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- [00:00]
A
The last few days of events were for me best summarized in an ex post this afternoon by James Lavish. It says, quote, nobody will be arrested, nobody will be held accountable, the money will never be returned. They will just cut deals with each other, print more money and act like it never happened, wake up before it's too late and own something that cannot be printed into oblivion. Today for me can be summed up in this quote from Michael Saylor in his interview on what Bitcoin did. The small idea here is we have a great product, you should buy our equity. The bigger idea is we have a great product. You should buy the product to make your life better. But the greatest idea is we have a digital credit product. You can actually build it into your financial product, build it into your bank, build it into your future. And you can have the greatest product in the world and you can be the greatest company in the world and you can be the most powerful nation in the world. Empower others. Welcome back to the hurdle rate Episode 43 for the week of January 12th, 2026, I'm Tim Kotsman. I'm here with Jeff Walton, Ben Workman and Matt Cole on the board today we have strategies $1.25 billion orange buy of 13,627 bitcoin at $91,519 per bitcoin bringing their new total HODL to 687,410. Bitcoin acquired for $51.8 billion at $75,353 per bitcoin. We have the Jerome Powell DOJ subpoena strategies, STRC volume liquidity and the history of the prefs since their launch. We have the algorithmic architecture of the market, global political unrest, riots, chaos and a new S&P 500 all time high. We have Starlink and global Free communication, a cap on credit card interest and the impact on credit card points. If that's the case, Jeff, as you said in your show notes, a wild week and even more craziness on the horizon. Over to you. Where would you like to start?
- [02:53]
B
Yeah, wow. Yeah, this weekend was crazy. We've got just a lot of energy in the market right here in, in 2026. There's chaos seems to be everywhere, globally like Iran, politically in Minneapolis, Minnesota, different cities, there's riots happening. Meanwhile equities are hitting all time highs. Really interesting things are happening with these perpetual preferred securities companies are raising capital. Yeah, very interesting time to be alive and I'm sure we'll get into some fun discussions here. But I want to start with the strategy buy just because it's huge. I think it's pretty monumental. Last week, strategy purchased, Tim, as you said, I think about 13,000 Bitcoin. And of that, 119 million of it came from STRC. So the really fascinating last week, so STRC traded between $100 or between $99.70 and $100.15 the entire week during the back half of the week from Wednesday through Friday. And it traded above $100, the entirety of all three of those days. And they raised $119 million of capital on about 420 million of total trading volume for the week. And of the volume that was trading at or above $100, they raised about 43% of the volume in those three trading days. So that was a massive day. And then fast forward to today. So recording this. On Monday, January 12th, there was about, what was it, 100, a hundred and $75 million of volume today, all above $100. If you took that same proportion of capital raised relative to volume, that that's around $75 million of capital potentially raised today, which is larger than all three of the days last week. So I mean, significant. That's a significant event within the markets. There's demand is growing for this instrument, the volume is growing in this instrument. And I think it's fascinating to see and conceptualize, like what's happening here. Why. Why is there so much demand for this type of product? And I'd be curious to get your guys's take on this. But, you know, I think the liquidity and the architecture of the market, like algorithms being involved here, has got a really unique impact of why there's significant volume in STRC and some of these digital credit products. Because you can calculate the risk 24, 7, 365 on a computer as opposed to having a balance sheet backed by illiquid and opaque capital. So, yeah, maybe I'll kick it over to you guys. Ben, Matt, what do you guys think?
- [05:47]
C
I'll start even more basic than that, right? These are great products. And when people find out about these products, they want them. It's that simple. I think right now, I think we're in that curve where awareness is starting to grow, right? You can't have products like these in the market for too long, providing both these tax advantages and these level of yield and not have word start to spread after time. We got through the end of 2025, you get through all the tax loss, harvesting season, we're in 2026. We're only 12 days in, but man, it feels like months have happened already just with all the news and I was listening to all the things Tim was rattling off and oh my gosh, look at everything going on. But you know, I think that the time for digital credit has come. And I think Stretch being such a strong product with such a broad, applicable and usable use case, I don't think this trend is really going to stop. I mean, I think you're just starting to see what happens when demand ramps up. It wasn't too many weeks ago when people said it was dead and there would never be demand for it again.
- [07:00]
D
Right.
- [07:00]
C
It went down to what, $94. They said it was broken, nobody's ever going to buy it. That's quickly been proven not to be the case. And I think we were all on the same page that that wasn't going to be the case. But when you've got products in the market yielding greater than 11%, backed by as much collateral as they're backed by with tax advantaged dividends, find me a better product. What else do you want to be investing in? If you've got a fixed income portion of your portfolio, what's a better product? You can look at all the total return products that are out there, look at all the bond products that are out there, find me something better. I think that we're starting to see that reality. These are great products. People are starting to find them, institutions are starting to find them and they're going to work their ways into portfolios and this demand is unlikely to slow down. It's more likely to speed up from here.
- [07:52]
D
Yeah, I, I couldn't agree more. And the reason that I think all of us have this conviction in it is we're having these conversations on a day in and day out basis where you talk to people that might have 500,000, a million dollars, a few million dollars to put to work in an income product. And then when you walk them through it, their first reaction is they don't understand it. And then when you walk them through it, they're like, sign me up, give me a million, give me a 2 million, give me 3 million. And we've had so many of those conversations just on a one off basis that start from just not understanding it, but loving the concept of a double digit yield. They're generally okay with bitcoin risk. And I just think that the more you go out there and tell that story, it reminds me of conversation that Ben, Jeff and I were having earlier today about a conference we're going to go speak at in Vegas during Strategy World and. But it's not a bitcoin conference. It's a conference with high net worth, probably like baby boomer type sort of people, individual investors. And it's like what, what is the best message for these people? Is it amplified? Bitcoin is a bitcoin? Is it digital credit? And the answer is pretty obvious. It's digital credit. It's just such a good product that directly hits such a large percentage of Americans in society today as something that's interesting to them and is more easy to understand. It's cash flow. It's a great cash flow. And you're seeing this demand with stretch and liquidity and liquidity relative to most income instruments is just outstanding. As a fixed income guy where when I was buying products, I wasn't buying them on an exchange, I was buying them otc. And so you're the liquidity what you understand to be trading volumes. It just sometimes bonds wouldn't trade for several months or we might even own 100% of the issuance of a single bond. And so it just like you then have to find a comparable to try to compare it to, to get like an estimated price and liquidity. And these things are just trading every single day with great liquidity. Whether it's strategies, prefs or rpraps, when you look at them on a relative basis, these things are just extremely liquid versus what the market is used to for an income instrument. And the yield is also great. And it's kind of like, you know, reminds me of the conversation we had last week about private equity, about, you know, how for some institutions that lack of liquidity is a feature, not a bug. But for most rational investors, especially individual investors, the liquidity is a feature. And that liquidity is something that I think, as people understand is going to continue to generate more and more demand. And I think we've just scratched the surface of it. And, and to think that with Bitcoin at 91k that people would, you know, the haters would write the death of bitcoin, treasury companies that issued preferred equity as like the death of them when, you know, bitcoin went down and amplification means amplification or you know, as, as we're just in the early days, we're not even a year into the pref, you know, know, issuance series yet that people would even consider riding the death. I mean, I think, to use a sailor phrase recently, I find that offensive.
- [11:11]
B
Yeah. And I want to double tap into this because I, I think all of those points you hit on are, are super valuable to think about. Just, okay, how do we get here? This is a six month old product, right? Stretch is a six month old product, okay. When it launched it was a two and a half billion dollar IPO. It launched in July. The price of Bitcoin is $117,000. Okay. So since that time the price of Bitcoin has gone down down to 30%. It's now about down 22% since it was launched. Okay. And the, in thinking about the IPO and how the IPOs work, the IPOs, that's capital that's coming in the door. But not all of that capital is long. The credit quality, they are long the discount that was offered at the very beginning of the issuance. So I don't know, you could estimate maybe 50% of that was folks that were buying, buying SDRC because of the discount. And over time there's turnover in the folks that helped get this thing off the ground to those that are actually long the credit quality into the future. And I'd argue we're probably starting to get to that point where this instrument is mature and it's in the hands of long term holders, at least it's on the way there. So when you think about like the future of what this looks like, I think that liquidity point is so incredibly important. And thinking about what does the next five years, 10 years, 15 years look like? I mean this is one of the most liquid fixed income instruments aside from all of the diversified ETFs that are liquid in an equity wrapper. This is one of the first single solo fixed income instruments that's got significant liquidity and the yield is high. So you think about how the world is advancing with AI and machine learning. This is also very interesting to the computers. Like the computers should be very interested in this product as well, because they can sit in it, it's got liquidity and it's got yield when they need it. So not only are asset managers that are interested, not only can asset managers be interested in this, this should be a very compelling instrument that computers and machine learning should be interested in as well. And the amount of trading pairs that you can have in between all of these different types of instruments is growing every single day. So yeah, it's a fast. These things are fascinating and it's super exciting to see how they're performing and look forward to seeing how they do in the future.
- [13:37]
C
I think you're seeing part of the life cycle of a Lot of these transactions play out, right? You saw it when you had a lot of the pipe transactions happening as well, is there's that initial rotation of the holder base that happens. And I think it's the same with a lot of these digital credit products. People that got in, in the ipo, you're going to have a lot of the institutions that come in and they want to invest for that immediate capital appreciation component of this. But over time, the structure of these products lends themselves to be held, right? You're realizing the taxes on this when you sell it. That's what's really interesting about this. So people that are holding this for the income, or even if it was for the initial capital appreciation and then the ongoing income, right, they have a lot of years to hold this where they can hold it in a tax deferred manner with the rock dividends. But once you get through that initial holder base that came out in the IPO and those shares rotate into the hands of the people that like the product and want the ongoing yield, all of a sudden you don't have a lot of incentive for sellers in the market and all. Ultimately, as the demand is ramping up and you've got that scarcity in the sellers, it reaches the price where strategy tells you, we'll be the seller. You can come in here, you can buy these products, you can market, bid this thing around a hundred dollars, we'll be the seller. At that level, you'll be able to get shares. And I think it's interesting that we're hitting that component of the cycle where it seems that most of those shares have now transferred into hands that want to hold them. So any net new demand is causing that price to constantly bump up against 100 because they have to find that seller. And that seller is strategy. And I think it's always very fascinating to watch how these cycles play out with the different transactions, but particularly with these products because they're so unique and they do incentivize you to be a holder, not a trader, right? With the rock dividends, you don't want to be trading in and out of these types of products just to collect the dividend. Because the minute you sell out of it, well, now you've got to pay the taxes on it, right? It's tax deferred, but not if you sell it. And I think that that's going to incentivize significantly more holding in these products. But you've still got liquidity in the market, right? And you're seeing that there's Evidence of it all over the place now.
- [15:52]
B
100%. It's changing every day. It is changing every day. Well, shall we, shall we transition over to talk about this, the big elephant in the room, this what Bitcoin did podcast interview? I think everybody's, everybody's chattering about it. I think the topic is worth, worth walking through a little bit.
- [16:15]
D
Well, you've done Danny's podcast twice in the last year, right?
- [16:20]
B
Yes, I have been on what bitcoin did twice in the last year. I went on in June of 25 and then December of 25 in Abu Dhabi. And the questions that he asked Saylor are effectively the same questions he's asked me as well.
- [16:36]
A
And
- [16:38]
B
I think that Saylor is justified in his frustration in the responses because it's a very tired question. Like the, the concept of, you know, are these bitcoin treasury companies doomed or are they dead? Is tired. These, these companies have money. Like the companies that hold the bitcoin have money. They can do things with that money. They have to build them. You know, what does the future look like of being able to build these products into the future? They have to build those opportunities. But there are several opportunities across so many different avenues. And we're all working together to build the bitcoin network. Sure. Is there friendly competition that I want to be higher than some of the other Bitcoin treasury companies up on the publicly traded leaderboard? Yes. Is that a good thing? Yes, but we're, we're all working towards the same goal here in converting Fiat into Bitcoin and operating into the future. And that's, that's it. Like, these companies have the money, and if you compare them to, you know, equal size market cap companies, what you'll find is most of the, most of the smaller companies that may be of equal market cap weighting have significant, significantly weaker balance sheets. And yet there's very little criticism on all of these other, you know, 6,000 publicly traded U.S. companies on major stock exchanges about where they hold their assets. So the bitcoin community could be a little bit more united in their shifting their gaze towards the rest of the market and looking at all of these other things that are priced at 30, 50, 80 XP multiples, 5x price to book ratios with significant AI risk on their balance sheet from their cash flows that they're currently priced on in their current valuation models. And if you begin to use Bitcoin as your hurdle rate or even STRF as your hurdle rate, all of the valuations of those other fiat denominated Products start to look significantly overvalued. So, yeah, I feel, I feel pretty strongly that I see why Saylor responded the way he did.
- [19:07]
D
Yeah, the question, it starts. And I mean, I don't know Danny well, but I mean, he's obviously a bitcoiner and he seems like a great guy, right? It seems like a great guy. Right. But I think the focus on the question, not the individual, because it's not just him that's asking the question. Like, he's just a conduit. Like he probably hears the question all the time, right, in his comments. So he's probably asking what his audience is asking him all the time because we also get the same questions. Right. But it, it boils down to, I mean, like, several different easy analogies. It's like I liked how Sailor talked about, if you buy bitcoin as an individual, are you competing against your friends or do you want them to have success? Do you want them to buy bitcoin as well? Because you believe in it, right? Like, not because you're trying to get them to buy it, to push the number up. You actually fundamentally, deeply believe in bitcoin, right? Like, I mean, as like an individual, like most of us have done similar, but like put my entire net worth practically into bitcoin because I believed in it then. I believed in it. So we started as a company buying bitcoin because we felt like that was the best way we can maximize value over the long run to our shareholders. And then you think about it as a company, like, I mean, I'll say it as like an American. I'd love to see many American companies holding a bitcoin fortified balance sheet. I love to see that as they're getting slaughtered by AI to have a balance sheet for their future. I would love to see that as, as, as an American. I think that would be, that would be a great thing for, for the market. Are we, are we competing versus each other? I'll tell you, like, you know, it's probably a little conversation for later. This will drop tomorrow. But, you know, we, we are anticipating the summer transaction to close. We're going to pass Tesla and would I love it if tomorrow Elon Musk at Tesla started buying more bitcoin and he passed us again. I'd love that. And then we'd have to pass him again, right? Like, it's, it's a, it's a competition, but we're not competing like directly versus Tesla. They're one of the, like, most amazing, innovative American companies. We're obviously an Amazing. Operating operation operator. As a bitcoin treasury company. I think what we've done with SATA is amazing. But we're not competing with Tesla. It's a silly notion. We're not competing with strategy. We're never going to have more bitcoin than strategy. We're competing on our own dimensions. And I think it's just a. And also the conversation of how many bitcoin treasury companies could there be? How many companies could there be that will put dollars on their balance sheet? 100% of the companies, all of them. That's obviously the answer. Right. And to what degree are they focused on being a balance sheet company? Which. Right. There's many companies throughout history that have been balance sheet companies, insurance companies, banks, Berkshire Hathaway. You could, you could kind of go down the list of different ways. I mean I could. And Taylor talked about this too. Like, I know between this group we could probably come up with a hundred different ideas for differentiated bitcoin treasury companies strive. Can't do every single one of those things. Like we can't. So I would love other people to do them because they, that will have a more flourishing bitcoin economy, a stronger economy, stronger balance sheets. And so I do get how, you know, that's, that's on the. Just the question of like, is there too many bitcoin treasury companies? And the second is like, why do the OG bitcoiners continue to attack bitcoin treasury companies or attack people that promote new products or new innovation in the space and call them shitcoiners or whatever they might do. And, and I mean my message is pretty simple. Like when I was young, I was a libertarian, okay. I like literally had a card in my wallet, card carrying libertarian, okay. My viewpoints on the world haven't changed. I probably become a little bit more conservative just as I become deeper in my Christian faith over the years. But like, I stopped becoming a republic, a libertarian way before that and it became a Republican. Why? Because libertarians, as much as their ideology might be great. They always put insane people on the front of their ticket. They always get, they always lose. They never accomplish anything. Okay. And, and, and I think with a lot of these, you know, hardcore bitcoiner people, like predators of the world, I would say, like, like they don't actually want to win. Like when people, like, I think they actually want to lose, they don't want to see bitcoin adopted by everyone. And my belief on this is simple. If you create the best form of money, the decentralized form of money. Everybody's going to want it, individuals are going to want it, corporations are going to want it, nation states are going to want it. And if you create crappy money, no one's going to want it or some small group of that will want it, but not everybody would want it. And so the fact that everybody wants it shows its value. And the fact that corporations are wanting the nation states are wanting it. And the reality is, is that as a decentralized currency, you can't stop that. You can't stop us from buying bitcoin. You can't stop strategy from buying bitcoin. And by the way, when that happens, bitcoin is going to win. Now, is it going to be the libertarian notion that only individuals will have it and nation states won't have it or try to control it? No, but that was never going to be the case if it was actually to succeed, because it would actually be something of value. And so I think it's just so obvious. And I also think that that is offensive that you know, when someone might say, you know, someone launches a. A stable coin off of stretch, you know, people that, that we may know. And will it succeed? Will it fail? I have no idea. Do I love to see the innovation? I love it. I hope they crush it and I hope they find success, and I hope that they are able to do it. I think it's a novel idea. But innovation has, has risk. Innovation always has risk. And we should want to see different forms of innovation and excitement around a booming bitcoin economy. And we should help those people try to succeed. We should help them, we should consult with them, not try to tear them down. And I think that that's that optimistic spirit that you heard Sailor or I heard Sailor say when he was talking to, to Danny Knowles and in part of the interview. And I think that that's an. It's an extremely important. It's a very differentiated message than what you hear from some of the community one. And it's like a. It's just a hill that I think we'll all die on.
- [25:22]
C
It was one of the most profound things that happened with bitcoin. Right. When you have someone like Satoshi that builds something like this and walks away and you release the code to the world and everyone gets to run it. Once you give a gift like that, you don't get to decide anymore how it's going to be used. Right? It's up to everybody to find the best and highest use case for that asset, for that gift that you left out there. And I think you're starting to see that now. And we're so early on the edge of all of this. We have no idea what this is going to look like in a decade. Jeff, I know you and I have had this conversation a bunch of times on True north, but the thing I've always said is, what's the downside here for these companies that are converting themselves to bitcoin? Treasury companies look down the road and say bitcoin's mildly successful. What can a company that has $5 billion do? What can a company with $50 billion do? Pretty much anything they want. There's not that many companies in the s and P500 that strategy wouldn't have the capital for if they wanted to. But I think there's actually a bigger movement that's coming. And what that movement likely is is all these companies that are capitalized that have all of this bitcoin on the balance sheet, they're also going to be the ones that get to rebuild the world on bitcoin. There are so many antiquated industries out there that are built on fiat dollars and fiat products and all these eroding balance sheets. And bitcoin is a better form of money. It's creating a better form of credit. It's giving us all these ways where we can really accelerate innovation in this space. The financial industry is one of the ones that's the most resistant to change, but it's the biggest opportunity that's out there. And you see it collapsing all over the world all the time. It's almost become normal to hear about all this hyperinflation and all these things happening in all these countries. It doesn't seem real, but it is real, and people aren't able to outpace that anymore. And so there's going to be this massive push. And I don't know if it's over a decade or two decades or five decades, I have no idea. But I know that we've now got a better form of money that's backed by energy that takes effort to create that you can't just print. And that asset is going to allow us to completely rethink how we've done everything. It's not going to be overnight, and it shouldn't be overnight. I don't think the world could stand the disruption if it was overnight. But I know that it's going to take companies that are holding a significant amount of this asset to be able to go and create that next future. That's not going to come from the anarchy view of it, where the individuals should just take the money and it's going to collapse all the government around them. I'm not sure people are actually ready for what that world would look like if it did happen. This is people building. These are individuals who believe in bitcoin that are holding the reins here, that are starting to build for a future that we see as brighter. We can see a better future. We've seen all the problems. We've seen what's happened through many different cycles of humanity. Right. Currencies have collapsed all over the place. We've never found one that's fully sustainable. And now it seems like we have. And you're hearing resistance against that. And I think that's just an ideology issue. I think people become very protective of something they find early and they don't want it to change from what it was the first time that they found it. But that's not how life works. It's not how the world works. You need builders. If we all just become squirrels and we squirrel away our bitcoin and we never build anything with it or find ways to actually integrate it into the world, that's going to allow us to transact in it. That's going to allow people to save in it. If we don't do that, we're not pushing it forward. And I think that would be a real shame, because bitcoin's such a powerful asset, and it's something that I don't think any of us could have ever even imagined a long time ago. Finance is so deeply ingrained in how everything worked. The banking system, the credit card industries, that we just accepted that as the status quo. And it took someone thinking outside of the box to shake that up. And it nudged it, got the ball rolling. Satoshi got the ball rolling. And now it's up to everybody in the community who finds this, who sees that there is an opportunity to have a better future, to keep rolling that ball forward and let that thing snowball until bitcoin does eat the world. Because I really do think that's probably the end game here. And I don't know if that's 100 years or 50, but I know I want to be a part of it. And I think we can do some really big things to make that happen. So I agree with his notion that we have to be supportive of the people that are pushing in this area, because these are people that are believers. We've talked to a lot of them. Everyone has big ideas. They want this to succeed. This is the capital, think of it like the sea, seed capital for how they're going to deploy this. I mean strategy made the. Or Saylor made the point that there's probably 500 different flavors of just digital credit that could be issued out there, let alone all the other industries that could be disrupted. I mean insurance and banking and all these other industries. There's no shortage of places we can integrate bitcoin, but there's a shortage of builders right now to go make that happen on a quick time frame. And I think the more we get in the game, the better this is going to be for everybody.
- [30:51]
B
Yeah, I completely agree there, there was a, an additional element and theme of that conversation with Danny and it surrounded time and this. And I think that's a really important point to hit across too. Most of the world and the investing world and finance world over the last 20, 30 years has just gotten hyper laser focused over quarter over quarter results, month over month results, year over year results and really focused on just what's, what's happening that quarter as opposed to taking like a long term horizon view of, you know, what, what's out there, what, what has your company done over the last four years, what's the four year compound annual growth rate of your business operations, what does that look like? And, and bitcoin kind of flips that and you have to kind of think about, because of the volatility associated with it, you have to think about that long term business horizon to withstand and capture the amount of volatility associated with it. And last week I had some heated debate and conversations with some bitcoiners as well about valuation methods and valuation models. It's so fascinating. Like bitcoiners, some, some of the OG bitcoiners will have this, you know, concept of bitcoin as a unit of account. But then once they turn their eyes to the equity world, it completely flies out the window for some reason. And then they go right back into, oh well, I've got a master's in finance. And you know, according to the discounted cash flow model, you have to take into consideration cash flow to get to a valuation. I'm like the discounted cash flow model was, was created in 1938. Might that be a little old?
- [32:43]
D
You want to know a key fatal flaw? The discounted cash flow model, it assumes a risk free rate.
- [32:49]
B
The risk free rate, Boom. What is the risk free rate?
- [32:54]
D
And if it's not risk free, the model's broken,
- [32:59]
B
right? Boom.
- [33:01]
D
I think most bitcoiners would agree there's no risk free rate.
- [33:04]
B
Yeah, well, the risk free rate is Bitcoin, so. And it's a fascinating argument. And if you think about the risk free rate being Bitcoin, then you need to redenominate all of the other components of that model into Bitcoin. So you got to think about cash flow in Bitcoin and then the cash flow starts to become a volatile component of that calculation. And once you see the, the entire equity market using Bitcoin as your unit of account, your world turns upside down. Like everything you knew. Just like the very first time most everybody found bitcoin, my world turned upside down. I'm like, no way. There's no way this, no way this thing exists. Like, what do you mean it's fixed, right? My whole world turned upside down. And like my, you know, the next couple months were ruined for me as I was like digging through all this information. The same thing happens when you start to look at the equity market and you use Bitcoin as your unit of account. You start to look at no way, no way. These companies are valued at X, you know, pe, multiple or, you know, that everything, your entire perspective changes. But it's a huge, it's a huge topic to wrap your head around and it takes time. And if you're not particularly like focused on it or, or looking at it very deeply, it's easy to take these historical narratives or quarter over quarter cash flow, discounted cash flow model, all these other things and just completely ignore it. But this is a, it's a paradigm shift.
- [34:31]
C
It is. And I do like that sailors pushing on time horizons pretty heavily. You know, when we were just dealing with bitcoin, the asset as individuals, we'd all wrapped our heads around understanding that, right, it's going to be volatile. The volatility is a feature. You're looking at it over four year time horizons on the short end, right? You're always looking at least one cycle out into the future and really you're willing to look a lot longer because everyone's saying, well, you just never sell your bitcoin. You'll borrow against it one day. That's how you'll live, right? So people had wrapped their head around having a really long term view on the asset. And then as soon as it worked its way into the equities market, it all shifted back into trading mindset. And one of the questions that was in the podcast was, well, was it kind of disappointing in 2025? And Saylor made the point, he goes, well, 95 days ago, we hit an all time high. He goes, is that disappointing? He goes, because we're down from the all time high that we hit 95 days ago. He goes, no, he goes, you don't look at the success of anything in 95 days. Imagine you're building a company, you've got a startup and 95 days in, you're not massively profitable. In cash flowing, do you throw in the towel? Is it over? Have you failed because three months have gone by and you weren't an overnight success? No, you're building because you think off into the future, you're going to be able to create something very valuable and generate a lot of returns. Now, after 10 years, if it's not performing, do you start to look differently? Maybe, right, that might be the timeframe, might be time to shift your view. But with bitcoin, and particularly when it moved into the equity space, the mindset shifted because you've got options and leverage on and people that have timeframes around their investment now and they're looking at expirations and people are making and losing money daily. You've got information coming out of companies like strategy every Monday and everyone's digesting the minutiae of every single announcement about what it means today, not necessarily what it might mean in five years, the compounding effect of all of this. And so I think that that framing is always helpful and even I have to remind myself of it fairly often because you do get caught up in watching the day to day and keeping track of everything that's going on. And how are these stocks performing and how's the sector performing and how's it performing? Performing relative to bitcoin this week. But you know what you're building towards and you know what you expect bitcoin to do, right? You're expecting the power of that fixed supply relative to the money printing that's going to happen, right? Absolute true scarcity building demand, right. You know what you think the future outcome is going to be and you have to just remind yourself to put your head down, keep pushing forward and if what you believe is truly going to come true, you want as much of this as you can get your hands on. That's how I feel about it personally. It's how I feel about it in my role at strive. I see Saylor posting these posts every Monday. I start to panic a little bit. He bought more bitcoin than Strive holds in total last week. Those are bitcoin I can't get my hands on personally or in my job. So like, yeah, that part comes becomes a little competitive, right? You start to see the urgency because I believe this is one of the most transformative assets out there. And I've got a short window here where. Well, I've got a long window, but I got a short window where I want to get my hands on as much of it as I possibly can before everybody else figures it out.
- [38:08]
D
Right?
- [38:08]
C
That's what's going to keep me up at night, is other companies might figure this out, other companies might launch good products. It's going to buy them a lot of and it's the friendly competition of it all. We all think we're building something great here. We all think we're building it on the right asset. We've put thousands of hours into talking about this asset, studying this asset, researching it, researching the assets that exist in the world today, finding the differences. What it is that makes this one unique, it becomes friendly. Because as this pushes forward, we all win and we all succeed, but we're all going to do it differently. And it's all going to happen on different time frames for everyone, depending on how you execute in the equities market. That's what you're going to be looking at. Who do you think is going to execute? Do you think they have the right model in place to be able to deliver it? Do you have the right team to be able to focus on this and execute it to the best of their abilities? And that's going to separate the equities. It doesn't mean that none of them will have value. To Saylor's point, if you're, say you're a company losing $10 million a year, but your Bitcoin gains per year are $30 million a year, you're still making $20 million a year. That's still a pretty good business. So you could have some of these companies that are even trading below nav and if their balance sheets are continuing to grow, that's still a company that's growing, called 20% a year. That's way better than most of the legacy companies. This is one of those areas that's going to be so interesting that you just have to stop yourself from getting so emotionally invested in the short time frame volatility. Because what's being built here is so much bigger than the price swings are day to day, week to week, month to month. Right? You just. This is when you convince yourself to sit on your hands because this is the starting gate. To your point, Jeff, this is year zero for things like digital credit. And it's only Going to speed up from here.
- [40:01]
B
And to emphasize that I watched Jerome Powell's video this weekend and I immediately thought, oh my God, I do not have enough bitcoin.
- [40:14]
D
That was, that was my, my reaction to also that I posted. I didn't have sympathy for him and I kind of wanted to just explain that a bit. And it comes back to my origin story for, for Bitcoin. And so if you rewind to when I was at Calpers and a bitcoin skeptic and was talking directly to the Fed and the treasury and they were gaslighting institutions. So I, you know, not just me, but all institutions and getting down these nuances of why they weren't printing money, why QE wasn't printing money and why, you know, because the treasury made new bonds, they sold them to Goldman Sachs and then Goldman Sachs sold them to the Fed. That that wasn't printing money. But if you asked him what happens if Goldman Sachs didn't initially take by the bonds and it just went from the treasury to the Fed? They're like, well, that's monetization of debt. Of the debt. But we're not doing that because Goldman Sachs buys it first for five minutes and collects a spread. And so it's like, okay, so you're paying Goldman Sachs billions of dollars to take it from the treasury and give it back to the Fed and be a middleman. So you can say it's not money printing. Oh no, that's not what we're doing. Okay, well then tell me how it's not what you're doing. And, and it just, it was, it's just a gaslighting to the American people where I think almost every bitcoiner knows that the Fed and the treasury, the US Government has been printing money, that QA has been printing money and that we've been monetizing our debt through Fed open market purchases. And that also to add on to that, that the dual mandate so that the Fed is only, that they only have two mandates, inflation and unemployment is not accurate. They clearly also care about liquidity conditions in the market to a certain extent. They care about the stock market, asset prices. And that's why we've talked about the Fed put for years. So they have more than a dual mandate. And then lastly that they are a political organization, they're monetizing the debt, they have more than a dual mandate. And clearly they're influenced by Congress and politics. And so the Fed is not independent. And I think people have known that since the beginning of the Fed. This is Not a new thing. It's something that when I saw it firsthand at Calpers, made me into a massive bitcoiner. But it's not, it wasn't even a new thing then. It's when I saw it firsthand and when I realized it for myself. Right. And so for, so for Powell to come out there and part of his statement just being about how the Fed is an independent body, it's just like, it's such a laughable statement that that's the Hill that you're going to die on, that the Fed is independent. It's just that we're smarter than that. Like, we see, we know it's not independent. And so if you're going to claim that it's independent and bad man Trump is attacking the independence of the Fed. I just don't buy that at all. And then you add on to it, it's like, do I think he lied to Congress? I have no idea. I have no idea. If he lied to Congress, do I think that the Fed should spend $3 billion to renovate their building? No, like, absolutely not. Like, you want, like waste, fraud and abuse. Like, was it fraud? I don't know. Was it waste? Absolutely. Like, think about what, what a sports stadium could be built for. Most sports stadiums could be built for less than $3 billion.
- [43:30]
B
So far. Stadium is like a billion in LA.
- [43:33]
D
And it's like, okay, like for, in a digital economy, we need to spend $3 billion. And they'll say, oh, well, it's, it's, you know, it's quasi, Is it taxpayer funded? It's not tax, like, it's the taxpayer money. Because the Fed doesn't need to exist outside of the government. And so I don't know where the money's coming from. I don't really care. It's, it's funded by the American people. It didn't need to be, it doesn't need to be done. Did he lie? Did he not lie? I don't care. But the bottom line, like, the important things are the Fed is not independent. They're a political, they're definitely not independent. And number two, they should not be spending $3 billion. But number one, is more important than number two because they print trillions of dollars. So I get why Powell probably has a bias in his mind that $3 billion is nothing because he controls the printer. So for him, $3 billion is nothing. But this speaks to the problem of the Fed. And so, I mean, it just gets to the point of like, bitcoin doesn't close Down. It doesn't need a Fed, it doesn't need Bell out. It works and it has a little bit more volatility in it, but it just questions the whole, is the Fed even a good thing or is it a bad thing? And I just think it's an all around bad look. But the bad look is from how the Fed and the treasury have behaved over the last several, several decades, not because of the new thing that happened today. And I think that's the, that's the most important message. But man, this, Venezuela, all the things going on, this is fourth turning stuff. And I think the bottom line is if none of that makes sense or you're confused, it's all just bullish stuff. For Bitcoin, it's the bottom line.
- [45:12]
C
Don't forget Greenland. That's happening too.
- [45:15]
B
Greenland. Cap on credit, credit cards, credit card interest. Well, that's crazy.
- [45:21]
D
We didn't even message that. Fannie Mae and Freddie Mac buying what, $200 billion of mortgage backed securities. That's what I would say is actually not qe. Qe. Very, very large upcoming buys. It's, it's wild times.
- [45:38]
B
Totally Matt. That, that concept, it reminded me of time I worked on. I did an RFP for the National Flood Insurance Program six years ago or something like that. We came up with this just like awesome structure. We were looking to place like $250 billion of 250 in excess of 250 billion. Like we thought we could get the market done. We had, you know, pre marketed this whole thing. We thought that we could save, we could save the NFIP National Flood Insurance Program. We thought we could save the NFIP like I don't know, 25 billion or like 30 billion. And we were like moving their retention up and you know, thought the design was really good. And ultimately the decision makers like they, they ended up coming to us and they were like, yeah, $30 billion doesn't move the needle. Like I can't, I can't make that decision because it does like, you know, this just doesn't move the needle. Like we can, we can print money. It basically is like we could print money. And it was just one of these moments of like, oh my God, I can't work with the government. Like none of these deals are worth chasing. None of these enormous deals of like cost saving efforts are worth chasing. We did it. We did a similar type program where you're looking at like the, the United States Postal Service, like reinsuring the workers compensation of the United States Postal Service. Same thing we were like, oh, cool, we just found, you know, 15 billion here. And it was. Another one of those conversations was like, that doesn't mean anything to us. You know, like, look. Look at our. Look at our. Look at how much we spend on our military. I can't. I can't even talk to the. You know, I can't even have a conversation with these people. And they don't care. It's. It was like, crazy.
- [47:22]
C
They're not even at the Fed. Imagine how disenfranchised you get with the concept of money if you're actually at the Fed.
- [47:30]
B
Yeah, you. Your con, Matt, your conversations with the people talking, talking about the Fed. You made all of those thoughts come back in my mind there. But it's. It's everywhere.
- [47:40]
D
One other story from when I was at PERS, so, managing a $70 billion portfolio and trying to produce alpha. So alpha measured in basis points, okay? So one basis point of 70 billion is $7 million. And so, you know, we're trying to earn whatever, 30 basis points of alpha a year. Right? So what. And where this goes is saving $500,000 is nothing when you're trying to earn, you know, whatever, you know, 30 times 7. $7 million of Alpha A year or more. Right? And so. And you're sitting there and you're like, okay, yeah, I work for the state of California at the time, you know, salary, call it like a couple hundred grand. And it's like, on a day, like, I could pretty easily make more than my salary in savings by just doing a couple trades or something like that. And they'd be like, oh, that doesn't move the needle. It's like. Like, number one, like, you. You're. You're so concerned with how many employees we have. So we can't have one employee, But I could spend 5% of my time and clip off several hundred thousand dollars here, several hundred thousand dollars there, probably add up to, you know, five to $15 million over the course of the year, pay for myself, like, 100 times over. And you're like, that's not worth it. But then you say, you know, you want one employee under you that, you know, maybe costs, like, you know, $80,000 a year. And like, yeah, can't do that. It's not in the budget. You're like, like, what. What are we talking about here? It just doesn't make sense.
- [49:18]
B
Anyways, several of those types of stories, for sure. Oh, my gosh.
- [49:23]
C
Why we're all working in bitcoin now. We've all seen it. I was in consulting that was the whole thing. It was cost cutting and it was within government or quasi government agencies. And you know you can find all the savings in the world. Most of the time they're not going to go chase it. Right. Because you get the same response, it's not worth the time. Yeah, billion dollars seems worth it.
- [49:46]
A
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- [50:32]
B
The I want to hit on the credit card thing for, for a moment. The like capping interest rates at 10%. So you know interest rates on credit cards are 24, like 20 to 30% or whatever they are now. Well I guess my first question is who pays for that? Like do like is that the government that's going to pay for the delta in interest? Question number one.
- [50:55]
D
I didn't see any details whether the government's paying for it. If it's a cap, which would be a credit restriction would probably be how that pays out. Right. Because they're, they're looking at loss rates and stuff like that which is why some of the criticism came out. It's like okay great, you cap it. Now no one has access to credit cards. Yeah, so I, I, I haven't been able to, I don't know if you guys saw any details on it but at this point it's, it's more of just a, a showing of a concern for the affordability for American people and trying to find solutions that you know some of these solutions I think directionally are helpful. So like as an example restricting institutional ownership of, of single family homes. So I mean I'm, I'm well aware you know one of my old job that we saw the, the borrowings from these buyers of single family homes like invitation homes, Blackstone companies that were doing this and on an aggregate national basis you look at it and it's like a very small number like oh they own 1% of family homes but an individual metropolitan areas they could be like 30% of the market. Like they were, they were the market in some, some in some areas. And the way they would work is that they would, they would basically buy bulk, one color of paint, bulk, one carpet, everything exactly the same. They just have this massive warehouse like in Vegas as an example of one of the places they were doing this. And then they would, they would buy these like wrecked homes or trashy homes. And then it was just the same thing goes into every home, rent it out. And so it was this operation of scale. And so they really did materially push up the home prices in various metropolitan areas. And so I kind of get annoyed when I hear the, oh, they're only 1% of them market because I saw the data of how much they were in an individual area. And, and this is like large areas like Vegas, Phoenix, like basically large metro areas where the home prices were largely affordable. They were taking over the markets. And so they did price a lot of people out. And, and I do think that that hurt affordability. And so I think reversing that, I think is broadly I'm, I'm a, I'm a fan of, I think that could, I don't think that that restricts access to credit. Fannie Mae and Freddie Mac recapitalizing, I can only assume to go public again. But who knows, you know, is, you know, I think, I think a good thing. They have the capital. So, you know, I think that's going to increase their profitability drives mortgage spreads tighter. So that will, you know, make interest rates come down a bit. But the credit card one, man, I can't, I can't wrap my heart, my head around how that one operationally works. Absent, you know, if, if I could borrow 10% on my credit card, then that makes a pretty interesting carry trade opportunity with, with bitcoin.
- [53:50]
B
But yeah, well, I mean, one of my responses is I immediately want to spend all of my credit card points that I've banked up. I'm, I'm like just going to go nuke them all and spend all of them and convert over to like a bitcoin reward credit card where I'm actually earning something that, that can't get inflated away. I just had this like flash moment of like, oh my God, what am I, I need to use these things and just completely convert everything else over to something else.
- [54:20]
C
You got to imagine they're going to be slashing credit limits, though. I mean, as, as soon as this becomes remotely real, you can be sure that credit limits on a lot of these cards know, minute that got mentioned, they've got to be deep in the data and analytics side of that business right now, trying to figure out where they've got exposure and how they're going to cap it, you know, because now if you're capped at 10%, you can't make up the losses that you're having all over the place. You got to find ways to mitigate that pretty quickly, which probably does mean that there's going to be a massive swath of people that'll lose access to a lot of the credit that they've got today. So we'll see. But that one would have a material impact, I think, on the access there. So I don't know how feasible it actually is to enforce that. You know, we've seen Trump lots of times. He'll say lots of things. I don't know what, what's going to be real with this one, but it does tell you where some of the focus is. It tells you that there's a recognition that there's a runaway issue here, that they've got to try something to stop. Right. This didn't come out of nowhere. They're probably looking at credit card debt and seeing it spiral and seeing that it's growing at 28% or whatever it is, and wages aren't catching up, so people really don't have a prospect to pay it back down, and that's going to spiral and bankruptcy start to skyrocket. And like, I would imagine that's what's starting to trigger a lot of this. And so, you know, it's. It's one indicator that there's something going on. There's a hundred other indicators saying the same thing. But this is the first time you're starting to see it really vocalized and show that there's about to be a major focus on it because we got a real problem on our hands.
- [56:05]
B
Buy bitcoin, Bitcoin fixes this, Bitcoin fixes this. And if you can acquire a company that has bitcoin, I think we should shift there and talk about that. We're getting close to an hour here, but yeah, some exciting news.
- [56:20]
D
Yeah, and a very accretive, I think, win Win transaction for both Strive and Semler. But it goes to show how to think about operating on a bitcoin hurdle rate. And I think that, to me is one of the keys here, is that I think that a lot of people didn't understand when it was first announced, and it was announced in fiat terms because that's what you have to announce in. In kind of the real world. But what we were looking at was we're on the bitcoin standard. And so we have a mandate to increase bitcoin yield and then we obviously want to increase amplification through preferred equity. And so what can we do to drive our cost down over time? Well, if you own more bitcoin, then the cost to operate an operating company is going to go down on a percentage basis relative to your balance sheet. And then on, on the other hand, is there someone else that is struggling to do the things that you already can do? And I think that's what the story of Semler and Strive was. Where Semler had gone out to their shareholders, they had gotten turned down to do digital credit. They had issued a convertible note. Their operating business had, you know, seen better, better days with dealing with some, some regulatory headwinds. And, and so it made sense to go to Strive as a place that was going to be a leader in digital credit, which we had already messaged to the market, say let's combine forces. And so we did that. And I think one of the interesting, maybe lesser known metrics is just the bitcoin accretion and how much bitcoin it accreted to Strive. I mean, I don't know, Workman, if you have like high level numbers, but on a bitcoin basis, it's a very accretive transaction to Strive. It's a moving target as we've been doing a lot of different activities. But, you know, this was something that pushes us, I believe, to the number 11 in the rankings. And so we passed Elon and Tesla, we passed Trump Media. So Elon and Donald Trump. If you want to buy more bitcoin and pass this back again, you know, we'll, we'll be cheering you on, but other than that, you know, you're in the, in the rearview mirror. I think CleanSpark is next.
- [58:28]
C
That's right. We're moving up those ranks, which is great to see. Yeah, I think it ends up being on a fully diluted basis right around a 16.9% accretion from current levels, which is a major pickup here. And being able to, to climb those ranks, you know, on the publicly traded company list and, you know, see all the capacity it's going to create for us over time here to get more digital credit out into the market. You know, this, this is an absolute win, win. Sometimes combining two individuals creates a better outcome than either one of them could have created in a time period on their own. And I think that's what we're seeing here. It's a great combination. It's a major win for our shareholders. We're looking at all these transactions on a bitcoin basis, which is incredibly important for where we think we're going and how we're trying to build this business. And couldn't be more excited to see this passing. This is a really big deal.
- [59:19]
D
Some serious scale shout out to Joe Burnett. Going to be on the Strive team soon. Also increasing podcasters per share. Going podcasters per share. See, this is still underrated in the market. They don't, they don't understand the value of good podcasters per share, but someday they will and they'll understand part of the broader strategy. But Joe is great. I think he's going to continue to add to our firepower and the team at Strive just continues to execute. I mean, the fact that got SATA out, the degree that we did, that Semler went out there. And when Semler was announced, a lot of the Twitter chatter was like, this deal's not going to close. And now that the votes, you know, come through, well, north of 90% of the votes that were cast voted in favor of the transaction. ISS recommended in favor. Glass Lewis recommended in favor. So, you know, once, once again, I think it just goes to show that, you know, some of the, the squawkers on, on X, like, you know, they, you know, I feel bad for their portfolios if that's how they actually trade. But, you know, we knew what we were doing and there was risk that a transaction, like any M and A transaction didn't go through. But, you know, diligence was done on both sides and this transaction closed very quickly. The average transaction ma takes about six months. This transaction closed in about four. So it closed extremely quickly. And remember, part of the time during that transaction, the government was shut down. So we were actually slightly delayed with the SEC because the government was shut down. So this, this transaction moved with, like, literally no headaches, what whatsoever, you know, pretty unanimous support for it. And so congrats to Semler shareholders. Congrats to Strive shareholders. I think this is, this is a big win for the company and shows how M and A can be done on, on the bitcoin standard and probably not the last bitcoin treasury company consolidation that we'll see over the next few years.
- [61:24]
C
It also shows you what you can get done in four months, huh? I mean, you go through a reverse merger, you launch a perpetual preferred, you run the IPO on that, you find in diligence a M and A transaction, you close an M and A transaction, it's been a really busy four months.
- [61:41]
B
Yeah. And. And some capacity might free up here to do some other things in the future.
- [61:46]
C
2026 going to be a big year.
- [61:49]
B
Big year. Big year. A lot of things in the horizon.
- [61:51]
D
Buy some more bitcoin. We don't have enough yet.
- [61:53]
C
Quickly,
- [61:56]
B
more to come. Absolutely.
- [61:58]
A
Everybody, for watching and listening to episode 43 of the hurdle Rate, the best message is digital. Credit for Matt Cole, Ben Workman and Jeff Walton. I'm Tim Kotsman and we will see you next week.