On The Brink with Castle Island - Weekly Roundup 05/08/26 (Consensus Miami, AI layoffs strike Coinbase, Clarity compromise, AI energy and water use) (EP.719)

Episode Date: May 8, 2026

Matt and Nic are back for another week of news and deals. In this episode:  Will Hantavirus become another global pandemic? Kraken buys Reap for $600m Bullish buys Equiniti for $4.2b Reflections on 10 years of attending Consensus Is it acceptable to wear a backpack with a suit a16z crypto announces a $2.2b fundraise Coinbase is laying off 14% of the firm Will AI lead to massive job losses? Is VC immune from AI job displacement I bipartisan compromise is finally reached on Clarity How the AI water use debate is just like Bitcoin The AI lobby is learning from Fairshake The SEC delays prediction market ETFs

Matt Walsh and Nick Carter are partners at Castle Island Ventures. All of these expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures. Guests and host may maintain positions in the assets discussed in this podcast. You should not treat any opinion expressed by anyone on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of their personal opinion. This podcast is for informational purposes only. Brought down by bad mortgage investments, Lehman, which has 25,000 employees will be liquidated.

The federal government loans American International Group, AI, IG $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing. And print a couple trillion dollars, and all of a sudden, people start to worry.

So out of this worry, we have something called a Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. Are you following this Hanta virus? Yeah, how can you not? At this point, you can't afford to write off any new virus

just from a financial markets perspective, let alone dying. What's your model for this? Is it like if Ballagy starts tweeting about it, we start to get really worried? Yeah, and well, really excited also because, you know, we know how to trade these things now. Yeah, you just go along, everything, right?

Yeah, I mean, at the right time. So, you know, on the one hand, you might die from fatal disease. But on the other hand, you might get another generational buying opportunity. Yeah. Be careful down at consensus. I mean, you're, you're kind of in a prime zone to pick up some sort of an illness. Yeah, I was thinking about that, actually. I've shaken too many hands this week. It's kind of hard to tell if someone is coming from Argentina just by looking at them. It could be anyone. Yeah. There probably are Argentine attendees, that consensus. this very moment.

Someone told me this morning that Gene Hackman died of antivirus. I guess it's a common thing. Really? Yeah. So the deal is, you get this from somehow

coming into contact with rat droppings. Yeah, aerosoled of rat droppings or something. Yeah, I mean, I don't even know how they could become aerosolized, but so these guys that got it were on a bird watching trip in our team. On a landfill.

Yeah. On a landfill. Great birdwatching to be had. And then they get on a boat and then they take what looks to me like the world's most hellish cruise ever. It doesn't look fun at all, even without dying of the disease. Right. They stop at Tristan Takuna, St. Tlina, Ascension, which are a lovely places, by the way. And then they just start dying.

It's not great. That's like the boat trip from hell. Yeah. I mean, it's choppy water. down there. And then the problem is the incubation period's long, right? It's a matter of weeks. And the mortality rate of this thing is like 40%. It's crazy. So this is a very combustible combination, potentially. Yeah. I just hope that it's not as easily transmissible as COVID. No. And I guess the surprising thing is that hantavirus, because apparently hand to

is normally animal to human. And so it's rare to see human to human transmission, but that's clearly happening, right? Right. Where do we stand on the lab leak versus zoonotic hypothesis here? Is there a lab in Argentina called the Buenos Aires Institute of Hanta virus? Oh, man. I hope not.

I can't deal with another scandal. And then people are just going to get kicked off of social media platforms for saying it was a lab leak. we're going to do this all over again. Yeah, I mean, I feel like this is, we buried this in history, but this is a real thing that happened. The lab leak hypothesis, now fact, was a conspiracy theory. And you would get banned from Twitter for saying it was a lab league.

What a time warp. Remember when that started? And we're like, all right, you know, we'll be back in like two weeks in person. Yeah, I do remember. And we were running around the Bitcoin Expo. at MIT in March, 2020. Yeah, that was the last thing I went to in person. I sat in the very far back,

and there were not a lot of people there. No, it wasn't well attended. And then as it turns out, Boston was like one of the epicenters. Yeah, by a gen conference. Yeah. So we'll keep our fingers crossed on that. We had a busy deal week, a couple of really big ones. First one up is Reap.

This is a stable coin infrastructure company. They're required by cracking for 600. million dollars. Cracken is just going on an acquisition spree right now. Yeah, monster deal here. One of the biggest stable coin acquisitions ever. Really interesting deal. Reap. They did all kinds of things. They're like corporate treasury management, B2B payments, payroll, all kinds of stuff based on stable coins, mostly focusing on the APAC market. It's a really interesting acquisition from crackin. Next up we have fun. That's a crypto payments company. There is 72 million for multi-coin signal fire and others. Fun. Fun. That's a good name. Then we have Deflow, which is a

Salana trading platform. They're acquired for $100 million by Moonpay, which is another company that's going on just a tremendous acquisition spree. So seeing these later stage private companies really just bolt on companies bolt on revenue here. I think it's going to make the public story for both of those company is quite compelling. We did say recently that it was going to be the golden age of crypto and especially stablecoin M&A. Yeah, I think we're seeing it. Seems to be happening. Yeah. Yeah. Next up we have open trade. That is a defy yield platform. There is 17 million from Mercury Fund, Notion Capital and A16 Z crypto. Then it's Henri, which is an on-chain reinsurance platform. They raised $5 million from Rockaway X and Forward Industries, which is the Salamad debt.

Then we have a monster deal. This is Bullish, the crypto exchange that owns CoinDust, so they're the ones throwing consensus right now. They agreed to acquire equinity. That's a transfer agent for $4.2 billion, which is, we're interesting, given that Bullish's market cap is not much more than that. Yeah, I mean, this is a huge deal.

So bullish has a market cap of about $6 billion in the public markets. They're buying, how do you say this, equinti? a huge push into tokenized securities. So this is one of the biggest transfer agents in the world. It looks like they're private equity backed by Cirrus capital. So it's an all-stock deal. Bullish is going to assume $1.8 billion in debt from equinity. It seems like the transaction is proposed to close in January of 2027 pending regulatory approvals.

You know, I think we talked about this actually last week, I think, but transfer agents are a necessary component of all of these on-chain RWAs. And this will put bullish kind of squarely in the lead here from a market share perspective. We also saw last week computer share partnering with securitize, which is also emerging as a big player here. Yeah, it's been an open question for some time now, what bullish would do with their balance sheet and how they would realize their ambitions. and as far as I understand, the exchange itself didn't necessarily take.

Yeah, I mean, the exchange actually does have significant volumes, but it must be a lot of volumes outside the United States because it's definitely not one of the bigger venues in the U.S. Unless it's one of these like LMAX situations where it's like a wholesale market, I guess that's possible, right? Yeah, I will say, even though Coin desk is probably a smaller portion of their business, I was very surprised by the attendance of consensus this year and also the speaker quality. It was very good on both counts.

Yeah. I mean, that used to be. Remember how big that conference was when it was in New York? That was just the marquee event of the year. I remember waiting in line for hours and what was it like the Midtown Hyatt or something in 2018. Oh, yeah. Yeah. Do you remember that one?

I remember that one. That was a tough one to get into. That was the Lambo year. Lambertians out front. So this was a little more restrained, but it was very, very busy. So different kind of attendee base. And, you know, people say like the mood is really dower in crypto or defy's dead or whatever. I mean, it is still nevertheless very, very busy here in Miami.

I have a lot of memories from consensus conference. There's a couple really good ones. One was the year that our former boss, Abby Johnson, gave a speech, which was a really good speech. But like five minutes before she went on, R3 announced their fundraise and was talking about how the future was these private blockchains and just like open chains are not a thing. Followed immediately by a speech from Abby being like, I love Bitcoin basically. And the other memory I've talked about on this podcast was when Gavin and Driesen came out and said, I know who Satoshi is and it's Craig Wright. I was in like the fourth row. Oh, no.

What year was that? I forget what year that was. I might have been 2017 or something like that. 2017 probably, maybe 2016. And I was sitting right behind Roger Vair. And he was like, wow. Like, I think everyone kind of believed it for a little while. Goodness.

So this is practically your 10th consensus. I don't know if you went to all of them, but. No, I haven't been to all of them. Some years you just got to take it off. It's a grim milestone. You let the Delight will send 50 people. You kind of know what stage you are in the market based on how many people from Delight go to it.

So here's my problem with these conferences. And actually you're guilty of this too. Sometimes, dare I say. People wearing suits, like that part's good. But then wearing a backpack with the suit. It doesn't work. Can't do it. I don't like that.

No, and then I see these people like going to the nice dinner or going to the club and they have their branded backpack with their laptop and it's like, what are you doing? It doesn't look good. Yeah, I struggle with that because I just think the backpack is an easier way to handle your stuff, you know? I'm not class. Yeah, but for aesthetics, you know, you have to do the briefcase. The briefcase is not convenient. For sure, it's not good. So he occupies one hand. but it just the aesthetics are important yeah the aesthetics are important but you need to have a place for your

stuff like your podcast equipment where you're going to put all your your notebooks I know it just to me it conveys the like summer intern working in their first their bulge bracket job

it's wearing the suit with the backpack and as a grown man you know you just can't I'm guilty of that. I'm guilty of that because and sometimes I'll be like wearing the sneakers too. Yeah, that's that's no good. All right. Last deal of the week, a big fund deal here. Andresen Crypto announced a $2.2 billion raise. It's their fifth crypto fund. So congrats to the team over at Indruson.

Yeah, tons of CryptoVC raises announced recently, including a couple 10 figure raises. So there is dry powder. I guess the question is a lot of people think maybe that this marks a bottom for some of the liquid valuations. The question is, how would it be deployed? Is it going to the venture side or the liquid side? I guess we don't know yet. Yeah, we don't know. I mean, historically, some of these very large West Coast funds have deployed into the liquid market.

So you never know. Yeah. You want to talk about Coinbase first here? Yeah. So a tough announcement from Brian Armstrong this week. he wrote a letter to his employees and tweeted that he has fired 14% of their employees blaming the market cycle and also AI. And a lot of people were saying, well, maybe he overhired or maybe he's right-sizing the

company because crypto volumes aren't what they thought they would be. but I actually completely buy that this could be a solely AI determined decision and I think it would be warranted frankly yeah I mean this makes a little bit more sense

for it to be AI just based on the timeline when it was announced when Square did their big riff and they said it was because of AI I just didn't think the models were good enough then and so I thought that maybe they were hiding behind it but 14% of a workforce

these days, I mean, it's crazy to say, but that doesn't catch me off guard when you talk about AI productivity improvements. I guess it's especially difficult at Coinbase because their business model is just so levered to retail trading. And when that declines, you do just have this crazy market downturn effect here where you're going to look like you're overhiring, then you're going to cut. You've seen this several times at Coinbase. Yeah, that is, they have this kind of cyclical issue and they're like you're a little bit laggy in terms of you're hiring and you're firing so you're always trying to stay in line with what the market warrants but yeah I mean we're definitely seeing this playing out and I this is maybe the biggest debate in markets right

now is are we headed for this kind of you know white collar labor apocalypse are we going to find new post AI jobs or will there just be a ton of of people in the kind of like human services sector like are there's going to be so many more therapists and you know i don't know dog walkers etc like i am unsure and i've asked this same question to chat jpd deep research like 10 times are we headed for a jobs apocalypse and it doesn't really tick aside on it now but it's it certainly doesn't align with the view of view that we've always bounced back from technological changes in the past, so we're mechanically and definitely going to do it again. Yeah, I guess you just have to hope that there are discoveries

that occur as a result of this technology, right? I mean, I would imagine if you could use AI to, you know, have a better understanding of physics, and all of a sudden we open up new modes of transportation, we open up, you know, space travel. I guess you have to bank on GDP growth on the back of this. Yeah, and I think the way in which it's not like previous technological revolutions, like, I don't know, you know, nuclear energy and the steam engine and the combustion engine and mechanical loom and the printing press is this is the most general technological revolution that we've ever lived through. It affects all cognitive output. So, you know, previously if you're a displaced textile worker, you could, you know, go work in the widget factory or something, right?

Now if you're a displaced lawyer, it's not like you can go be an accountant. Right. So that's the difference. I think it's much more generalized. And it might even apply to physical labor, too. I mean, humanoid robots, that's definitely going to be a thing. So I still, I still, continue to think like this fear of white collar job displacement I still think it's real but it's not a good thing what happens yeah I agree I mean the humanoid robots will be more of a blue collar displacement don't you think that that's where you start to think about landscapers and you know people that work on highways and things like that I mean it's pretty indiscriminate like I've been thinking really hard what jobs are immune even

VC is not even our very own jobs complete not complete not completely You just put a business plan through an AI. Is that kind of how that would work? Well, I mean, part of what we do is taste in theory and diligence. And you could imagine LPs feeling empowered to do deals directly because they now feel like they have the technological edge and the expertise and the subject matter knowledge and the ability to if they are just using good AI tools.

Yeah, I guess you could see that. I mean, you could also see just a, this would be more of a regulatory and actually blockchain use case, which is just crowdfunding and things like that. That's kind of where I think there would be a bigger impact. Yeah, I mean, if you think hard about it, there's not that many sectors that are totally immune to AI, especially anything to do with knowledge work. So I continue to think that there is significant displacement coming ahead. and I don't know, it's actually quite scary. Working for the government's probably pretty safe, don't you think? Yeah, any sector that's highly regulated, highly cartilized, like, well, frankly, the legal

profession will find a way, certainly the medical sector, anything bureaucratic. Yeah, and I think that's why, you know, government's going to keep growing as a share of GDP. Maybe it'll be 50% of GDP soon. All right, let's move on to the Clarity Act. So what's happening now is Senators Tillis and also Brooks, Republican and Democrat, they have released their language for a bipartisan compromise to address the bank lobby's concerns around stablecoin yield. It's being called a compromise, but it looks like, to me, it looks like a win for the bank

lobby in that there can be no payments of stablecoin rewards based on AUM. It has to be tied to it looks like some manner of transactions. So almost like credit card points type of an idea. And so you'd look at this and you'd say, oh, that's not really a compromise. Crypto industry, crypto lobby lost on that one. But it's the bankers that are not happy, which leads me to the obvious conclusion that this was not really what the fight was about for the bank lobby. They just don't want the Clarity Act to happen. Because if the Clarity Act happens, all of a sudden you have a lot more comprehensive.

for banks by financial services oriented blockchain companies. Case in point, everything we just talked about on the fundraising with tokenized securities and things like that. So I think it's pretty clear the banks just don't want this bill to happen. But it's also very clear that now there is a compromise. It is bipartisan. This is going to go to a committee vote, I think, next week. And I'd imagine it'll get out of committee.

And then you just need to hope that it can pass. Yeah, I think that's an astute analysis. I mean, the Tillis is normally working hand in glove with the banks. And now the banks are not backing Senator Tillis' own compromise, as Alex Thorne pointed out. So it's kind of suggests there was just bad faith from the beginning on the side of the banks. They got everything they could have wanted in this comment. It's not a compromise in any meaningful sense. It's just any interest provision of stable coins is effectively banned.

And maybe you can get some meager rewards through some other unrelated mechanism. But not a compromise as far as I can tell. It looks like the banks, yeah, we're negotiating a bad faith. And regardless, this seems like progress. Hopefully it does pass, even if it's not the best bill we could have hoped for. So I think the thing to watch for now is, okay, it'll go to committee. There'll be a lot of loud talking. Elizabeth Warren will say that crypto is for.

terrorists and things like that. But it should have the votes to get out of Senate banking. Then it'll go to a floor vote in the Senate. And I think what will probably end up happening there if I had to just guess is that there's going to be proposals to put language in the bill around ethics. And they're trying to put in language that says Trump's family cannot be involved in the industry. And that that'll be a battleground. And so you just have to, you have to bank on that issue going away. And so in order to get to 60 votes, yeah, I think you're going to need like 10 or 11 Democrats to be on board with this. And that's where the politics and the money here becomes a factor when you think about the vulnerable Senate seats and whether or not you want to be on record

going against this bill heading into an election. Oh, yeah, very much so. And it's not like the crypto super PACs or anything. anyway diminished from the last election cycle. I think they probably have more money actually now than they did in the last cycle. Fairshake kind of wrote the book on supporting an incipient industry because now you hear the AI people saying we want to do fair shake. Yeah, right. So talk about a successful electoral strategy.

Now the other guys are saying, yeah, this is the standard. Well, I think you're going to see a lot. It kind of rhymes, right? So you have all of these anti-data center people that are saying it's melting down the environment and they're worried about water usage. It kind of reminds me of Bitcoin mining. Yeah, no, it's effectively identical. I mean, I looked into it for AI queries. What do you think query, quote, unquote, uses?

I mean, it's not really using. The water doesn't pop out of existence. But if you had to guess, what do you think the water use of a given query? he is. Half a cup. Oh, way, it's like on the order of single digit milliliters.

Oh, okay. All right. But it's sort of a funny way to think about it because at a data center, it's not like you have just a faucet running into it.

It's just recirculated water. Right. And the water doesn't pop out of existence. I mean, so you have the primary usage and then the bigger part is the secondary uses, as in like,

there might be a river that is some of the water is redirected into a power plant and it cools the power plant and then the water is sent right back into that same river. You just fill it up once though, right? It's like filling up a tub at a data center, right? Like you don't need to have constant 24-7 flow of net new water coming into a data center, which is why this always puzzled me. Well, I mean, it really depends, frankly, on the model. I mean, many data centers don't really use water directly at all. They might be air cooled.

Yeah. You know, so then the associated water use is you trace those electrons back to the power plant and then you look at the power plant is using. But either way, however you compute it as narrowly or broadly, it's just not, like look at how much water almonds consume or golf courses. You know, and then if you want to say, well, maybe this is a debate about resources, like resource allocation. Okay, data centers, believe it or not,

don't statistically increase electricity prices. So states with lots of data centers, on average, you're not seeing higher consumer electricity prices. Believe it or not. And in fact, having all these huge hyperscalers and big tech companies effectively supporting the build out of the grid, arguably is a good thing.

thing. And in some sense, it subsidized is the ongoing electrification of the grid that was necessary for the green energy revolution, right? Electric cars, heat pumps, or whatever is that thing that during the house is. Like, if the climate folks get what they want, there will be a massive increased burden on the grid just through more residential electrical usage. So it's actually quite convenient that now the big tech companies are directly paying for improvements of the grid. Yeah. Yeah. If you are climate conscious, it's actually very hard to be against data centers. And the other thing is, you see people protesting these data centers, right? They don't want them in their neighborhood or whatever. Those people, it's another way of begging to pay higher property

taxes protesting against a data center. Because if a data starter comes in, they will pay billions in local taxes and fund all of your social services, your schools, police, everything. So they're directly acting against their own economic interests. So I actually, I'm always shocked when I see this because it's like your property tax bill will go down if this data center is built. Wouldn't you want that? Yeah. And it's puzzling because it's not like they're that loud.

So the noise pollution thing doesn't really ring true, I guess, unless you live right. right next to it. And it's not like these data centers are populated with thousands of employees. You know, it's not a huge drain on like the roads and, you know, local restaurants and things like that. Yeah. And we haven't even said anything of the benefits, which is everyone uses AI. It's enormously useful to everyone, a student, professional, anyone.

And even the critics use AI. The critics who write emails their local council. trying to knock at the data center built are using Claude to write that email. Right. So you always have to consider the virtues and this is to say nothing about improvements to biotechnology,

medicine, material science. So it's very similar to the Bitcoin debate except the advantages and the positives of AI are so much more obvious because they're just apparent if you're a user of the technology. I guess the way we got on this was just the clarity act. And maybe the last thing I'll say about this is if this thing

passes, I think people are underestimating how big of an impact this is going to have on the M&A market. I think you're going to have banks, broker dealers and asset management firms dust off their business plans and go into these build versus buy considerations really quickly in the same way that the Genius Act prompted some pretty quick M&A. So this will have a material impact on the startup ecosystem. And I also think you're just going to see a lot of hiring at these banks. You already see it actually. The job listings at the big banks for digital assets, it's gone up materially over the past eight weeks. I think there's some underwriting that there's going to be regulatory clarity either via this act or via the rulemaking. But you're starting to see this big, big ramp up in

managing director in charge of blockchain assets, those type of roles. That's right. And we have a bunch of other news items along those same lines. So Morgan Stanley, they've been very active with their newfound crypto ambitions. They launched their crypto trading offering via e-trade this week to a subset of customers undercutting Coinbase, Robin Hood, and Schwab on transaction fees with a 50 basis points take rate. Someone was asking me about this last night, whether or not I thought this would turn into a price war. I don't think so. Do you? I mean, If I was Schwab or if I was Robin Hood, I don't think I would change my pricing strategy based on Morgan Stanley coming out.

I don't know if 50 bibs versus 100 bibs is enough reason to switch brokerage platforms just for cryptocurrency. And we're not talking about every cryptocurrency. And we're also not talking about the ability to pull the cryptocurrency off the platform and put it into a hardware wallet. We're not talking about the ability to stake it. We're not talking about the ability to put it into a morpho vault. So I don't know that this is actually going to result in a price war.

The product set is different. Yeah, I agree. Those are not, those brokerages are not necessarily fungible with each other. And there's obviously costs as opposed to switching. I think we see the price war on the ETF front. Yes. Because it's much easier to, you know, choose between ETFs. Yeah, there is a price war on the ETFs.

That's true. I just think spot crypto. that's not going to be the, that's a good feature of a brokerage and it's a necessary one. It's surprising that not everyone has done it. But I don't think you lose customers. It's not like equities, right? When we went through this huge equity price war, that could be the reason that you'd switch from like an e-trade to a Schwab based on commissions.

But I don't see it for this one. The CME is introducing cash-settled Bitcoin volatility futures in the coming weeks, which is the first regulated product of its kind. I think that's going to be a 24-7 market too, right? That's pretty interesting. CME is always at the cutting edge of this type of stuff. Bitcoin volatility futures. Yeah, that makes sense, right?

People want to trade that. Why not? Next up we have securitized. They received FINRA approval to be a custodian of tokenized securities and serve as an underwriter for initial tokenized securities offerings. So that's the first broker-dealer of. authorized to do that. Yeah, you're going to see more of this. So they become a qualified custodian, I guess, effectively there. And then they can take things public. I think you're just

going to see a lot of attempts to go public here via security token. Maybe see some later stage startups go that path. How attractive that market is is going to be a function of how liquid it is and how many byside participants come into that ecosystem. So you'll see Securitize, obviously, go live with this, I think you'll see a handful of others over the next few months. So definitely a big development. In other regulatory related topics here, the SEC, did you see this? They delayed 24 prediction market ETFs that would have launched this week. They've requested more information about the mechanics of how these things work and the disclosures. Some of these products are devised to give specific exposure to outcomes like presidential election.

and whether or not Congress would flip. There's a bunch of them tied to the 2028 election. I think these are actually going to be super popular if they get through. You know, bet on blue, bed on red, bed on House, bet on Senate. If you could actually buy these on brokerage platforms as ETFs, I think the inflows would be very, very big. But I get that this is totally novel. So I think getting more information about how these things work,

I understand why they want that more time. Yeah, I mean, you remember around the election there are all these thematic ETFs like, oh, this is the portfolio of stocks that we think do well in a Trump victory context and it was like defense and private prisons or whatever it was. People yearn for highly specific exposure to certain events. And if you can get it in your brokerage, all the better. So I think these will be quite popular when they come out. I just don't know how they are going to work exactly.

And I think some of the Bloomberg guys might have messaged us about it. But how do they work again? Do they just get retired when the event happens? So I think the way these work is the prediction market shares, like the ETFs, will hold the exposure to whatever the underlying contract is. So I think the ETFs would theoretically settle at zero or one. And so I think you're buying on that spectrum. So you'd be buying a 50 cent exposure right in the middle,

and it's either going to settle to a one or a zero. So that's my understanding of how these things would work, which is different. I can't think of any other ETF that has ever worked that way. Yeah, I mean, it's a completely unfamiliar structure. Because it kind of goes to trades to zero, and you wind it down, right? Like it's, they get wound down either way.

So you're kind of liquidating an ETF at the defined mark. Yeah, that must be administratively complex. So I'm not surprised the SEC delayed these. But I'm very excited to see them trade. Yeah, these are kind of like the, I mean, didn't SBF have a bunch of these type of things? Like he had. Yeah, the Trump win contracts. Yeah.

Yeah, that's right. So micro strategy, they're in the news this. week. They didn't buy any more Bitcoin. I think they have an earnings call coming up. So they, sometimes they have these quiet periods. But there was a comment by Saylor that said he might be selling some Bitcoin just to prove that he can sell it and fund a dividend. What do you make of that? Yeah. I mean, I sort of understand what he's trying to say, which is he wants to not surprise the market in the eventuality that he has to sell the Bitcoin. And of course, if you look at this thing, he's going to have to sell something to pay the dividend, you know, just mechanically speaking, the dividend on STRC.

So issue more common, maybe. But if that never trades at a premium to NAV, you probably can't issue more common. So you're going to have to sell the underlying. So I guess the game now is strategically issuing as much STRC you can without upsetting the delicate balance and hoping, that Bitcoin goes up so that maybe if you do have to sell Bitcoin to cover the dividend, you're selling at a higher price. But it seems scary. The more STRC, the more fragile it gets. Yeah. I think that's a good analysis of it. And you wonder just what the governance is around this. So Sailor's board. What does that discussion look like? Are they saying,

all right, sell a little bit now, prove that you can do it? Or are they telling him? him, hey, we want to see 24 months of cash here to pay these dividends. We don't want you to go below that. I wonder how that works. Yeah. And I think people who need to remember is ultimately the preferred and the common claims, somewhat diffuse claims, but claims nonetheless on the same underlying pool of assets, which is the Bitcoin. So if you are issuing SDRC, $1,000, issuance, it effectively subtracts the commons claim by a dollar. It's actually more than a dollar because STRC has an attached dividend and it's perpetual. So you can do a little bit of math and see what that's worth. So every time you issue preferred, you're harming the common

effectively. That's just a accounting reality. So the challenge now is why would anyone buy the common? If there's this huge sack of referred sitting on top that has this ravenous appetite for dividends. That's the thing that I don't quite understand. And I get that, you know, if Bitcoin goes up, people get excited about it, whatever. But why would you buy the common at this point? Decided to throw in the towel on being a securities analyst on micro strategy along time ago. I came out of the gate strong on this name, understanding it, but it's just gotten too complicated to keep up with. If it's not your job to follow it, it's really, it's difficult. Yeah, I invested a couple hours a few weeks ago in understanding it, uh, in conjunction with

AI. And I think I get it. It's not something I would own personally, but I don't begrudge other people that own it. I just want people to be mindful that there's nothing mechanically requiring that STRC trades at $100 or mechanically requiring that that dividend is actually paid out in perpetuity. And you need to remember, they need to raise cash to pay that dividend from somewhere. Yeah. And if MSTR is not trading in a premium to the underlying, they're going to have some hard decisions to make. Did you see this Politico piece this week? Wall Street went to war with crypto. It's losing.

Yeah. basically arguing that the clarity compromise was actually quite bad for Wall Street. I don't know. It seems to me that Wall Street is actually kind of all of these firms are doing crypto stuff. So I don't see it as war. It's a really funny framing because I get one part of it, which is like the banks didn't get everything they wanted. But clearly what they wanted was just for this to die entirely.

And so that was just an unrealistic expectation, I think. And so Wall Street went to war with crypto and they won on their key issue, which was stablecoin yield is what I would say. And now we're going to get a framework for tokenized assets. And the banks can compete there if they want to. But hey, sorry, you also have to compete with Coinbase and Cracken and Bullish and Talos and all these companies that are coming into the space. So a better way to phrase this was the banks wanted to not have any competition. And now they do. Yeah, I mean, Wall Street doesn't mean banks either necessarily.

Like, I think the asset managers have been pro-crypto for a long time, most of them. Some of the banks have been very hostile, that's for sure. But they didn't lose when it comes to this clarity deal. They kind of got what they wanted. Or, you know, they grit their teeth and this is the least worst outcome for them. You just have to have competition in financial services. I mean, that's how you get a stagnant economy is you just, you anoint a bunch of winners and you don't allow anyone to compete.

And that's, unfortunately, that's how we've been living in this country for the past 25 years. Yeah, and you know what really refreshes me is the fact that new charters are finally being granted by the OCC. And we had virtually none for a decade. And now there's some vibrancy happening for the first time in years. Yeah. I mean, just innovation all across the spectrum in financial services is a net good thing. It's really good for consumers.

And so to see the Elizabeth Warrens of the world be so anti this industry when it's cutting the cost of remittances, it's putting more dollars back in people's bank accounts or people's wallets, there's a surplus here that is being delivered back to the consumer across everything that we've been talking about. You're basically talking about whittling down middlemen. It's really good thing for the economy. That's very well said. Before we leave, I want to do a featured prediction market for you. So Hantavirus pandemic in 2026 is trading at 9%.

9%. All right, let's keep that low. I can't deal with another Hanta virus. I'm going to have to get a whole new monitor set up. It's going to be disaster. Yeah, I mean, that's actually way too high for comfort. It's way too high for comfort. I mean, what am I going to have to do again?

I'm going to have to buy a bunch more. Remember, we're buying all those, like, cleaning supplies because we thought it was delivered to, based on touching your groceries and stuff. I can't do another one of these. Well, really, what you do is you create a sole proprietor LLC called, you know, Hellcat LLC and you get a PPP along. Collect some PPP.

That'll start up again. I mean, then I'm going to be going for, a run in the woods and just getting yelled at because I'm not wearing a mask. There's going to be crazy people like that again. I mean, that was going on. That was actually, that was the last draw for me with Boston was at the, in Boston you had to wear a mask even if you're on a run by yourself outside. People literally were screaming at me because I was 50 yards away from them in the woods running, not wearing a mask. Yeah, in hindsight, there was a lot of lunacy around COVID that we've never reckoned with society.

Like the six foot thing, that was completely made up. Like completely made up. There was no scientific basis for that. I mean, the masks, I don't think they did anything. I'm not sure any of the non-pharmaceutical interventions did anything at all. I'm not going to talk about the vaccines on this podcast, but yeah, virtually none of it was scientifically warranted, as it turns out. So what do you want?

All right, we're going to shut down the player. grounds in the cities, I guess we'll just let our kids play in the street or something. What are we talking about? Yeah, and it was we'd shut down the beaches and the police would go and arrest someone that was surfing by themselves in the ocean. Yeah, we can't do the hantavirus. I'm not doing the hantavirus. No, we're opting out of it.

That might be what gets me down to Florida full time if we do another hantavirus lockdown. All right, so we'll just hope that ballagy takes a look at this. and isn't that worried. I think that's all I can think of right now. All eyes are on him. So I hope it's the right answer. All right. So I think that's it for the week.

I think next week's going to be a big week, as they say in the industry, because I think we're going to have some fireworks in Senate banking. So we're going to keep an eye out on it. Everybody have a safe and healthy weekend. We'll see on Monday.