The Canadian Bitcoiners Podcast - Bitcoin News With a Canadian Spin - The CBP - SB on $MSTR, $COIN, the Miners, Trump and More

Episode Date: June 20, 2024

FRIENDS AND ENEMIES Join us for some QUALITY Bitcoin and economics talk, with a Canadian focus, every Monday at 7 PM EST. This week we're bringing back fan favourite SB to discuss his latest thoughts on a number of topics. The Miners/AI, Coinbase and Microstrategy, Block/Square, Corz, Trump and more. From a couple of Canucks who like to talk about how Bitcoin will impact Canada. As always, none of the info is financial advice. Website: ⁠www.CanadianBitcoiners.com ⁠Discord:   / discord   A part of the CBP Media Network: ⁠www.twitter.com/CBPMediaNetwork This show is sponsored by: easyDNS - ⁠⁠https://easydns.com/⁠⁠ EasyDNS is the best spot for Anycast DNS, domain name registrations, web and email services. They are fast, reliable and privacy focused. You can even pay for your services with Bitcoin! Apply coupon code 'CBPMEDIA' for 50% off initial purchase Bull Bitcoin - ⁠⁠https://mission.bullbitcoin.com/cbp⁠⁠ The CBP recommends Bull Bitcoin for all your BTC needs. There's never been a quicker, simpler, way to acquire Bitcoin. Use the link above for $20 bones, and take advantage of all Bull Bitcoin has to offer.

The Canadian Bitcoiners podcast is just two guys and maybe a guest or two discussing Bitcoin, Bitcoin equities, and the related macroeconomic space. It's not meant to be financial advice, so please, if you're doing any investing, after listening to our program, do your own research, do your own due diligence, and understand that any money you invest can be lost. The show is meant for entertainment purposes only, and we hope you enjoy the program. Friends and enemies, welcome back to another episode of the CBP. We were here last night, just me tonight, at least out of Len and I. I'll be joined by a fan favorite, frequent guest of the show, SB. We're going to be talking coin.

I have a list of stuff here we're going to talk about. I'm going to read it to you now, okay? Maybe not word for word, but to give you an idea of what's on the agenda here. MSTR strategy, block earnings, the Coinbase check-in, miners in the news, Trump and mining. We have something SP calls embrace debate corner. We'll be talking about mining nationalization

and the TradFi embrace of Bitcoin. And then why new MSTRs are tiny and big unlikely soon. I don't know what that means. I copied it from our group chat. We're going to find out though. As always, first things first, the sponsor is EasyDNS. The best place for you to host your content, to host a website, to buy a domain.

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They have a couple of different ways to buy them. I know you can have auctions. You can go through an auction, which is kind of fun, though probably the more expensive option. And then the other option is just to buy outright some, I don't want to say less than desirable domain, but something that people are not looking at buying, that's for sure. Anyway, so you can do all that with Mark. If you want to do some virtual private server stuff, not just Bitcoin stuff, but you can do Bitcoin stuff there too. He will help you. You can get an email account at your new domain. He can help you with email privacy,

GPG and PGP, both of them enabled over at EasyDNS, among other things. The number of things that we're not using on our website because we don't have time, at least that's what I tell myself, is huge. So if you want to do that stuff, go over to EasyDNS, start something new today, man. Use Mark, use the website, use the promo code CBPmedia, or just tell Mark we sent you, and you get half off the first round of buys. The second sponsor, great team, of course, full Bitcoin. You guys know them, you love them. They are one of the few remaining Bitcoin-only exchanges. They're the only Canadian one. ShakePay, not Bitcoin-only. BitcoinWell, not Bitcoin-only. Who else is out there? I don't even know the other exchanges. So, I mean, these guys are the only ones. People say liquid, they don't like liquid,

whatever. Okay. But you get what I'm saying when I say Bitcoin only. I think they're Bitcoin only too. You can pay your bills over there if you want. If you don't want to sell, sell, but actually buy gift cards or pay bills. I'm not just talking like credit card bills. I'm talking property tax. I'm talking cell phones. I'm talking the list of vendors is long, long, long. So basically any outstanding debts you have, you can pay with your Bitcoin through bills, a platform they acquired some time ago. And they just released a wallet app too. So if you're looking for custodial lightning solution, semi-custodial lightning solution,

that's the place to go. You can't beat the bull team and the bull suite. We've been working with them for the better part of a year and a half now, I think. Actually, maybe not quite. We signed on with them just around the conference last year, which I think was in June or July. So maybe we're closing in on a year. Anyway, it doesn't matter. You guys have been killing it over there. Use the promo code to sign up. You get $21, help support the show. And yeah, listen listen if you don't vote with your money as far as where you buy your bitcoin you're supporting stuff that's not

bitcoin and uh we try not to do that here we hope you'll join us in that mission so bullbitcoin.com and sign up with our promo code he's got a new picture tonight the bull therapist these hire for longer rates. Are they in the room with us now, SB? What is going on, buddy? Good to see you. Man, great to be here. Yeah, I just find it so fun because it feels like increasingly Bitcoin is sort of joining in TradFi that as someone who is in TradFi but doesn't necessarily have

an aggressive Bitcoin strategy where I work, it's a very interesting kind of melding of both worlds together, which I think we're going to talk about today. We have to because, as you mentioned, you come from that world. I have no experience in that world except for what I pretend to know about when I do the show. And we have a lot of agreement between the two of us tons of it actually and i think a lot of bitcoiners are you know in the same boat on a lot of these things on the facts of the story and you know it doesn't mean that a lot of bitcoiners support it obviously len and i have had a number

of guests on who are like really hardcore don't like etfs don't like trad fighting included uh want to see these people sort of rot in the street and you know have fun staying poor etc etc etc you know whatever man i think we're going to find out tonight where we have some disagreement and uh it looks like we'll be debating some things or at least embracing debate uh on the air this evening so where where do you want to start we have a number of items here i'll let you pick I assume you have the same list from the group chat. I'll let you decide where we dive in and we'll get rolling

here. I'm down to hop into let's start with a little mining because it feels like mining has kind of come to the big leagues. There's a mining question in the chat here, by the way, already. Thoughts on Hive and HUD-8. I don't know if you have anything on that. It feels like mining has kind of come to the big leagues and i think that

originally it was we saw this riot news where they're buying up a bunch of bit farms and this is the type of move this is like a vulture hedge fund type of move where if you see an undervalued company you got capital you use that to your advantage and you're like, yeah, I want to go out and buy these guys for, you know, what they're, they're going to come out and say, yeah, we think it's a great price. Of course, BitFarms comes out and says, we think we're higher valued. So I saw that recently. recently, then you go, oh, the hottest AI startup, Anthropic, wants to buy Core Scientific. Unbelievable.

Bitcoin miner recently out of bankruptcy, as we've talked about before, we had BlackRock being a very significant, if not the biggest investor in some of their debt in the bankruptcy proceeding. So very interesting blackrock was i think in what they call the dip which is basically um lending during the bankruptcy so you know that's signaling a lot now is before the etf started so that sent core scientific up like like crazy and then recently and you guys have have had had the um the ceo or co-CEO, Dan Roberts, I remember he was on your podcast before, of Iris Energy. And their stock has exploded recently. the high-performance computing angle, where you have the option of going out

and using some of your mining capacity for things other than Bitcoin. That sparked Anthropic both signing a deal with Core Scientific and then trying to buy them because they want AI computing power and Bitcoin miners, of course, as Bitcoin does with everything, have to be

ruthlessly efficient. And so it does two things to me. Number one, it's OK, we're in the big leagues now, like miners. They're owned by the biggest ETFs out there. They're owned by, you know, you pull up who owns them. Very high profile companies are very big into a lot of these Bitcoin miners. So they're in the financial system, I feel like, in a big way, and it's hard to see them getting out of it. And then the second thing is, what are these actually worth in terms of the computing power that they've gotten so far? And is there a situation where, is the right path to be purely Bitcoin mining? Is the right path to do to go in between?

Something we've talked about in the group chat is, well, wait a second. If it's much more valuable to do AI computing, then why doesn't every Bitcoin miner just put all the resources towards AI and make more money? So I think it's opening up a lot more interest. And I'm even seeing, you know, I'm on financial Twitter, they call it FinTwit whatnot, I think you are too. And I'm even seeing, you know, guys like value investors go, I would have never thought to ever look at a Bitcoin miner. But hey, this anthropic deal for some of core scientific capacity has got me interested. So to me, that's one of the biggest changes in the Bitcoin space recently is kind of mining,

going to big leagues. And then, of course, the cherry on top, Trump meeting with them. And then, you know, as I've said to you, I just can't believe Bitcoin's not significantly higher from here. But what are you going to do? So let's let's dive into a couple of things there. I want to get your opinion on two things here more than anything. Number one, why do Bitcoin miners continue to mine Bitcoin? I said this to Len the other day, maybe not this week, but last week on the show. If AI compute and HPC is really the move as far as the market is concerned, and as far as the best use of energy in terms of turning a profit per kilowatt hour is concerned, why mine? It's an incredible question.

And I think what Core Scientific is figuring out is, hey, we're going to sell that capacity to Anthropic. So I totally agree. Now, I am not an engineer. I'm not in these mining centers. But I think what what was interesting was if you compare somebody like Iron to a CleanSpark, for example, right, because they're two of the biggest mining companies by market cap, CleanSpark doing completely Bitcoin mining, and then they're holding on their balance sheet if they feel like it's a good time to hold, which has been seen as a very solid strategy and they have been rewarded in the stock market for very high performance. Up until recently, Iron had not been rewarded compared to CleanSpark and some others. They went out and bought a bunch of NVIDIA H100s a while back. And that was very interesting to me because Bitcoin miners, especially six months to a year ago, capital is very, very, very scarce. And I think we're going to talk about this a little bit with the MSTR, kind of some of these companies in the future. But capital is very scarce for every company, but especially Bitcoin miners. So if you're out there telling me that, you know, your stock is,

I think in Iron's case, it's like $3, $4, $5, and you're raising a lot of very dilutive equity. And instead of using that on buying more mining machines or building up more capacity, and they are doing that, but it's a mix. Instead of doing that, you spend X amount on high performance compute. That tells me that like you kind of had an idea a year ago that this was something that might be happening. So I, again, I'm not the engineer. I don't have the knowledge of what is actually the best play. I think where I'm

intrigued by is if in the future there's this interesting tradeoff of the Bitcoin network where basically if Bitcoin isn't as high as we'd like it to be or the miners would be, you're shutting off mining machines and you're using more capacity for AI. And then you can kind of flip that switch when the difficulty adjustment whatnot bitcoin price goes higher you flip the bitcoin and to me i'm intrigued of of like what does that mean for bitcoin in the future it is that the capitalistic type of bitcoin mining we're gonna have you're gonna have other countries governments doing it and then that's going to be the more of the kind of is there a is there a name for that by the way when governments uh take over yeah i was trying to be nice there the national yeah the nationally yeah so are you gonna have capitalistic miners and nationalistic miners and where the capitalistic miners maybe they're not

mining that much yeah so i that's why i i've been telling you guys i'm like dude i would love for you to have on uh some mining execs to ask them this exact question. If they're in high performance computing, why are they in it? Why did they think about getting in it six months, a year ago, two years ago? And if they're not in it, what's the tradeoff? Because we just saw this crazy deal that Anthropic did with Core Scientific. And so maybe why wouldn't you get some of that revenue? So, yeah, it's all completely fascinating.

I'll try and keep all my thoughts in line here. But the thing I'm curious about from your point of view, it sounds like you think that the miners, buying the miners is more a play on maybe energy procurement and power purchase agreements than it is actually a play on Bitcoin in the medium to long term. Is that fair? Yeah, it's fair characterization. Okay. And then the other thing I'm curious about, you know, if you're really concerned about power procurement, fine, not you specifically, but sort of the royal you, there's got to be better ways to express that view, that power is really the thing. Because I think what you're saying there is you trust the Roberts brothers at Iron to do a better job allocating energy than, I don't know, than you do an energy company who's presumably going up in value for the same reasons to go up in value during that same bull market. How do you sort of square that circle?

In my sort of limited knowledge and understanding of all this, you'd almost be better going with the commodity producer than you would, I mean, I'm calling an energy company a commodity producer, but you get what I'm saying. You'd almost be better going there, I think, wouldn't you? Why wouldn't you go that direction? Yeah, it's a great question. And I think a couple years ago, I remember some like when the Bitcoin Mining Council was founded, one of the questions people were talking about was, you know, when are you know, when is ExxonMobil going to go buy a

Bitcoin miner, right? Like, when are we going to link the energy? And I think that could still happen. But one of the things that I think Iris has been interesting, and Dan talked about this when he talked with you guys when he came in the show, was that they have the background in energy. So they had been investing in private equity energy deals for probably over a decade by the time they started Bitcoin. So at least when they started that several years ago, they were thinking that this is sort of the next frontier of how to best monetize energy. And so I think they, you know, they're very open that if there's a better way to monetize the, you know, extremely efficient energy that we have. And I think because I'm using them, because I've, I've looked at at them and they had a press release at one point that they were basically being able to get energy at no cost because of the way that they had set up their data centers, their machines on the grid.

They were just using complete excess energy, if not being a part of the question is like, why haven't other people thought of this beyond Bitcoin miners? And maybe the answer to that is simply that AI has taken off like no one thought. Look at the NVIDIA stock price, right? It's gone up 10 times in 18 months. I don't, I'm not sure even Nvidia thought that was going to happen. So if that is an indication of what the market was thinking about AI ramp, then maybe just the energy has not been procured. One of the top places to get the energy is going to be the Bitcoin miners. And so we're going to have a trade-off here between upfront cash and or long-term deals with ai companies where you're not going to have that ai where you're not going to have that bitcoin exposure or just completely

completely leverage yourself to bitcoin and that and i i want to hear that conversation going forward and that should be asked on earnings calls to companies that have the compute and the companies that don't have it so You mentioned the H100 buy. H100 is the enterprise AI GPU, basically. If you want to build and run and sell access to an LLM, this is what you would use. This is the

horsepower you would need. I guess my last question on this and maybe if there's anything else you want to cover on this, we can hit it right after. If energy is the play, maybe you still like the miners for whatever, you know, the reasons you just outlined. But if you're really thinking that high performance compute is what's next, why not buy NVIDIA? And actually, I ask this, you know, in earnest, because if I look at some of the ETFs that

do mining, like WGMI, the Valkyrie mining ETF SB has, what is the allocation here? A 4% NVIDIA allocation along with some of the miners, right? And so they have some TSMC, they have some NVIDIA, they have some other stuff. So I think even the miners view NVIDIA as something worth having in their ETFs. I i mean if you're an investor why not just buy nvidia then what is that is that more i mean if you're especially in your um in your silo we talk all the time about how the career risk is just too great you can't go to your you know board or your your investment team and say yeah look here's my presentation on iris energy and this is why we should invest in them because your board board's going to look at you and say,

why don't we just buy NVIDIA? How do you answer that question? Excellent question. And I'm looking up what Iron did. They've spent maybe $33, $32 million on 800 H100 NVIDIA GPUs. Yeah, you're going to want to buy NVIDIA because they have 75% margin when they sell. Now, TSM has come out and said, hey, we think we can take some price up on NVIDIA. And so I think

when that happened that day, when the CEO said that, TSM was up 4% or 5% NVIDIA, maybe flat down a little bit, whatever. Now, you're going to want N want nvidia i mean i think the the question mark on nvidia specifically briefly is just that we don't know what the run rate is for full uh spending on these things uh going forward like is this an arms race or is this actually what companies are going to be spending on this for the foreseeable future so i think that's kind of why if you actually look at the valuation of nvidia for their their growth rate, it's not actually that expensive. The question is if the growth rate continues. But yeah, to your point, who's going to make the most money from the transaction?

It's going to be the company actually making the chips, the creative design behind it, which is NVIDIA, not the companies that are buying the chips. So I totally agree with that. Okay, let's move to Square and Block. This is a favorite of yours. I have some Square, some Block. I should mention that either of us could be invested in anything we talk about. Doesn't mean it's advice. I don't give advice because I the loop here, big thing from the last earnings call, at least in our opinion or my opinion, the DCA, the Bitcoin DCA, right? So what else is going on in that camp? What do you think we should be looking at? Yep. So DCA, I loved it. Now I want it to be a lot more because they're talking about investing 10% of Bitcoin gross profits into Bitcoin.

And the Bitcoin gross profits have been maybe 150-ish around there annually from selling Bitcoin. Now, ideally, they're going to have a lot more business than that in the future when they go to a variety of other Bitcoin businesses. But for now, it's really only making money selling Bitcoin. So if you think 10% of the 150 million annually, it's really not that much. I loved the signaling of it. I thought that was great. But ultimately, the Bitcoin they already have in the balance sheet is probably going to do more for them in the immediate term. Obviously, an incremental positive, though I'm not hitting on it. I think what was interesting is when they discussed Bitcoin, this earnings, and this will lead into some of the other stuff we're going to talk about.

Jack on the call said, we get tons of questions about Bitcoin from investors. And I think what we have to understand is that, you know, me and you and most people listening to the show, I mean, we love Bitcoin. We love Jack. We agree with Jack on what Bitcoin could potentially do for the future of humanity. Tradify does not believe that. I mean, I would say 90% plus does not believe that, especially the people that are covering block on an investment basis. I mean, they're payments people. They're covering PayPal too.

They're looking at Pfizer. I mean, they're comparing toast versus square in terms of restaurant business, stuff like that. So they're not well – a requirement of their job is not to be well-versed in Bitcoin. And if anything, if you are in this financial system and you're looking at these companies and that's your job, you're probably disliking Bitcoin. So going back to,

going back to block, Jack goes, we get so many questions in this. We're just going to write about it on our investor letter. We're going to talk about it. What was very interesting was not even one question about it in the earnings call. So I would say that there's a very, um what was very interesting was not even one question about it in the earnings call so i i would say that there's a very i would say that bitcoin best case scenario is flat and probably

in my opinion is is actually a negative right now for their stock price that that's my current assessment just my opinion how do you square that with the stuff you've seen from DeFi Technologies, from MetaPlanet, which I know you know a little bit about, from Semler Scientific? I realize these guys are part of this wider micro-cap march to a Bitcoin treasury strategy or a Bitcoin balance sheet strategy

or a Bitcoin DCA strategy as part of an attempt to pump a stock price in what's basically an illiquid equity. But the trend is going that way. I think you and me both agree that even in the traditional finance world, whether these people are ready to self-custody or not, there's at least some appreciation, even from the sort of most ardent naysayer that, yeah, we have to start looking at this. It's that sort of one to 5% allocation thesis that's becoming more prevalent.

What's holding these companies back? Why is it a neutral to negative sentiment on something like a Bitcoin DCA? Like you said, it's small, very conservative. And I think it shows two things. One, it shows that he's not going to bet the farm on Bitcoin. It shows he's got an even temperament on the asset, even though he's a huge Bitcoin bull. And number two, that he's not willing to sacrifice the stock price right off the hop, as far as the sentiment and the return that he might get from the market, even though, you know, on the, on the sort of larger cap side, MSTR, you know, they're, they've absolutely crushed the last three years on the same strategy, um, at, you know, arguably much more dangerous

levels in terms of like their actual market cap and, and free cash flows every quarter. So why is it negative to, to neutral? I, this is, I don don't i can't understand this yeah so i and and this is this is where i think me and you disagree modestly oh no here we go no but this but this this is great and no no one's necessarily right so the i mean the audience can decide what they think too but i i think you are giving stratify too much credit here. I think that's part of it. I think what you're just saying there and being forward looking for this,

that Tradify is not viewing it that way. The way they're viewing it is they got their financial model and they got, hey, I'm comparing Square Seller, which is about half the business. I'm looking at that and I'm saying, what's the growth rate on that? What are the earnings on that? What's the margin on that? How does that compare to Toast? How does that compare to Pfizer's Clover?

How does that compare to a variety of other PayPal? PayPal certainly is sort of on that small business to enterprise type of payment company. Then they're also looking at Cash App and they're going, all right, like Cash App's kind of new. It's sort of trying to be a app for a bank. So there aren't really any perfect comparisons. But the financial analysts looking at this are going, all right, what's the growth rate on Cash App in 24 versus 23? What's the modernization rate? Are they going to take that up or they're going to take that down?

Are they growing customers? So that is what is getting there. Okay, I'm going to put a multiple on a Cash App earnings expected for 2024. I'm going to put a multiple on the block earnings. Then they're going, man, why are they fucking spending so much time on Bitcoin? They're making almost nothing from this. This is a distraction. It's not driving the stock. Why are they even putting any money into this at all? And I think that's why it's being viewed at best as a nothing and probably negative. Now, I would say as someone and I would even leave Bitcoin out of it,

I would say if me personally, if I'm analyzing this company, I'm looking at the Bitcoin and I'm looking at, OK, this is an option value. Because ultimately, if they can make some money off of this global remittance option, I mean, like in and I can if I'm an analyst, I can give Jack some credit. I can give him I don't have to give him the benefit of the doubt, whatever. But if I'm able to give him a little bit of benefit of the doubt and try to build a little bit of a model and saying, hey, there's this massive total addressable market TAM in global remittance. If Block can get X percentage of that, you charge X and then have a margin on X, here's a build that I could potentially get to this being worth 5, 7, 10 billion, whatever it is. So that's what I would be doing to sort of talk about the option value. But I'm not seeing that analysis being done. What I'm seeing is that basically the analysts looking at Block are saying,

title doesn't matter. Bitcoin doesn't matter. Best case, it's nothing. Worst case, it's a distraction and a money sink. And I need Cash App to continue its high growth rate. And I need Square to return to a higher growth rate to accelerate, which a Clover is doing, which is their competitor, which Toast is doing, and which Jack has talked about, hey, I'm running Square for the first time in years. I'm focused on it. We will see revenue acceleration and growth in the back half of the year. So I think that's what they're all focused on. With one caveat to if they're 500 or 750 million of Bitcoin, whatever it is right now. Yeah. If that five X's like, yes, we're going to have a huge, we're going to have a huge impact on what blocks valuation

is, but comparing it to a micro strategy or Semler, MicroStrategy, they have $15 billion of Bitcoin and their software company is worth a billion. Block is worth about $40 billion right now and their Bitcoin is worth a billion or less than a billion. So that's really the main difference is Saylor, his whole thing is about Bitcoin. Jack, if Bitcoin goes up some, great, but it's really not what's driving the value of the stock right now. But why is the premium so high on MSTR then? And it's zero on Jack's company.

That's, you know, by basically any tangible measurement, a better company. Why? Is what I don't understand. Maybe there's no good answer for that, except that people expect something from Saylor and something different from Dorsey. To me, it's like, you know, clearly, and we talked about this offline. Like if I look at the square business, it's better. It's a better business than MicroStrategy. MicroStrategy's business was so bad that they basically pivoted to being a Bitcoin development company, whatever that means. And no one seemed to care. The stock just keeps going up when Bitcoin goes up. It is a Bitcoin exposure play. Why can't Dorsey leverage that? It's a rhetorical question at this point. It's

so weird to me that in the financial space, there's a gap in when and where people appreciate certain strategies. It's bewildering to me. So I i think a couple things all all excellent points i think number one yeah i'm looking at the terminal right now i got i got blocks got 36 billion enterprise value so then if i compare that to so block um they their earnings for um 2024 um they're not going to be huge to the extent... Basically, Block's kind of an expensive company on their earnings, but that is because the expectation is these guys are going to grow significantly. So it's not like you're paying not like you're paying, well, and again, like I said earlier, video is not that expensive, but it's not like you're paying a 60, 70 times multiple for block. I mean, basically they're the estimates on the street. It's like 2.7 billion

EBITDA in 2024, 3.3 billion in 2025. So you put 35 billion on that. You know, I don't personally think that's that expensive. And I think the stock's been higher than it has been before. But that's kind of what it's trading on. Whereas so like basically if Block is going to get the benefit of Bitcoin, you have to buy in already to the valuation of the payments business. And maybe if you're in Bitcoin, you don't really want a payments business because you want to just invest in Bitcoin. Whereas with Saylor, and yeah, I love wanting to talk about MSTR

because I thought he said some really interesting stuff in the most recent earnings call. So the Bitcoin premium was asked. And like we've discussed this, but just for the pod, I mean, basically he's running at 100% plus Bitcoin premium where rough numbers, don't quote me on them exactly. Essentially, MSTR is worth $30 billion, around $30 billion. The software business is worth around $1 billion and their Bitcoin is around $30 billion. The software business is worth around $1 billion. And their Bitcoin is around $15 billion. So essentially, the Bitcoin is being valued at 100% premium. And this was about the price that it was when they had the earnings call a month ago. And he was asked about that. Why is this premium so high? Because the premium was 40% prior to the ETF, went down to 15%

to 20% after the ETF, but then it's come roaring back. So it's like, okay, why is it so big? And he basically said that, and I'm quoting him from the call, if you thought you could generate 8% accretion per year, there's no reason why you couldn't justify a 100% or more premium in that asset value and he's he used the eight percent because essentially that's what he's getting when they raise convertible debt or equity at a very big premium and buy bitcoin with it and then i'm continuing his quote um if you could generate an eight percent accretion more often than once a year, if he could do it from quarter to quarter or every other quarter, which essentially he's been doing, it's quite possible to come to quote,

any number of different premium calculations. So this guy is poured gasoline on the bull hopium here. But he's been right. You can't go against this guy i i thought it i think most people thought i don't i mean jim chanos fucking thought it the guy that his hedge fund is now gone partly because he bet against mstr i think don't quote me on it but um everybody thought this bitcoin premium was going to disappear after the etf and it not only hasn't disappeared it's gotten even higher and then it's the self--filling prophecy where if you issue equity at 100% premium or better yet, issue converts at a 40% premium to the stock that's already at 100% premium, you're just buying amazing amounts of Bitcoin at great prices because it doesn't matter

if the price went from 67 to 65 when the premium was 140%. So to answer the question, MSTR, it is purely a Bitcoin premium arbitrage, Bitcoin on steroids play. Block, much different type of play. Do you want to talk a bit about the current state of MSTR's convertible notes? I haven't really looked at where they are in terms of repayment schedule or anything like that.

And maybe talk about the latest offering. I think he ended up increasing the size of that offering a week or two after the initial announcement. What do you know about that? Yeah, so I'll start. Let's start with the 2025 bond. So 0.75% to all 25s. And actually, let me start briefly before. What is the point of a convert? The point of a

convert is, because the question is, what's the point from the buyer's side and the seller's side? The point from the buyer's side, if I'm buying a convert, I want a typical bond, so a fixed payment, and what she is giving in some of these, one zero coupon, but you want a fixed payment, but you're also getting a, um, you're also getting the upside if the equity does well. the 0.75% 1225s, when he issued those in December 2020, the price of MSTR at that point was not even close to what it is today. And the conversion price, usually it's a 40% premium. The conversion price, $398. So with the stock price of $1496 – so actually let me ask you. Do you know – let me ask you to take a guess. So the $1225 bonds, the conversion price that you convert in it is $398. The MSTR stock price is $1470. What do you think the price of the bonds are?

They've got to be cheap, but – Well, remember, you can convert these into equity at 398. Yeah, I know. And par is 100. Why don't we split the difference? Maybe it's 275. I don't know. That was a good guess. 375.

Okay. So add a 275. I don't know. That was a good guess. 375. Okay. So, added 275. So, that is unheard of in bond land. Un-fucking-believable. Most bonds, best case scenario, like if you buy a high-yield bond that does really well, you're maybe looking at like 110 maybe. If you buy an invested-grade bond and rates rally in the bond rallies, maybe it goes from part of 120, 130 plus the coupon, but 100 to 375. That's insane. But so so that was the benefit from the buyer that the buyer wanted equity is issuing these bonds, it's very cheap debt.

The 0.75% compares to the 6.125% coupon he has on secure debt on a software business and the Bitcoin they bought with that issuance. So it's a lot cheaper, which is great for him. And then the other point is that they're issuing these at a 40% premium to the current stock price. So if I look in the most recent bonds that were issued, the conversion price for those ones are $2,043. So if you're a sailor, you can either pay, in this case it's 2.25%. I can pay 2.25% for about eight years and I raise equity at 2,043 in eight years, or I raise equity at 1470 today. Why not raise the equity at 40% higher?

And so that's why it keeps doing these. And that's why when you have 100% premium and then you're raising the converts at 40% and you're paying 2.25%, 0.75%, there's 1% ones. When you're doing that, you're just making incredible. Another one was 0.875% earlier this year. When you're doing that, you're making incredible stuff. One other point too. So the 0% 2027s. So this is fun because he raised these in like the height of it. So the conversion price is 1432, actually pretty high.

I think the stock price is about a thousand when they did that. So if I look at the historical pricing of those bonds, those bonds, you could have bought those bonds for 33 cents in the dollar in november 2022 and they're now 125 yeah so the this is this is just an incredible display from him to have the balls to do this because i've been on this program before and i've said this has been irresponsible that he's raised all this debt. But he had the conviction that, you know what? No, Bitcoin is going up and I know it's going up.

And worst case scenario, it's going to rebound and these converts are going to be able to be conferred to equity. And they have been and it's been just incredible. It's been a gangbusters trade for anyone who's been in it. I'm curious if it's even worth talking about the soft whimper of the quote unquote, sailor gets liquidated at X Bitcoin price crowd. These people have basically disappeared off the face of the earth like the dinosaurs. And I think it's probably for good reason. There's not really much talk about this as Bitcoin sort of consolidates here between 65 and 70,000 for the third month in a row. Is this worth discussing anymore? Does he have anything to be afraid of maybe is the broader question. Like you mentioned there, on the maturity date, 2027 or whatever you just said, the odds of Bitcoin being at such a low price that it affects this whole bond offering operation

probably pretty low. But in the interim, I'd imagine you're in the camp and you've been in this camp for a long time. It's not like you just started thinking this. He doesn't really have much to worry about in terms of these things giving him a problem on a low Bitcoin price. We're sort of out of the woods in that regard.

No, because the 2025, I think the notice was just out that in that regard. No, because yeah, the 2025, I think the notice was just out that the people are going to convert. So they're going to get equity there. And so the next one are the 2027. So we got plenty of time before that. And basically, he's proven he has market access for more converts because they've raised 2.1 billion now over the first six months of the year. And then even the secured bonds off the software and the debt that they – each time they raise converts because it was debt issued after the secured bonds by the software, that actually now serves as collateral for those bonds. So I don't know if he's going to tap that box again for new buys but that bond has 500 million outstanding and depending on

the documents i don't totally know but um depending on that i very easily maybe you would see a refinancing of that and maybe even more from there i don't know for sure but um no he doesn't have anything to worry about right now i mean look in the draconian scenario where Bitcoin drops 75 percent from here and goes to 15K, I mean, yeah, like he's assuming these 25s are gone. He's got 1.05 billion 27s, 500 million 28s. I think those are securities. Those are fine. So basically, the unsecured stuff that you'd have to refinance because he doesn't – if they're not going to convert the stock, he has to refinance. They're the $1.05 billion 27s, $800 million 2030s, $600 million 2031s, $700 million 2032s. So $3 billion worth of –

It's a lot, but it's also not a lot if you compare it to, oh, the company's worth $30 billion. $30 billion debt on $30 billion of company worth is tiny in the leveraged markets, leveraged finance markets. Yeah, it's not bad. So we've done a little bit of a dive here in everyone's favorite Bitcoin company. Now let's talk about everyone's least favorite, Coinbase. They had their earnings some time ago, actually. We didn't have you on when they had their earnings some time ago actually we we didn't have you on when they had their earnings but there's there's a lot of talk about coinbase because they're you

know they're in the news for all the wrong reasons half the time sb and then all the right reasons some of the other times you got you know and we'll talk about the sort of biden administration trump camp here using coinbase not using coinbase to help secure donations. Coinbase obviously doing ETF custody and then also being sued by the SEC at the same time. What's going on in the Coinbase camp? These guys are, they got to be having a hell of a time over there. So long-term listeners of the pod

might be surprised here and you might be surprised too. Oh, here we go. Coinbase is doing a good job. I have positive things to say about coinbase and i'm not positive everything obviously the shit coining i don't like i've never liked i will never like it but um yeah i'll read off some stats here because some of this stuff's kind of crazy so um 1.32 billion revenue was up 70 year over year uh and uh, and one key 24, pretty damn nice. Yeah. Um, we got

775 million transaction revenue was up over a hundred percent year over year. Pretty good. Um, 53 billion consumer trading volume was up 153%. That's a ton. That is a ton for a bull market stretch. That seems like a lot to me, but okay. Continue. Yeah, yeah. And it was up from $29 billion in 4Q23. So that's a pretty significant one-quarter jump. And I think this one's powerful for kind of the investors in it. The $644 million EBITDA was – oh, wait a second. I was reading off the Wall Street estimates. So those actually underestimate. They had reading off the Wall Street estimates. So those are actually underestimate.

They had 1.59 billion revenue. So there you go. It's even better. It's even better than what I expected. Wall Street was expecting all that. They have 1 billion EBITDA. So that's up, I think, from around 300 million in the quarter ago. So the EBITDA is up, um, basically three times the 1.59

billion revenues up from 736 million in the first quarter of 2023. So it's more than double. And then, and then this is the beautiful part of coin is that their op X only gained five percent quarter over quarter so what they learned so basically the this the story of coin is that in 2021 they went gangbusters had an incredible run i think made maybe like four billion of earnings and then they thought new paradigm shift crypto is taking over the world investing all this stuff and all these crypto VC assets, like let's get fucking blockchain rewards and all this stuff, invested like crazy. And then when the bear market happened, they were burning cash like nuts, burning $250, $500 million of cash a quarter because they had way too many costs versus revenue. So what they've done now is they've basically kept the costs flat and the revenues got up. And so when you're in finance, I mean, that's beautiful. That's

basically what Nvidia is doing. Nvidia is having incredible revenue and the costs are pretty much flat. Same thing with coins. So I can't hate on them in terms of the results. Now, do I dislike the fact that they're a shit coin casino and their earnings are from that? Of course I can. I don't love that. I mean, 33% of the trading volume is Bitcoin. So what does that leave you? Now, some of that's Tether too, which is interesting. And USDC at 13% Ethereum, I don't love that it's 13% Ethereum, right? I want it to be 100% Bitcoin, but I understand that they're making money. And if they're investing that money

in doing things that help the Bitcoin community, like, you know, being the custody. I mean, I guess that's the ultimate question, right? It's like, if you're a company that's doing things to help Bitcoin, does it matter if you're getting the money from shit coins or not, right? It's like the philosophical question.

And I'm not sure we totally have the answer for that but what i will say is the fact that they're enabling and they're the storage for and the custodians for the etfs i mean that that's a wonderful data point is it not it is but you know i can't figure out i mean the biden administration is you know bipolar in a lot of ways mean, we joke about this all the time. These guys don't know what they're doing. They don't know their sort of head from their ass. And you see it all the time in the way that they address these new technologies. It's not just crypto, by the way.

It's AI. It's, you know, encrypted messaging. It's everything, basically, except student debt forgiveness, which they're all aligned on at all times. I think that the question for me as a Coinbase guy, and I hesitate to say that I think Coinbase is out of the woods because I still think there's potential here as Bitcoin continues to eat up market share. And it will. Ethereum just hasn't caught up in market share. And the idea that a coin or a token like Solana or, I don't know, I really only know Solana and Ethereum besides Bitcoin, to be honest with you. But you know what I mean?

The idea that something else is going to eat into Bitcoin now is pretty low potential. And the thing that worries me, especially because Coinbase serves a 100% US market basically at this point, I think maybe there's some Canada, some Europe. I'm not sure. But the thing that worries me is when I look at that market, what do I see? I see a lot of people who have less and less money to gamble away on shit coins and less and less to save in Bitcoin. And you need both those things to keep that business running at this clip you're talking about, right? Where OpEx is so easily exceeded by their profit margins. And so I'm worried about that.

Does that ever come up on a call? Is that something I should be worried about? I mean, you dive somewhat deep in economic data, I'm sure, sure as shit deeper than me. But I look at this stuff and one of the things, this is actually a broader concern I have about Bitcoin, that as people get starved out, literally and figuratively up here in Canada, they're going to have less money to put in Bitcoin and this other stuff. And then you're going to see the operating margins

of these companies go the wrong way. Fair or no? Of, so of coin? Yeah, I mean, I guess coin would probably argue that if people want to... Coin would argue that if people want to buy Bitcoin, then they would just shift to buying Bitcoin on their platform, probably. But I agree with you. It's a casino, right?

If consumer spending is in decline, casino should be in decline. And this is an easy access casino on an app. So if you have less money, you're going to spend less. I think i think that's totally fair yeah yeah i that's one of my big concerns and uh do you is there anything on your mind about this base thing they have which i think is like some kind of like what is it it's like a shopping slash send like i really don't know much about it i'd be curious if you have any thoughts on that. It's on my list here that I just want to touch on if you know something about it. But if you don't, then I'll tell you all about it. Yeah, I don't even know what it is, honestly.

It's probably some nonsense. Okay, we're going to move on now to – hold on. Oh, there it is. Nice. Okay, we're going to be talking about Trump and his recent embrace of – God, so good. Bitcoin and mining right is that is that a fair characterization i think it is yeah i mean i i was so pumped to see that oh and also by the way i uh i misspoke earlier it wasn't anthropic it's core weave uh that did that did for um for core scientific um yeah so Trump and Bitcoin mining.

I mean, SB, the woke antidote. This is where I'm coming from in terms of the show. Obviously, I haven't done one in a while. We're looking at two songs. I know I always say that. Come on, so you shouldn't believe me. We'll see. But yeah, so Trump, look, I think what's funny is I'm always seeing these tweets.

It's like, oh, you know, progressive Bitcoiners, where are you? Like, oh, they got to start getting some politicians from that scene. And I'm like, dude, they're communists. Communists don't like freedom. Why would they ever like Bitcoin? So maybe there's a couple of them out there. I don't know, but it's so it doesn't make sense. So, of course, it's a natural evolution of someone that likes freedom to be pro Bitcoin.

I think Vivek probably sold him on it. If I had to guess, probably going like anti-CBDC because Vivek said that in the debates and got a great amount of applause and people loving that. And Trump is laser focused on what moves the needle. And I'm sure he saw that and got a talking to from Vivek and was like, man, I don't know what this thing is, but I got to start talking about it. I think Trump Jr. I'm seeing on Twitter is more into this. So what's the downside here? Because if you're Trump, are you losing any votes at all from embracing Bitcoin? No, the boobers are on fucking Twitter.

Fox News isn't covering this shit. No way. But are you gaining votes? Of course you are. So I love it. I think it makes total sense. Do I think Trump totally grasps the the concept no do i think he grasped the concept of a lot of things no he's shown that he has good instincts many a time in not

grasping the concepts that much but having smart people around him talk to him about these things when i think the bitcoin miners talk to him and are like hey we can lead in, we can lead in AI, we can lead in cryptocurrency mining, and we can make it in America. Does that make him excited? Of course it does. So I think they pitched it to him perfectly from the outside looking in. He's in it, and he's going to start talking about it at his rallies. And if he gets more and more people cheering, he's going to keep talking about it.

And if he gets more money, he's going to keep talking about it. So I absolutely love it. It's fantastic. I was so excited that night when all those photos came out and it's beautiful. Is it fair to say that every politician now has to have a well-articulated stance on Bitcoin and crypto before this election cycle really ramps up or no? Yeah. I mean, I think we're getting there i mean how could you not how could you how could you ignore a voting base like that every single election everyone's everyone asks republicans and democrats are you going to cut social security are you going to cut medicaid and medicare okay so so what do we think now is that your boomer is that your boomer like moderator voice

like what was that? Who are you impersonating there? Is that Chris Wallace? Who was that? Well, I'm thinking back to Dylan. What's his name? The guy doing MetaPlanet. Yeah, yeah, yeah.

Dylan Lawson. LeClaire, LeClaire, LeClaire. Yeah. So he had the tweet out that was like, Trump's talking about Bitcoin in the same breath as a social security medicare and i think that's right i think i think i said i said that to you like i think that's right we need to be we need to be go reaching out to the boomers and saying we're not going to cut your boom uh spending on your health care and we need to reach out to the zoomers and millennials and say

we're not we're not going to hurt your bitcoin that you have and i think i think i think that's the perfect way for him to look at it and to your point i think more and more politicians are going to be asked by a base of voters about their opinions on this very important matter i i actually love this len and i disagree that this that this matters obviously we disagree on like it used to be like 5% stuff. Now it's like 25%. But I think it's so important. And the reason I say it's important, as you mentioned, okay, Trump, I don't think in terms of granular details, he just doesn't have a grasp of this, nor does he have a grasp of Russia, Ukraine, or Israel, Palestine, but it doesn't matter because the fact of the matter is no one has a granular grasp of those things at the highest levels, clearly. So what he's doing,

to your point, is saying, look, this is something that I think will help me garner support, help me gain traction with this voting block, which I noted the other night, there's no more apathetic group when it comes to voting than Zoomers and millennials. You have to drag me to the polls, man. And I think a lot of people are in the same boat. But if you tell me that you're going to protect my Bitcoin, which by the way, I don't have a house, I don't have a pension. Fuck, I probably don't even have a job or a box of Kraft dinner in the cupboard. But I've been gambling on Coinbase, pushing the stock price higher for the last two years. I got that. I don't want you guys to fuck with that too. You've already fucked with everything else. I think that's a pretty good strategy.

I'm curious, put your blue hat on for a second. Do you think that the Biden camp, I mean, clearly they're engaging with Coinbase as far as taking donations. That's one thing. I think that's sort of tertiary marginal stuff. But do you think that they're going to release a statement on Bitcoin pretty soon? Because really, when I look at Trump, Biden, the Bitcoin thing, even the broader crypto thing, people ask all the time, you know, what does it matter if Trump wins the presidency? Well, I'll tell you what happens if he wins the presidency. Gensler is gone immediately.

Warren is neutered immediately. All these people who are talking about anti-crypto this, anti-crypto that, they're gone. They're powerless. They cut the legs cut out from underneath them immediately. Even if Trump doesn't do anything with Bitcoin and reneges on all the things he's saying about custody or whatever, and just is neutral, does nothing, the price still rips. If Biden wins, these people are empowered and they gain more traction. They gain more power. They're taking scallops, they're eating corpses, whatever demonic symbolism you want to use for gaining power, and they're going to use it to crush your assets. So does Biden need to get that party in line before the election? Liz has been pretty quiet to the credit

of the democratic machine here. But I'm curious, is this a thing that they're going to have to come out and talk about? And maybe the follow up question, are we going to get probably has to be Fox News because they know that it's a winning issue for Trump. So they don't want him to have anything good for that. But yeah, in terms of if Biden has to come out, I'm of two schools with that because on one hand, I think – When you say I should stop you, he's going to be led out by somebody usually holding his hand or his arm, right? He's not actually coming out. He's being led out by somebody.

God, it's bad. Yeah, even Bill Ackman is starting to notice that, right? Yeah. The generals between about that. God, his friends probably aren't too happy with that. Mark Cuban is not happy with it. Oh, God. American politics is so great i love it anti climate change guy owns three private jets and a yacht i think so what are you gonna do there

yeah gotta gotta get my woken for this pod um yeah in terms of biden look if he thinks and it's not him if the people around him feel like they can get additional votes either siphoning them back from trump or expanding to a new market they maybe they come out more positive but on the other hand if they potentially feel that trump's already got this interest group down then maybe they say yeah we don't even need to do much of anything. We'll try to triple down on, we'll call Trump, we'll say Trump values highly risky cryptocurrency instead of spending money on social security.

Maybe that's an attack line. If Dylan Leclerc, the guy's name, he says, you know, Trump should do a billion dollar strategic Bitcoin buy. Then Biden comes out with an attack commercial and says, Trump's gambling with your money, and we're going to ensure that we have Social Security, Medicaid for the future. I don't know that's a possible line of attack. I'm not in the strategy sessions of the people around Biden. But look, I mean, it's hard to think these people are that smart. I mean, what has been happening to the world recently? And what is America's place in it?

Again, putting on the woke hat on what's been happening there. And I think the policies are dreadful around the people in Biden. So they probably already messed up giving Trump this opening. And will they continue messing up and just letting him have this? It's very possible. Now, are there going to be money coming in saying, hey, be positive on crypto because then we're going to give you money? If that happens, then great. He'll be positive.

But I think if you've got the money, why would you ever direct it towards Biden? Direct it to Trump. Grow the fund. David Bailey writes, been talking about all these donors rolling in. Join that and let's get rocking and rolling on getting a pro-America, pro-Bitcoin mining stance in the White House. I'm very excited to hear. I mean, there's rumors swirling. I said this to you yesterday. There's rumors swirling that Trump is going to be on all in this week.

Obviously, Chamath and Sachs host the fundraiser. I can't imagine they do that without a writer about a podcast appearance. And those guys will ask him important questions that are all sort of in, they're able to weave one common thread through them. Debt, deficit, war spending, the economy, and Bitcoin. And those guys care about it. They talk about it often. Chamath and Friedberg especially talk about it. These guys all have one foot in that realm at all times, whether they want to or not,

because of their involvement with the tech industry. I think that's going to be an important interview. And one thing I can't figure out, you put in your woke out for this too, why do a debate at all if you're Trump? Like? Why bother? You're going to get a guy in Biden who's clearly going to be on all sorts of uppers and held together by duct tape and threads. Why do a debate at all? Why not just do the podcast circuit? Why do rogan all in tucker lex and i don't know pick a pick a right wing one do kara swisher show or something whatever she's doing like or pick a left

wing one i should say do those shows and skip the debates and tell biden do the same thing and see how it goes right that's like to me that's easy strategy they won't do it like for the life of me that that kind of stuff from trump's camp drives me fucking nuts. You have any opinions on that? Of course you do. What are they? philosophy going with Biden and I think Trump is leading right now and I think that the the media will only use his answers to attack him the media he when he does a CNN debate he will not be debating Biden he will be debating Jake Tapper and Dana Bash I mean these are these are not unbiased moderators these people hate Trump with passion and do we really think of oh it's convenient that the CNN one is the first one. Do we think that he's actually – do we think Sleepy Joe is going to go on Fox News?

I have a lot of thoughts on that. I completely agree with you. Yeah, I couldn't agree with you more. Yeah, okay. Do you want to hit anything else or are we done? Should we do – should we finish up with embrace debate TradFi timeline? Okay. Let me articulate my position on this, okay? finish up with embrace debate TradFi timeline? Okay.

Let me articulate my position on this, okay? Because I think I'm being unfairly characterized here by you and your camp about my timeline. I think your camp is unfairly characterized by my position here. I do not think that all this stuff is like, you know, a year away. And although we just spent

15 minutes talking about the election and the sort of relevance as far as the political realm and the mainstream realm that Bitcoin suddenly has, TradFi adoption is difficult because as the saying goes, trying to convince somebody of something when their paycheck depends on them not being convinced of it is the most difficult thing on the planet. Traditional finance requires that this game continues to run at top speed or something close to top speed for the foreseeable future. And if you think that Bitcoin is here to stay, and we both do, and you think that Bitcoin's adoption is accelerating, not only because of quality changes and quality improvements on the

network and the asset, but also because of just this broader understanding from people in both the Bitcoin space and the TradFi space that the other side of the equal sign, the government spending side, the policy side, is just going to push this thing to infinity, then you have to imagine that the more that happens, you're going to cross some threshold. I think the difference between our opinions is only in the threshold required for the inertia to become exponential. And whatever that threshold is for you, it's probably a little more than it is for me, but I think we're getting pretty close to it now. And I know you and me talk all the time about this mythical 100K Bitcoin. You think that it doesn't matter because you are in this, and I'm going to unfairly characterize

your position now as your camp has done to me uh you know i think you think it doesn't matter because you look at stuff on the terminal and think 100k bitcoin what's the market cap it's insignificant blah blah blah but that's not what matters what matters is if everyone stops and i've said this to you before but i'll articulate if people who are not in our little group chat there. If everyone stops putting 100% of their savings into indexing and starts only putting 85% into indexing and 15% into Bitcoin, it's a problem for traditional financial markets. And it's a problem for pensions. It's a problem for a lot of things. At 15% Bitcoin, 85% indexing, the price rips. And so you get this flywheel of upward price momentum that I think is difficult to comprehend in this moment, but it's going to be so obvious in retrospect that we had all these things leading up to that.

And I think at 100K, competent people who have even a finger in the investment side of their life are calling their brokers or doing it themselves and saying, yeah, I got to put something into this every two weeks instead of doing everything into the index, say, you know, inspire or whatever. What are your thoughts? Tell me why I'm wrong. I think you're overestimating the intelligence of these people and not only the intelligence but the patience because it's going to go down eventually maybe it doesn't go down from 100 maybe it goes from 250 to 100 or something this cycle who the hell knows but i don't think people are thinking that long term i mean i think i think they're i think the the midwits do a little bit smarter than that

the 401k system historically has worked and it is working for them right now. I mean, the 401k, man, if you've been putting in over the past 10 to 15, 20 years in this equity market and you're getting the company match, you're doing great. The S&P 500 is almost 5,500, I think. I mean, it went down to – I mean, just look at the long-term charts. I don't have to go over the numbers now. It's doing well. It's doing well. You've done very well for yourself.

NVIDIA is 40% or whatnot of the S&P 500 return this year. Like you're crushing it. So one, I would say there's no reason to change anything. For the boomers, there's no reason to change anything. The other thing would be if and when we break 25 down to where maybe you would want to change something if stocks are down 25 probably bitcoin's down um and or if bitcoin's still up you might go well i just lost all this money in the market i don't want to do something higher risk which is bitcoin so i think maybe that's one angle i would take to

address that point and then i think the the other one, which we talked back and forth on off the show, but I think TradFi, I think you're talking about retail getting in, which certainly I would agree with you if 15% got in. I would say the indexers. Is the indexers retail? I don't know. Like how many 401ks are doing match and they're just indexing too? Indexing is a huge chunk of the inflows for everything. talking about here? Are all these people really buying Nvidia or are they just loading up on these ETF products that have an increasing Nvidia weight over the last month or two months or quarter or year, like you said, right? That's another concern I have, but anyway, continue. True, but how is that impacting Bitcoin though?

Are you saying if MSTR gets to a huge market cap and people keep buying it? Yeah, I mean, I don't know what will happen there. This is the problem I have. I think there is a correlation between the stock market and Bitcoin, but I'm not sure that at Bitcoin 100K, the correlation continues and they rise and fall with each other the way they do now. And we talked about this offline, by the way, the MSTR thing. And this is happening with other stocks, too. That used to be just high beta exposure plays the bitcoin before the etfs the beta is disappearing so the correlation is shrinking a little bit and i don't know if it's

like meaningful or significant certainly it hasn't been too long in the tooth yet but something is changing there it looks like to me yeah i think maybe it's people that are just looking to get any any bitcoin exposure on sale uh i think maybe that's that's are just looking to get any any bitcoin exposure on sale uh i think maybe that's that's it but i'm looking at like so so the number one holder that the conspiracy theorists are going to come in the number one holder of nvidia's vanguard at 8.7 they own everything um and then out of that the number one fund that uh owns so 2.3 percent of nvidia total is owned by the vanguard total stock market index fund yeah that one i think pretty sure anyway yeah yeah and what do you know they bought 576 000 of it last quarter. Yeah, because they went up. They had to. The second one, 1.55% of NVIDIA total

is the Vanguard 500 Index Fund. So exactly what we were talking about. They own 380 million shares. They bought 442,000 last quarter. So yeah, they're buying that. And that is completely having a positive effect on the NVIDIA stock price, as it is for Apple, Amazon, all these guys.

Completely having a positive impact. I just don't know how... And I guess this briefly on our final point, because I know we're going long, but this brings me to the MSTR. The MSTRs of the future are going to be small for the receivable future. It's the MetaPlanets. It's the Semler. It's companies that will benefit massively on a Bitcoin run-up. NVIDIA is worth $3.3 trillion.

Even if NVIDIA put all of their cash into Bitcoin today, immediately, and they have $30 billion of cash. NVIDIA puts $30 billion of cash nvidia puts 30 billion cash to bitcoin bitcoin 10x's okay now they have 300 billion of bitcoin well their market cap is 3.3 trillion so it's not really going to do much for the stock at all so so that's why and going back connecting it way back to the beginning of the podcast talking about iron um i was like cap like 33 million by iron the capital is scarce why are they spent like they're raising equity at four bucks a share that's 13 now like they didn't raise as much equity beforehand it wouldn't be as high like capital is so scarce all these companies even nvidia but nvidia is an extreme example all these companies out there, they have capital for everything. Like different parts of

the company want different parts of capital for different reasons. They have long-term plans. Like when you're a company and you say, I'm investing X amount in Bitcoin, you are removing the ability for all these different people and and functions and groups across the company to gain access to that capital and to do something potentially productive for the company so that's why the companies we're seeing in my opinion are like meta planet was a fucking nothing they i think they literally just had a pile of cash um mstr basically had a pile of cash their software business is doing much and then this new one, Semmler, yes, they have their existing business,

but they also had a pile of cash. And I think the guy owns, the guy's name is Eric Semmler, right? Like he owns the majority of the company, at least a lot of it. So I think that's the kind of companies that are going to do it. And Eric is going to go out and say, hey, we love the idea of Bitcoin as this treasury reserve asset.

It's going to go up in value, all that stuff. There's a lot of upside there. For the average big company, Amazon, Apple, Nvidia, Google, Meta, all these companies, it's just more hassle for them than reward. And I think until Bitcoin is consistently higher priced, they're just not going to worry about it. They just don't need to. It's not a bad thing. I agree with you there.

It's sort of in the same vein as the career risk thing, obviously a little bit different for accounting reasons and whatnot. And you mentioned, too, this idea that shareholders ands to, you know, especially these guys who have run companies from the beginning, guys like Zuckerberg, you know, they want that cash available to better the product. We didn't talk about, I think it was one of the European outfits of T-Mobile getting into node running and mining, right? Which, yeah, so we talked about this offline, because I was wondering what what so what is the actual dollar amount being put forward we don't know we talked about yesterday on the show we didn't have

the number because because because that's that's the big question to me good and now now t-mobile prime example t-mobile let's let's pop on the terminal here um they generate a pretty significant they're they're a wireless company in the US. I think they're the biggest, maybe they're the second biggest to Verizon, but they're the biggest in terms of valuation because they're growing more than Verizon. So I'm looking at last year, 15 billion of free cashflow and they have 7 billion of cash.

So yeah, if I'm T-Mobile, like if I was an investor in T-Mobile, I'm like, dude, why would you use the cash? Why would you not use the cash in Bitcoin? But what goes into running a wireless network? It's, oh, can I invest in more towers to have better service? Can I invest in better radios for better service? Can I buy more wireless spectrum from the government who is going to auction it off or from other companies that have an excess amount?

And they just did that actually. They bought some stuff from U.S. Cellular. So there's all these things going to auction it off or from other companies that have an excess amount. And they just did that. Actually, they bought some stuff from US Cellular. So there's all these things going to it or it could be, hey, if I'm T-Mobile, I want to acquire more customers this quarter. I'm going to spend more money on it. So that's why I think it's so much harder to sell a Bitcoin strategy, not only to the street, but to your own employees. If you're a big company like this, there's career risk. If it's $10 million, great. T-Mobile, I think as a T-Mobile Ventures program, they're investing in startups. That's fine. But I think for me and you, we want to see something way more than that. We'd love to see a billion dollar buy. And I think, look, I used to be more positive on it. I used to be, you know,

Saylor came out hot in 2020 and 21, like more companies are going to do this. It didn't really happen. I love Metaplan. I love the settlers doing it. I just think that Timo, and the other thing too is that Timo and all these companies that have less cash,

they can make 5% of their cash right now. Yeah, that's the other problem. You're right. Their cash isn't losing money. So they're making money off that. And so they're not going to put it on Bitcoin. Yeah, as long as the short end is still 5% and change. Yeah, you're probably right.

You're not going to see these guys invest. It's too bad because it really does demonstrate to me that there's a lack of forward thinking and all these companies whether it's t-mobile or apple apple is a great example of this actually like they have been caught with their pants down fighting the last war as the saying goes in the last year or so whether it was this headset or the underwhelming iphone updates or you know not building their own llm and outsourcing it to open ai causing all these privacy issues like these companies i think are sort are reaching their capacity for innovation under the current

management umbrella, or under the current suite of products, or maybe just under the current market. Is the candy bar phone at its peak? How fast do I really need my shampoo and body wash from Amazon? Do I need it that hour? Can I, if I can wait till the next day, like the marginal returns, the diminishing returns now on all these quote unquote innovations, you know, it's, it's reaching the point where at least in my opinion, you'll disagree with this. I'm sure for good reason, you know, the, the, the explorer sort of phenotype, you take a shot now, you know, like you, you. You have a chance to do something great and

be innovative in the C-suite space, in the founder space. You've seen benefits for the companies that have done it. Yeah, it might be a difficult road to begin with. Yeah, you're going to have to have really unwavering support from your board and your shareholders and your investors. But man, the potential outsized returns, both in terms of personal reputation and growth of your company, I don't know, it feels like to me pretty soon you might get there as sort of these other options become less appealing and return less in terms of wow factor and bottom line. I totally agree with you on the companies with a strong founder and people that have voting control like Saylor. So I totally agree there.

And I think Saylor has proven that because he will go down in history for the reasons that you just outlined. But I guess I would push back a little bit. Just let's use the T-Mobile example. The guy that's the CEO there. Is he being paid to allocate resources to Bitcoin? Not really. It's going to cause a bunch of investor questions. All the Wall Street analysts are like, I got to put this in my model now.

What's going on here? How much cash is going to be used for it? Man, like they're investing in fiber now. Why are they going to go out and invest in Bitcoin? And then it's the career risk that you mentioned previously. But the question is for somebody like me, if you were in this business, if others were, what's the better call for you? Is the better call to be a high up executive making the – I'm not saying I'm a high up executive, but I'm putting myself in the shoes of someone who might be if you're a high up executive is the right call to keep banking

that $500, $750 a mil a year stock options you can be crushing it and just buy some Bitcoin on the side or is the better opportunity to buy a bunch of Bitcoin for your company and then when it falls 75% you might get fired

I think a lot of guys are just making that fiat mining cash go, go a long way. And I, and honestly, I can't blame them because I'm, I'm doing the same thing. There's a great experiment. Uh, we're, we're far afoot here, but, um, or far field, there's a great experiment that was done. Uh, I don't remember exactly where, but basically if you put like, you know, 10 monkeys in a tree or in 10 trees and each tree has a banana or two bananas, the likelihood of any one monkey going to get any other one banana is pretty small. They all just stay home and guard the banana they have. But the one monkey who goes to get another banana

actually winds up with all the other bananas like 90% of the time because everyone is just so scared even when they see the results and the potential, the possibility that leaving your tree under the assumption that no one else is going to take your banana while you're gone because they're so afraid to leave, the results are outsized. The gains are outsized. And you see that. It's human psychology too, right? I'm talking about monkeys, but human psychology is the same.

A lot of people would rather, like you said, sit on the 500, 700, especially because chances are to get to that 500, 700. You've already taken your fair share of bananas on the way up and maybe you don't feel like going banana hunting anymore at that level, which is another problem, right? These guys already have all their scalps. What's one or two more? I'd rather just sit on the yacht and get on the horn with Zuck anytime I want, go play golf with Mark Cuban after flying on his Learjet or whatever, right? It's a difficult conversation to sort of figure out because these guys are in a different world,

both in terms of psychology and in terms of incentive. But fuck, it's bothering me lately to see these companies constantly put out shitty products. Google's AI product, Apple's iPhone, Amazon hasn't done anything. If the only thing holding them back is that they don't want to take a risk, to me, that's no way to live. It's frustrating to watch. Yeah.

I mean, I guess another thing too is is i would say and i'll use t-mobile here again as an example so they they are a company that if they're going if they're going to do something they will give advanced warning of it so they wouldn't just go out and buy um a fiber, for example, because that's kind of what they're investing in now. There's a lead up. There's a three, four, six quarter. Hey, I'm going to mention on the earnings call might be interested in this kind of thing. And I think I'm using that as an example because there's a whole like industry of these companies have investor relations team

they're in constant communication with wall street analysts on a big company like nvidia you could have 40 or 50 of them and then the chain goes the the wall street analysts are in big communication with the huge companies the huge active managers. Hey, should I be buying buying Fidelity? You know, like a Stacey Rosgon. He's a Bernstein semi-data analyst. Very well regarded. He's probably talking to these top investment companies that are investing in semis going. Here's what I'm hearing from the company.

All that stuff. The problem, if you go into Bitcoin, is that now that whole chain, they have to dedicate a portion of their day to talking about and learning about bitcoin and they just don't want to it's just it's negative it's i don't want to think about it um if you have a bunch of bitcoin you're like i don't want the career risk if you have no bitcoin if you're a hater if you're a salty critic they're like fuck this man i can't believe I have to talk about this. So it's just like I think anybody in that chain just goes, I don't even want to deal with it.

And so it goes back to our block conversation. People just don't want to deal with it. Like I don't want to write about it in my write-ups. Like if I'm a sell-side analyst, likep morgan jack goes to the conference every year i don't want to fucking talk about bitcoin in my write-up because i know i'm gonna get a bunch of questions on it oh oh you're bullish block because of bitcoin why and now my whole day is filled with tradify no coiners bitching at me that i'm too bullish on block because of bitcoin so i and it sounds it sounds so stupid to the outsider like like why why is stuff this happening but it's kind of the way it's kind of tradify

and i and like i there there's an illusion and i'm not saying you specifically have all of this but in general there's this illusion that like man like i'm at this fucking crazy hedge funds and it's supposed to be the smartest guys in the room that's what we all think they're they're not they are not man i'm in here they're fucking not and if they were they would have gotten corn and been out a bit years ago because who knows the most about how these financial systems work and why it's a scam it's the people in the industry and they can't even see it yeah they're i mean they're relying on it you've been great sp um you said you are you going to tell people like uh are you starting woke antidote again

it's election season i need something to listen to it can't just be tucker all day every day it'd be good to get uh you and tv back on the mics there me Me TV and I, we, we saw each other recently. We, we discussed getting, getting the show back, back in bloom. So we might be back. I mean,

so I'm, I'm coming to you guys now with, with a higher, a higher percentage of a chance that we we're back and especially ahead of the election you're right i mean at the very least i mean i got to talk about trump doing the mining stuff come on i do the pod just for that i love it i love i mean i i'm a big fan of that show i hope you bring it back do you want to tell anyone anything else before we wrap up? Final parting words? Oh, yeah.

So briefly on, so it was CoreWeave, Core Scientific, and this is interesting. So once, I'm quoting from the press release, once the 200 megawatts of HPC infrastructure is operational, the project that this is the hosting agreement is estimated to generate over 3.5 revenue for Core Scientific during the 12 year contract term estimated annual revenue for the contracts to 90 million. So the question there would be, you know, how does that at what Bitcoin price does it make sense to to not sell the capacity and actually have it yourself? And I think in general, it's going to be part, you're going to sell part of your capacity if you want to, which guarantees money coming in, but limits your upside. And then there's going to be some miners that are pure play doing all Bitcoin upside. But yeah, no, I think I just wanted to kind of to reiterate the point that I said earlier that I think I just I think like Bitcoin's in the big leagues like Bitcoin is we have the ETF. Now, the Bitcoin mining companies are increasingly being I'm not sure they're still respected, but at least investors are now appreciating like when when a core weave comes out which is which

is the hot startup which is probably one of the hottest besides nvidia in terms of in the ai space in general anthropic i was thinking of because sbf invested in that with uh with fucking stolen bitcoin funds that's what i had on my head that's so stupid. Amazon invested a lot in Anthropic too. But yeah, so when you have somebody like CoreWeave going, not only am I going to agree on a 12-year deal with this just-out-of-bankrupt miner, not only that, I want to fucking buy these guys. That kind of starts getting people going. It's the Riot and the bit of it's it's increasingly being owned by the top um by the top etfs and i think this is for people

out there that are kind of anti-tradify getting into bitcoin i would just say this is the natural process like you're you're not you're not going to be able to grow in the way you want if Bitcoin just completely avoids the number one financial system in the world. The financial system runs on the US. The US stock market is the stock market. Go look at the world and all the top companies, Microsoft, Apple, Amazon, Nvidia are all US based in the US stock market. So if you're really trying to come out there and saying there is an asset that has appreciated like nothing in history and it's going to completely avoid everything in the number

one current financial system in the country, no fucking way. You're crazy. And I don't understand why you would have this thought. This is nuts. Listen, people are curious. I don't know what else to say. They don't want it. They love the number go up, but they don't love the cause, right? We have this discussion on CBP almost weekly at this point um it's you know it's frustrating but i understand both sides i just think that the more number go up the more people realize like not only you bring in more capital but you're bringing in a lot of smart people who maybe just are a little late to the party who will make this whole space better that's the thing to keep in mind yeah and you're gonna

have i mean there are there bad apples in in trad five of course there are but are there bad apples in TradFi? Of course there are. But are there bad apples in fucking 2017 ICOs and 2021 NFTs and DeFi and whatever? I mean, meme coins, I guess. But at least, you know, that's another one of my theories that we've – I appreciate the rotation from ICOs to NFTs to meme coins, because ICOs, it was the promise of this new technology is going to take us to a new decentralized Twitter on shit coin ABCs promised land. And then 21 was like, all right, it's not going to do that much,

but you know, Paki, we might, we might have some, you know, house deeds on the NFTs. And then 2024, it's like they were all memes anyway. They were memes from the start.

And now it's pure, purely boiled down to memes because we know the technology is not there and we don't give a fuck about the NFTs. So I I I'm not invested in any meme coins myself. But can I appreciate a fun meme coin? Of course I can. Yeah, I think I've enjoyed some of those ones on Solana. I'm not going to lie. Anyway, that's, listen, a story for another time. SP, great as always.

Thank you for your time. People in the audience, thank you for tuning in. People on Twitter, I can't see your comments, but I see there's a bunch of you guys out there. Thank you very much. We'll see you next week on Monday night for more CBP fun. Until then, take care of yourselves. Outstanding.

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