00:00 Speaker A
So I’m reading your ad, this is actually one of the biggest all stock Bitcoin Treasury mergers to date. So walk us through the news mad and just the the strategic rationale here.
00:15 Matt
Yeah, so it’s actually the first uh merger of two Bitcoin Treasury companies. And so Strive actually just went public ourselves a little over a month ago as a new Bitcoin Treasury company and Semler scientific was actually the second US Bitcoin Treasury company that were publicly listed. And the idea here is a couple of different things. One that when you actually combine the scale, it actually drives down the cost of running a Bitcoin Treasury company. And and one way to think about a Bitcoin Treasury company is effectively on one side an operating company, on the other side effectively a a hedge fund that is doing various different things to outperform Bitcoin itself over the long run, which we can get into it it re resolves around uh digital credit and actually a carry trade. And then the other thing is actually reimagining a broader mandate for Semler’s operating business and leveraging people like our co-founder Vivek Ramaswami, other board members that have a lot of expertise around preventative health care, biotech, and giving that a broader mandate around preventative health care, the Maha movement and driving better value for shareholders.
01:31 Speaker A
Matt, if I’m an investor, I’m listening to this, why do I want to own a Bitcoin Treasury company rather than just Bitcoin?
01:44 Matt
Yeah, it it ultimately comes down to your future predictions on the return of Bitcoin. So if you are a Bitcoin bull and let’s say you think that the future cager of Bitcoin is 20% or 30% or 40% or 50%. And as an example, since 2020 the the cager of Bitcoin has been over 60%. So let’s say that that is your your view, a Bitcoin Treasury company has access to leverage perpetual preferred equity that’s has no margin is not callable that is not accessible to you as an individual to a fund and so that carry trade can outperform Bitcoin itself over the long run. Now obviously embedded that is volatility. There’s periods that like late last year where micro strategy as an example, outperformed Bitcoin drastically. There’s also periods like strategy started the their strategy itself in 2020 in 2022 and 2023, they actually had underperformed Bitcoin drastically. Now they’ve outperformed it by about 10 X. And so over the long run, these strategies can work, but they’re volatility on volatility.
02:49 Speaker A
Let me the there are critics of this strategy, right? You’ve heard Jim Chinos. He’s a well-known guy, right? He doesn’t have nice things to say about this. I think he he calls this financial gibberish, man. I mean you’ve heard that, I’m sure. What do you make of that? What’s your response to Mr. Chinos?
03:13 Matt
Yeah, so I think that there’s times where valuations could be stretched, but the thing with both Bitcoin and Bitcoin Treasury companies is zooming out. So I’ll give me give you an example of strategy itself. If strategy was gibberish, then even if strategy’s valuation collapsed to the value of their Bitcoin or even 20% under their Bitcoin, since they’ve implemented the strategy, they would have still outperformed Bitcoin itself by multiple X. And so I think what Jim Chinos was not a fan of was the valuation of strategy at the time. He put on a a short, probably. It’s probably worked out well for him, but for the company itself, strategy, they’ve outperformed Bitcoin in a sustainable way. So has Metaplanet. Companies that have been all in have long-term outperformance over Bitcoin that I think is already showing itself in a way that is pretty un-reversible.
04:14 Speaker A
Can I ask you more broadly just about what we’re seeing in cryptocurrencies here, the pressure some have been where you look at Bitcoin or Ethereum. And what do you make of that and what you chalk that up to? Macro weakness, folks booking profit, What do you think?
04:31 Matt
Yeah, so, you know, over the last week there was a large massive crypto liquidation. was a $20 billion liquidation. It was multiple times larger than the FTX liquidation. And that was around a hack in Binance around a stable coin that had cascading liquidations. Really didn’t impact many institutions. It also didn’t impact probably the average American who had really wiped out was the crypto native trader and market maker that many of these people had 10 million, 20 million, $50 million accounts completely wiped out, $20 billion overall. and that has caused problems with liquidity and crypto conditions. It’s caused downward momentum. and on top of that, you obviously have some broader macro weakness right now in in equity markets and and I think that that’s kind of filtering through, but over the long run, as an example for Bitcoin, there is not a single four-year period in Bitcoin’s entire history. So today minus four years, yesterday minus four years where there’s been a single negative period of return over that time. So again, I think it’s that zoom out mentality. And when you zoom out, both Bitcoin and Bitcoin Treasury companies can work. But in the short term, it’s obviously a a a volatile market and that’s a market where you need conviction and education.
