BTC227: Bitcoin, Taxes, and Smart Estate Planning w/ Jessy Gilger (Bitcoin Podcast)

Summary

Podcast Summary: BTC227: Bitcoin, Taxes, and Smart Estate Planning with Jessy Gilger

We Study Billionaires - The Investor’s Podcast Network
Episode: BTC227: Bitcoin, Taxes, and Smart Estate Planning
Release Date: March 26, 2025
Hosts: Preston Pysh and Jessy Gilger

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Introduction and Setting the Scene

The episode kicks off with a light-hearted recount of a skiing adventure in Jackson, where hosts Preston Pysh and Jessy Gilger unexpectedly found themselves skiing alongside Olympic athletes. This anecdote not only sets a relatable and engaging tone but also underscores the importance of stepping out of one’s comfort zone—a theme that resonates throughout the discussion on embracing Bitcoin and innovative financial strategies.

Traditional Finance vs. Bitcoin: A Stark Contrast

Jessy Gilger shares insights from attending both Bitcoin-centric and traditional finance (TradFi) conferences. He highlights the significant knowledge gap that exists between Bitcoin enthusiasts and traditional financial advisors.

Notable Quote:

“We are still so early. We’re not even in the second inning. I don’t think we’re even in the bleachers yet. The game hasn’t even started.” – Jessy Gilger [03:55]

Gilger contrasts the dynamic, fast-paced nature of Bitcoin conferences with the more reserved and skeptical atmosphere of TradFi gatherings. He notes that while Bitcoin advocates are exploring innovative financial products, traditional advisors often dismiss Bitcoin as too volatile and risky.

Skepticism in Traditional Financial Circles

The hosts delve into the reluctance of traditional financial advisors to engage with Bitcoin. Gilger points out that many advisors advise clients to "do not go near Bitcoin," preferring to stick with familiar 60/40 stock-bond portfolios. This skepticism is largely due to a lack of understanding and the intimidating volatility that Bitcoin presents.

Notable Quote:

“Most people attending other events... they think this is reckless. This is a complete scam. They need to steer well clear of this.” – Jessy Gilger [04:58]

Current Administration and Bitcoin’s Strategic Reserve

The conversation shifts to the current administration’s approach to Bitcoin, particularly the concept of a strategic Bitcoin reserve. Gilger explains that this initiative is often perceived by traditional sectors as a mere political ploy rather than a serious financial asset.

Notable Quote:

“If anything, it’s the second. I would say most people, it’s not even on their radar.” – Jessy Gilger [04:30]

This lack of serious consideration by traditional finance underscores the early stage of Bitcoin’s integration into mainstream financial systems.

Bridging the Knowledge Gap: Sound Advisory’s Role

Gilger discusses his role at Sound Advisory (Unchained's sister company), which focuses on wealth management and financial planning for Bitcoin investors. He emphasizes the substantial gap in knowledge between seasoned Bitcoiners and traditional financial advisors, highlighting the need for specialized services to bridge this divide.

Notable Quote:

“This is a hard, it’s an ego death... you have to change how you approach finance, but you’re doing that on behalf of your clients as well.” – Jessy Gilger [05:30]

Impact of Technological Deflation and AI on Bitcoin

A significant portion of the discussion revolves around the rapid advancements in AI and robotics, particularly Nvidia’s role in accelerating technological deflation. Gilger expresses concern over how increased productivity could lead to deflationary pressures, challenging the fiat system and highlighting Bitcoin’s potential as a hedge against such economic shifts.

Notable Quote:

“The technological deflation is an exponential curve, and it builds in... the amount of printing that they have to do to offset this is just miraculous.” – Jessy Gilger [20:03]

Tax Implications and Estate Planning for Bitcoin Investors

The core of the episode centers on the tax strategies and estate planning techniques essential for Bitcoin investors. Gilger outlines several key areas:

1. Income Tax and Estate Tax:
   • Income Tax: Managing annual income through strategies like gain and loss harvesting.
   • Estate Tax: Planning to avoid hefty death taxes, especially for those with significant Bitcoin holdings.

Notable Quote:

“Bitcoiners are unique because even the person that’s at a $500,000 net worth thinks they might be in some measure of time... the death tax as a problem.” – Jessy Gilger [28:10]

2. Tax Loss Harvesting:

   • Utilizing Bitcoin’s price volatility to offset gains and losses, potentially reducing taxable income.

3. Donor-Advised Funds:

   • Leveraging charitable giving with Bitcoin to achieve tax benefits while supporting causes important to the investor.

4. Roth IRA Conversions:

   • Transitioning traditional IRA assets to Roth IRAs to benefit from tax-free growth, particularly appealing to Bitcoiners who anticipate substantial future gains.

Notable Quote:

“There is a situation... a couple lives in one of the nine states that have zero percent tax, they can sell $30,000 worth of gain in bitcoin and then buy that bitcoin right back the very next second.” – Jessy Gilger [30:37]

Estate Planning: Trusts vs. IRAs

Gilger differentiates between trusts and IRAs in the context of Bitcoin estate planning:

• Trusts: Essential for holding Bitcoin assets to ensure smooth inheritance without involving the state, which can lead to probate complications and public disclosure of assets.

  Notable Quote:

  “A trust is that mechanism that can hold assets... if something happens to you, your wife is just the co-trustee the next day not going through the state.” – Jessy Gilger [40:24]

• Self-Directed IRAs: Allow Bitcoin holders to manage their assets securely within a retirement account, offering tax advantages while maintaining control over Bitcoin holdings.

Technical Risks and Custody Solutions

Addressing technical risks, Gilger discusses the challenges of managing Bitcoin keys, especially for less tech-savvy individuals. He advocates for a balanced approach, combining custodial solutions like ETFs with personal key management to mitigate risks associated with exchanges like Coinbase and potential hacks.

Notable Quote:

“I've got bitcoiners... what you're doing is a big time risk.” – Jessy Gilger [43:32]

Mining and Technological Integration

Towards the end of the episode, Gilger touches on the practical aspects of Bitcoin mining. He shares his personal experience of mining Bitcoin to heat his home, illustrating innovative ways to utilize mining hardware beyond traditional purposes. This segues into a broader discussion on how advancements in AI and robotics could further integrate Bitcoin into everyday utilities, potentially driving technological deflation.

Notable Quote:

“There’s a deep need for heat... have it all point to an address or a wallet and it’s not too difficult.” – Jessy Gilger [52:21]

Final Takeaways and Advice

Gilger emphasizes the importance of personalized financial planning tailored to individual circumstances. He cautions against adopting one-size-fits-all advice from the Bitcoin community, advocating instead for strategies that align with one’s unique financial situation and goals.

Notable Quote:

“Only you are in your shoes. You can reach out to people that work on this... be a partner with them in the game that they’re playing.” – Jessy Gilger [48:11]

He concludes by encouraging listeners to consider professional guidance for navigating the complexities of Bitcoin taxation and estate planning, ensuring their financial strategies are robust and future-proof.

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Conclusion

In this episode, Jessy Gilger provides a comprehensive overview of the intricate relationship between Bitcoin, taxes, and estate planning. By bridging the knowledge gap between Bitcoin enthusiasts and traditional financial advisors, Gilger underscores the necessity of tailored financial strategies in the evolving landscape of digital assets. Whether you’re a seasoned Bitcoin holder or just beginning your journey, the insights shared offer valuable guidance on optimizing your financial standing while safeguarding your assets for the future.

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For more insights and in-depth discussions, subscribe to Bitcoin Fundamentals on your favorite podcast platform.

Transcript

[Preston Pysh]

You're listening to tip.

[Jesse Gilgar]

Hey, everyone. Welcome to this Wednesday's release of the Bitcoin Fundamentals podcast. This week, I have special guest Jesse Gilgar on to talk about current events in bitcoin, estate planning and smart tax strategies for investors. As you'll see, Jesse is a wealth of information and someone that makes the topic exciting and accessible for the listeners. So with that, let's jump right into the interview with Jesse Foreign.

[Preston Pysh]

Celebrating 10 years. You are listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pysh.

[Jesse Gilgar]

Hey, everyone. Welcome to the show. I'm here with Jesse, and we've got a lot to talk about. Jesse, we had a pretty fun experience together out in Jackson. We were skiing, and we just happened to be fortunate enough to be out skiing with a couple of Olympians by chance. And I don't know how you felt after this, and we'll talk about this quickly and jump right into the content, but this is, like, too cool of an experience to not talk about. This was nuts to me. So I had skied as a kid and, you know, really haven't skied all that much as an adult. And, you know, we were at a conference. There were some people that were Olympic, like, Olympic skiers, and we just happened to be able to spend the day with them, the mountain. And I don't know about you, but, like, how I felt after I was done, I told my wife, I said, I feel like I played Russian roulette and. And won and, like, made it out of the day alive and didn't kill myself. I don't know how you felt, but I was pressing my comfort.

[Unknown]

Yeah. For the record, I was on the Preston side of the Keeping up with the Olympians. I was not, you know, one of the Olympians. And the things these guys were doing were just completely humbling. Right. Preston and I. I was pushing myself to my max, and they were skiing the same mountain backwards, just relaxing, you know. It was. It's quite an endeavor. Try to keep up with them and. Yeah, an experience I will remember for years to come forever.

[Jesse Gilgar]

I remember I called my dad afterwards, and it's like, you're not going to believe this experience I just had, but it was. It was miraculous. I mean, we were moving out. Like, how I didn't kill myself that day. I. Wow. Yeah, it was crazy. It was.

[Unknown]

It's a tough mountain, right? Jackson is. We're talking to one of them. They said, oh, favorite in the whole world. You see essentially everything that was top of the list. For him. So, yeah, congratulations, you made it out.

[Jesse Gilgar]

I kept looking over at you because I knew you were kind of at a similar skill level as me, but wow, that was crazy. Hey, so you went to a traditional finance conference after this ski adventure we had. Talk to us about this. Like, what was your takeaway? What can you.

[Unknown]

Yeah, so I, I had a bit of back to back. I did the ski conference, and then I got to go to Austin for the south by Southwest bitcoin takeover, which is a largely bitcoin audience. Lots of signal and probably names you've had on the show before. And then right after that, went to one of the more well known Tradfi conferences. And it was the complete opposite from a signal standpoint. So I got delayed in the flight, but as soon as I landed, got in the conference, I learned that Michael Saylor was speaking at it. I was like, oh, I've got to catch this. What does Michael Saylor have to say to a traditional finance audience? Got to the stage and seats were a third, maybe half packed. Right. Most people attending other events. And Saylor is describing what he's up to with releasing and arbitraging new products or essentially adding volatility to his stock. Right. And yeah, this is breaking the minds of traditional financial advisors. I got to have conversations with them afterwards, and they're like, this is reckless. This is a complete scam. He's going to blow everyone up, and we need to steer well clear of this. And I'd say the general consensus amongst traditional financial advisors is 8, 9 out of 10, like, do not go near bitcoin. Don't touch it, don't talk about it. So what was from. Go ahead.

[Jesse Gilgar]

What was the general take at the conference with the current administration and everything that they're doing from the strategic bitcoin reserve? Is any of that being talked about or is it still just looked at as being this real novelty, weird, he's placating his voters kind of thing?

[Unknown]

If anything, it's the second. I would say most people, it's not even on their radar. You brought up a strategic bitcoin reserve. It's the.

[Jesse Gilgar]

What?

[Unknown]

You know, just not. It didn't make it to their news feeds. And then if it did, it's like, oh, that's cute. He's probably placating to some audience and, you know, making some voting constituency happy with a promise, but not taking it as a serious asset. And we just maybe rewind a little bit to what I get to do day in and day out. I helped lead sound Advisory, which is Unchained. Sister company Unchained. Does bitcoin products sound advisory, does wealth management, financial planning for bitcoiners. And so it's very common for me to see someone who is 50% of their net worth, 80, 90% plus of their net worth already in bitcoin and using multisig key control before they ever even get to us. And then so hopping from that type of bitcoiner to the traditional financial advisor, there is was just a giant gap in knowledge between the two. And I got to see them back to back, like one conference to another, and it made me realize, like, we are still so early. There were many conversations I had with advisors. They could not believe the type of the niche that we serve. Right? Like, oh, that's. That's very interesting. You've got people that are that crazy or, you know, off the deep end. And for us, it's a serious market that needs help. So, yeah, just the juxtaposition, it got me thinking, like, this is still very, very early. We're not even used to say second inning. I don't think we're even in the bleachers yet. Game hasn't even started.

[Jesse Gilgar]

Yeah. Well, I'm curious. What are they talking about?

[Unknown]

So the conference is called Future Proof. It prides itself on being innovative. We're headed to the future. All of these new things are happening. And I think the most innovative thing that they talked about was maybe adding AI to record their meeting notes, which is the bitcoin content. I mean, Saylor was poking at it. He was very explicit, like, hey, we are adding volatility to this situation. That makes a traditional 60, 40 stock bond advisor just cringe like, you're doing what? Their phones are ringing off the hook because of a 10% correction in the S&P 500. And so an average investor can't stomach a lot of volatility. And it's something that a lot of advisors shy away from and say the most common question I got was, I hear all this talk from bitcoin believers that it's a store of value. Not for me, not for my clients, that they're nervous in a 10% correction. And that's a Tuesday in bitcoin, right? And so I'm trying to help reframe some of those conversations educated by just like, okay, we store value, but it's over 20 years, right? It's not a tomorrow store value. And I think often as bitcoiners, we're so deep down the rabbit hole that we've, like, carved Ourself into a rut with our language and things that we say that are just common to us. Most recent one I've been hearing is the Overton window. No, like a regular person doesn't know what kind of window are you talking about? Is that like a style or brand? We've got a lot of bridging to do to educate that. I mean, there's over a trillion dollars represented amongst those advisors and what they're managing. Right. Billions and billions of dollars. One shop and 1500 people at the conference. And they're thinking on, they're on the cutting edge of innovation, yet avoiding bitcoin, taking it seriously. Or I did see a lot of this too. There's so much ego that goes into being an advisor. You have to be right, have a good knowledge and understanding about money. And if you change something fundamental like, oh well, I think money is something different now, you're not only wrong to yourself, you have to go explain yourself to 100 plus clients. And so it's a hard, it's an ego death. Right. But if you're going to be an advisor who starts to take Bitcoin seriously, you have to not only change how you approach finance, but you're doing that on behalf of your clients as well. And so I think we've got a long way to go. It's an industry that I think sits on the cutting edge of innovation, yet they're ignoring something that's often a cornerstone asset for at least my client's financial life.

[Jesse Gilgar]

Yeah. And you know what, if you go to business school or let's say you majored in finance or whatever, they truly define risk as volatility. So when you'd have a guy like Saylor on stage saying, well, I'm basically taking Bitcoin's volatility and I'm bottling it up and turning it into a product for fast money on Wall Street. I'm sure they're just looking at this and be like, this is a madman. What in the world is he doing? What's he talking about? And to even begin to understand it, you first have to understand the core thesis of bitcoin, which I don't think any, I hate using the word any, but very few even understand that, let alone the building financialization on top of it.

[Unknown]

Yeah, on top of, I think is a great word because the way I've tried to create a metaphor out of this is like they have a financial belief structure. Right. The way they view creating plans and talking about allocations and the base of that is the what is money? Question. Right. It's like a Jenga tower. And if you start pulling for those low blocks, I'm going to change what is money in your mind and what it could be and how it might be broken. It just makes the whole structure crumbly. There's an instinctual reaction. Nope, don't touch that question. And you can tell them, Look, Fed printed 3 trillion one night. There's the bottom. March 2020. Watch it go straight up. Everything, gas, beef, groceries, bitcoin, gold. Did all those assets get better March 21? No. A bitcoiner is very intuitive. Money's broken. Money is better now with bitcoin. And a traditional financial advisor just struggles with that low Jenga piece. There's a cringe when you go for polling at it. But no, not that one.

[Jesse Gilgar]

It's so commonplace in our community, the bitcoin community, to talk about how the real hurdle rate is basically like global M2 that you should be trying to outperform. But I think in traditional finance, I don't even think that that idea or that concept is something that they would first of all agree with. Second of all, they'd be like, where's this number that you're. This M2 number? Like, what are you talking about? It's not even.

[Unknown]

I would agree with that. I would say inflation to a bitcoiner is the expansion of the money supply.

[Jesse Gilgar]

Yeah.

[Unknown]

More currency units. Inflation to traditional financial advice is cpi.

[Jesse Gilgar]

Whatever the government tells you. Yeah, yeah, yeah.

[Unknown]

So that, that becomes their hurdle rate. They quoted at 3. We got to outperform 3s. And P does a good job. It's kind of like their monetized, almost like a token. Right. Like, okay, you go into S and P as like a baseline to outperform CPI over the long term. Yeah.

[Jesse Gilgar]

It's wild to me how far like you said it, we're still in the bleachers, national anthem hasn't even played yet. Kind of level of the ball game. And what helps people start figuring it out? Is it just pure price action? Is it bitcoin going to 500,000 and more people just questioning the narrative or what?

[Unknown]

Like, yeah, I've seen a lot of people start and continue their bitcoin journeys over the years. And you can't replace curiosity. Right. And so sometimes. And price does a very good job of instigating curiosity. Right. You have a 10x on anything. It's like, well, why? Why did that happen? And that can start the digging for some people and they land at different conclusions or they Start like an altcoin phase early in the journey. But it's gotta be curiosity and I've started to communicate with advisors that are curious. I can't make you a believer in this or I can't make you understand it. I can give you the information but you have to if it's going to be something that you believe, do the proof of work and get there yourself. And so there are. Unfortunately some advisors are like sitting on a golden goose of a 6040 stock bond practice, have hundreds of millions of AUM and they're just not interested in doing much more work. They're going to continue to ride that easy cruise control type of practice and that's unfortunate. I think bad message to clients is you got an advisor like that, what are you paying them for? What's going on there?

[Jesse Gilgar]

Truly, yeah.

[Unknown]

I think curiosity is something you can't replace, can't teach and it starts everyone's journey. Let's take a quick break and hear from today's sponsors.

[Jesse Gilgar]

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[Jesse Gilgar]

The thing that continues to just boggle my mind, and it's boggled my mind for years and years, is everybody that's gone to business school, everybody that's a financial manager, they know that you control the volatility quote unquote risk with position size. And so right? Like. But it seems like when you look at Bitcoin and you look at its performance and you say, well why don't you own 1 or 2%? You even have BlackRock now coming out and saying they think it's appropriate for a 2% position. This was literally in Bloomberg probably two months ago or I think before Christmas that there was a Bloomberg article that came out and BlackRock thinks that a 2% position size in Bitcoin is responsible. Has large cap financial companies like BlackRock saying these types of things. Do you think that that's slowly starting to make an impact or is it still just kind of like, yeah, keywords.

[Unknown]

Slowly. Right. Out of the 50, 60 advisors I talked to, I'd say like three are curious and starting to open the door in a reasonable way. Let's put another 10 in. Okay, I could consider that. But if I'm going to buy Bitcoin, which Bitcoin. Right. Like they still got the blockchain Altco. Lack of understanding there. And not. Most advisors don't want to have to apologize for something, right?

[Jesse Gilgar]

Yeah.

[Unknown]

And so if they stick their neck out for anything, even a 1 2% idea, and they got to explain to the client why they're putting it in portfolio and then it goes down by half or to zero, they just rather not do it at all. What I'm doing works well enough to keep the client happy and not calling. And I have to meet with them two times a year, continue to collect my 1%. That's the apathy that I think exists in too big of a chunk of the tribe.

[Jesse Gilgar]

One other current event topic that I would love to cover before we get into some of the top questions you get as a retirement planning expert. Did you see this stuff with Nvidia that came out this week with all the robots and the AI and. Oh, you haven't seen this?

[Unknown]

Oh, no, not the new stuff.

[Jesse Gilgar]

Oh my God.

[Unknown]

What are they doing?

[Jesse Gilgar]

Well, so Nvidia just comes out and I mean, they are just going to town on providing GPUs and software interface for basically pushing robotics at a pace that's like humanoid robots at a pace that I think is way faster than anybody's anticipating. To the point where I'm hearing trials in factories this year, maybe even home testing, developmental testing this year, and then maybe even by next year some initial prototypes going into homes. They're able to accelerate the learning through simulated environments. That 10x the speed at which the robots can learn, the way that they're moving, the battery, technology, like all of this stuff. And I'm just looking at it and I'm saying to myself, I can't even imagine how deflationary this is going to be from a technology standpoint in the coming five years. And the amount of fiat printing that's going to have to be conducted to offset the technological deflation that this is causing and the dislocation. And like all these other Things. And I'm just like, I'm watching all this Nvidia. Maybe it's because I put a lot of this into my Twitter feed that I'm seeing a lot of it may be more prevalent.

[Unknown]

That makes sense and breaks my mind at the same time. Right. Because if you imagine where we're at with Chat GPT two years ago.

[Jesse Gilgar]

Yeah.

[Unknown]

It's like, okay, well, this is kind of cute in a tool, and look what it can do. And now I'm seeing regular people, like, use it as a necessary tool in their workflows now. Like, oh, you can't get rid of ChatGPT.

[Jesse Gilgar]

Yeah.

[Unknown]

You know, I'm reliant on it. And that was the software side. And now you're talking about hardware. Yeah, yeah. Mechanical engineering. And like, okay, well, if you take the growth of what's happening in software and you showed me Lynn Jackson, like, watch me speak Korean. I don't know how to speak Korean at all. But here I'm going to have some Michael Saylor commentary. And it's going to take all of that content, change how my lips move. And then you gave it to your friend who was fluent in Korean. He said, it's perfect, right?

[Jesse Gilgar]

Yeah.

[Unknown]

And the software combining with the hardware, I can't even imagine how much the world's going to change. And he said, Five. I've got to live 10, 20, hopefully 30 more years. Where does it all go? And it touches on that Jeff Booth idea. It's going to create so much productivity, which is going to cause deflation. And that's the kryptonite to the Fiat system.

[Jesse Gilgar]

Yes. This is what the trade fi. If I had a big gripe, this is the thing that I don't think all those people in the room that you were there at this conference understand is that the technological deflation is an exponential curve, and it builds in. This goes to Jeff Booth's thesis that so many bitcoiners talk about is like, the 50th fold of the piece of paper gets you from the Earth's surface to the sun because it's exponential. And when I'm just looking around at AI and I'm looking at robotics, and I'm looking at saying the amount of printing that they have to do to offset this is just miraculous. It's out of our comprehension just within five years. And I just want to be able to scream it to the rooftops of traditional finance, like, wake up. You have to see this. Like, there's no way they're going to be able to Mask this any other way than just printing like tons of more monetary units.

[Unknown]

But. And that was really when I started taking bitcoin seriously in clients financial lives. Right. When they in March 2020 created those new currency units to expand the system, you had something to point to. Right. I was in a situation where I got a stimulus check at that time, shoveled that puppy straight into bitcoin, encouraged.

[Jesse Gilgar]

Clients to do something which by the way is what amount? Now it's like 20,000.

[Unknown]

Oh geez, I haven't checked on it.

[Jesse Gilgar]

It's like, I'll look it up while you're talking. But it was a $1200 check and I want to say it.

[Unknown]

Yeah, I know mine was 1400, so I don't know.

[Jesse Gilgar]

14. Okay, all right.

[Unknown]

And maybe the point I was getting to within that is when they inject, they have to choose how and who. And that's inherently an unfair process. In that month they were buying Apple corporate bonds. There was the PPP loans for business owners and then there were stimulus checks for, let's call them the plugs. Right. The common folk. And it was just a whole set of rules that was created and then injected. And I think for the first time you saw when the note, the new money units are injected into the lower socioeconomic ends of the population. That's where you're getting the grocery store inflation. Right. If you just injected into banks and Apple bonds, you're not going to see beef be affected as much as capital assets. Right. And so I was paying attention to injection site like, okay, they got to print new money. Where's it going to go? And that Cantillon effect is not a straight line. Right. It filters and flows through the over years and it has ripple effects. And so the printing that got done was still under a Trump 1 administration. But then all this price inflation is like trickling through into the Biden administration. And people are like, oh, it's Biden's inflation, inflation. It's just not intuitive to people that, okay, money gets injected 3 trillion one night, people didn't change the list price on their house the next morning. Right. It takes years to trickle through and it's not fair. You can't choose how it happens and it is going to happen again. And so I guess the, that's a question I kind of want to ask you. Like how big do you think the next Federal Reserve balance sheet expansion is going to be?

[Jesse Gilgar]

Yeah. Your point on the frequency or the lag factor of the input versus the output is so on point and so important. And so lost on so many. By the way, the stimulus. If you got a $1,200 stimulus, it's now worth $12,000. It's 10x in value. Since they mailed those out. If you would've taken all of it and put it in the Bitcoin. My answer to that. I'm sorry, help me remember.

[Unknown]

Oh, it was a cheap shot. Question. How big is the next print?

[Jesse Gilgar]

Oh, yeah, yeah. The way I would go about answering this would just be, you know, look at the growth rate of the Global M2, and the US is printing at about 8 to 10% annualized, and it's been very flat for three or four years. This is another point on how much do they got to print? It depends on how much of that deflation of the credit. How much of that credit do they allow to be soaked up or to go poof? All the promises. How much of that do they allow to go poof? And for how. How deep do they allow that to go? Also plays into how much they've got to print in the immediate term to get it back on track with that 8 to 10% growth rate.

[Unknown]

Yeah.

[Jesse Gilgar]

So if they don't ever allow that impairment to really kind of play out in the credit markets and they just continue to, like, juice it, then the print is just going to continue to take, you know, whatever 8 to 10% of the current nominal growth rate is and just figure that out. But if it contracts, like what we saw in 2020, like that was really a sharp reaction to Covid. And so the amount that they put into the system was, I would say, a little bit extra than what they probably needed to. But I think that if you're looking at it from that. The speed at which.

[Unknown]

And they're. And, yeah, the speed. The response.

[Jesse Gilgar]

Yes.

[Unknown]

Become quicker. So TARP was what, Wait, and TARP was three months. Covid was like three weeks.

[Jesse Gilgar]

Yeah.

[Unknown]

And then the bank's breaking. You know, I think they did that over a weekend. Right. Like, yes, Valley bank and you know. Yeah, that's Oprah was broke on Friday and made whole on Monday.

[Jesse Gilgar]

That's a perfect example of why it's so hard to predict the next amount that's going to be printed is because look at Silicon Valley bank. Perfect example. Died on a Friday, was reinvigorated before the market open on Monday and everything just kept chugging along.

[Unknown]

Yeah, it's like nothing to see that weekend.

[Jesse Gilgar]

Yeah, nothing to see. But if they would have let that play out for. Let's say they didn't do anything they took their hands off the controls for two weeks. Could you imagine the amount of the.

[Unknown]

Dominoes would just start.

[Jesse Gilgar]

The impairment would have just cascaded through the entire global economy and then they would have had to have printed a lot more to offset that versus how they responded to it. So yeah, it's a little bit of a fool's errand to answer a question like that because you just don't know how long they're going to allow the impairment to play out. But I think that if you're looking at it on a net long term basis, like over how much are they going to print in the next five years? I think you can actually figure that out pretty closely to, by just looking at the chart and just kind of doing the math of that growth rate. Now whether this robotic stuff will accelerate the technology deflation, I don't know, but AI, I don't know.

[Unknown]

But yeah, and it's that it's feedback loop too, right? The more they do, the more they.

[Jesse Gilgar]

Have to do big time.

[Unknown]

Yeah, it's crazy.

[Jesse Gilgar]

All right, so here's my question for you. What's the number one question that you hear? Because with like ego death, when I'm talking to a lp, I can tell you the number one question I hear.

[Unknown]

Like, how do you outperform bitcoin?

[Jesse Gilgar]

That is the question. That is the question.

[Unknown]

Yeah.

[Jesse Gilgar]

So what's your number one question you hear? You nailed that, by the way.

[Unknown]

It's a, it's a twofold set of problems. So typically, I'll just tell you the typical is a husband and wife coming in. This isn't always, I see where this is going is more the technical bitcoiner and very curious on if there's tax savings to be had. Right. So tax is number one. That one's typically the primary technical bitcoiner in the family, wants to save money so they can buy more bitcoin. The less technical spouse is looking at that guy and saying, well, what if I do if he smokes out, right. Like I'm on board with the bitcoin, I'm not involved in the finance. But if something happens to him, health or otherwise, God forbid, I'm not confident that I know what to do or if I want someone to talk to. So it's twofold. It's like a tax and inheritance one, two punch and then maybe a third as a backup is like, well, if we're right about bitcoin, then I'm going to have a new set of opportunities or choices. So how do I dial back? Maybe the work I'm doing or pivot it to something else. So can you save me money on taxes? Probably the number one question, and that's a deep and customized question. Inheritance is pretty standard, especially in couples. I believe in my spouse and I'm on board with Bitcoin, but I'm not as technically confident or I don't know I'm going to be okay if something happens. And then once those two are solved, we start looking at the future and what transition scenarios might look like. So I'd say that's the most classic.

[Jesse Gilgar]

Let'S talk the tax piece, because, and I know that you said this gets very nuanced to the individual, but if you would take, let's say you have a person, their net worth is $500,000, how would you walk them through the tax implications and how to think about it?

[Unknown]

Yeah. So there's a couple different components to tax, and I'd say that the two big ones that are just highly dependent on who you are in your financial situation would be income tax. I make money every year and have to pay taxes on it. And then estate tax, which is kind of the net worth one that you were poking at. I've got this much money. And the way the tax law is currently structured, if you die with too much, that's the death tax. Right. Government comes in and takes a quick, it kicks into 40% really quickly. And so if death tax is in play, that's a huge needle mover. We're often, we're looking at hundreds of thousands, if not millions of dollars tax saving. Bitcoiners are unique because even the person that's at a $500,000 net worth thinks they might be in some measure of time, like, oh, yeah, well, I'm going to the moon. And so I might have the death tax as a problem. So it's something we're always paying attention to, regardless of net worth. Right now, those numbers are about $14 million per person. So $28 million net worth for a couple. That's part of the Trump tax bill that sunsets this year if they don't change any rules, gets cut in half to 7 million per person. So coming down from 28 per couple down to 14.

[Jesse Gilgar]

Yeah.

[Unknown]

And just depending on the uniqueness of your situation, if you see a net worth and like those two, that perfect storm collides, like, well, I might be over 14. And if this sunsets, it's nuanced, it's a little bit complicated. And we're talking about two different structures that we can Move the needle in. So when you present net worth, that makes me think which tax are we talking about? Right. Is it I pass away and I had too much money so now I'm tax pay half to the government. That's a big one. To avoid the more common one, I think that applies to everyone is income tax. I've got rental properties or W2 or I sold a business and that tax is experienced every year. You're not having the death tax every year, hopefully. And the income tax, that's a different one, a little more unique I would say if I could answer the question quickly for you and then kick it back to any follow up. The three biggest needle movers we have as bitcoiners within the income tax are going to be good understanding of your basis to do both gains and loss harvesting. Right. In a pullback you can do loss harvesting, but there's also gains harvesting. There's a 0% capital gains tax bracket. Some people live in 0% tax states. So if you can go get and sell a bitcoin and pay no tax, sometimes you can do that and just buy it right back and give yourself a higher basis.

[Jesse Gilgar]

Help us understand where that would apply.

[Unknown]

So we'll take someone who is at $100,000 a year of income as a couple, right. Husband, wife, make $100,000 a year and they don't have any other complexity in their tax situation. The 0% capital gains rate goes up to about $130,000 for this year 2025. Using round numbers here, it's a little more specific, but there is a situation. If that couple lives in one of the nine states that have zero percent tax, they can sell $30,000 worth of gain in bitcoin and then buy that bitcoin right back the very next second. That is a capital gains harvest and they're not going to pick up any tax for doing that. They're still within the 0% federal window. 0% state. What they can do is sell. Where are we at today? 85,000. So let's pick. They bought Bitcoin at 55,000, 85,000 today. And to sell the $55,000 Bitcoin, buy it back for 85,000. And I just improved my basis and future tax situation. Oh yeah, by that much for free. So that's one to pay attention to. And then I'm saying quickly the other.

[Jesse Gilgar]

Yeah, I love that. No, I love that. That's outstanding.

[Unknown]

The other two are going to be donor advised funds. So we have a lot of clients who are charitable it's kind of this fix the money, fix the world idea. And we're often identifying their lowest basis Bitcoin and using that within their tax situation to get write offs. Right. And front load that and they can continue to hold the Bitcoin doesn't have to go straight to charity. They just leave it in a structure where they can continue to hold it, let it grow, give it to charity one day. We've saved hundreds of thousands, if not millions of dollars by doing that for folks. And then the third one is going to be Roth conversions, Roth IRAs being tax free. Bitcoiners love the idea of tax free. And so if we can get Bitcoin into a structure that without tax law changes, by the time they want to use it, they can do it without having to pay taxes. That's a big one. So that is pretty nuanced in looking at the current bracket and how much can we get from traditional to Roth IRAs or are we building Roth IRA from scratch? But in general, those are the three quick answers of real needle movers. There's other more peripheral ones, but tax gain, tax loss, donor advised funds and charitable gifting and then Roth conversion. Let's take a quick break and hear from today's sponsors.

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All right, back to the show.

[Jesse Gilgar]

If a person was. A lot of people hear about having their own trust, at what point would you start recommending this for somebody? A self directed trust or self directed IRA through a trust? Help us understand how you think through some of these mechanics.

[Unknown]

Yeah, so there's a couple nuances within there and I want to be clear on what you're asking. Are you talking about trusts, which are typically more for like asset protection and don't necessarily need to be IRAs. And then there's IRAs. A subcategory of IRAs is like the self directed, where a lot of early bitcoiners had to use that structure to hold bitcoin in an ira.

[Jesse Gilgar]

So yes, let's talk about which one. You pull both of those. Sorry.

[Unknown]

Okay. Yeah, yeah, yeah. Okay. So I think we'll do the IRAs one first because early on in Bitcoin there wasn't a great way to hold your own keys for a bitcoin and have it be tax advantaged. And so what happened is you set up what's called a checkbook ira. It ends up being IRA owns this llc and then the LLC is a business and it can go hold bitcoin on its balance sheet. And so people or bitcoiners to have key control, they do this checkbook IRA structure or hey, I'm going to have the ira, it's going to own the llc, the LLC is going to go buy bitcoin, and I'll hold my keys in that. And I would say that's probably one of the earliest ways you saw Bitcoin in IRAs. Now there's far more products and options whether you would just want to be the ETF on Schwab or Fidelity I helped develop when I was at Unchained for a few years. They have a two of three multisig IRA where clients still holding two keys, Unchained holds the third. They use their third to keep you compliant from a reporting perspective. So because they have a key in the setup, they can watch if the bitcoin ever leaves. That's the mechanism they use to keep you compliant as an ira. And so there's far more options now. And I think it's rare for me to see a checkbook ira, but they still do exist. Like anything, there's trade offs, feed structures. So I don't want to rabbit trail too much on that one.

[Jesse Gilgar]

And then how about just the trust in general?

[Unknown]

Yeah, this is more of an estate planning and inheritance question. Trusts can hold assets, wills cannot. Right. So when you look at doing your estate plan, you say, hey, I want my kids to be taken care of by Grandma Susie and I want the dog to be taken care of by someone else, because she does. You can do everything you want within a will, but a will can't hold Bitcoin for you. When assets are transferring to inheritors, you often want to trust. And this is a 50 statewide question. I'm not an attorney. Attorneys have to write trust. But I'll brainstorm this with clients because the three big things that bitcoiners don't like when they hear what I'm about to say is the state can be involved with how your assets are transferring to heirs if you don't have that set up. So if you've got bitcoin and you bought it in Preston's name, I'm Preston, I bought bitcoin. Something happens to Preston and that bitcoin is supposed to go to your wife. Depending on how you're set up, the state you live in could be involved. That is a process Called probate. It's often very slow, can be expensive. And the big one that bitcoiners don't like is its public record. Hey, Preston's wife got this many bitcoin on this day. That's an avoidable situation. And so a trust is that mechanism that can hold assets. I'm Preston, I'm going to set up a trust. My wife is going to be a co trustee to that trust and we are going to put the bitcoin from my Preston name into the trust. That is a non taxable event like going left pocket to right pocket. Now the trust owns the bitcoin and there are still key control structures available to do that. Then if something happens to you, your wife is just the co trustee the next day not going through the state. No one needs to know it's next day access. And it really keeps her above board. Right. She doesn't have to document. Well, how'd you get this bitcoin? She's able to find your keys like in a single signature setup. Right. Hey, it's unfortunate. Preston pass. But I got the keys. She's going to bring that into a financial service at one point to sell it or take a loan against it. And they might ask well how'd you get this? And you can save a lot of that pain up front by just hey, let's title this correctly. We don't have to make sacrifices in our key control setup. We just need a good legal wrapper around this to avoid really the state getting involved in having their say.

[Jesse Gilgar]

Yeah, at what net worth or like what would be the metrics that you would tell somebody?

[Unknown]

That's common. I don't think that one's tied to net worth at all. So that situation we described is called like revocable living trust. Yeah, revocable, meaning I can take it back as long as I'm living. Right. And so revocable living trust, often called a family trust, you can put assets into it, take it back out. That is something that everyone should consider currently, regardless of net worth. I would say some of the more automated legal zoom type options can be a few hundred bucks. Meeting with an attorney's probably between three grand and ten grand to get it done. And you're getting your basic set of documents taken care of that you can still make changes to. And so that one in my opinion doesn't have a net worth trigger like some of the more advanced trusts do. The more advanced trusts are called irrevocable, which means no take backs. And the big reason you're Doing that is for asset protection or to avoid that death tax that we talked about earlier. Hey, I'm over that 14 or 28 million. Let me use that number now and get the bitcoin out of my estate into this trust that I no longer control. And so you set up that type of trust with a lot more intentionality and due diligence. And you're usually not exploring that until you're on the bubble. Right, the 14 or 28 or whatever it decides to be next year.

[Jesse Gilgar]

Yeah. Let's talk. The technical risks that you said come up in, you know, these initial meet and greets that you have, that one of the two bring up that they have concerns if the other one passes, to be able to manage the keys. How do you go through this? I mean, when I'm thinking about this, I think about on one extreme, you have like my grandmother, there's no way she could ever do anything with bitcoin keys without having somebody do all of it on her behalf. So buying something like an ETF for somebody of that technical competence seems to make more sense. And I know that that's not a popular thing to say in the space. How do you go about it?

[Unknown]

Might not be popular, but I think it's right. Take everyone for where they're at and try to get them the best thing that fits them.

[Jesse Gilgar]

Yeah.

[Unknown]

Unfortunately, we had a client pass last year. In his 80s and surviving spouse in her 70s. He was holding his own keys. She doesn't want to have anything to do with that. And so in some ways we have to ask the question, like, is going backwards. The rest of the. Right. We were holding keys and now. But she's very nervous and it's tough for her to feel comfortable with. She likes bitcoin. Her husband believed in it. She feels this almost this urge to carry on in his name with the asset. But maybe the ETF is a better fit for now, or at least we can choose a little bit of each. Right. And we just have those discussions and figure out what might be right. As far as ETFs go, it's common for us to divide amongst the custodians. Coinbase, Honeypot. I think they're helping out eight or nine of the ETFs. Spidelity runs their own custody and then a Gemini runs. Van Eck. So if we use etf, like, hey, let's maybe spread across these custodians to diversify against the hack a little bit. Yeah.

[Jesse Gilgar]

What are your thoughts on the coinbase? Honey? Quote unquote. Honey Pot.

[Unknown]

They hold a lot of ETF coins. Yeah, I think there are a lot of microstrategies coins. I don't know where America is going to hold its coins within that summit that we went to in Jackson. Yeah, I heard them called the gold standard for bitcoin custody and what I see with we'll just call them bitcoiners on the street. It's like it's not the gold standard of how many bitcoin maximalists would trust Brian Armstrong with their private keys? I don't know. Not a high percentage. And so that looks like a big risk to me. And I have bitcoiners. Don't say that. Don't jinx it. We saw Mount Gox, we've seen the ftx. We're looking at what a honeypot could be they're holding between those three entities. It's over million and a half bitcoin somewhere around there. The ETF MicroStrategy and potentially America. I don't know. And so I'd like to see coins leave Coinbase slowly rather than all at once. Right?

[Jesse Gilgar]

Yeah.

[Unknown]

If a million bitcoin leave in a night, that's a bad year, potentially decade for bitcoin. If we can have better custody options develop and be adopted over 10 years and Coinbase doesn't have to have a catastrophic event, that would be a preferable outcome.

[Jesse Gilgar]

I think the SAB121 and this request for in kind redemption is all a positive direction to remedy some of this what you're talking about. I just don't know the pace at which it would.

[Unknown]

Yeah, that would allow banks to be like, hey, we're going to redeem the ETF at Coinbase. But then they still have to come up with their key control model. Right. What does Chase bank running cold storage multisig look like? I don't know. How much work have they done from that perspective to make sure that that's secure? So yeah, I'd like to see maturity in the industry. Competitors develop SAB121 and or in kind redemptions would help make it easy to transfer some of the ETF coins elsewhere.

[Jesse Gilgar]

Yeah, no doubt you had mentioned that. The third thing that sometimes comes up is this discussion around like, well, what do we do if we're right?

[Unknown]

I don't know.

[Jesse Gilgar]

No, it seems more like a philosophical discussion with purpose and I'm just kind of curious to hear your thoughts on some of that. Like hey, we're 10, 15, 20 years into the future. Let's say you're very right about all of this and it changes your life. Like for some people I get to see it.

[Unknown]

Right. I work with clients who started in 2012, 2013 and exactly that happened. Right. This used to be a nominal amount and now it's grown into a life changing. Yeah. Life changing amount. And what if that happens again? So what I've already seen, if it compounds, right. We're folding the paper and you're going to be presented with opportunities that you've never seen before and simultaneously problems that you've never encountered before. For a lot of people I didn't know a death tax kicks in at $28 million. So I encourage them, hey, do your moon math and figure out when this matters to you. I've seen some bitcoiners like, well, my answer is to just go underground. I'm going to do the no Kyc thing and I'll make my family go dark for generations. Okay. Or with some planning and intentionality, you can choose to stay above board and just have good structures and a strategy in place so it being exponential. And if you're right, in 10, 15, 20 years you're presented all this new opportunity from a time and energy perspective. How you make work optional and what you focus on, what matters to you. I do see a trend of fix the money, fix the world. As bitcoin has happened to people, it unlocks that fix the world side of them and they start caring about causes and want to use their bitcoin for that. So that's exciting to partner with. And then yeah, just the problems that wealth brings. I've got to meet, in my opinion, some very, very wealthy people on this journey and they are not problem free. They just have different money problems.

[Jesse Gilgar]

Yeah.

[Unknown]

So it's a fun job getting to see the whole spectrum, right?

[Jesse Gilgar]

Yeah.

[Unknown]

Those early in the journey and ones that it's already happened to. What would be the strokes for different folks?

[Jesse Gilgar]

What would you say is the one bit of advice you'd like to leave with the listener as they think through some of these things?

[Unknown]

I think the biggest piece of advice is your situation is not like anybody else's. And I'll bring Saylor back into this because another common question, I guess I'm told to never sell my bitcoin. Right. Michael Saylor said to never sell my bitcoin. Well, Michael Saylor is getting 0% debt and arbitraging a convertible bond market that we have no access to. And so he's playing a different game and his needs are going to be met incidentally, like they're A rounding error of his life. Right. He's operating in a different threshold. So don't play somebody else's game.

[Jesse Gilgar]

Yeah.

[Unknown]

You go on Twitter and you see all this advice. Do this, this and this. Often someone speaking from like, hey, here's the game I'm playing and how I want. I'm a revolutionary. I'm going to die on this bill and I'm never selling my bitcoin. Talk to a 62 year old couple, they're retiring and are they in that same spot? Are they a revolutionary? No, they're not going to work. They want to have a calmer experience than what bitcoin volatility has traditionally brought most folks. So it can be tough, especially within. If we are in an echo chamber and we're saying those words to ourselves, you can get caught up playing somebody else's game and you think you're making good financial decisions because that's what a community or a signal could be telling you. But they're not playing your game. They don't know who you are. They don't know if you have a wife or kids or what your job looks like or that you just sold your business and you've got to pay a bunch of taxes. They don't know any of that. And so only you are in your shoes. You can reach out to people that work on this. Like, that's why we built sound advisory. I got the question before sound advisory launched. I got that question all the time at Unchained. What should I do? I can't say should. Right. You hear it all the time in every podcast. Not financial advice. Go talk to your guy. There weren't many good guys or people in the space that could answer that question for folks. And so that's what we look to do is just be a sounding board, understand bitcoin deeply and try to give advice that makes sense for bitcoiners and be a partner with them in the game that they're playing.

[Jesse Gilgar]

Love this advice. Love this advice. Because you do. You see it on Twitter X all the time where people are actually getting in fights and arguments over no, that's not. And it's like, no, everybody has a different life circumstance that they're dealing with. And I just really like that point a lot. You mined a little bit for three years and I'm curious what your takeaway like, looking back at the experience, what was your takeaway with mining for three years on your own?

[Unknown]

So I mine out of my garage and heat my house. So in the winter or I think we Kick it on around October and I just above the fridge, popped a vent through the garage and then just pump it out into the entryway. I live in Idaho, so it's cold, right. Often be like single digits or the teens. And so we just keep it on all winter. Not an advanced setup, but it was heating the house for about eight bucks a day electricity and at the time maybe making six to seven bucks a day in bitcoin. So more of a nerd hobby, but fun. And I see the conversation starting around heat reuse. Right?

[Jesse Gilgar]

Yeah.

[Unknown]

For so many of these mega scale miners, they're looking for cheap electricity costs and then doing just massive scale. Right. And a lot of heat is the output and it's valuable. And I saw that just personally I'm like, I could either run the heat pump, which is really expensive and doesn't make bitcoin, or can run the miner and get some bitcoin alongside. And so it's just completely on grid. We weren't getting any sort of special rate or anything. But I'm very encouraged to see. You've seen the prototypes of the hot tub, right? We're going to heat the hot tub with bitcoin. And talking to another Idahoan locally, he's like, I want to heat my driveway and I want to eat my pool. And if it makes bitcoin, all the better. And I just think that energy that's changed from electricity into heat is often being wasted by miners and it could be injected into so many homes. Right. Water heaters, there's just a deep need for heat. I was chatting with someone on the plane who did get got bitcoin a little bit. I'm like, it'd be very curious to see miners migrated in winter. Like they go from North America to South America for the winter just because that's where the heat is needed. I don't know if that'll happen. But yeah, there was a joke there with chickens and egg six and it was a good joke, right. Like maybe we'll see minor migration if heat becomes more valuable.

[Jesse Gilgar]

If you could look at it objectively from the typical person that's wanting to do this at their house and the technical competence required and the operational and maintenance, like you just told me before we started recording that you were on quite a few trips in the past three weeks. And being away from that, how likely do you think something like this coming into the home is? And like what kind of timeline do you think something like that might occur?

[Unknown]

Oh, goodness. If they built. So I've seen like the the heat bits. And there's an industry that's poking at the. The user interface of it all, like making that easier. It wasn't too difficult. Like, I am not an electrician or an engineer. I don't know how to code at all. And I just opened up my panel, ran a wire over, plugged it in, and I was able to jerry rig it. I'm confident that others could. But I think the industry making it plug and play is just a very. That's a curiosity. I think I have that. Okay, well, what if you could just buy a water heater at Home Depot that has ASICS using to heat the water.

[Jesse Gilgar]

Yeah.

[Unknown]

Have it all point to an address or a wallet and it's not too difficult. And your water heater goes out. Like, are you going to buy the one that mines bitcoin or doesn't they cost the same? You're going to choose the one. And I think that'll just start to infect the need for heat market.

[Jesse Gilgar]

Yeah. So it's exciting to just see the potential. Jesse, if people want to learn more about you or sound advisory, give them a handoff.

[Unknown]

Yep. So we can be found atthe sound advisory.com that's T H e sound advisory. You can book an intro with our team. We're three advisors, two CPAs doing taxes in house for folks. I'm at Idaho HODL on Twitter and then other folks on the team. So Vaughn, Kellerman, Malcolm, I'm sure any of them would be happy to have a follow. So reach out, say hi if you've got questions. That's what we're here for.

[Jesse Gilgar]

All right, we'll have links to all this in the show notes. And until next time, hopefully we can be as lucky as we were this past time in Jackson, not killing ourselves on the slopes. But, boy, I had a blast with you, sir. So thank you for making time and coming on the show and yeah, thank.

[Unknown]

You for having me. It's an honor. Yeah.

[Preston Pysh]

Thank you for listening to Tip. Make sure to follow bitcoin fundamentals on your favorite podcast app and never miss out on episodes. To access our show notes, transcripts or courses, go to theinvestorspodcast.com this show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by the investors podcast Network. Written permission must be granted before syndication or rebroadcasting.