Bitcoin Eats All Markets: IPO Hype, Treasury Grifts & Buffett Lessons

It all comes down to computers communicating. >> The information superighway can be a confusing mix of on-ramps and off-ramps. >> Bitcoin is worthless artificial gold. >> Is it still rat poison? >> Probably rat poison squared. >> We need to get into the world of okay, this is actually foundational technology. What the internet of money does is it creates a single network which can do a microtransaction to a gigat transaction. The internet is going to be one of the major forces for reducing the role of government. The one thing that's missing but that will soon be developed is a reliable ecash. Hey guys, thanks for tuning in to another episode of Final Settlement. We had a awesome podcast covering all the news. You know, whether it's uh the new IPOs coming to market, Gemini bullish, or uh some of the new announcements from the BIS and marketing coins tying back to the digital asset treasury companies and you know, some of the fundamentals that people should know about when it comes to management fees and rent extraction there. Um, quick word from On-Ramp. We've had uh incredible demand and interest from the uh launch of Bitcoin Dynasty Trust. We recorded a podcast um this morning that'll go out Wednesday with the First Covenant team tying in a little bit more into what we're doing there. Would encourage you guys to check it out. Um and if you have a lot of questions, thoughts, you can look at our website. It's right there on the top onbitcoin.com. the uh Dynasty Trust Services page, there's reports that break down how it works, but then also um there's a great report that'll walk through a little bit of the the savings and the process that goes into it. Uh again, you can feel free to book a consultation or reach out directly to somebody from the team, Michael.com is a good example, or Jackson or Cam. All right, on to the rest of the show. >> Gentlemen, welcome back to another episode of Final Settlement. Today is Monday, August 18th, 10:25 a.m. Little bit of a later start today. Little dreary in my background. No beach day for me today. It's a little overcast, a little rainy, but uh great to be here with my co-host, Liam Nelson, Michael Tango. How we doing, boys? >> Yeah, this is my uh this is my sick game. I I was I didn't think I was going to make it. It's my it's my flu game. The you know, whenever they they unleash the new co or whatever. Um but you got dreary. I got like a little, you know, feeling under the weather, but that means we're just going to like bring a little extra heat, so we'll make sure to to to make up for it. >> Yes. Yes, we will. Um, so I think we're going to start with a slew of uh news items, deals, IPOs, uh, from late last week. Uh, we're going to start with, um, bullish IPOed last week, ran up to about $90. Uh it's now back around 65 I believe, but it IPOed around 37. Um cryptocurrency exchange based out of Hong Kong I believe. Um and this is um you know sort of a trend that we're seeing. We'll we'll talk in a in a bit about Gemini. Um finally go public as well. Um BO is another on that list. I believe Kraken as well. Um so we're seeing a lot of this. Um, but any thoughts on the bullish announcement, Liam? Perhaps. >> Yeah, though. Uh, I mean, this is just what we've been seeing. I think that they tried to go back uh go public back in 2022, but it failed um just because of the market interest overall. Uh really positive stock performance. Uh another thing that we've just been seeing overall and that Bill Gurley's been really on is just like the inefficient pricing. I think that, you know, market participants and uh they were they received shares um bullish at $37 and then immediately traded up towards like 70. So unfortunate to see the team lose out on you know efficient pricing from going public. But regardless very positive reaction from uh you know the public markets. I think it's just everybody knows um that right now there's a lot of institutional interest in the sector um despite it's pretty much every company under the sun that goes uh public in the digital asset space is getting some sort of positive reaction and so at this point we're just going to see more and more of this and uh in very early days of it. Yeah, I mean I think it's positive in the sense there from a pure techn technological entrepreneur startup you know getting liquidity you've been grinding no matter how much we think or don't think about crypto um it's a positive sentiment to be able for the you know get to the public markets them get exposure to your your company with that said I think it's actually a really good podcast um not really good but there was they touched on this in the private and public markets It's uh really bad for the private market, specifically VC on the all-in pod. Um and it was relating to like a lot of these companies, you can just wait for them to IPO and if you know how to pick the winners, um you know, obviously the forgot what they're like Palanteers, the Facebooks of the world, um you can really get a lift. And what I'm taking from that and relaying here is like if you really like the company, if you think you'd use them, if you they have solid fundamentals, like, you know, if you like your equity, if you like your store value parked in, you know, the S&P 500 or whatever, then then maybe there's a company out there for you. But would it be bullish? And what do they do? Who uses them would be my question. Uh, you know, they spun out of Block One, which was it had its own, you know, interesting originations back in the 2017 ICO bubble. I think they like got is it 210,000 BTC? Is it was it that large? >> 170 I'm pretty sure. >> 170 still just like that is an insane number at the time and it it wasn't even that you know it was a billion I think maybe roughly now whatever that would be. Um so anyway just interesting dynamic. I think the so the core sentiment is you're just going to see everyone under the sun in the crypto space. It's almost like AI it's like look we could tap liquidity. we like we have the the tailwinds at our back in the sense of um people think this industry is hot. They want to be able to express a view to it and so this is just something we're going to see and mainly just be careful if you're you know trying to park capital here in a long-term buy. >> Well said. Um one other interesting aspect is the company went public with uh 24,000 Bitcoin too. Um they also clarify in their S1 um that they also own some wrapped Bitcoin as well which I believe uh based on my preliminary reading that they consider the wrapped Bitcoin is Bitcoin on their balance sheet as well. Um, important clarification. And yeah, to your point, it's it's interesting to see in terms of digital asset sales, which is, you know, the primary revenue stream for the business, uh, it's flat from 2024, um, the first three months of the year to 2025. Um interesting to see that despite the slew of interesting uh you know how much higher Bitcoin is and all the other digital assets as well they're institutional focus. So just uh you know interesting to see them not really growing quite as much as the industry at whole. >> Yeah. Um, another sort of trend following announcement that that broke earlier this morning. Um, the Dutch crypto company Amdax is going to do a Bitcoin treasury company strategy. So, Michael, you had sent this one over uh via text this morning. Targeting 1% of the supply. So, everyone's going for all the bitcoins. Um, everyone's going to get 1% of supply allegedly. Um, any any thoughts on this one, guys? I didn't think you were going to pull it up. I thought it was that funny of a joke. Uh, it kills me. We're going to keep talking about it, but I guess we have the I think the kicker is when we go back, the Bitcoin treasury craze will be looked at as like the most fiat thing that has ever existed because at the end of the day, when you really break it down is you're just selling um one Bitcoin for 90 or you're selling one Bitcoin um or I'm sorry, one Bitcoin for, you know, 1.12 or >> Yeah, you're you're sending you're selling Um, and we'll just go to like what were we thinking? Uh, and I guess like if you were going to pull this up, we can you can go into the uh treasury market or the the research from BitMax because you know like very few people have looked at the management teams, the advisory agreements and BitMax had a really good breakdown of treasury company advisory agreements looking at just some won't go too far. I think I had them written somewhere, but ultimately it's like anywhere between 1.5 to 2.5% annually of management fees fees that go to these management teams. There's one uh again without naming names, you can read all this that the the company gets exposed to 85% of the Bitcoin appreciation and then the other 15% goes directly to the to the management company. Um, and then obviously on Twitter you see no shortage of kind of where these salaries are coming in from, you know, leadership. It's just a grift. It's it's a huge money grab. And like the reality is because there's multiple layers to be able to pull it down where like if you really had a fundamental business, you would just pay it all in stock and then they would you don't need the cash. And then also if you were really building a fundamental business, you would use that cash to provide additional value. it wouldn't go to like like just the whole thing doesn't align with fundamental value. Um ultimately fundamental value being delivered. So anyway, I thought this was a good write up. Um goes into obviously some of the other crypto dats and Salana and they're all equally it doesn't matter if it's Bitcoin, crypto, hyperlquid. You know there's a story ton. I think the sad part is this is just getting started. this is going to go much higher uh than we I think are expecting. I think we're just kind of in a mini lull right now for the the DAT DAT craze. >> Yeah. No, it's well said. And um you know particularly on the sort of DAT side outside of Bitcoin um what this all strikes me as is just like a way to effectively like re ICO all these old coins just in the Trady world. So, in a trap by rapper and just do a a very similar sort of pump and dump to insiders who get in early on the deal. Um, when there's actually nothing fundamental either from a business perspective or the even the underlying token. Um, and so I I would also agree with you like I I do think this can this can persist uh longer than than many anticipate despite how insane it it already seems. Um maybe slight transition to another uh a few other uh announcements from last week uh more on the mining side of things. So um Block finally came out. They've been working on this for a few years, but um they came out with their uh mining hardware. Um this is called Proto. And um pretty big deal I I would say in my mind just in terms of you know historically in the Bitcoin mining space there's been a concern or general risk that a lot of the or the vast majority of the manufacturing of AS6 um is in China and so uh Block took it upon themselves to effectively build out from scratch um a mining hardware business as sort of one of their many subsidiaries that are are sort of bitcoin focused. Um any thoughts on this one guys? >> Yeah, my manufacturing mining hardware is a very difficult business and the biggest players in the space have been around for a long time and just have a ton of capital which is essentially what you need in order to uh be competitive. It's very um capitalally intensive business. What's most interesting here and has been an issue for the industry for a long time is the module. It's modular. In order to kind of swap, repair all of these A6 as they continue to depreciate over time. There's a lot of um repairs and changes that happen within the industry. And this is going to be very positive in terms of or it sounds very positive in terms of the actual um changing and repairs for the infrastructure. We'll see how well it actually goes out in terms of you know the deployment and everything. But the other most interesting aspect too is that they're planning to open source all of the firmware which historically um has been an issue with respect to the mining um manufacturers and blocking as a company in total just seems to be really leaning into uh Bitcoin as a whole. They have now um Square rolling out to all the merchants. uh Proto Rig is, you know, a competitor to main micro BT. Um they're they're really leaning in and and obviously stacking Bitcoin themselves in exchange uh hardware devices. It's uh it's good to see and and hopefully these uh the announcement and the adoption of it continues to to be as prog or be as strong as the announcements because we've have seen unfortunately a lot of these announcements that have kind of not come through quite as well as many of the industry participants really hoped. Um but you know very positive to see at least from a design perspective. >> Yeah, I don't have a lot of insights on the mining side outside of the what Liam touched on the modularity is pretty interesting and the the take is that what you would take in a two to four year uh depreciating asset you can extend to 10 years but been able to switch out those boards um so you know in theory it sounds more efficient I I think Jack and and Block are an incredible company um I think they're net definitely net positive for the space everything that they've done um from spiral to to the um you know cash app integration being one of the first you know with bit I think had bit license but being one of the first to offer um like a bitcoin only exchange back in like 17. Um the thing that I'm most interested or want to call out is where they'll succeed in any of these sectors in a vacuum. Um meaning it's my fear that they're such a large company that it's really hard for them to start from ground up because that's effectively what you're doing is starting from ground up to build like a an area. It's not like Google started in search has a very like you know had a very stronghold hold there and then could start to like filter into these other products that were tied into search and the internet. You think about Chrome and Chrome naturally served um the browser from search into Google search where you see like the the hardware device is a great example at face value. It may look super interesting, but anybody that's like shipped hardware devices, onboarded individuals, and specifically collaborative custody, it's like not really a great product for 10 different reasons. Um, and it's something that would come from a company that would have, you know, billions of dollars at their disposal because I was also at Google and I understood like those are well-meaning individuals, but it's very inefficient when you have 10 layers of middle management, planning different products and services and doing, you know, user testing versus like truly being focused. And so that's kind of my take is just like I wonder how much even all the way down to the terminal stuff because the terminal exists um you know in the sense of like cash app cash up the application the terminal and that there's the perfect synergy there but like do they really have whether it's the will the connectivity to go out and get millions of users to start adopting it. Now the the counter to that is Jack is you know world-class entrepreneur. I don't know how many entrepreneurs have run publicly traded companies. Two CEOs. He could be playing a very I mean I know he's playing a long game because this is all setting up for you know multi-deade Bitcoin exposure. So I don't want to discount and say that couldn't be a master plan. But it's just something that I think about when I see a lot of these updates come out. It's like when I look at if there was a singular company singularly focused on what Block is doing. They're not doing anything like best-in-class and somebody else will go out run them if they were focused solely on it. Yeah, it's fair. Um maybe just one other mining related announcement. Um then we can move move on. But uh Terra Wolf signs 200 plus megawatt 10ear AI hosting agreement with Fluid Stack. Um this is notable just in in the sense of again sort of an ongoing trend that we've seen is either Bitcoin miners getting into um AI uh data hosting or the other way around. And so you're you're sort of just seeing the merging of these two fields, uh, Bitcoin mining and AI infrastructure. Um, and Google was a part of this deal backtopping 1.8 billion of fluid stack obligations. Um, and so this nets out to um, you know, uh, Google being involved, I think 8% they have an 8% stake in the company and I think I saw a tweet this morning that that is now actually 14%. They upped it. Um, any thoughts on this or we can we can move on. >> I guess just at a high level, Bitcoin mining is not great for economies of scale um, for the most part and AI high performance compute is. So, it's just natural that larger Bitcoin miners are going to shift more into that industry just given their ability to source lowcost electricity. So, it's just something that we're going to see more of. Um other than that no no real insight that's differentiated. >> Yeah. The only thing for me is just the fascination between mining AI um in general you know technology. Like you think about these things two or three years ago it was generally disperate and they were segmented and then AI started to really you know take a stronghold when it came to compute power and then you saw you know co-location and then natural buying. Um, and I can't help but think there's going to be increasing synergies as you go through it. Now, the interesting part is like the AI models and my understanding the way that they they um the cycles require like, you know, 100% uptime. It's not like mining where you can shut off, but this still concept exists that the miners are like the cockroaches, at least in Bitcoin mining, that they're out there, they're the canaries in the coal mine looking for the cheapest cost of energy. They're like the wildcatterers and then everyone else comes behind them. And so, um, it'll just be interesting to see how they play out. I think part of a big mining deal that just happened over the weekend as well was Galaxy. Uh, it wasn't even mining. I think it's it's AI infrastructure. It's a big um facility down in Texas that they s I don't even know exactly what the headline was. Um, but it was for a sizable power u plant in Texas between Galaxy. They had like Novagrats down meeting with Governor Abbott. >> Yeah. Um slight transition back to sort of IPO world. Um this one was fairly startling. Um people called this out on Twitter. These are pretty bad numbers coming coming out of Gemini. Unprofitable 2024 for a crypto exchange. How um someone replied to that. Am I reading this correctly? 140 million in revenue in 2024 and they spend 130 million on salaries. Um there's a lot a lot of ways to unpack this one. Um I think what comes to mind most uh for me is like something we've we've sort of known and talked about a bit on the show is like retail really isn't here. Um and these numbers would support that in the sense that you know entities like Gemini Gemini are are primarily retail focused businesses. Um, and you know, having myself worked at Coinbase for a stint, you know, I I saw the the business model of retail focused exchange firsthand and the the underlying in the underlying incentives at play there, which are effectively, you know, they they make the bulk of their revenue from getting people to trade and really pushing them out the risk curve and and getting them to speculate on all these the really the long tale of crypto assets. um and making the bulk of their their money from uh trading revenue. And so interesting to see, but I think this is just indicative of what we've all sort of felt is that like retail really isn't here. There's, you know, marginal institutional bidding. There's the the you know, treasury companies, the DATs now. Um but by and large, it feels like retail really isn't here. Um but there's probably a few other ways we could unpack this one. What are your guys thoughts? Yeah, I mean one of the main ones is we're still kind of in a mini crypto Bitcoin bare market at least for for companies in this space because to your point something we just felt anecdotally um that retail isn't here and the retail that's here has been stepping in. We had uh James Safford on the pod last week explaining about 700% of ETF inflows has been you know have been retail and then the Bitcoin chargery companies as well. And so when you look at whether it's a Bitcoin only company that's doing exchange um or a crypto you know exchange Kraken Gemini like even though the price is sitting at you know close to all-time highs um between like Micro Strategy and this like constant bid from large buyers there hasn't been the natural retail bid and then usually in the markets for exchanges the retail bid for Bitcoin as Bitcoin grew then it naturally flu uh flew into alts and then trading and so That's just one core component. I don't think enough people really appreciate. There's a lot of companies still bleeding out there. Um, and then it ties into Unity Economics. And this is really just kind of like fiat bloat one-on-one, whether it's traditional tech company or crypto exchange. There's just a a recognition or unrecognition of how to build a business. And these companies, it it this tweet that Brian pulled up is u am I reading this correctly? It's 140 million in revenue in 2024 and they spent $130 million in salaries. And it just really ties into um as you build a business, you naturally have to compete for talent and there's generally two ways to compete for talent. You can give them more money that's effectively mercenaries or you can you know effectively give them more meaning and for for oversimplifying and you can actually have a sustainable viable business that makes a difference and then those people you know at a certain point of capitalism like you naturally will almost do anything. You don't necessarily need more money. You need something to like be able to make a dent. There's a there's a lot of things that go further into it, but point being is like these exchanges are mercenaries and so they have to go out and a lot of these companies are and so they have to go pay these 200 300 $400,000 base salaries along with crazy bonuses, corporate cards and that's just the the uh individuals that's not titling marketing other referral spends. I think there were some losses that had to do with the Genesis uh deal. And so again, it ties back to the bullish conversation earlier like just be careful if you're getting exposure to these public equities. Um because the name brand in crypto, you know, it's just the same thing we talk about with traditional equities. They're um the the price of earnings multiples are like at insane all-time highs. And do you really want exposure to that? Uh especially if you're listening to this, you're probably weighing it against Bitcoin. >> Yeah, that's well said. One, I I looked at their S1 a little bit closer, too, and and some of the metrics that they closely follow. It's it's pretty much all just trading volume and um futures volume. So that's grown to like 50% for the industry from 2020 to um 2024 which is when you know their latest SR run comes. Um as well as interestingly in 2023 to 2024 we were in just a absolutely raging bull market for Bitcoin. Um there's you know I think that year it it uh it probably doubled their went up even more than that. I think it was like 42 to to something even higher. Um, their uh monthly transacting users went up 14%. And I was shocked by that. I was like, "All right, well, you know, they had their whole issue with uh Gemini Earn and thought that, you know, maybe it's just an issue or they're underperforming the industry." but went and looked at Coinbase as well and they had the same exact numbers and it's pretty much similarly like 14ish% so far the first six months of 2025. Um so a lot of the things that we've been saying about the lack of new users in the space is um just driven by you know the the industry overall I think uh doesn't have a very good brand after everything that happened to FCX back in 2022 and you know everybody still just generally thinks the industry is a scam. We've seen more of the new 13F filings of Preven Howard taking, you know, over a $2 billion stake and Mubata uh or the Abu Dhabi sovereign wealth fund leaning in a little bit more. So, it really is just a lack of retail driven adoption um at all of these, you know, crypto exchanges um and just lack of really new industry retail driven participants. It's um awesome to see you went through that and that's a fascinating insight of the you know kind of ties it um it it provides the data backing what we said anecdotally about retail not being here. I think a lot of this ties into um where there's a huge opportunity in this space whether it's from investors on our side or if you're an entrepreneur um and having the focus because one of the the at least my understanding of where Gemini came about was um the the Winkle by having that the Bitcoin that they held trying to get an ETF because I think they actually wanted to park their Bitcoin in the ETF and seed it. I think from a custody perspective, ultimately the SEC coming back and saying, "Hey, um, you know, custody is a problem." So, they had to build an exchange and then they went down the rabbit hole of, "Well, we're doing things the right way." If you guys remember back in 17 and 18, they were the, um, like doing the I forget what the slogan was. Point being is that they were trying to do everything, you know, in a certain way and then they end up getting their clients rugged via Genesis, but there hasn't ever been a direction there. There's no direction. Are they for institutions? Are they for individuals? What are they? Are they for family offices? the derivatives traders and the point being is you can imagine how that growth would increase if there was a natural uh vertical integration like Bitcoin just Bitcoin is a savior technology right like that's pretty powerful but nobody says that uh specifically nobody at scale because they've had to raise capital or they're all the way down the longtail of crypto assets so you get the Krakens the Coinbases the um um you know the Geminis the world I was going to say like FTX and BlockF but they're they're no longer here but it was a similar concept that they are selling everything to everyone under the sun. And so you really are all fight everyone's fighting over these scraps of this like speculative mania coming into digital asset. You land on the page and you have 101 cryptocurrencies to trade versus like somebody that built a vertically integrated strong solution on how do you get best-in-class exposure to Bitcoin. How do you custody it? How do you lend against it? How do you develop IRA? How do you do all the things that this asset continues to grow? And here's the kicker. It continues to grow at whatever the kanganger is. So your dollar denominated balance sheet actually is increasing with it while the Bitcoin stays the same and it compounds. Uh and that's how early we are that this is just foreign and we talk to people all the time they're like that would make zero sense like if Bitcoin is the only thing. Um I'm curious your guys thoughts on that because it seems so clear to us but this is where these companies come into a gap because they're all fighting over the all the same dens and so like that's how you get 15% growth. Yeah, I think it's also a function of just general um short- termism as opposed to thinking long term. Like everything you described around like if they were to have a more dedicated focus around Bitcoin, like that is thinking longer term because maybe that doesn't lead to insane trading revenues in the short term. Uh but over the long term, you build out financial products and services that are akin to a specific asset. a specific asset which will actually help people preserve value over the long term. Um versus focusing on everything under the sun as you mentioned um really going after sort of short short-term mania and hype. And that lack of focus I think is just indicative of like yeah if you if you're if you're everything if you're trying to do everything you're kind of doing nothing. Um would be my my broader takeaway about a lot of these types of companies. >> Yeah, that's exactly right. And I I was thinking while you guys were talking just about, you know, what maybe the other side of this um with publicly available financials and the only one that I could really come up with was River. Um you know, they just put out their audited financial statements for 2024 and you know, they they don't have anything for 2023. So it's difficult to compare the growth in total users um from from them. Uh, but I would imagine it's probably higher than 14%. And then just looking at, you know, salaries and related benefits at 8 million for River versus 130 for Gemini. It's just, you know, completely different. I would imagine that that team is a little bit more mission focused on bringing Bitcoin to uh the world and and uh in a in a really thoughtful way. Um, and you know, wanting to stack Bitcoin on the balance sheet does have a an implicit cost. And so, you know, River is just kind of one example, but it's every business under the sun should be thinking that same exact way of just, you know, the ability to stack Bitcoin is the and you should be uh comparing every single cost that you have uh versus this returns that it will generate by just holding more Bitcoin. Um not just, you know, Bitcoin and financial related companies in general. >> Yeah. Yeah. And I think that underpins why this isn't a buy if you're a uh you know stock trader or have a manage a portfolio. It's ultimately the the notion of u you like uh I forgot the exact term but it was it's it's the whole idea you like throwing good money after bad. Like if a company needs um additional equity round, specifically like the private markets um it's like nine times out of ten if not 10 times out of 10, they're not going to get their unit economics and fundamentals better after they get more money. And so if they already manage a company like this, getting the public markets doesn't is not going to make them some insane efficient company. And uh we got to do a show or something on this because I'm kind of like from Brian being uh in the private banking space and investing, you know, in a I don't know if a Buffettism is the word, but like studying Warren Buffett. Um it's just a realization of like this whole thing if you just have a low time preference or 10ear heart, you can just out compete everyone in almost any field specifically here. So whether it's building a business and focusing solely on Bitcoin or it's just the notion of holding spot Bitcoin, the compounding nature of not touching that asset was just kind of foreign to me. Like you, you know, you hold it but from an ideological or whatever it is, but when you go look at the greatest investors of all time, this is how all their wealth was made is finding out how to be busy while their asset ran. And that's I think one of the big aversions for myself on the Pubco stuff. It's just a trade. Everyone is so mired in the like daytoday what's the hottest what's the latest thing and when you take in account just a simple like selling in taxes you're already going into the black uh let alone everything else when you're missing out on Bitcoin's appreciation. Uh anyway so like I think there's I just this is like I'm coming out on the other side of it after holding Bitcoin and not you know selling or trading it realizing like this is the fundamental innovation is you just little part you literally park it. Um anyway, on a few things. >> No, no, that's that's spot on. And um you had shared over the weekend a um an old clip of Warren Buffett speaking at uh University of Florida and and I had watched that many years ago. And so it was I'm glad that you had shared it because you know say what you will about Warren and and his you know disdain for Bitcoin and and maybe you know clouded judgment around generally newer emerging technologies but there's a lot of things that he you know built his stellar career on that are objectively true in terms of one what you mentioned the long-term orientation I think is is key to outperforming just generally speaking whether whether it's uh stocks or emerging tech. Um but the other the other one that's he you know he talks a lot about in that in that um clip that that you had shared is what we sort of just discussed which is focus and not branching out to things that you don't have don't understand and so keeping things as simple as possible because that's what allows you to have a long-term view on something if if it's easy to understand simple like you know he talks about the seas candy business you know it's a very simple business. Uh the numbers are are pretty uh plain vanilla and if you can just raise prices a little bit each year like you know he knew that that business was going to do well because it had brand recognition uh a mode around it etc. And so it's this this notion of simplicity or staying in your circle of competence which I think is super critical and also you know relates to exactly what we're talking about like if you are trying to service the entire crypto sphere um you can't possibly have a circle of competence across all of these different domains and it's also not simple because a lot of it is you know the vast majority of it is and so how could you possibly have an expertise on something that is not doesn't even have fundamental value. And so you kind of have to play this game where you pretend to know all the stuff about all these things. Whereas then you compare it to like the river example. It's like well no they deeply understand Bitcoin. They're solely dedicated and focused on that. That's their circle of competence. They have a very long-term horizon. And that dedication to the one thing, the singular asset is actually their that's their ability to forecast it long term. And so I think, you know, say what you will about Warren and and uh the value investing sort of ethos and and the disciples thereof, but there's a lot of truth in the in the things that made them successful that are applicable to to this space as well. >> Yeah. I mean, this is the notion of uh really just rechecking your priors because I had uh the version that Warren just given you see the clips he has, but in that video there's more like alpha or value I heard in the first 15 minutes. I've probably heard in the past 15 months from anybody talking even like new, you know, individuals outside of Bitcoin. It's just timeless wisdom. Uh, and to back into how I got there. So, there's a really great book um called Richer Wise Are Happier and it outlines like the top 15 investors of all time. And um I forgot what the investor was, but it was basically saying that he listened to that that video like 15 times or something like multiple times in a year. I was like, "Well, I got to listen to it because why the hell is somebody listening to it, you know, 15 times?" And uh so there was the notion what Brian shared, I haven't even finished it, but the other part was uh breaking down long-term capital management and how did 16 people all blow themselves up. And he was breaking down how these 16 people were the best in their class, uh the best professionals, like they had every reason not to. and he's trying to understand what brings somebody to play a game where there's a chance that they can lose everything. And he likens I and I'm missing exactly what he had said, but he likens it to like effectively playing Russian roulette. And even if you have like a thousand uh shots and there's only one bullet and you can make a million dollars or a billion dollars. By definition, you still shouldn't play. Like you would never play that game because you can get knocked out. And um it just reminded me of custody as a as a whole because most people just rely on a single custodian or they rely on their own self-custody setup. And if that's all your money and you mess it up, like if there's one small chance that a fire or whatever happens, you get hit by a bus and your family never recovers, you shouldn't play that game. But we do for a number of reasons and they're more psychological and that's what made Warren Buffett great is like he was a risk, he managed risk appropriately. Um, so anyway, I think this just it's a it's it's a good example of like just sticking to those principles can do you very well as a person uh as an investor or company builder if you just kind of go away from the noise. The other one I think was Nick Sleep because that's why this book got I think so popular is because Nick sleep one of the best performing asset managers had never like opened up kind of like uh I think I think he had his shareholder letters but he had never given feedback on like what went into the psychology and these guys were similar and very concentrated bets but he also referenced how like they had one Bloomberg terminal and it was like on the other side of the office and there was no there was not even a chair uh you had to like lean in to like view it because it was just the notion of staying away from the day-to-day news. We think about like Twitter and all these things are literally just like blasting people in the face, moving them out of position or getting them to think in short-term views versus like the thesis of Bitcoin has relatively been the same for 15 years. Doesn't matter what happens in the short term. It's doing what everyone expected. >> 100%. That's very well said and I think that many people in the space uh would be do uh would do well to hear a lot of that like uh you know the thesis of Bitcoin I could go into a coma for 15 years and would be completely unchanged. Um but there are many people out there who look at the revenues of Hyperlquid over the past month or so and think about how they should be allocating to the space for the next 10 years and um it's just completely out of touch with reality. uh as well as just like everything related to to business building as you mentioned it it should be you know the the greatest flywheel is potentially you know the adoption of Bitcoin uh is from both you know users uh adopting it as their reserve asset and custody everything to trading it getting exposure um especially for all the hedge funds all the products and services that you need around it um the companies like like the blocks and rivers are trying to create um should be one of the should be some of the fastest growing areas of the market just given Bitcoin's adoption and the reflexive feedback nature across all the other related products and services around Bitcoin. But there are many of these publicly traded companies uh especially most of them that are looking to go public that just haven't completely identified that's the core thesis here just uh trying to grow you know monthly uh active users and adding useless to their uh you know product roadmap platform uh rather than focusing on what what will be the good part of their core business for the next 10 plus years versus what's the hot uh aspect for today that they can start to get some revenue off, but maybe a poor investment of time, resources, etc. just because it's going to take away time, energy, effort, and focus from the core business. >> 100%. And um few things that you you noted in there. It it's it also comes back to competitive forces, right? Like we could do a whole show on why, you know, Bitcoin has an insurmountable lead and has really already won in terms of digital store value. And so that is, you know, akin to a moat around a business. There's a moat around digital store value that is um extremely hardened and it's a wide moat. Whereas everything else in the crypto space has effectively zero moat um and is going to be continued, you know, there will be continued competition and people making you know uh faster, cheaper blockchains which are inherently centralized. Um and so it's it's very difficult to forecast 10 20 50 years out when there are those um everinccreasing competitive dynamics at play. And so that's you know a lot of what Warren and and sort of all the the school of of traditional value investors talk about is predictability um the ability to forecast longterm and and really you know finding things that have defensible modes um because that's again what allows you to have a long-term vision on something. Um, >> yeah, >> maybe. Yeah. Yeah, go ahead. >> Before Before you transition, just um the uh it all ties back to rent extraction. >> Like that's the core idea. Uh maybe we'll talk about it again next week, but the notion of whether it's like trying to arbitrage daily active users or the the the DAT stuff like everyone and it's not anybody's fault. It's just the nature of of fiat. And as you have more dollars inserted, you have people chasing how do you arbitrage that? You see this at the state, federal, you see this as like medical care, like everyone's trying to get theirs. And so you look instead of providing value, how do you extract value? And there I had a lot of time on my hand this weekend because everyone was sick and so I was listening to a bunch of podcasts. I catching up and there was a really good one with uh you should talk Laura Shinn and there was a guy I can't remember if if you remind me after we'll put in the show notes. It was effectively a guy that came from Trafi and they were breaking down like all of the um uh mechanics with the stable coin stuff and the relation to like you know building their own blockchains and blah blah blah. And it was he was really thoughtful because at the end of it he was like I think who wins um and and what it looks like is is really Bitcoin because of its neutrality and and it's like well that's obvious right like it's neutrality and it's like this notion that it's you know censorship resistant and unseasable and like so then you have this like thing that hadn't existed and where the value occurs but that again is antithetical and uh juxtaposed against what people are trying to do is extract value versus try to like lean into it and figure out how to you know deliver value around it. And so, um, yeah, I think it's just full circle as we we think about like crypto in general. It's like how do I launch the token, make some money, uh, and then the sad part is that's where people's like reputation comes in because there's a lot there's a a lack of long-term orientation or reputation. And that's the reality we said earlier about trying to sell uh it's like trying to sell a Bitcoin for 1.1 or sell a Bitcoin, you know, $1 worth of Bitcoin for $2. like that's inherently fiat and that inherently is um uh it can't persist forever. And so when this eventually happens that like people's reputations will be burned and most people don't care about reputations because we have a very short-term mind frame or mindset when it comes to all this stuff. Um, so yeah, there's just a lot of like really interesting stuff that like will be fun to I know you did a great piece of Bitcoin as the ultimate value investment as an ode back to Warren Buffett, but it'll be fun to bring back more of these concepts because for whatever reason they've kind of just gotten pushed to the side when they're like time lost. one. >> Yeah. >> I I I think the the one aspect that we're all kind of trying to tie back to is it's better to almost overpay for a really good business or asset like Bitcoin rather than it is to try to, you know, buy a what they perceive to be an undervalued asset and um try to time that until the market um values it properly. because, you know, a lot of the times the undervalued asset or uh is just, you know, valued properly, whether it be some of these altcoins out there or these DATs that don't necessarily have a very long-term value proposition to them. And if you uh you know, I think most people are just inherently bad traders, especially if they don't have uh inside information on the token or that or whatever it may be. And so it's just significantly easier both for your mind to just focus on what you're best at if you just focus on, you know, what is going to provide the most value over the long term and continue to focus on that rather than these inherently these b businesses and tokens etc with just poor uh unit economics and trying to buy them at an undervalued metric and and hope that they can turn it around. Yeah, it's a good it's a good point and and interestingly that is um sort of an evolution that Warren himself and other value investors sort of progressed through was you know initially in the in the early days of value investing in sort of the 80s um there was this notion of like investing in a cigar butt business which you know proverb proverbally like you know there's one puff left on the cigar but it's way too cheap um and so you would buy something like that because it's, you know, quote unquote a value investment. And effectively, he got burned on too many of those and and evolved his thinking on that over time to realize exactly what you said, Liam, like in some scenarios, like it makes sense to not overpay but pay up for a higher quality business, um, something that is more defensible, has a strong management team, um, all these factors that you would look for in a quality business. And sometimes, again, over the long term, that's a much better bet than looking at a cigar butt type business. >> Hey guys, hope you're enjoying the show. There's a lot to talk about today. Uh, quick note from On-Ramp. I wanted to call out that we had u this last week our OnRamp midyear client briefing. We had over 200 uh individuals that were clients of On-Ramp and also friends and family that uh joined. I wanted to share a few of the responses that initially came out before we took a poll um to help influence kind of some of the topics we talked about and common questions came up around what does ONRIP offer beyond custody and inheritance how does the insurance product work with Lloyds of London how does on-ramp protect against digital threats how does ONRIP protect against physical threats how does uh inheritance planning work and really what are the differences between uh multi-institution custody and self custody it was a great um session And if you're interested in learning about it, please shoot us a note. michael@honorbitcoin.com, hellobitcoin.com, or book a consultation. We'll happily share uh that private video so you can get some more information on what we do. Hope you enjoy the rest of the show. Hey guys, hope you're enjoying this show. Wanted to give a quick call out to the guild by early writers and onramp. Um, we have no shortage of exciting things coming out, whether it's world-class research, um, the investments that we've been making and will be announcing soon that aren't public, as well as the opportunity to give, uh, operators and investors asymmetric information and insights really into what we're seeing, what we're building in the market. There's no shortage of clients and folks that listen to this um podcast and our regular podcast that really want to figure out how they can get involved in what we're building and ultimately maybe not ready to leave their full-time job but are thinking about how do they start to um allocate and then also invest more of their time into a private network so they can develop what their core thesis is will be as their next chapter and whether it's investing or operating building a company. I'd encourage you to check it out and then reach out or just subscribe to our research. We're going to be sending some updates about inperson events, uh, virtual events, polls, and, um, data sets that we're capturing around the industry as a whole. I think there's a lot of listeners that get a lot of value for it. So, I felt it would be a good thing to call out. Uh, again, you can always shoot us a note as well if you ever want to um, discuss or learn more at contacted earlyriters.com. All right, have a great rest of your week and uh, we'll see you on Don't forget scarce assets. this weekend, Wednesday, for um the Dynasty Trust deep dive and then Thursday we have a pretty special guest for the last trade. >> Um but I do want to transition slightly here um to Bank of America put out a survey um I think they do this either monthly or quarterly uh but this most recent one for August uh it's the global fund manager survey and there was a few different charts from this um circulating on Twitter. This is this is where we'll start. Uh Marty had had put this out and and many others had as well. Global fund managers are still woefully underweight Bitcoin. A recent Bank of America studies found that just 9% of managers that responded have any exposure to Bitcoin with a weighted average allocation of those who have uh being 0.3% of AUM. So the smart money is still missing the best performing asset of all time over the last 16 years at least. Um and so here is that chart. Um but this is you know as we were talking about before retail is not here and you know institutions are are allocating at the margin but by and large um they're still you know structurally underweight or have no exposure uh to Bitcoin or or crypto as it as it's described here. >> I thought it was interesting um that part of this it shows 48% of investors have exposure to gold 2.2% 2% of AUM. So it's pretty significant difference. Um you know based on I guess 5x from u 5x exposure from the the cohort that had exposure to crypto and then what is that like seven 7x uh roughly 7x the size um of allocation to gold versus BTC. And it kind of ties into what we've been discussing that um as Bitcoin aligns more with gold from a sound money trade, you're going to naturally start to see um these investors get, you know, more proportionate allocations. It still has I think Bitcoin and crypto are too intertwined that these individuals just see all of it as noise and like what's the next Bitcoin? Um and there's just again it ties back to the education aspect of it. Yeah, I would also um fund managers are generally very unsophisticated and generally underperform the market, whatever their benchmark is over time. And so they're going to be the last ones to really adopt this uh in a meaningful way. It's going to come only once they've adopted it from a personal perspective and their clients have asked for it enough times that they're going to understand exactly how to get exposure. and the V1 is not going to be the way that they will and should in the long term. And so it's really not that surprising to see. >> Yeah. And then this ties into uh I think I think we did it on Last Trade or with Braum about Ray Dalio making some comment. I can't remember the numbers um on gold and Bitcoin, but it's like that's what he's saying publicly. That's not probably what his portfolio has and there's a lot of u inertia uh underpinning why he would say that. In the same way there's a lot of inertia where fund managers, financial adviserss won't position Bitcoin in anything in material amounts because a they have a book of business. They don't want to look lose that book of business because of the aversion to the asset class. And then also um I think there's a lot of fear that if you're ex you know telling somebody to hold spot BTC it's like why wouldn't they just hold it themselves which I think is kind of like doesn't make sense because there's still a lot of knowledge needed to manage you know Bitcoin if you're going to do it for a long time outside if you're just saying in the ETF but that's a lot of these things tie into uh some of the things we'll be doing on the honored Bitcoin trust because I think Brian like that's a huge component of going down this rabbit hole of you know just prudence the the trust is is a no-brainer for institutional investors because if you're thinking about a buy and hold, well then you need to make sure to that quote earlier about um you can't get knocked out of the game. Why would you be willing for Coinbase to go down? Doesn't matter if it's one in a thousand chance that the bullet can be, you know, the trigger pulled and there's a bullet in the chamber. It's that you have to think about this. The problem is that most people again here have.3% allocation. So, it's very speculative. So, you're going to custody it in a speculative way. Uh which is again underpins just how early we are to this whole thing. Um yeah, I was just going to say that's um spot on in the sense of if you view the asset as speculative and you're you know allocate allocating a a sort of flyer allocation whether it's 0.3% or or whatever it is that's that's dimminimous relative to your broader portfolio. you're not really incentivized to to think about custody critically because you're already considering that allocation as being able to be knocked out of the game just due to the investment thesis being wrong and it going to zero because you know it was a scam or uh had no fundamental value. Whereas once you start to see, you know, specifically Bitcoin for what it is and and you allocate more materially to it, um you start to think a little bit more critically about the ability not to get knocked out of the game because you start to realize you're not going to get knocked out of the game due to the investment thesis wrong being wrong. Like Bitcoin is not going to go to zero. Um and so the only way that you screw this up is effectively picking the wrong custodian having single counterparty risk to the point where you could get uh you know theoretically knocked out of the game. And so I think all of that is to say like we are very early in sort of the the transition of people having you know at least in these circles having material exposure to the point where they start to think about this stuff a little bit more critically. Um the other chart uh that I wanted to share from this same survey uh was one that Luke Gman highlighted. Um the question was effectively um asking the respondents, do you expect the next Fed chair to resort to quantitative quantitative easing or yield curve control to help alleviate the US debt burden? And the majority of respondents, 54% said yes. Um and the other notable thing here is that um so uh Harnet, I forget his first name, but Hornet is the uh chief investment officer at Bank of America. And in response to this uh um data from the survey, he said effectively raise your allocations to gold and again crypto. um not specifically Bitcoin here, but um just a recognition again that um I think despite how early we are, there is more and more talk and discourse around dollar debasement um inflation hedges and recognizing that sound money, particularly gold and bitcoin have a have an increasingly important role to play in portfolios, whether that's uh at the individual level or or the institutional allocator level. Any thoughts there? >> Agreed. I think it's going to be um even more interesting to see all the speculation about Fed chairs and as the they narrow down the list of Trump's uh 11 or so that he's said that he publicly is interviewing or considering for the Fed chair, what they start to say about monetary policy is going to become significantly more important than anything the Powell does or existing Fed chair members because it's all markets are forwardlooking and they're going to continue to see where they expect interest rates, yield curve control and quantitative easing to go longer term. Uh as well as the continued issuance of short-term uh treasuries versus long-term. >> Yeah. Um one uh one thing I did want to raise, Michael, you'd beat me to the punch on this one. I I wanted to share this one, but you already had it on the list. um BIS proposes grading wallets for per permissionless blockchain AML. And so effectively what this is suggesting is that um the bank for international settlements is thinking through ways to effectively um look at Bitcoin and say, "Hey, this Bitcoin uh is different than this other Bitcoin because it was associated with XYZ transaction that we deem nefarious." And the reason I found this interesting was because, you know, if you put your sort of tinfoil hat on for a second, you know, there was a whole sort of two-year period where people were playing around with ordinals and rare sats and developing methodologies um to effectively allow you to separate and make, you know, uh distinctions around this Satoshi versus this Satoshi. This Bitcoin's a little bit different than this Bitcoin. and now the BIS is kind of running with that and doing you know nefarious things with it. Um so Michael I I don't know if that was your line of thinking on this or if you had other thoughts. Yeah, I mean I think I think just in general, you know, BIS um I think they were behind or a faction of them was the FATF rules if you remember like travel rule and wallets and um you know KYC and that was a like unelected body sitting somewhere in Europe. Um and very similar here. I think you'll naturally it's kind of like a barbell approach that when I think about whether it's the ordinals or grading wallets on um the use of a UTXO to the other side of the barbell when it comes to centralization via ETFs or um Bitcoin treasury companies in that whenever you kind of just see these tailwinds in this inertia and momentum grow in directions, you kind of want to take a step back and just wonder what's the underpinninging underpinning nature of it, but also Is it conducive to like long-term uh this asset, you know, free floating and doing what it needs to do? Uh and both of these things I think completely kind of like kneecap and I don't I don't think Bitcoin will do its thing and and market forces will drive to the to the outcome uh the ultimate outcome, but it still doesn't mean that we have to remain vigilant and um kind of call these things out. It's just a ludicrous statement. uh and we've seen a lot of like European governance and forward direction of like how they want to um effectively kneecap the movement of this asset in general. >> Yeah, this is almost something similar to the US dollar. I think there's a statistic out there that 65% of US dollars that are physical have some sort of drugs on them uh from usage in the past. And uh if you are traveling with that and uh there was an article about a false positive on the essentially dogs sniffing drugs that were on dollar bills and somebody going to jail for it or having his funds seized in the past. And um I think that you know all money is generally um fungeible. And so it's it's going to be something where a lot of people that just don't understand that there may have been something that has been bad with the their money that's been done in the past, but it's not necessarily applicable to what they've done and how they've used their money. And uh it's going to be very difficult for individuals in order to to track and understand what the UTXO set or or dollars to make that equivalent has done in the past. And it it shouldn't be their responsibility to track, you know, where what transactions uh money has been used in in the past and um and that shouldn't relate to how they use money in the future. >> Yeah. I mean, you could see how the angle though uh will naturally get perpetuated in the sense of like Bitcoin has this uh you know uh stigma of being used for drug dealers and in various activities. So they'll naturally tie it to that. I think this really breaks down to the elegance and beauty of Bitcoin and the market clearing forces because the other side to this that also uh underpins where this can have somewhat bad outcomes is the centralization of like mining pools and the regulated uh status of them. So when it comes to okay, if you're able to um you know mark a UTXO as having some kind of you know blacklist or even potential gray list and then the ability to mine them uh from a centralized you know pool or get deemed with some kind of sanctions or whatever it might be. But those market clearing forces of miners exist globally and if somebody's willing to pay more for a transaction, they will ultimately clear and be able to validate and send that transaction is the thing that I think uh we don't know how it will work until it happens. But you have the mechanisms in place and then eventually you kind of like the best way to beat any of this is the technology. And if the technology works as it's intended to, uh, it'll ultimately be an exercise of futility to mark anything as whatever you want because somebody will clear it and those assets will still move. >> Yeah, that's a great point. >> Also, >> um, coming up on time, maybe one more, uh, I think you brought this, Michael, and it sort of ties back to what we were talking about, uh, on the mining side of things. AI arms race heats up as startups borrow billions to buy Nvidia GPUs. And so I think you had sort of alluded to an analogy here um a few years ago when um you know people were borrowing against uh depreciating assets in in AS6. And so this is a similar dynamic that we're seeing here. >> Yeah. I this um I don't know where this came up over the weekend, but it was a notion of startups borrowing billings to buy the GPUs, but then naturally markets starting it's it talks about on the bottom starting to form or private credit stepping in. I think there was a $500 million facility references at the bottom to step into letting uh startups lend against their uh GPUs to access liquidity. And I think this is kind of where there's a lot of notion of like Nvidia itself being a little bit of a Ponzi because they do like the financing for the underlying purchase or they work with third parties. Um, right there. Yeah, Lambda Labs also raised $500 million special purpose financing vehicle collateralized by GPUs. Um, and yeah, we saw this play out. It was uh it's again fascinating to to sit in 2025 and everyone act like 2022 never happened. This is how a number of financers and large mining companies and publicly traded firms went bankrupt was because they ultimately lend against this physical depreciating asset. And so naturally, you know, when you have Bitcoin in the collateralized market, that's already super speculative and risky and you have to have great risk management from custody all the way to not rehypothecating the underlying. But now you have this thing tied to it. uh and the GPUs are effectively tied to AI's um demand where it sits today because you can see if the market took some type of correction whether it's open source nature or uh other ways that the market forces would start to squint and not be able to see how um there'll be a return on capital. These GPUs and the startups get marked down and then these uh assets that were lent out get marked down significantly and it's just a whole flywheel that we're going to see blow up. uh it's just a matter of if not when and yeah it's there's too much dollars out there and so the in again it goes back to extracting rent because you ultimately have the demand here you have demand for AI you have demand for startups you have demand for dollars to look for something above the Fed funds rate and so people are willing to step in lend those dollars and have no idea on the other side of it um they're going to blow themselves up and potentially their reputations All right, boys. That was uh that was most of the list. Any other parting thoughts or comments or news items? >> Focus on Bitcoin. Um use that as your hurdle rate with your personal investments in business. Um and you know, rather than focusing on speculative assets and uh you know, fleeting revenue streams and and business lines. uh I think is is the core point that um we wanted to get across today. >> Yeah. On my side, uh it's been incredible to see the demand for the Bitcoin Dynasty Trust product. We just finished recording a pod before this with the the team from First Covenant to go a little bit deeper into that product. Uh I likened it at the time. It's like finding Bitcoin at $10. It's a it's a no-brainer in the sense that um almost everyone will eventually have to come into that that trade uh if you're trying to protect your wealth, protect the ability to move it um in a way that's advantage not only to your like legacy but for for tax purposes. Um so yeah, please reach out if you're interested. Find us on the website. There's a bunch of reports we'll be putting out and then u you can always reach out or view the podcast. I believe it'll drop Wednesday morning. really goes deep um into a lot of the themes and questions that individuals have been having that have held Bitcoin for a while and want to know if this is something that's right for them. >> Good stuff. All right, thank you gentlemen. We'll see everyone next week. >> Thanks, guys. >> Thanks for listening to this week's episode of the show. If you found the information valuable, please share the episode with a friend or leave a rating on your favorite podcast app. All the links we discussed in today's show will be in the show notes inside your podcast app. Before we finish, a quick reminder that Onra Media is forformational and entertainment purposes only and nothing should be construed as investment or legal advice. Regardless of where you are on your Bitcoin journey, we'd love to hear from you. Visit onrampbitcoin.com/cont to schedule a consultation with one of our private client adviserss.