Bitcoin Treasury Companies: The Rise of Digital Credit | Tim Kotzman

One of the developments is the separation kind of between the companies that feel it's important to have an operating business that is the core.

And then owning Bitcoin is a strategy for their treasury strategy, what we're doing with our cash.

How does the world perceive that? How has that changed? And what do you think lies ahead on that score?

I think digital credit is the...

most important innovation in the Bitcoin treasury space period.

And I think there'll be a focus on that for a very long time as it develops.

And we're talking years and decades.

I think a lot of the other strategies, including ones that haven't even been developed yet, will play an important role But when you think about the preferred equity product and giving that yield, high yield, 12%, 13%, to that cohort of investors and then taking that capital and buying more Bitcoin and being a true capital markets machine, buy Bitcoin, sell Bitcoin, you're really just arbitraging.

I think Michael did a great job on the last Q&A call of saying, we can buy back this product.

we can buy Bitcoin, we can sell Bitcoin.

That's that amount of financial engineering or to put it flexibility.

Yeah.

To the equivalent of this is, uh, going to sound dramatic, but like literally printing money.

Like if you can write, people look at companies like tether and they have such an incredibly profitable business or like just literally kind of like printing money.

Um, i think that's a bad a hard business model to beat i think it's hard to beat uh giving investors over on one side what they want taking that capital and buying something that you have conviction is going to go up 30 40 50 percent a year uh and you're paying out 13 you can literally buy the top of bitcoin sell the bottom of bitcoin look like an idiot for a couple of years, and then boom.

Yeah.

I guess another way of saying, if I'm correct in hearing you, is that just the straight business model of issuing digital credit, buying Bitcoin, and that as the business model sets a very high hurdle for any operating companies that want to just put Bitcoin in the On the balance sheet, then they may operate a business that's fantastic and have lots of value and outperform a strategy.

But in general, it's very difficult to find businesses and operate them to reach that kind of a hurdle rate of return.

Is that a fair way to recap? Absolutely.

I would equate it

to, you know, Bitcoin.

Let's say that it goes up 30% a year for a while.

starting from zero, if we walk out this door today and say, we're going to go start a business, an operating business, and our goal is to make 30% a year.

It's hard to find those.

So it's hard to find them.