Latest / Bitcoin for Financial Services Podcast / Offense vs. Defense: How Bitcoin Treasury Companies Actually Work

Transcript

Offense vs. Defense: How Bitcoin Treasury Companies Actually Work · Bitcoin for Financial Services Podcast

• 0:00
  Jeff says, well, Bitcoin goes up 25, 30 percent over the next decade.
• 0:04
  Then coffee sale goes, well, that's not going to happen.
• 0:06
  I don't believe that's going to happen.
• 0:07
  And then Jeff goes, well, that's, you know, then we're not going to agree on this because that's the core of the debate.
• 0:16
  And so that's my biggest takeaway from it, honestly.
• 0:18
  I thought he did a good job.
• 0:19
  I think people who look at the balance sheet, they just don't believe in Bitcoin.
• 0:26
  So they don't understand it.
• 0:28
  Bitcoin is a currency on the internet.
• 0:31
  If you don't trust any other currency, this is where you go.
• 0:33
  It's going to outperform everything.
• 0:35
  Bitcoin could eventually be worthless.
• 0:36
  Every day is a good day to buy Bitcoin.
• 0:39
  Bitcoin reached its highest price to date.
• 0:41
  Bitcoin getting a new high.
• 0:42
  It really has reached escape velocity.
• 0:44
  There is no second best.
• 0:45
  Who cares about Bitcoin?
• 0:47
  It's the only secure database that's ever been invented.
• 0:49
  Antisocial.
• 0:50
  Bitcoin is the real deal.
• 0:52
  Stupid.
• 0:53
  Everything is bullish for Bitcoin.
• 0:55
  Immoral.
• 0:55
  It's going up forever, Laura.
• 0:57
  fix the money, fix the world.
• 1:27
  future performance. Any statements or pain is subject to change without notice.
• 1:34
  Welcome to Bitcoin for Financial Services Media, the podcast for sound money meets professional
• 1:39
  services. We explore how to build the financial services industry within the principles, values,
• 1:44
  and ethos of Bitcoin. A big part of that is our flagship event coming up in Denver from October
• 1:49
  20th through 22nd. Legacy finance is being rebuilt in real time, and Bitcoin is at the center of it.
• 1:55
  The Bitcoin Financial Services Summit brings together the people actually building the infrastructure.
• 2:01
  RIAs, lenders, CPAs, miners, treasury companies, and Bitcoin native operators all in one room.
• 2:08
  If you want to understand where Bitcoin finance is going next, get your tickets now at bffs.media.com.
• 2:16
  Looking forward to seeing you there.
• 2:18
  Today, we're joined by special guest Sam Callahan, Director of Strategy and Research at Orange BTC.
• 2:26
  You won't want to miss it, and let's get started.
• 2:33
  What's up, ladies and gentlemen? We are joined by a special guest, Sam Callahan, Director of Strategy and Research at Orange BTC.
• 2:41
  How are you doing, Sam?
• 2:42
  I'm doing great. How are you guys doing?
• 2:44
  doing pretty good i mean what is the bitcoin price even at i've not checked that that's always
• 2:52
  a gauge for how the podcast is going are we back in like 79 76 what are we at right now
• 2:58
  it's somewhere around there it's bouncing okay all right cool what what my friend checkmate calls
• 3:04
  the chop solidation in the sideways range just chopping everybody up yeah well i just got off
• 3:13
  the golf course with uh with my financial advisor who i have orange pilled over the course of the
• 3:19
  last like i guess four years and he's just been steady eddie just buying on river um and he was
• 3:26
  on the course he's like dude you got to help me get get this off river and i was like well we
• 3:30
  could do that but at least it's on river that's like your least bad option on an exchange so i
• 3:36
  I think so. I like that River built their own custody solutions internally.
• 3:44
  Yeah.
• 3:45
  And they're so transparent for a private company.
• 3:48
  I mean, they're like the standard that other private companies should follow in terms of releasing their financials, proof of reserves with their Bitcoin holdings.
• 3:57
  I really like their transparency over there.
• 4:01
  Man, we're just pumping River right off the cuff, Wyatt.
• 4:05
  We need to, Alex, if you're listening, you need to throw some sponsor dollars over here, okay?
• 4:11
  Because we're just doing this for free.
• 4:14
  I'm a big fan of Alex and Julia and Sam over there.
• 4:18
  I've known him for a long time.
• 4:19
  Yeah, I'm also a fan of River.
• 4:23
  I'll show them too.
• 4:24
  Why not?
• 4:25
  Before I do that, I'll just note that I'm not Jordan's financial advisor.
• 4:30
  He's not my CPA either because I'm holding firm.
• 4:33
  Once he switches, I'll switch.
• 4:35
  No, I think the best tweet I've maybe have ever seen was when, oh shoot, it might be close to a year ago,
• 4:43
  and Coinbase, it wasn't even a hack.
• 4:46
  They just had some offshore support person get bribed and they release a bunch of customer data.
• 4:52
  And Leishman just went scorched earth on him.
• 4:54
  He was like, yeah, this is why we pay real salaries to US-based employees and just absolutely wrecked Coinbase.
• 5:01
  I thought that was awesome.
• 5:03
  That was awesome.
• 5:04
  All right, Sam, tell us your background because you've been in Bitcoin now for, I don't know, is it five years more or less?
• 5:14
  I've been working professionally for a little over five years.
• 5:20
  Okay, give us your background.
• 5:21
  I've been in Bitcoin for almost 10 now. I mean, nine.
• 5:27
  Wow, okay.
• 5:28
  Which is, it's been a long journey, but I've learned a lot.
• 5:34
  But yeah, no, I mean, how far do you want me to go back?
• 5:37
  I would say, I think it's always interesting to hear, especially someone who now works in Bitcoin, maybe and especially going back almost a decade, who got you into it?
• 5:47
  Like, how did you happen upon Bitcoin?
• 5:50
  Did you stumble along the way into any other tickers?
• 5:55
  Just tell us that whole story.
• 5:56
  I think that'd be interesting for the audience.
• 5:58
  Yeah.
• 6:00
  I had always studied financial history.
• 6:02
  I kind of geeked out on it. I like studying on my free time.
• 6:08
  I like the social behavior aspect of markets, like the human behavior.
• 6:13
  It's kind of what drives markets today.
• 6:17
  And so I used to just study that stuff.
• 6:18
  I studied manias and financial history and I studied central banking.
• 6:23
  And that kind of led me down that whole rabbit hole long before I came across Bitcoin.
• 6:28
  I think the global financial crisis, I really wanted to dig in there and understand what was going on because I knew something was completely wrong there.
• 6:38
  And I knew that there was a bailout and I would walk through the parks and there'd be Occupy Wall Street.
• 6:44
  And I just wanted to understand the grift that was going on.
• 6:47
  So I was digging into the TARP. When Neil Kashkari gave testimony, I was reading all of those testimonies and digging in and just trying to figure out what was going on. So that kind of led me to understand the problem, long story short.
• 7:06
  And it was a little bit depressing at that time because I didn't feel like there was a solution. I thought that central banks and the government, they become too big and too powerful, too intertwined. And I saw what it did when they debased the currencies. And I just inherently understood that after doing all my studies.
• 7:27
  And so I was kind of into gold and investing on the side. And then I discovered Bitcoin. I just read some article in maybe early 2017 about Satoshi Nakamoto. And I was just like, what? This cannot be real that this person created this technology and is worth whatever it was at the time. It was a crazy amount and nobody knew his identity. And I just thought it sounded like a movie.
• 7:56
  and so I just kept reading then about it I dug in so it says Toshi is what actually hooked me into
• 8:02
  Bitcoin and then I read the book Digital Gold by Nathaniel Popper which I still think is one of the
• 8:08
  better books on Bitcoin in terms of like the historical account of how Bitcoin was created
• 8:17
  there's a couple books that I recommend it's there's like Crypto by Stephen Levy which is
• 8:22
  kind of like pre-Bitcoin as well as I know there's one by Aaron Van Weirdem that kind of also covers
• 8:29
  the area before Bitcoin. And then there's Digital Gold, which kind of handles like 2009 to 2015,
• 8:38
  that era of Bitcoin building. So like the Roger Bears, Eric Morese, all those kinds of players.
• 8:44
  And then there's like the Block Size Wars from there is a great account of the next couple of
• 8:49
  years. And then somebody needs to write what happened over the last five. But I read that
• 8:56
  book and it just completely captivated me. I was just like, oh my gosh, the light bulb
• 9:02
  lit up and I said, this could actually work. This could potentially take power away from
• 9:09
  the people in charge of controlling the money supply. And it's digital and all those things
• 9:15
  that we like about Bitcoin, it really captivated me in a way that nothing else has ever had.
• 9:21
  And I just read everything that I could on Bitcoin at that time, which there was a lot of like
• 9:26
  blog posts, Twitter threads. In a way, it was very decentralized, like the Bitcoin
• 9:33
  resources and content. There was only like two or three podcasts, like Stefan Lavera,
• 9:38
  um tales from the crypt with marty bent and matt odell um pomp was one of the only ones there and
• 9:46
  then what bitcoin did those were kind of era of podcasts that i just consumed all the time
• 9:52
  learned everything and then um and then i just realized that it was so important to me
• 9:58
  not to just get potentially wealthy from bitcoin by owning it but also um i wanted to drive it to
• 10:05
  adoption. Like I wanted to look back when I was a grandpa and tell my grandkids like, yeah, your
• 10:10
  grandpa helped drive the adoption of Bitcoin. Like that was like important to me. It was more from
• 10:16
  like a human rights angle, Alex Gladstein. I really thought, still think, and it's what drives me
• 10:20
  today that Bitcoin can have a positive influence on the world. And it solves a very real problem
• 10:27
  that everyone, all 8 billion people suffer from, which is currency debasement and inability to
• 10:33
  save and so that's kind of the tldr no that's good yeah so you so what were you doing uh
• 10:40
  professionally in in like 17 and maybe just before you answer that look i'm not trying to like
• 10:47
  put my nose in you know places it shouldn't be i just noticed that big one for everyone wasn't on
• 10:51
  your list of recommended books do you have any thoughts or comments more you know that's probably
• 10:56
  the best book i would say for beginners nowadays okay okay there we go who's the author on that one
• 11:02
  that's natalie brunell great book very nice
• 11:05
  what i was saying was like the historical account of bitcoin those are the books i gotcha
• 11:13
  gotcha yeah just want to give you opportunity to maybe clear the air on that five bitcoin is for
• 11:17
  everyone i gotta say um but before so i want to go back to when i was in college
• 11:27
  I was in business school
• 11:30
  and it was during the global financial crisis
• 11:32
  and I would ask questions
• 11:34
  as I'm just independently
• 11:36
  digging into this stuff like investigating
• 11:38
  I would ask questions to the professors
• 11:40
  really challenging
• 11:42
  Keynesianism and QE
• 11:44
  and I just didn't get
• 11:46
  good answers to be frank
• 11:48
  it didn't make any sense to me
• 11:49
  some of these economic theories
• 11:52
  that they were educating us on
• 11:54
  and so I switched majors to hard sciences
• 11:56
  I was in biology and I studied a lot of physics because it made more sense to me.
• 12:02
  And ironically, I think it helps me more understand markets today than anything physical.
• 12:08
  And so I studied biology.
• 12:11
  I got a doctorate in sports physical therapy.
• 12:14
  I then developed algorithms that we, back then, nobody objectively measured players to try to prevent injuries from happening in the first place.
• 12:24
  It was very reactive.
• 12:25
  So after somebody blows their ACL, they were like, how do we get them back on the field?
• 12:31
  But the real question should have been, how do we prevent them from tearing their ACL, which is very different back then.
• 12:36
  And so we used to go into these professional sports teams and work with Olympians and D1 schools and just teach all of their, you know, the health care providers there how to objectively measure their players and stratify the risks.
• 12:53
  So which players are more likely to get torn to ACL and how do you address it before it happens?
• 12:58
  And that was kind of a different way to think about it back then.
• 13:00
  Now everybody does that.
• 13:02
  But it was really interesting.
• 13:04
  I really enjoyed the work.
• 13:05
  I still have my options and everything.
• 13:07
  But then I discovered Bitcoin and it just blew my mind.
• 13:11
  And then after a couple of years of being down the rabbit hole, I just realized that, you know, I have so much passion for this.
• 13:17
  I need to just see where it goes.
• 13:19
  So I took that leap.
• 13:20
  You know, it wasn't like I think people really get stuck in careers and things.
• 13:27
  But you really got to have courage to kind of switch things up if you feel passion.
• 13:31
  That's what I've learned from this.
• 13:33
  But it takes a bit of a courage because there's so much sunk cost, so much work that goes into getting a doctorate degree and building up that career and that reputation and everything.
• 13:43
  Like you worked hard to get there.
• 13:45
  but if anybody's listening to this and feels stuck or something you just got to start doing
• 13:51
  actionable steps and then have the courage to actually take the leap because it's worked out
• 13:55
  for me but it's all about just following your passion what you want to be thinking about every
• 13:59
  day and when you were kind of you know researching bitcoin and you know wanted to work in bitcoin
• 14:06
  like is that when you started writing because you're a prolific writer you've done you know
• 14:10
  a ton of research and, you know, top notch reports.
• 14:12
  Is that kind of where you waited in or did that come later?
• 14:16
  No, it was. I mean, I always, people always ask like,
• 14:20
  how do you get into Bitcoin? How do you start working in Bitcoin?
• 14:22
  I think there's a lot of younger kids specifically.
• 14:25
  And I always tell them proof of work. You know,
• 14:29
  you can separate yourself from that stack of resumes that all say the same
• 14:33
  thing. Oh, I listened to 10,000 hours of podcasts. I did this.
• 14:36
  I love this. I'm passionate by just saying, Hey,
• 14:40
  I wrote this paper, check it out. And then that are automatically separates you from like 99% of
• 14:47
  them because then I'm like, Oh wow, they took the effort to write this, you know, report on whatever
• 14:51
  it is. And then I read it and I like it. I'm like, okay, this guy can think this guy can write.
• 14:56
  Like, why don't I give him a, give him an interview. Right. So that's kind of what I did.
• 15:01
  I was on Twitter and I just started writing tweets, writing threads, writing reports.
• 15:07
  and this was when I was just sending out resumes to everyone and I was basically didn't get a call
• 15:14
  back for a year and a half two years but I just kept writing kept doing eventually that proof of
• 15:21
  work caught the eye of the right person and that's how I broke into the industry
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• 16:04
  but then once I was in the industry, um, I remember there was one day where they were like,
• 16:10
  Hey, we want to write like a market update. Have you ever done anything like that? And I was like,
• 16:15
  yeah, but like, not like officially, why don't you give it a go? And then I just wrote it and
• 16:22
  it did well. And they were like, did you like doing that? And I was like, yeah. And then they
• 16:28
  were like, well, why don't we just, why don't you be like the head of research lead analyst and,
• 16:32
  and start writing more reports and writing things.
• 16:36
  And then I just, I mean, to this day now,
• 16:38
  I mean, I've probably written over a hundred,
• 16:41
  you know, updates or research reports on Bitcoin
• 16:46
  and all different facets of the sector.
• 16:48
  And I love it because it just helps me really understand
• 16:52
  all the different parts of Bitcoin in the ecosystem.
• 16:55
  Like I've written papers about lightning and mining
• 16:58
  and whatever, decentralization and institutionalization
• 17:01
  and all these different facets of Bitcoin.
• 17:03
  And I find it all fascinating.
• 17:05
  So it's kind of like the perfect,
• 17:07
  it was the perfect role to really learn about Bitcoin.
• 17:10
  I remember that even the first day
• 17:12
  or the first couple of months
• 17:13
  when I worked in the industry,
• 17:15
  one of my jobs was actually to build out,
• 17:18
  I told you that all the content back then
• 17:20
  used to be really distributed
• 17:22
  across blog posts and everything
• 17:24
  and YouTube videos.
• 17:26
  And so they were like,
• 17:27
  we just want to create an archive.
• 17:29
  And I was like, okay.
• 17:30
  And so my job was basically to scrape the entire internet for every single piece of good Bitcoin content there was back then.
• 17:39
  And I collected like 2,500 pieces of YouTube and I digested it all when I was doing it.
• 17:47
  No, this is pre-AI. That's crazy.
• 17:49
  Yeah, this is pre-AI. So I was literally, I had a girlfriend at the time and I think it really affected me.
• 17:57
  I changed careers. I was like, this is my green job.
• 17:59
  I was just like in the rabbit hole trying to find if there was a bottom.
• 18:04
  And I tried and there was no bottom.
• 18:07
  I was reading like cryptography research reports in the 80s, you know, like I was really deep in the rabbit hole at that point.
• 18:15
  And I still have that archive.
• 18:16
  It actually led to at Swan, we called it the Bitcoin Canon.
• 18:20
  And it was just a project that we had where like people could like customize their rabbit holes and have like recommended resources.
• 18:27
  So like you know Michael Saylor or anybody could like create their own rabbit hole of like 10 important pieces of Bitcoin content that they could like give out to somebody to orange pill That like a thing But I had the back end of that which was this huge database of content
• 18:43
  I categorized it. I like it was it was awesome.
• 18:47
  Wow. You're the original AI agent, it sounds like.
• 18:52
  Yes, it was a lot different back then. It was very tedious, but I enjoyed every second of it because it was like a PhD in Bitcoin.
• 19:00
  uh for that summer i was just in the room just like this geeking out and just reading everything
• 19:06
  for bitcoin and getting paid for it basically i love it bitcoin is dream right there so was swan
• 19:12
  your first was that your first full-time gig in bitcoin okay cool yeah so i was like the i was in
• 19:17
  like i don't know if i was like the 22nd or 23rd employee at swan but that was really that was a
• 19:22
  really awesome learning experience of just being at this like hyper growth startup, you know,
• 19:30
  expanding the, the benefit, the, the pros, the cons, the lessons learned, everything. I just,
• 19:37
  it was, it was a really good experience. I liked the people that I worked with there.
• 19:41
  And I had a lot of autonomy with like how I researched and how I wrote. And it was kind of
• 19:46
  like the perfect way to enter the Bitcoin ecosystem. But I was just so excited to work
• 19:51
  in Bitcoin. Like I said, it was about just spending my time driving adoption for something that I
• 19:57
  think is so important for the world at a time back then where it was really, you know, fought
• 20:03
  out, fought against, you know, it still is today in many ways, but it's more like misunderstood
• 20:08
  today. But back then it was like the FUD was all the time. And so you were just like FUD busting.
• 20:15
  it was very different than where it is today and that just shows like the progress that we've made
• 20:24
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• 20:54
  But so I started at Swan.
• 20:57
  I was there for three years or so, a little over three years.
• 21:01
  From there, I'm on the advisory board of a few companies, Mara, Cantilever,
• 21:08
  which is like a Bitcoin VC fund, Liquid Technologies.
• 21:12
  I then joined Battery Finance, which is a private credit fund
• 21:15
  that's combining Bitcoin and traditional credit assets.
• 21:19
  So dual collateralized loans.
• 21:22
  That's with Andrew Hones, a great guy.
• 21:27
  But basically combining, say, like a multifamily office
• 21:32
  with a little bit of Bitcoin in the loan.
• 21:35
  And when you include that piece of collateral in that loan, it does really interesting things to the return profile of the asset, right?
• 21:44
  Because it's especially from a lender perspective, because you have this collateral that's fungible and it provides diversification, it's liquid, it's transparent.
• 21:55
  And so it kind of de-risks any kind of loan that you make.
• 22:00
  And so I was doing that for a number of months.
• 22:02
  I was there for about seven, eight months.
• 22:06
  And it was great.
• 22:09
  It was just, I had followed strategy since, due to my job at Swan, I just cover it.
• 22:15
  I just had my finger on the pulse of things.
• 22:17
  It's like part of the job.
• 22:19
  So like I knew August 2020 when Saylor announced the first Bitcoin purchase, I've been tracking
• 22:25
  that journey from day one.
• 22:29
  And it's been fascinating to observe. And I really wanted to try to implement that business model in a different capital market. I thought that was a real good opportunity. And then I had worked with Guy Gomez at Swan. He was the president. And he grew up in Sao Paulo in Brazil. And he reached out to me. He's like, hey, I have a, you know, my best friend I grew up with.
• 22:56
  He was a CEO and CFO of a public company in Brazil for almost a dozen years.
• 23:03
  And we want to do this.
• 23:05
  And we think we got the right thing to do this.
• 23:06
  We're interested.
• 23:07
  And I was just like, that's really interesting.
• 23:09
  So I did some research on Brazil, just the market there and whether this would be a good idea or not.
• 23:15
  And what I found was like, this is really interesting because it's kind of like bringing Bitcoin, improving Bitcoin access in a region that needs it most due to the currency instability and all those things we know about in Latin America.
• 23:29
  And there's a lot of adoption, but the market infrastructure was not really built out.
• 23:34
  There's also structural reasons that makes it hard for institutions to acquire spot Bitcoin.
• 23:41
  They're restricted still.
• 23:42
  A lot of pools of capital there, but they can buy domestic equities.
• 23:46
  There's a bit of a proxy play there.
• 23:47
  There's tax benefits.
• 23:49
  There's all these interesting things why something in Brazil would be – or a company in Brazil would make sense.
• 23:55
  Then the financial markets there are extremely sophisticated and deep, by far the largest in Latin America.
• 24:03
  I think they have the first or second largest derivatives market in the world.
• 24:06
  so all those like factors together i just really wanted to do it so so i love battery and you know
• 24:14
  kudos to them i learned a lot from andrew and those guys and wish them the best
• 24:18
  um but then joined orange btc in august officially and uh we we've been off ever since so that's kind
• 24:26
  of my professional journey very nice no that's that's amazing man appreciate you sharing that
• 24:32
  with us i want to move more to the the treasury company play and different markets uh in a sec
• 24:39
  here but just to kind of tidy up like the research you know part of things like do you have a piece
• 24:44
  you're you're most proud of like you know sam callahan's like speculative attack and then if
• 24:49
  you could maybe share with the audience like some of the tools or resources you use when you're
• 24:53
  doing your research well it's changed you know with the with introduction of ai now i mean i even
• 25:01
  write very differently. I mean, if you're not like, there's, you have, I use AI to write.
• 25:08
  It's like weird. It's like a different way of writing now. Right. It's like, I'm, I'm prompting
• 25:12
  it. And then I like use it to tweak my writing and we kind of go back and forth. It's like a little
• 25:17
  assistant that I use while I write, which is very different than when I used to write,
• 25:22
  which is just like straight. Um, but it's just so much more efficient and sometimes better.
• 25:26
  um so it's kind of changed in terms of the tools but i mean x or twitter has always been such an
• 25:33
  amazing tool i i like use bookmarks like crazy because i always just bookmark things bookmark
• 25:41
  things and just like if i have an idea for a piece and i'm i'm monitoring the situation so
• 25:47
  right of course there's things that pop up and it gives like i have a thesis of like a piece that
• 25:53
  I'm working on and I see a chart by this guy and like, you know, that could actually fit well into
• 25:58
  that piece book market. And I might not use it, but that's how I work. I just constantly like
• 26:02
  think about how I could have supporting arguments to this piece that I'm working on. Or if somebody
• 26:07
  has a good thought about it, I kind of bookmark it. So Twitter has always been like one of the
• 26:13
  most powerful tools, period, for my research and my writing. I always like, I used to more like
• 26:22
  scrape, find research papers at institutions to have, again, like some like credible evidence
• 26:32
  to support my arguments, you know, especially from like in the early days of Bitcoin.
• 26:37
  It helped when you had some kind of, I don't know, it could have been anyone.
• 26:43
  It's just like Fidelity, for instance, Fidelity or Bridgewater or even like the Bank of International
• 26:49
  settlements i'm not a big fan of these guys but if i could show even in their research that they
• 26:55
  have something that i'm talking about it's powerful because i'm like well even these guys
• 26:59
  who i don't really think about have all the data in the world and are supposed to be like the quote
• 27:03
  unquote adults they're showing the same whatever the debt the unsustainable nature of the fiscal
• 27:09
  situation or whatever it is right um that's kind of i just scrape everything all the time like i'm
• 27:16
  I'm just constantly reading.
• 27:19
  Reading is like the superpower actually.
• 27:22
  And then I don't know when this chart that I read or this paper that I read is going to come back, but I remember it later.
• 27:30
  And then I kind of pull it all together sometimes to create a unique piece.
• 27:35
  So it's kind of like a constant learning, constant reading, constant research.
• 27:39
  and then just kind of thinking,
• 27:44
  how can I frame this differently?
• 27:46
  Or how can I...
• 27:47
  Back then it was just like,
• 27:48
  how can I put a Bitcoin lens on this?
• 27:51
  Which was always fun.
• 27:54
  But in terms of favorite pieces,
• 27:55
  I mean, I'm really proud of the...
• 27:57
  I'm really proud of working with Lynn Alden.
• 28:00
  I think she's one of the best macro thinkers
• 28:05
  and writers in the game today.
• 28:07
  So I was really honored to work with her on a couple pieces that had a good response.
• 28:13
  One was on the Nothing Stops This Train fiscal dominance.
• 28:18
  And then the other was on Bitcoin's correlation with global liquidity.
• 28:23
  So both of those were pretty solid pieces, I would think.
• 28:27
  And then some of the past ones that I've written, I wrote a good one on lightning early on, just comparing it to the correspondent banking industry.
• 28:35
  that one comes to mind. I wrote one on
• 28:39
  CBDCs. So like one of the things like CBDCs, I used to
• 28:45
  be more concerned about them in the past, but now I'm kind of happy about the progress made.
• 28:51
  But back then, you know, I would read these papers and just kind of geek out on it. And
• 28:57
  the central bankers and all the proponents of CBDCs would always say that they're good for
• 29:02
  financial inclusion, right? They would think like, this is a good thing that we're doing this.
• 29:07
  And I wrote a paper that I think really systematically debunks that on all these
• 29:13
  different angles. And so I think that one kind of came together pretty well. So I'm kind of proud
• 29:16
  of that one actually. Very nice. I've written a lot of them, man. There's one that I wrote,
• 29:21
  one, why I'm bullish heading into 2023, which was in the bear market of 2022.
• 29:27
  and that one aged really well you know right and reasons why i'm bullish and a lot of them age
• 29:35
  pretty well but the one i'm most proud of was i was very bullish on bitcoin because ethereum
• 29:41
  merged to proof of stake and that actually was really spot on because bitcoin became the only
• 29:48
  proof of work blockchain at any scale and i thought that was like the most bullish thing
• 29:56
  Whereas like Ethereum proponents were celebrating that they moved proof of stake and they were, you know, it was cleaner, so to speak.
• 30:03
  I don't know. Like, I just thought it was like a really big cell phone and it actually gave Bitcoin the entire proof of work market.
• 30:11
  Like it was done. And I thought that that piece aged pretty well, too.
• 30:15
  So anyway, there's there's a lot of them. But I'm still I'm still still looking to write some good pieces in the future.
• 30:23
  And I just wrote a piece on quantum before, which was pretty solid.
• 30:29
  I'm writing a piece on Bitcoin's rising equity correlation, because a lot of people call Bitcoin just like leverage beta right now.
• 30:38
  So I'm trying to kind of critique that, that framing a little bit, which should be a good one.
• 30:43
  But I'm always just writing. I think writing is a superpower, too.
• 30:46
  It helps you clear your thinking a little bit, you know?
• 30:49
  Yeah. Okay. Well, I was, you mentioned earlier what Bitcoin did. And before we move to the treasury stuff, we have to talk about something that Peter always talked about in bull runs. Bitcoiners find girlfriends or wives. I think you just got to briefly just tell the story that anyone out there that's thinking, hey, should I, should I make the jump? I'm, you know, maybe a single guy or just got to have a relationship. Are, are you going to get a girlfriend or a wife if you get into Bitcoin?
• 31:18
  Well, I certainly did.
• 31:24
  But I would say yes.
• 31:26
  I would say yes.
• 31:27
  I think Bitcoin affects, from my personal experience, as well as many Bitcoiners and friends and family that I've talked to who've gotten into Bitcoin, it does change you how you think because you start to think more long term.
• 31:44
  you start to think about you know what do i really want to just like go to the bars and just like do
• 31:50
  short-term thinking things that are a negative net negative for my long-term health or like how do i
• 31:56
  build like family and like all these things like it really it really got me thinking differently
• 32:01
  about so many different things um and so not only are you maybe more attracted because you're holding
• 32:08
  some awesome hard money that appreciates over time.
• 32:12
  But also, it just gets you thinking more long-term.
• 32:16
  Like, how do you build long-term healthy relationships
• 32:18
  and stuff like that?
• 32:19
  So I think, yes.
• 32:21
  I think if you get into Bitcoin.
• 32:22
  Okay.
• 32:23
  It's guaranteed.
• 32:24
  You heard it here first.
• 32:25
  Yeah.
• 32:25
  I love it.
• 32:26
  Not crypto, though.
• 32:28
  Not crypto.
• 32:29
  Easy, easy.
• 32:30
  We don't use that word, man.
• 32:32
  We're careful with the C word.
• 32:36
  Yeah, so I want to kind of...
• 32:38
  ease our way into this treasury discussion.
• 32:40
  Obviously it's kinda hot.
• 32:42
  So we'll progress in our difficulty of questions here.
• 32:46
  Just to make sure you're warmed up.
• 32:47
  My opening ensemble is kind of a three-parter.
• 32:51
  So bear with me, but I'm just wondering
• 32:54
  what you think of the DAT moniker.
• 33:01
  You said three questions and he was like,
• 33:03
  I'm outta here.
• 33:04
  no my uh my dryer was being loud so i just closed the door sorry you're good uh so yeah what you
• 33:15
  what you think of the dat moniker if you think that has staying power and then why it's dumb
• 33:21
  why it's dumb yeah yeah like dat referring to these as dads
• 33:26
  I mean I don't really like
• 33:31
  I would prefer Bitcoin
• 33:34
  treasury companies
• 33:35
  I don't know why you would build
• 33:38
  a treasury on anything other than Bitcoin
• 33:40
  so
• 33:42
  I would prefer Bitcoin treasury than
• 33:45
  DATS
• 33:46
  I think other
• 33:47
  DATS are kind of building their
• 33:49
  treasury on quicksand a little bit
• 33:52
  and so I guess I just
• 33:54
  don't like that
• 33:54
  It's kind of a broad umbrella term for all these other ones.
• 34:01
  Yeah, I think Bitcoin treasury company is just such a broad term where each one is going to be very different with different management teams, with different strategies, with different risk tolerance and risk management.
• 34:18
  And, you know, now you're seeing the rise of like, say, like active treasuries versus more like the issuers of digital credit where they don't necessarily have like these big yield generation strategies.
• 34:33
  And then there are other ones that are kind of leaning into that more.
• 34:38
  Some like to have operational businesses.
• 34:41
  Some think that's kind of a drag on the overall treasury strategy.
• 34:45
  Some thinks that supports it.
• 34:47
  Some wants their operational businesses to be Bitcoin aligned.
• 34:50
  Some wants it to be not.
• 34:52
  And so it's kind of a broad term, right?
• 34:53
  It's kind of a category that people should think about.
• 34:57
  And they shouldn't just say like, oh, it's a Bitcoin treasury company.
• 35:00
  It's another strategy, right?
• 35:02
  Because it's really not the case.
• 35:05
  And you're kind of seeing that differentiation happen right now.
• 35:09
  During this latest drawdown, you've seen people start to understand that, right?
• 35:17
  how like there's differences here.
• 35:19
  There's different markets.
• 35:20
  There's different management teams.
• 35:21
  There's different strategies,
• 35:23
  different business models,
• 35:25
  different capital structure.
• 35:27
  So I just think it's a broad term
• 35:30
  and I just,
• 35:31
  I much prefer Bitcoin treasury companies
• 35:34
  than the dats.
• 35:37
  I do too.
• 35:38
  It's just like the ETH heads
• 35:41
  or something trying to like insert themselves
• 35:42
  into something good like they always do.
• 35:45
  But, you know, one of the things I think you probably have a very unique perspective on just, you know, working for a Brazilian company, you know, obviously not American market, but a big market.
• 35:56
  Nonetheless, you know, I was listening to Jesse Myers a few months back.
• 36:00
  He was on Preston and, you know, it was kind of his his belief that it's not necessarily winner take all in each market, but it's winner take most.
• 36:08
  And obviously, you know, whether it's Orange or, you know, MetaPlanet, whatever, kind of establishing themselves in their local market.
• 36:16
  Like, what do you think? Do you think it's winner take all?
• 36:19
  Do you think like each market will kind of have like their Bitcoin treasury company or how are you kind of thinking about that at a macro level?
• 36:27
  Yeah, I mean, I think I think naturally there will be probably a winner take most scenario.
• 36:33
  It depends on what you define a Bitcoin treasury company because there's also a different...
• 36:41
  I think every company is going to be a Bitcoin treasury company.
• 36:44
  I know Adam Back said that too, but it's just Bitcoin is pristine money and the best form of way you can save over long periods of time.
• 36:54
  And every single corporation needs that if they have that on their treasury.
• 36:59
  But there's like a defensive model
• 37:01
  where it's more like,
• 37:02
  hey, I'm going to put Bitcoin
• 37:03
  on the balance sheet.
• 37:04
  We going to hold it for long protection against debasement and censorship et cetera And then there more like the offensive right Where you actually like raising capital to buy more Bitcoin
• 37:19
  to increase Bitcoin per share.
• 37:21
  You're building out operations to acquire more Bitcoin,
• 37:25
  to increase Bitcoin per share.
• 37:27
  And that's like a real, the treasury operations is like a key component
• 37:31
  of your business model.
• 37:32
  And so those are kind of like two different things. And I do think for the other one, really, there's only like a few real moats. I mean, there's like a management moat, like just executing and managing the capital structure with discipline.
• 37:48
  so there's a moat there but really it's like scale and liquidity and then maybe jurisdiction
• 37:54
  right so if you just you already asked about the jurisdiction but like it's really about like
• 38:00
  scale and liquidity to really separate yourself from the pack and so i think he who has the most
• 38:07
  bitcoin already has a big head start because that big bitcoin balance sheet you can utilize that in
• 38:13
  various ways, whether to generate some kind of yield on a portion of those Bitcoin holdings,
• 38:18
  which improves the sustainability of the business. More Bitcoin, obviously, the more you can bring in
• 38:27
  with the treasury revenue there. And also the scale allows you to do things like issue in the
• 38:36
  future a preferred where you have a large balance sheet that has good asset coverage on any kind of
• 38:42
  instrument that you issue. And so it separates you because it's tough to get a lot of Bitcoin,
• 38:48
  right? It's like, you got to acquire it, you got to raise that capital, you got to get the Bitcoin,
• 38:53
  you got to get a vehicle to take it public. And so that's the big mode is just getting a large
• 38:58
  Bitcoin balance sheet from the get go. And as Bitcoin appreciates, that's going to get harder
• 39:04
  and harder for people to compete with. So I see that as kind of, I think there is going to be
• 39:11
  consolidation. I think there is going to be a few big players who are offensive Bitcoin treasury
• 39:18
  companies whose main mandate is to increase Bitcoin per share for their shareholders.
• 39:26
  Real quick, I mean, I'm not as well versed in all this as Wyatt. I'm just curious on,
• 39:34
  I see on your all's website that you will have the proof of reserves. Maybe talk us through
• 39:38
  the decision to actually, I just pulled up the two mempool addresses that show that you all have
• 39:45
  proof. Hey, we've got this Bitcoin. Here it is in these two different tranches and
• 39:50
  in these wallets. And of course, I know there's been a lot of back and forth,
• 39:55
  specifically with Saylor on why don't you show us proof that you have these funds,
• 40:01
  even if it's held with Coinbase. And I've heard his answer, but I'm curious
• 40:06
  why you all went that route of saying,
• 40:09
  hey, we're going to maybe talk through your custody strategy
• 40:12
  if you can share anything about that,
• 40:15
  but why you made the decision specifically
• 40:16
  to show your proof of reserves as a treasury company?
• 40:21
  We just thought it was important
• 40:23
  because it's one of the things that makes Bitcoin unique as an asset
• 40:27
  that it does have this auditability
• 40:31
  and it's transparent
• 40:33
  And it's actually like a core value of the Bitcoin community, I would say, is don't trust, verify, be transparent.
• 40:41
  And if we can do it, so we did it.
• 40:45
  I think if it gives shareholders or potential investors more confidence to invest, then we were going to do it.
• 40:54
  It kind of fit with our values.
• 40:55
  And it's just important to us to adhere to the Bitcoin community's values that we believe in thoroughly.
• 41:06
  And so that was a lot of it.
• 41:09
  Now, I do understand the other side of the argument a little bit.
• 41:15
  Like specifically when I listened to Saylor, I didn't really think about how when he's that big and if he knew the address,
• 41:23
  Like anytime they did anything, they moved the coins.
• 41:28
  The market would basically see it as them getting hacked or like them selling the Bitcoin.
• 41:33
  Right. It would just cause like panic.
• 41:35
  And maybe they were just like updating their custody situation.
• 41:39
  Right. So, yeah, I kind of understood that because I was like, yeah, he's kind of right.
• 41:43
  Especially when he gets to that size. Right.
• 41:45
  It's like people would just assume the worst all the time.
• 41:49
  And there is moments at Orange where you are going to see the Bitcoin move as we're kind of moving it between custodians or we have 20% of our Bitcoin earmarked for yield generation strategies.
• 42:01
  We maintain the keys in all those strategies, but there's times where we just have to transfer it places and we have to communicate that to the market and communicate it to shareholders.
• 42:10
  So it's a little bit of a headache, right?
• 42:13
  But at the same time, we just thought it was really important to just have that transparency.
• 42:17
  So I guess that goes back to the differentiation and there's different management teams that are going to weigh those tradeoffs and make a decision based off that.
• 42:27
  But again, we just thought it was important and we wanted to be transparent about our holdings and just make investors feel comfortable knowing that they can check that if they ever want to.
• 42:39
  That's off to you guys. I appreciate that, honestly.
• 42:43
  I do too. I think that's awesome.
• 42:45
  And Sam, I'm just kind of curious, you know, what the conversations are like that you're having, you know, with obviously being a publicly traded company, working with large pools of capital, you know, you're kind of more traditional suit.
• 42:58
  Like, what are you frequently having to explain to them?
• 43:02
  Are there any metrics you focus on?
• 43:04
  Like you mentioned, Bitcoin per share.
• 43:05
  Is that kind of like the guiding light?
• 43:08
  And what are these conversations like?
• 43:10
  Well, they're different because in Brazil, they're a little bit, the institutional adoption is a little bit behind the US. And so it's a lot of what I was doing the last five years, which is just teaching them why Bitcoin is important from the start.
• 43:26
  from the start. And so there's a lot of Bitcoin education that goes into this, but it's been
• 43:31
  really exciting because I feel it feels the same where there's a lot of excitement and momentum.
• 43:38
  And they realize they look at the U.S. adoption that's happening at the institutional level. And
• 43:43
  they're like, OK, we got to this isn't going away. Like we have to do something. We got to learn
• 43:47
  about it to develop products. And so it's almost like I'm catching the second wave that I just
• 43:52
  experience in the US, but just in a new market. And so it's a lot of Bitcoin education, how it
• 43:59
  fits into portfolios, you know, why, why it's unique. Why, what drives it? How do you value it?
• 44:09
  There's a lot of those questions. And then from like a treasury standpoint, it's like, what's,
• 44:15
  what's, yeah, like KPIs, like BTC yield, Bitcoin per share,
• 44:21
  why they would potentially want like a Bitcoin equity exposure
• 44:27
  or like amplified Bitcoin exposure through an equity
• 44:30
  where we can have the ability to accumulate Bitcoin
• 44:34
  on an accretive basis for shareholders
• 44:38
  and how that could maybe outperform during a bull market.
• 44:42
  You know, that's an interesting outperform Bitcoin.
• 44:45
  potentially, you know, that's like an interesting conversation as well, because when you teach them
• 44:51
  and you show them about, you know, we'll look what, look at the success strategy is done and
• 44:55
  then teaching them about that business model, about why being a public company, a public operating
• 45:01
  company that has access with a large Bitcoin balance sheet that has access to cheap, you know,
• 45:09
  favorable capital access where you could raise capital or favorable terms,
• 45:16
  denominated in fiat currencies,
• 45:18
  and then turn around and use the proceeds to acquire more Bitcoin and why a
• 45:23
  public company is in a unique position to do that and has a ton of flexibility
• 45:28
  with how they manage their capital structure. You know,
• 45:31
  that's a really interesting conversation as well. So we're,
• 45:34
  we did the first institutional focused uh bitcoin event in brazil's history in october
• 45:43
  and it was awesome because we had sailor speak on the the big screen and we had representatives
• 45:50
  from every single major financial institution in brazil major family offices and you could just
• 45:57
  sense that they were like starting to it's starting to click and they're excited and and so
• 46:03
  We're going to carry that momentum because that's part of our thesis was that we think there's an opportunity here because Brazil's crypto adoption.
• 46:13
  I say crypto because this is based on Chainalysis annual crypto adoption index that they put out every year where they measure per jurisdiction the levels of crypto adoption.
• 46:27
  And they do different.
• 46:27
  They do DeFi, stable coins, Bitcoin, crypto.
• 46:31
  and Brazil was the only one,
• 46:34
  only country in the top five of every single category.
• 46:38
  So like the adoption rates are really high on the ground,
• 46:41
  but the market infrastructure
• 46:43
  and institutional adoption
• 46:44
  hasn't met that retail adoption.
• 46:47
  And that's why there's an opportunity
• 46:48
  to kind of build out and fill that void.
• 46:52
  And that's exactly what we're seeing.
• 46:53
  So that's kind of, those have been the conversations
• 46:56
  and it's fascinating to be honest with you,
• 46:58
  Because like I said, they need Bitcoin there.
• 47:02
  And it's just fun to think that you're potentially helping people protect their savings and protect themselves against the basement and capital controls and all that.
• 47:12
  Have you seen anything specifically with, you know, there's this whole like there's the BRICS nations versus kind of the West?
• 47:19
  Are you not to get like ultra political, but are you seeing anything there where folks in Brazil are trying to find ways to, you know, break out of this dollar dominated global economy and give themselves as their own country more sovereignty and seeing Bitcoin as a as a way to do that?
• 47:43
  Or is that conversation? Have you not seen many of those conversations?
• 47:46
  No, actually, I haven't really heard much about BRICS or anything in my conversations in Brazil yet.
• 47:54
  Okay.
• 47:55
  I think it's natural, given how weaponized the dollar and treasuries have become as a reserve asset.
• 48:07
  Really, since I read this book called Treasury Wars.
• 48:10
  This was way back.
• 48:12
  This was like probably 2012 or something, 2014.
• 48:16
  where they kind of foresaw this and it kind of played out exactly how this book, the author of the book suggested it would, which is just the weaponization of the dollar system.
• 48:26
  So you kind of see from like an incentive standpoint why some of these other countries like to take politics out of it, just are looking for alternatives.
• 48:34
  Because when the whole system, you can just get shut off at any time for political reasons.
• 48:39
  I mean, that's tough.
• 48:41
  but obviously I think Bitcoin is the long-term solution there is just a
• 48:46
  apolitical neutral monetary infrastructure that all the world can use
• 48:51
  but I haven't really heard much about the BRICS I do think Brazil is a really really
• 48:56
  interesting market right now because they have like the second largest rare earths reserves
• 49:04
  in the world behind China and it's really not like so the third place isn't even close
• 49:10
  So it's like China, Brazil, and then down here is the third.
• 49:16
  And so I think the trade relations, like I kind of post some things about this sometimes,
• 49:21
  but you're seeing like more deals between the U.S. and Brazil and with the policies,
• 49:29
  the administration's policy goals in terms of the Western hemisphere.
• 49:33
  And they want to, you know, reshore their industrial base as well as critical minerals
• 49:38
  and materials for things like healthcare.
• 49:42
  I think the pandemic really woke people up
• 49:44
  to dependence on China
• 49:46
  for some of these critical things.
• 49:49
  And when you have Brazil right in your backyard
• 49:51
  that has all those things,
• 49:54
  I think the trade relations between the US and Brazil
• 49:58
  are gonna improve over time.
• 50:00
  And I think you're already seeing that.
• 50:03
  There's been a few deals over the last year,
• 50:05
  I would say, between the U.S. and Brazil.
• 50:09
  And China is looking at Brazil, too.
• 50:11
  They've tried to build roadways in there, and they have relationships.
• 50:14
  You mentioned the BRICS.
• 50:16
  But Brazil is kind of right in between that because they both see Brazil
• 50:19
  and its natural resources as this honeypot, this really valuable trade partner.
• 50:25
  And I just think the U.S., given that they're in the Western Hemisphere,
• 50:28
  and I think that's going to improve over time, which is good.
• 50:32
  Which is good.
• 50:32
  I would prefer that.
• 50:35
  That does sound good. You mentioned, I like how you frame this offensive versus defensive,
• 50:42
  Bitcoin treasury company strategies. You guys have taken the offensive route. How have you
• 50:49
  gone about doing so? How do you communicate to the market and where are some of the future
• 50:55
  developments, new products, et cetera, that you see Bitcoin treasury companies developing?
• 51:00
  yeah so what we did um what we just did was kind of a first of its kind debt transaction
• 51:08
  in this market and it goes back to what i said before you have to understand that
• 51:12
  um the institutional adoption for bitcoin is not where it is in the united states it's like three
• 51:19
  or four years behind so we did the very first you know bitcoin backed loan at scale with the
• 51:27
  proceeds used to acquire more Bitcoin. That's never done before, especially with Itau, which is
• 51:35
  the largest bank in Latin America by assets. And so this is a huge player that we basically pulled
• 51:43
  into Bitcoin and we're building that relationship with them. And then we were able to get this
• 51:49
  a five-year loan backed by some of our Bitcoin holdings with zero cash burden.
• 51:57
  It's a bullet loan.
• 51:58
  So it's essentially structured in a way where it's almost, think of it like a five-year call
• 52:03
  option on Bitcoin.
• 52:05
  And so it comes with an FX hedge on top of it.
• 52:11
  The total cost is probably like 10%, which when you model it out, we would love that
• 52:19
  We love that position because we're basically short BRL, long Bitcoin for the next five years.
• 52:27
  And Bitcoin, basically Bitcoin just has to outperform our cost of financing, which is around 10 to 11 percent, for it to be accreted for our shareholders.
• 52:39
  And if you look at, you know, our expected assumed CAGR over the next five years is higher than that, just based on our models and our beliefs.
• 52:47
  But also, if you look at Bitcoin's historical performance of rolling five-year periods, if Bitcoin underperformed that, that would be one percentile of what it typically does over a rolling five-year period.
• 53:04
  You know, if it does above 10%, we're talking about like the fifth percentile, meaning that Bitcoin's outperformed that 95% of the time over only five year periods, especially coming out of a 50% drawdown off the all time high.
• 53:18
  It's even higher.
• 53:20
  And so we feel really comfortable with that.
• 53:22
  This is like the intelligent leverage that Michael Saylor talks about.
• 53:25
  Now, he's kind of moved from away from this into convertibles into preferreds.
• 53:31
  But that's not to say a five-year loan, which is with pretty good cost of financing with no cash burden whatsoever to acquire Bitcoin with a major bank in the region is an intelligent leverage.
• 53:46
  This is why a public company can get terms like this that an individual could not.
• 53:52
  And so this is the benefit of being a treasury company that you can get these favorable debt deals done.
• 53:58
  And we can acquire more Bitcoin at depressed prices in an accretive, non-dilutive way for our shareholders.
• 54:06
  And so our leverage ratio, and really what it's about is just being really good about risk management and sizing the debt deal in relation to your Bitcoin balance sheet.
• 54:16
  You know, our leverage ratio today is, depending on the Bitcoin price, like 13%.
• 54:20
  So really not that high at all.
• 54:22
  But it allows us to acquire Bitcoin in a non-dilutive way for our shareholders, increase Bitcoin per share, lower our cost basis. And so this is the exact kind of thing with like being offensive. We're raising capital denominated in fiat currencies that will continue to be devalued to acquire an asset that appreciates in value over time that we add Bitcoin holdings to our balance sheet.
• 54:52
  that gives us more optionality in the future.
• 54:54
  So that's what I mean by offensive, right?
• 54:59
  And so that's the,
• 55:00
  and it's just, it's the first of its kind deal.
• 55:03
  And so now building that relationship
• 55:05
  with a large financial institution,
• 55:07
  other financial institutions see it.
• 55:10
  Hopefully there'll be more deals like that in that market.
• 55:13
  And that's another way we're driving Bitcoin adoption.
• 55:17
  Okay, so I'm going to give you a chance
• 55:18
  to go back to that 22 article, right?
• 55:21
  We're in, some would say, a little bit of a bear market right now.
• 55:25
  I don't really know how to feel about that because we're still right at 80K.
• 55:28
  If you would have told me when I got into Bitcoin that 80K would be a bear market, that
• 55:32
  would surprise me.
• 55:34
  You joke about it.
• 55:35
  Yeah.
• 55:38
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• 56:06
  but like tell us why you're bullish in 2026 as you look out over the course maybe take that whole
• 56:16
  five year four to five year time horizon that you all have but some things that you're seeing in the
• 56:21
  market for the folks that are listening in our audience that maybe their clients are asking about
• 56:27
  bitcoin they haven't gone down the full rabbit hole but they're trying to understand with all
• 56:32
  the things happening in the world should they be bullish bearish over that time frame
• 56:36
  i usually when you really break down bitcoin it's it's kind of a function of supply and demand right
• 56:46
  because and then it's easy because let's just let's just take the supply side out of it because
• 56:53
  the supply side it's fixed at 21 million that's a function of bitcoin security and its decentralization
• 57:01
  As long as the 21 million remains credible, then we can kind of just forget about that, right?
• 57:07
  To be honest with you.
• 57:08
  Because I look at the decentralization and the security of Bitcoin, the hash rate, all these things.
• 57:15
  That's looking as healthy as ever, in my opinion.
• 57:19
  It's growing.
• 57:20
  It's good.
• 57:21
  Awesome.
• 57:22
  So, like, take the supply side out of it.
• 57:24
  Then we just focus on the demand, which really comes down to, like, adoption trends.
• 57:29
  It's two things.
• 57:30
  It's like adoption trends of Bitcoin itself. And then it's also the macro environment that it sits in because it's kind of a function of both that drives demand for Bitcoin.
• 57:38
  And so when I look out, the adoption trends for Bitcoin are incredible.
• 57:45
  I mean, we've made incredible progress over the last couple of years in terms of removing regulatory barriers to allow institutions to finally build products around Bitcoin, improve investor access with the launch of the ETFs and all these things.
• 58:03
  And that is all just leading to it unlocks large pools of capital.
• 58:08
  And this is why people need to understand about the traditional financial system. It's that pools of capital are like siloed and they're controlled by money managers, financial advisors, investment committees.
• 58:21
  They have investment mandates. They have these like allocation buckets. And Bitcoin needs to like fit into that. And that's due to like regulatory advancements.
• 58:31
  advancements, but it's also just increased market awareness. And just as Bitcoin matures,
• 58:38
  they feel more comfortable finally fitting it into those allocation buckets. And we're in the very,
• 58:43
  very, very early stages of that. We get really excited and I understand why, but the ETFs,
• 58:50
  BlackRock's ETF breaks the all-time record in terms of AUM. I think it got to $80 billion in
• 58:58
  like 375 days and the next highest was like it took them like 1500 days to do it so incredible
• 59:04
  demand there and i understand that but the institutional adoption is it's like we've we're
• 59:10
  at the tip of the iceberg and that's where all the capital is trillions and trillions and trillions
• 59:14
  of dollars are going to get unlocked as bitcoin continues to as they they feel more confident
• 59:21
  investing in it because it has more of a track record as it has more regulatory clarity and they
• 59:27
  feel more comfortable, as they have better products, as Bitcoin gets integrated into their
• 59:31
  trading systems and platforms, and it just makes it all easier. We're in the super early stages of
• 59:37
  that in terms of pension funds, in terms of sovereign wealth funds, sovereigns themselves.
• 59:43
  It has to be stressed so much that the opportunity ahead of us is to bring in all of those
• 59:51
  investors, all those institutional investors. And that's why the adoption trends are so
• 59:57
  favorable right now because Bitcoin's only like a $1.6 trillion asset. You look at gold trading
• 1:00:03
  around almost $30 trillion and you compare gold and Bitcoin, the total addressable market for
• 1:00:08
  Bitcoin is much, much higher than it is today. And if you believe in Bitcoin's monetary
• 1:00:14
  characteristics, you think that it should eat some of that as a long-term store of value.
• 1:00:20
  And we're just in very early stages of that whole trend. And so I'm really bullish about that. I
• 1:00:26
  I think the institutional trend is probably the next step forward because it's going to open the door for everyone and bring in a lot of capital.
• 1:00:38
  Yeah, I think I'll stop there.
• 1:00:40
  But what else has you guys bullish?
• 1:00:43
  I'm curious.
• 1:00:45
  I mean, I would just say on our end, it's just seeing more and more clients spin up companies or get into Bitcoin.
• 1:00:53
  whatever they were doing prior to hearing about Bitcoin,
• 1:00:58
  integrating it into their work life or going out and raising capital.
• 1:01:02
  Like I was just on a call yesterday with a startup out of Singapore
• 1:01:07
  that they're doing a prediction market on Bitcoin that you pay in Bitcoin,
• 1:01:13
  you get paid out in Bitcoin.
• 1:01:15
  And there's just so many opportunities there,
• 1:01:18
  either whether it's that or you just go and you can spend your Bitcoin
• 1:01:22
  at a Square Merchant that just has it, you know, accepts it there.
• 1:01:26
  I think that there's just, there's so much adoption and I see less of the institutional
• 1:01:31
  side of, but of course that's where the big money's at.
• 1:01:34
  But, but just seeing it just, it fits into whatever the game that you're already playing,
• 1:01:41
  whether that's you're an institutional investor or you're just running a small business, Bitcoin
• 1:01:45
  can be a really powerful solution for, for your long-term wealth preservation.
• 1:01:50
  So, yeah, I have to I do want to say, like, I see Bitcoin, too.
• 1:01:59
  There's all these factions in Bitcoin that are working together to drive Bitcoin adoption.
• 1:02:04
  And Bitcoin is a technology that has many different use cases.
• 1:02:07
  People come to Bitcoin for different reasons.
• 1:02:10
  You know, a financial advisor might look at their Sharpe ratio and be like, oh, my gosh, I want to diversify a portfolio.
• 1:02:15
  where somebody, there could be a protester across the world
• 1:02:20
  that's using it for its censorship resistance, right?
• 1:02:22
  Or somebody in Latin America that sends remittances uses lightning
• 1:02:26
  because it has cheaper options.
• 1:02:28
  So it's happening all at the same time, Bitcoin adoption.
• 1:02:33
  You brought up Jack Dorsey.
• 1:02:36
  I'm bullish on the progress in the payments side of Bitcoin,
• 1:02:40
  like with the Square developments, and there's so much other things.
• 1:02:44
  I'm bullish on Bitcoin, how easy it is to self-custody.
• 1:02:48
  I'm bullish that the Clarity Act has at least some language that has some protections for self-custody.
• 1:02:54
  I'm bullish about what Michael Saylor is doing in terms of creating digital credit products that unlocks the fixed income market and provides Bitcoin exposure into that $300 trillion market.
• 1:03:06
  All of these things are happening simultaneously, and they're all good for Bitcoin.
• 1:03:11
  They're all good for Bitcoin adoption, demand, and they're happening together.
• 1:03:16
  And so a lot of times they fight like, oh, I'm a medium exchange maxi, right?
• 1:03:21
  Or value maxi, whatever, institutional, whatever.
• 1:03:25
  To me, I love it all.
• 1:03:27
  And I think it's all good for Bitcoin.
• 1:03:29
  And so that's one of the things.
• 1:03:30
  And then I mentioned the macro environment because it's really important.
• 1:03:33
  It's that investors are starting to re-rate Bitcoin's risk because everything else is getting riskier.
• 1:03:42
  Every other traditional asset, you look at the environment of rising inflationary pressures, geopolitical fragmentation, hot war, large fiscal deficits, highly indebted governments, which increases the risks of currency debasement, financial repression.
• 1:03:58
  There's more capital controls.
• 1:04:00
  In this environment, Bitcoin shines. Bitcoin's value proposition becomes more and more clear in investors' minds. And they look at their portfolios and they're like, I actually don't have as much diversification as I thought because I'm not actually protected against these other risks that Bitcoin can protect me against.
• 1:04:21
  So I think the macro environment deteriorating and people becoming more concerned about the long term sustainability of the fiscal outlook and all these really big problems is also going to drive demand for alternatives like Bitcoin.
• 1:04:37
  And really, when it comes down to it, there's gold and there's Bitcoin.
• 1:04:40
  Like there's really not many monetary alternatives.
• 1:04:44
  And then it comes down to, well, why is why would I choose Bitcoin over gold?
• 1:04:48
  And we could talk about that if we want.
• 1:04:50
  But that's the other side of the equation of why I think I'm so bullish on Bitcoin, on the demand side of Bitcoin, which if the supply is fixed, obviously there's only one thing that can happen, which is the price goes up.
• 1:05:03
  So it's an important point.
• 1:05:07
  I think understanding the macro problems is really a first step for people to understand why Bitcoin is a potential solution.
• 1:05:18
  Without a doubt.
• 1:05:20
  Yeah, I'd retweet bullish institutional adoption.
• 1:05:23
  I'm also super bullish.
• 1:05:25
  The companies and products that are being developed that individuals can take advantage of.
• 1:05:31
  I have a ton of people asking me, I've stacked stats, like now what?
• 1:05:35
  And we're utilizing things like, meanwhile, Bitcoin denominated whole life insurance.
• 1:05:40
  And Savannah, Horizon, unlocking maybe idle equity in their home to purchase Bitcoin or Bitcoin collateralized loans.
• 1:05:45
  So there's just so much more that we have available to us to use our Bitcoin, which is really exciting.
• 1:05:52
  And yeah, we're about at time here, Sam, but I would be kicking myself if we didn't get your thoughts on the Jeff Walton, the CoffeeZilla debate and what you thought of that.
• 1:06:07
  I thought Jeff did great.
• 1:06:08
  I think one of the things about like, whenever you're talking about strategy or stretch or SEDA, these digital credit products that people are like, well, how are they going to service the dividend?
• 1:06:24
  You know, like, you know, they have these large dividend obligations and, you know, they don't generate enough cash with their operating business.
• 1:06:34
  Like it's not sustainable.
• 1:06:36
  It's a Ponzi.
• 1:06:36
  They always say these things.
• 1:06:37
  Right.
• 1:06:38
  But really, if you boil down to the core of that disagreement, it's always the same. It's that they don't think Bitcoin is going to go up forever. They're bearish on Bitcoin. That's why they think this doesn't work.
• 1:06:51
  But really what Jeff and Saylor and myself is saying is that, no, I think Bitcoin is not only going to go up forever because they're going to debase the currencies forever.
• 1:07:02
  So it's flipping it on its head. It's going to continue to appreciate forever denominated in fiat.
• 1:07:09
  Not only that, it's going to outperform the rate that they're paying in dividend.
• 1:07:14
  So over the next 10 years, I personally believe that Bitcoin will outperform stretches dividend of 11.5%. And that's based off the adoption trends that I see. That's based off Bitcoin's historical CAGR.
• 1:07:29
  I mean, when you break down and say 20, if I think it's going to go up 25% over the next 10 years, that means that by 2031, Bitcoin is going to be around $240,000.
• 1:07:41
  Then by 2036, it's going to be, I think, $750,000.
• 1:07:48
  And I'm like, yes, I think that Bitcoin can do that.
• 1:07:52
  Like, I think it could very easily do that.
• 1:07:54
  And if that works, if it goes up 20, 25, it just outperforms the rate of the yield, then the business model is fine.
• 1:08:07
  It doesn't matter.
• 1:08:08
  So even when the Financial Times writes a critical thing, there's a moment in the Coffeezilla, Jeff Walton debate where he says they come down to that point.
• 1:08:17
  And he says, well, Jeff says, well, Bitcoin goes up 25, 30 percent over the next decade.
• 1:08:22
  And then CoffeeSail goes, well, that's not going to happen.
• 1:08:24
  I don't believe that's going to happen.
• 1:08:26
  And then Jeff goes, well, that's, you know, then we're not going to agree on this because that's the core of the debate.
• 1:08:35
  And so that's my biggest takeaway from it, honestly.
• 1:08:37
  I thought he did a good job.
• 1:08:38
  I think people who look at the balance sheet, they just don't believe in Bitcoin.
• 1:08:45
  So they don't understand it.
• 1:08:46
  And they don't understand, too, that I've always said that Saylor should sell Bitcoin.
• 1:08:52
  I like what he just did because he's showing that it is a large liquid at any time.
• 1:09:01
  He can monetize the Bitcoin on the balance sheet for any reason.
• 1:09:05
  That's why an operating company is such a good vehicle here.
• 1:09:08
  Like BlackRock with their ETF, that's a passive fund.
• 1:09:11
  They can't do any.
• 1:09:12
  But like Saylor has and the strategy team can do anything with that Bitcoin that they see fit if they think it increases value for their shareholders.
• 1:09:20
  And if I'm issuing a preferred and I'm raising a billion dollars to buy Bitcoin today at 80,000 and I have to pay out an 11.5% dividend a year, and I think it's going to go up 30% a year over the next 10 years or so, and I have to sell a sliver of that Bitcoin over time to pay off some of the dividend, I'm still walking away with net thousands of Bitcoin from my shareholders.
• 1:09:50
  So it's like, you know, it only doesn't work if Bitcoin doesn't go up, Bitcoin falls, and then stays down there for years. Like if Bitcoin drops 80%, you can model this all out. If Bitcoin drops 80% and then stays down there for like five to 10 years, which I, you know, is always a tower as possible. Do I think it's probable? No, I really, really don't.
• 1:10:17
  And so that's why it's just about structuring the balance sheet to manage the Bitcoin short-term volatility.
• 1:10:25
  And they actually, by Saylor issuing over $10 billion of stretch, the amount of conviction that he is showing in Bitcoin's long-term price appreciation is incredible.
• 1:10:38
  Because he's basically saying, we'll take the long-term risk of Bitcoin.
• 1:10:43
  We believe that it's going to go up, not just positively over the next 10 years, but really
• 1:10:49
  positively.
• 1:10:49
  We think it's going to go up 25, 30, which gives us the confidence to issue this product
• 1:10:53
  that pays out 11.5%.
• 1:10:55
  People want to buy Stretch because they're like, well, I'm scared of Bitcoin's volatility.
• 1:11:00
  I just want steady income, 11.5%.
• 1:11:03
  And maybe Bitcoin goes up over the long term, but I'm really just interested in 11.5% monthly
• 1:11:08
  income.
• 1:11:09
  You can take all the residual, all the return beyond 11.5% over the next 10 years.
• 1:11:15
  Strategy can keep it for themselves because they earn that because they're taking the risk of holding the long-term volatility.
• 1:11:21
  And that's why that residual return after the 11.5% goes down to the MSCR shareholders.
• 1:11:28
  So I think people just don't understand that it really just comes down to conviction and Bitcoin's appreciation.
• 1:11:35
  And that's the entire business model kind of wrapped around.
• 1:11:39
  And that was the core disagreement that really exists between many, many debates between people who doubt the business model and then people who are proponents.
• 1:11:50
  It's really just about what they believe Bitcoin is going to do over the next 10, 20 years.
• 1:11:57
  Yeah, that's well said.
• 1:11:59
  Well, it's been fun.
• 1:12:00
  Sam, thanks so much for coming on.
• 1:12:02
  Let our audience know where people can find you on the Internet, find your writings and how they can learn more about Orange.
• 1:12:09
  yeah um they can find my writings at orangebtc.com that's like spelled with a j
• 1:12:15
  and trendy yeah they uh i there's a blog post we have educations on there so you i'm going to be
• 1:12:26
  posting a a piece on bitcoin's equity correlation probably next week and they can read about the
• 1:12:33
  quantum piece I wrote and some of those other things. I'm on X at Sam Calla, S-A-M-C-A-L-L-A-H.
• 1:12:39
  I post analysis, post charts there all the time. And then we also have a company X account. It's
• 1:12:45
  just at Orange BTC, same spelling. So thanks for having me on guys though. I really appreciate it.
• 1:12:52
  Dude, our pleasure. That was a ton of fun. Thank you for coming.
• 1:12:55
  Of course. Of course. You guys have a good day. Have a good Memorial Day weekend.
• 1:12:59
  All right. Thanks, Sam. See y'all. Bye.
• 1:13:03
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• 1:13:09
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• 1:14:00
  Thank you.