  So then you're just kind of managing that.
• 51:09
  It's like that cash obligation over time.
• 51:15
  But it's interesting because they're still accumulating Bitcoin.
• 51:19
  They're just doing it through different products.
• 51:21
  I liked what Jeff Walton said one time.
• 51:24
  It's like when you're fishing and you're looking for different fish
• 51:27
  and it's with different bait and at different depths
• 51:30
  and it requires a little bit different strategy.
• 51:34
  What Sailor's doing is just creating these products
• 51:36
  that are attractive to different cohorts or investors.
• 51:40
  And so some like the fixed income,
• 51:42
  some are going to like the converts,
• 51:43
  some are going to like just the common equity
• 51:45
  because it's more volatile than the Bitcoin itself.
• 51:48
  And so it's all meant to just accumulate more Bitcoin
• 51:52
  onto the balance sheet,
• 51:53
  but he's just providing different financial products
• 51:56
  that are Bitcoin backed
• 51:57
  that are attracted to different types of investors.
• 52:01
  And so that's where we see ourselves going eventually.
• 52:05
  But then, like I said, there's also all this other opportunities to build out different Bitcoin financial services in that market.
• 52:13
  So Brazil, it's just, it's wide open in terms of all types of businesses.
• 52:18
  I mean, and we're considering all of them.
• 52:21
  You know, we have a history of building Bitcoin financial services.
• 52:25
  We have experience in there.
• 52:27
  And then our team has a lot of capital markets experience on this other side.
• 52:30
  So it's a mix of the treasury operations, education, educating the market about Bitcoin,
• 52:37
  as well as considering strategic partnerships with local players, as well as internationally,
• 52:42
  and considering different lines of business down the road. So we see us being an entire Bitcoin hub
• 52:48
  and just a leader in that entire region. So 3,700 Bitcoin is a lot of Bitcoin.
• 52:56
  There's a lot of treasury companies that cropped up over the last however many
• 52:59
  months that are a lot smaller than you guys.
• 53:01
  And a lot of those are now trading at a discount.
• 53:04
  Do you think the like your young company,
• 53:07
  so I'm sure you're not thinking about this right now,
• 53:08
  but do you think we're going to see a lot of acquisitions,
• 53:10
  a lot of them consolidation in these treasury companies?
• 53:13
  I know obviously similar going through this at the moment.
• 53:15
  Like do you think that going to be a growing trend Because essentially if you trying to buy cheap Bitcoin you can buy Bitcoin at a discount by doing that Yeah No I think that going to be a natural maturation of this part of this ecosystem
• 53:29
  It just makes sense.
• 53:31
  I mean, if you can buy discounted Bitcoin,
• 53:33
  then it's there.
• 53:35
  It's just a decision, right?
• 53:37
  Because when you buy Bitcoin,
• 53:39
  one of the cool things about it
• 53:40
  is the return on investment is so short,
• 53:42
  meaning you know exactly,
• 53:44
  you raise the money,
• 53:45
  you turn around you bought bitcoin you know if it was like a creative to shareholders almost
• 53:49
  immediately if you do a a acquisition it's a little bit harder for the market to kind of digest
• 53:56
  it and understand it like is the transaction going to go through is it a creative they got
• 54:01
  to do some math and so it's just a little bit more complicated for the market to understand like
• 54:05
  was this uh a creative like because the bitcoin is the hurdle right so you gotta always think well
• 54:10
  they could have just turned around about bitcoin so is this even better is this is this a discount
• 54:15
  of Bitcoin given where our shares are trading versus their shares if this is like an all equity
• 54:20
  transaction. So it just takes a little bit more thought for the market to understand it.
• 54:27
  And it takes time to understand if that was a quality move or not. It moves it from
• 54:34
  basically minutes, because the return on investment to just buy Bitcoin is like minutes,
• 54:38
  to maybe months, even to years to understand if the acquisition was a good decision.
• 54:43
  And so all of those options are available.
• 54:46
  And I think if you see these companies
• 54:47
  really trade at distress levels,
• 54:49
  then you will see more M&A activity.
• 54:52
  But it is a decision every single time
• 54:55
  you raise capital and don't buy Bitcoin,
• 54:57
  that's a decision you make.
• 54:58
  And so you got to be right with your due diligence
• 55:00
  and your analysts to make sure
• 55:02
  that that is the right decision.
• 55:04
  Because one of the things that makes me think of
• 55:06
  is if you're a strategy
• 55:07
  and you're looking at like all these other places
• 55:10
  that might have a good incentive
• 55:11
  to have a treasury company
• 55:12
  in that country.
• 55:14
  The idea of going through,
• 55:15
  building a business out there,
• 55:16
  putting a team in
• 55:17
  seems much harder than just
• 55:18
  waiting for something to trade
• 55:19
  under 1XM NAV
• 55:20
  and trying to acquire it
• 55:21
  and then have something
• 55:22
  in that jurisdiction.
• 55:23
  Like if strategy
• 55:24
  is a huge fish in this pond,
• 55:26
  like do you think they end up
• 55:27
  eating all the little fish
• 55:29
  in different markets
• 55:29
  and being a behemoth?
• 55:32
  Well, it's probably
• 55:34
  a better question for Fong or Sailor.
• 55:38
  I know they've said that
• 55:38
  they aren't interested in doing that
• 55:41
  and it's probably related
• 55:42
  to what I just said.
• 55:44
  It's just harder for the market to understand
• 55:45
  if it's an actual right decision or not.
• 55:49
  But maybe, maybe.
• 55:51
  I mean, for me,
• 55:52
  if you're able to build a great brand
• 55:56
  and have a great track record,
• 55:58
  you get a lot of Bitcoin on your balance sheet.
• 56:02
  You're right.
• 56:03
  I mean, if strategy is looking into a market
• 56:04
  and they don't know,
• 56:06
  like I said, they don't know the players,
• 56:07
  they don't have the network,
• 56:08
  they don't have a relationship with the regulators
• 56:10
  or the local banks,
• 56:11
  it could be an easier decision for them to do it,
• 56:14
  especially if they trust the management team.
• 56:16
  You know, that's what it comes down to.
• 56:18
  If they feel like acquiring that company is better
• 56:21
  than them going in and building it themselves,
• 56:23
  then maybe that's a decision they'll make.
• 56:24
  So I wouldn't really be surprised.
• 56:27
  I mean, maybe it's not even just strategy.
• 56:28
  I mean, now you have 21 coming on board, right?
• 56:31
  You're going to have ProCap Financial coming on board now.
• 56:35
  They're finally going live.
• 56:37
  And so you have these transactions finally closing.
• 56:39
  We're about to get a couple of major players in this market too.
• 56:43
  And then there's the Bitcoin Standard Treasury Company.
• 56:46
  That's Adam Backs one.
• 56:47
  That's Adam Backs one.
• 56:48
  And I bring those ones up because they also have a lot of Bitcoin.
• 56:53
  And they could be successful in their own strategies in terms of acquiring Bitcoin.
• 56:58
  And maybe they consider expanding globally.
• 57:00
  And so there could be opportunities for acquisitions.
• 57:03
  And that's the decision that they'll make.
• 57:04
  I mean, you know, Orange BTC is just focused on our region, focused on Brazil, and accelerating Bitcoin adoption there.
• 57:13
  And I think that's the right move for us.
• 57:15
  Like, we're not thinking, like, we're just focused on our market right now and building a presence and a brand there.
• 57:22
  So Jack's recently been quite vocal about trying to, I think at least, he's trying to separate himself from this idea of like a pure play Bitcoin treasury company.
• 57:30
  and he's trying to push them as a Bitcoin company
• 57:33
  that are trying to build services.
• 57:36
  Is that something that you do at Orange
• 57:37
  or are you just pure play on the treasury stuff?
• 57:41
  I mean, we're an education company.
• 57:44
  I mean, so we went public via reverse merger.
• 57:47
  We took over an education company
• 57:49
  and there's a lot of infrastructure there
• 57:51
  and we plan on repurposing it for Bitcoin education.
• 57:55
  So curriculum courses, educational content.
• 57:58
  And so that's our focus right now.
• 58:03
  But like I said, down the road,
• 58:05
  we've been inundated with already opportunities.
• 58:09
  We almost have to just focus on building out
• 58:11
  our treasury operations right now.
• 58:13
  And so right now, we're an education company
• 58:15
  that also has treasury operations
• 58:17
  that are implementing that sailor strategy,
• 58:21
  so to speak, that business model.
• 58:23
  But down the road, we see ourselves thinking through
• 58:27
  what is the best use of our time
• 58:28
  given our resources and the return on investment to go through whether that's you know i'm just
• 58:33
  throwing this out like whether that's lending whether that's you know a credit or debit card
• 58:38
  that's that provides bitcoin back you know the market is wide open that's what i mean in brazil
• 58:43
  and so if a opportunity comes up and we think it's attractive um for not only ourselves but
• 58:49
  also for bitcoin adoption we'll probably consider it and we have we have a experience as well with
• 58:56
  Bitcoin financial services like Jack.
• 58:58
  I don't know what Jack's going to do.
• 59:00
  I'm so curious to see what 21 is.
• 59:02
  I'm excited.
• 59:04
  The beauty of this is it's all good for Bitcoin and Bitcoiners.
• 59:09
  And so Jack's successful and 21's successful
• 59:11
  and Michael's successful at strategy.
• 59:14
  And it all leads to demand
• 59:16
  and that strengthens every single balance sheet
• 59:18
  that holds Bitcoin.
• 59:20
  And so I'm just excited to see what he means by that
• 59:23
  because there's a little bit of uncertainty.
• 59:25
  but I want to bet against Jack or Apollo.
• 59:30
  It's going to be great.
• 59:32
  I'm excited to see more of these treasury companies pop up
• 59:35
  because I think it's all good for Bitcoin.
• 59:38
  I think some people are saying,
• 59:41
  well, we should focus on payments.
• 59:43
  We should focus on...
• 59:44
  And to me, it's like if you're passionate about that
• 59:47
  and that's what you want to focus on, great.
• 59:50
  Make Bitcoin's payments better.
• 59:52
  That's awesome.
• 59:53
  And so treasury companies are like,
• 59:55
  we're going to improve accessibility to Bitcoin
• 59:57
  because there's large pools of capital
• 1:00:00
  that can't buy us from Bitcoin,
• 1:00:03
  but they can buy Bitcoin-backed security.
• 1:00:05
  That's good for Bitcoin too.
• 1:00:07
  And so I just see them as in parallel with one another.
• 1:00:09
  And if you're passionate about something,
• 1:00:11
  a specific part of Bitcoin,
• 1:00:13
  then you should just focus your time and energy
• 1:00:14
  and build stuff around it
• 1:00:15
  because it's all going to come together
• 1:00:19
  and it's all going to help push Bitcoin adoption
• 1:00:21
  at the end of the day.
• 1:00:21
  Yeah, my left curve take is buying Bitcoin is kind of cool.
• 1:00:25
  Buying Bitcoin is cool.
• 1:00:27
  Yeah, that's great.
• 1:00:28
  The big, one of the reasons I'm skeptical is like on the underlying business that these treasury companies have.
• 1:00:35
  Like, I don't know if it matters.
• 1:00:37
  Like, I don't know if that actually plays any part in the treasury companies, even like strategy.
• 1:00:41
  Like they have a cash flowing business that's pretty large, but I don't know if it matters.
• 1:00:46
  Like, I don't think anyone's buying either the common stock or the preferreds because of the underlying business.
• 1:00:52
  You mean the software business?
• 1:00:53
  Yeah.
• 1:00:54
  Well, I would say their business now
• 1:00:55
  is almost like a digital credit issuer
• 1:00:58
  or like a Bitcoin financing franchise
• 1:01:03
  is what Matt Levine at Bloomberg called it.
• 1:01:06
  They're an issuer of Bitcoin-backed credit products,
• 1:01:09
  and that's a business.
• 1:01:11
  That's a business in itself.
• 1:01:13
  But they also have a software business.
• 1:01:16
  Yeah, does anyone care about the software business?
• 1:01:18
  Well, I think their investor base
• 1:01:20
  has changed dramatically since they've adopted Bitcoin
• 1:01:24
  and developed this strategy.
• 1:01:26
  I think it's become maybe less important over time,
• 1:01:30
  but at the same time, I think there's a large part
• 1:01:34
  of their business that's also just focused on that
• 1:01:36
  in terms of the people, and they're still building products.
• 1:01:39
  They're still making millions of dollars
• 1:01:41
  through that business line.
• 1:01:43
  Maybe over time, it might get less important
• 1:01:47
  as Bitcoin grows in adoption,
• 1:01:48
  and the Bitcoin part of their business grows.
• 1:01:52
  But I wouldn't say it doesn't matter.
• 1:01:55
  I think shareholders in general are more Bitcoin-focused
• 1:02:00
  and they've benefited from that.
• 1:02:03
  But I think it still matters.
• 1:02:05
  I think at the end of the day,
• 1:02:08
  it's kind of complementary to their strategy.
• 1:02:10
  I would be a little bit surprised.
• 1:02:13
  I could be proven completely wrong here
• 1:02:14
  if that part of the company still exists in 10 years' time.
• 1:02:17
  I imagine they just become a Bitcoin bank and that bit's lost.
• 1:02:20
  Yeah, I mean, I could see that.
• 1:02:22
  I might agree with that.
• 1:02:24
  So Bitcoin treasury companies are good for Bitcoin?
• 1:02:27
  Yes.
• 1:02:28
  Tell me why they are not.
• 1:02:29
  No, I don't think they're bad for Bitcoin.
• 1:02:31
  I don't know if they're necessarily good for all the investors,
• 1:02:34
  but I think they're good for Bitcoin.
• 1:02:36
  They're buying more Bitcoin.
• 1:02:37
  That's cool.
• 1:02:38
  Well, why not?
• 1:02:38
  Why do you think they're not good for the investors, I guess?
• 1:02:41
  I guess maybe I'm specifically talking about retail investors.
• 1:02:44
  I think people should just be buying Bitcoin.
• 1:02:45
  because I think MNAV is going to be super volatile.
• 1:02:50
  I think there is probably a gravity to one.
• 1:02:52
  So if there's a gravity to one,
• 1:02:54
  why not just own Bitcoin?
• 1:02:55
  And that gravity could be below one.
• 1:02:59
  I don't know.
• 1:02:59
  Yeah, no, you got to earn the premium.
• 1:03:01
  That's kind of what I said earlier.
• 1:03:02
  And it's also, it's more volatile than Bitcoin.
• 1:03:06
  I mean, that's right.
• 1:03:07
  But some people want that.
• 1:03:08
  Yeah, for sure.
• 1:03:09
  They want that upside.
• 1:03:10
  But that upside doesn't come without downside risk too.
• 1:03:13
  Yeah, and I'm like, I'm nothing against it.
• 1:03:15
  no no i'm trying to understand it because there is it's a it's a divisive uh issue on x and stuff
• 1:03:21
  and i it's hard for me to understand because i always saw bitcoin adoption happening this way
• 1:03:26
  of like corporate adoption having bitcoin back credit products like i always saw this happening
• 1:03:32
  and i think maybe people are a little upset because they it's not like spot bitcoin but if you
• 1:03:37
  nothing beats like if you want to own the asset,
• 1:03:43
  to remove counterparty risk,
• 1:03:45
  to have censorship resistance,
• 1:03:46
  if you want the capital efficiency,
• 1:03:49
  meaning like you got to make cross-border payments.
• 1:03:51
  Like there's so many things that only Bitcoin,
• 1:03:54
  spot Bitcoin could do.
• 1:03:55
  And it's not to say that that's not awesome.
• 1:03:58
  And like a good, to me, it's like a foundational asset
• 1:04:01
  in every single portfolio should have spot Bitcoin,
• 1:04:04
  you know, in self-custody.
• 1:04:06
  It's something I've been passionate about for a very long time.
• 1:04:09
  I just think some people also want amplified Bitcoin, as Michael says it, or simply it's in like a 401k.
• 1:04:16
  Like I have a 401k and I own a Bitcoin ETF because I can't buy Bitcoin in that 401k.
• 1:04:22
  So that's what I mean.
• 1:04:23
  It's just the way that capital markets are structured.
• 1:04:26
  You just have these siloed pools of capital that can't buy it.
• 1:04:30
  And so now we're saying, hey, we're going to inject Bitcoin into there as well.
• 1:04:33
  So nothing replicates spot Bitcoin in self-custody.
• 1:04:38
  It has unique value propositions.
• 1:04:42
  And I think everyone kind of benefits from that.
• 1:04:44
  That's not to mean that there's not usefulness
• 1:04:48
  for other Bitcoin backed securities as well.
• 1:04:50
  No, I agree with that.
• 1:04:51
  And I think you're right.
• 1:04:52
  Like this was always going to happen as Bitcoin gets adopted.
• 1:04:54
  There's always going to be corporations buying Bitcoin,
• 1:04:56
  doing these financial gains with them.
• 1:04:58
  And I think that's cool.
• 1:04:59
  I'm not against it at all.
• 1:05:00
  The issue I have is, like, if you're selling spot Bitcoin to speculate on treasury companies, I think that might be a bad idea.
• 1:05:09
  Like, you might get it right, but, like, spot Bitcoin is the sacred part of the bottom of this entire stack, and, like, you should just be saving that.
• 1:05:15
  Like, if it's a 401k, something that you can't access spot Bitcoin, like, different story.
• 1:05:19
  And if you're, like, an institution that can't buy spot Bitcoin, different story.
• 1:05:23
  But I just, the idea of, like, Bitcoin is selling their Bitcoin to buy a treasury company is the part that I don't like.
• 1:05:28
  Yeah, I think it's about understanding the risk return trade-offs. Because when you're
• 1:05:33
  buying Bitcoin, the risk is like protocol risk when it comes down to it. And when you buy an
• 1:05:43
  equity in a Bitcoin treasury company, you're moving it from protocol risk to the management team,
• 1:05:49
  and trusting the management team to execute on the strategy to accumulate Bitcoin faster than
• 1:05:53
  you could yourself to increase Bitcoin per share on your behalf. And so you're moving that risk from
• 1:05:59
  the protocol, which I think we both agree is like, there's nothing more secure than the Bitcoin
• 1:06:04
  network right now. That's another thing of the fundamentals, like got hash rate above one zeta
• 1:06:09
  hash. I mean, it's amazing. That's one of the more bullish charts out there, I think.
• 1:06:14
  So you're moving the risk from the protocol risks to humans, you know, and their ability to execute
• 1:06:19
  on the strategy.
• 1:06:20
  And so you got to understand
• 1:06:22
  the risk return you're taking
• 1:06:23
  and that you're moving it
• 1:06:25
  from the Bitcoin network
• 1:06:27
  to humans and their ability to execute.
• 1:06:30
  So just being clear about that risk,
• 1:06:33
  like doing due diligence,
• 1:06:35
  understanding what you own
• 1:06:36
  in both Bitcoin
• 1:06:37
  and a Bitcoin treasury company
• 1:06:39
  is so important
• 1:06:39
  before you make that decision.
• 1:06:41
  And that's kind of,
• 1:06:43
  that's how I think about it.
• 1:06:44
  Yeah.
• 1:06:44
  And like the reason I would tell people
• 1:06:46
  not to like sell Bitcoin
• 1:06:48
  to buy a treasury company
• 1:06:48
  the same reason I'd tell people not to sell Bitcoin now hoping to buy back lower. Like you
• 1:06:53
  want to protect your Bitcoin, but if you are in like a trap pool of capital, then having exposure
• 1:06:57
  to Bitcoin is better than almost anything else. So I just think it's like, what I haven't enjoyed
• 1:07:04
  is like the retail fervor around the treasury companies, because I think most people have
• 1:07:09
  probably not done very well on that. It's like people that have made loads of money on strategy,
• 1:07:13
  then those people have lost loads of money on strategy.
• 1:07:17
  And like selling Bitcoin to speculate on a treasury company,
• 1:07:19
  I think might end up hurting you.
• 1:07:22
  Yeah, I don't know.
• 1:07:22
  I mean, it's a bit if they were trying to trade.
• 1:07:25
  I mean, I think most people have made a great amount of money
• 1:07:28
  with the strategy over a long period of time.
• 1:07:30
  I mean, it's still one of the best performing stocks
• 1:07:32
  of all the S&P 500.
• 1:07:33
  I think only NVIDIA, since they adopted Bitcoin,
• 1:07:36
  has outperformed it now.
• 1:07:38
  But we know that retail buys the top.
• 1:07:40
  Yeah, so it's, well, it's just a matter.
• 1:07:41
  again it's about like position sizing understand what you own and you're right it's just about
• 1:07:46
  education and um same thing with the bitcoin we say the same thing with bitcoin right i mean
• 1:07:52
  people the one thing i worry like i agree with you a little bit is i get worried when people
• 1:07:59
  skip bitcoin and don't understand bitcoin and all the great things about it and then just go straight
• 1:08:05
  into uh these dots and it's more of a trade for them and they don't really care about what the
• 1:08:10
  the Bitcoin strategy is.
• 1:08:11
  They don't really understand
• 1:08:12
  what they're even doing.
• 1:08:13
  They're just seeing a stock ticker going up.
• 1:08:15
  That's where I get concerned
• 1:08:16
  because like you gotta,
• 1:08:17
  it's, Bitcoin's such an awesome,
• 1:08:19
  awesome thing.
• 1:08:20
  It's just like,
• 1:08:21
  it's such a cool technology
• 1:08:23
  and there's so many great things
• 1:08:25
  about the asset to own.
• 1:08:27
  And they're really missing the point
• 1:08:29
  if they don't do that education
• 1:08:30
  to understand why strategies
• 1:08:32
  acquiring Bitcoin
• 1:08:33
  and why Bitcoin's cool
• 1:08:34
  and why it's important.
• 1:08:36
  And so I hope,
• 1:08:37
  I hope if anybody's listening to this
• 1:08:39
  who skip that, go back to the first principles
• 1:08:42
  and just learn about Bitcoin
• 1:08:44
  and then make a decision from there.
• 1:08:47
  This is why the Bitcoin treasury companies
• 1:08:49
  are accumulating Bitcoin because we love Bitcoin
• 1:08:52
  and we want to drive its adoption
• 1:08:54
  because we think it's the most important technology
• 1:08:56
  of the 21st century.
• 1:08:58
  And it's solving the biggest problem of the 21st century,
• 1:09:01
  which is currency debasement and the inability to save.
• 1:09:04
  So that's the advice that I would give.
• 1:09:07
  You've just, you got to start with Bitcoin
• 1:09:09
  and then go from there.
• 1:09:11
  And maybe strategy was a bad example there,
• 1:09:13
  but we're at David Bailey's conference,
• 1:09:15
  so I'm sorry, David,
• 1:09:15
  but look at all the people that invest in NACA.
• 1:09:19
  It can be brutal.
• 1:09:20
  And if you're selling Bitcoin thinking
• 1:09:21
  that thing's going to pump when it goes public,
• 1:09:23
  you're down a hell of a lot of money.
• 1:09:26
  And sometimes just owning Bitcoin
• 1:09:28
  and playing the long game is probably the best option.
• 1:09:31
  Like I said, there's nothing that competes with Bitcoin
• 1:09:35
  in terms of like the risk adjusted returns,
• 1:09:38
  I guess you could say.
• 1:09:39
  Yeah.
• 1:09:39
  When you're comparing these things.
• 1:09:41
  And, you know, I own Bitcoin
• 1:09:43
  because of the potential, obviously,
• 1:09:46
  but also all the risk I remove when I own it
• 1:09:50
  compared to all the other asset classes.
• 1:09:51
  And I think it's like an important differentiation
• 1:09:53
  to think about.
• 1:09:55
  And because people see risk,
• 1:09:56
  they see volatility when they look at Bitcoin.
• 1:09:58
  But all I see is like removal of risk.
• 1:10:01
  Like you're removing counterparty risk,
• 1:10:03
  you're removing business risk,
• 1:10:04
  sector risk, management risk. And that's really attractive. It's the same reason why a lot of
• 1:10:09
  people own gold. And so nothing really competes with Bitcoin for long periods of time. But
• 1:10:17
  we know that it's very difficult to outperform Bitcoin. One way to outperform it would be to
• 1:10:22
  get more Bitcoin and accumulate more Bitcoin and leverage Bitcoin play. And that's what Bitcoin
• 1:10:27
  treasury companies are. And so you're taking on more risk, but you could potentially outperform
• 1:10:33
  Bitcoin even. So that's why people are attracted to it.
• 1:10:36
  Yeah. It's going to be an interesting couple of years to see how this all plays out.
• 1:10:40
  Keep buying Bitcoin, Sam.
• 1:10:42
  We're going to do that. That's the plan. Educate and accumulate. That's the plan.
• 1:10:47
  Awesome. Thank you for the time, man. It's been good.
• 1:10:49
  Yeah. Thanks, man. Appreciate it.
• 1:11:03
  Thank you.