Eventually, all companies will hold Bitcoin on their balance sheet.

Day one, it's about acquiring as much Bitcoin as we can.

But we want to be an absolutely integral part of the Bitcoin infrastructure system.

Total market cap of Bitcoin is roughly $2 trillion at the moment.

We are talking about a total pool of wealth that is in the hundreds of trillions.

Bitcoin is this like 800-pound gorilla sitting in the corner while all of these tiny little marmosets are scurrying around.

And the gorilla's just sitting there doing nothing.

I want him to get up and start beating his chest.

If you don't engage with politicians, they just make bad laws.

There's no incentives for politicians to understand, but it will take away some of their power.

But at some point, they may realize that they can actually get more money and more power by embracing it rather than resisting it.

And I think that's a tipping point.

Cheers.

Cheers.

Nice to meet you again.

Welcome to the new What Bitcoin Did.

this is your first appearance it is thank you very much for having me back the poshest man in bitcoin is that still true?

I think so I can't think of someone more posh yeah I mean we need I mean my mother did have a double barreled name before she got married so there you go and my grandfather was what's now the mayor of London so your grandfather was the mayor of London?

well he was the head of the GLC the general under council who's a conservative politician Bernard Brooke Partridge so So perhaps I am the poshest man in Bitcoin.

I think so.

I think you've just solidified it.

What would your grandfather think of the state of London today?

Well, the one surviving clip I think of my grandfather that is on YouTube is of him ranting about the sex pistols and how pleased he is that he's finally managed to get sex shop windows covered in opaque layers of paint, which until recently was still the case.

We need more punk.

I'm more of a cypherpunk fan than a straight punk.

Fair.

as you can probably tell by my voice and my haircuts and my love for ties.

I don't know if you have a love for ties, really.

I think you masquerade as a suit coiner when it's necessary.

Yeah, I mean, I do like a good suit.

Do you?

Yeah, I've got about 40 Hermes ties in my cupboard.

Holy shit.

I was a corporate lawyer for years.

I have one suit that I wore on my wedding, and then I wear it.

The only other time I've worn it is at BPI events.

Nice.

Yeah, because they make me wear a suit.

Oh, I used to read a website which told you exactly where James Bond got all of his suits made and who the brands were.

And so I religiously followed this.

I used to get my shoes in the same Churches and Cochrane Jones, Black Capital Oxford's, Drake's Ties, Sambler-Lonassa shirts from German Street.

So you are officially a suit coiner.

You even say it's suit.

Yes, that's quite an old-fashioned pronunciation.

Is that right?

Yeah, not many people say that anymore.

Yeah, I've never heard that before.

So this might be the poshest conversation I've ever had.

Jesus Christ.

Well, I think the conclusion here is we need more posh representation in Bitcoin.

We do.

We need diversity in Bitcoin.

Posh lives matter.

But we're here to talk about something totally different.

You are the latest Bitcoin treasury company, as if we didn't have enough.

What's happening?

Yeah, it's exciting times.

And obviously, it's like waiting for a bus, isn't it?

You wait all night for a Bitcoin treasury company, and then three of them arrive at once.

So I announced a couple of months ago that I was moving out of the fiat world.

I'd obviously wanted to work in Bitcoin for a long time.

And it was proposed that I was going to join Coin Corner.

As part of those discussions, we began to explore a new venture that some of the Coin Corner team were working on.

and as part of those discussions we decided that uh instead of joining corn corner i joined the new venture and would head it up so i'm going to be acting as the ceo there uh none of this is is public yet but i think by the time this interview by the time this goes out it'll all be public it will all be public and we will have announced uh what i think is going to be quite exciting change not just for us but hopefully for the bitcoin industry as well so you focus on the idea that this is a Bitcoin treasury company, I would say that it's not just a Bitcoin treasury company.

We aim to essentially make Bitcoin our business.

And we'll obviously delve into this as we talk.

But the idea is that we will not just acquire and hold Bitcoin, but we will actually use that, particularly via the deployment of that Bitcoin into Lightning nodes and generate revenue thereby.

So we very much want this to be a genuine, functional, profitable operating business, which happens to buy and hold Bitcoin and aggressively wants to accumulate as much of that Bitcoin as we can.

Considering that our business model actually involves the acquisition and deployment of Bitcoin, it makes complete business sense for us to raise as much capital as we can as quickly as possible, deploy as much as we possibly can as soon as we can, because that then creates a virtuous circle or a flywheel of continuing acquisition, deployment, revenue.

Okay, so let's go right back to the start.

This new company that's spinning up, it's backed by CoinCorner.

Can you talk about who else is going to be involved in the project?

Yeah, I can give you a few names so these will all be public as well.

And actually, this is probably the item that we often flag third when we're speaking to investors, but I think it's worth doing as you have and actually focusing on this from day one.

So one of the key differentiating factors that we see for ourselves is that we are a Bitcoin-first, Bitcoin-only, and Bitcoin-focused business.

So a lot of the other treasury companies, many of which I like and whose management I admire, Strategy, for example, or SWC, those are companies which began in different business sectors and have pivoted.

The differentiating factor for us is really twofold.

we're starting in Bitcoin, we're going to remain in Bitcoin, and the people coming on board are some of the best known and most well experienced Bitcoiners with a UK focus.

So just giving you a few names.

So alongside me, we're going to have Danny from Coin Corner, who's joining as the Chief Bitcoin Officer.

Dave from Coin Corner is joining as our CFO.

So two of the most well respected and most experienced people already.

Zach from Coin Corner is coming over as a CTO.

so he'll be handing the technical side of things.

Between Zach and Danny, you've probably got one of the most experienced sets of people in managing and running a Lightning node, which would be the core business proposition.

We've also got Alan Farrington coming on board as a director.

David Jacks is joining us from PayPal.

So he was PayPal's first ever CFO, and he's coming on board as chairman.

Is he a Bitcoiner?

He is now.

And so what did he do at PayPal?

I'm interested.

He was their CFO in the very, very early days.

So the chief financial officer.

Yeah.

And perhaps it's worth spending a bit of time on that.

So across, I think between what we've tried to do in assembling the team here is to put together a group of people who are very, very focused on Bitcoin, also very, very focused on pay tech, and also with a wide and broad understanding of capital markets and money raising and also asset management.

So, Alan's background, of course, is with Bailey Gifford.

As you'll know, one of the biggest asset and wealth managers in the world.

Bailey Gifford happened to be a client of mine when I was at Robeson Gray.

I did a bunch of deals for them.

Some of the most interesting work I did was for Bailey Gifford, particularly in their early startup and tech work.

And also, we have obviously very, very extreme corporate experience from David.

I should say that David's also been on boards of banks.

was on Silicon Valley Bank.

He's worked for Barclays as well.

So he straddles both the paytech and the traditional financial world.

And we really want to combine that, I suppose, that triumvirate of experience between the Bitcoin world, the paytech world, and the financial capital markets and asset management worlds to really, I suppose, the base layer of the pyramid that we're trying to build.

And so, okay, is there anyone else on the board worth mentioning?

I haven't talked very much about myself, but we know each other.

No, but I think actually it's worth getting into your background because in Bitcoin, I imagine most people know you as the policy person, but you obviously have extensive experience before that.

So maybe it is worth talking about that.

Yeah, sure.

Very happy to do that.

So my professional background, I trained as a lawyer at Freshfields, which is one of the oldest and most well-respected firms in the UK.

Funnily enough the Bank of England's lawyers for two or three hundred years.

No coincidence, I'm sure.

And so there I worked for a lot of private equity houses, largely doing tape privates, but I also advised the boards of various different illicit companies.

So I worked with the Board of Cattles, PLC.

When I was a young lawyer trainee, I would draft briefing papers for the boards of companies such as Tesco.

And I also advised the board of Avis Europe when they were undergoing their takeover by Avis US, so pushing them back together.

I did the first prepack administration of a listed company ever.

I think that's probably, weirdly, that's such an esoterically weird thing to say.

And it's something that no one will ever remember.

But if there is ever a wiki page on...

You will be on it.

Yeah.

That was a horrendous deal.

That was DTZ PLC.

So I've got a lot of experience both in terms of advising boards at unlisted companies, but also doing listed company work as well, which is crucially important for the kind of responsibilities I will have as CEO of our new company.

We should probably mention the name, which I think will be in public domain by the time we...

Yeah.

We've finally settled on B-Hodl.

obviously the bee looking like the Bitcoin bee.

I don't know whether it's deliberate that it sounds a little bit like beehold, but you know.

I like it though.

Maybe there's a marketing ploy.

Beehold, beehodl.

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The focus on this treasury company, which is more than just a treasury company, is British.

So who else have you got to come in on the investment side?

Well, Adam Back is taking a significant position in the company.

So he will be subscribing prior to IPO.

So fantastic to have him on board.

And to the extent that we can draw on his expertise, that would be fantastic.

And I think the fact that he's coming in this early on and with this much enthusiasm is a good sign for our future prospects.

And certainly we'd like to gain as much benefit as we can, both from our association with him as one of our shareholders, to whom I will be owing my duties, and also his incredible experience in the Bitcoin world.

Yeah.

And also, so full disclosure, I am also going to be an investor.

It's funny because I almost feel awkward about saying it because I've been so critical of treasury companies.

And like, to be very clear, the reason this is interesting to me is because of the team you guys have.

So when Danny first told me about this, first of all, I think what Danny and the team at CoinCon have done is incredible.

Like they're people that I trust deeply.

And the thing that resonated with me is that this is a Bitcoin first play.

So maybe it's worth getting into like how this business model is actually set up.

Sure.

And perhaps even before I answer that, I think it's right to be skeptical.

We come from an industry where we are encouraged to challenge everything.

And I completely think that's the correct approach to take.

And it's the reason that I'm much less rich than I might otherwise be.

If I was less skeptical, I would have bought a lot more Bitcoin early on.

I didn't.

I misunderstood it.

And I have to live with the consequences now.

But so I completely agree.

And maybe we'll dig in I think we should, because when I look at the treasury companies, I almost separate strategy, I think MetaPlanet because of its jurisdiction and the length it's been running.

And I think there'll be a few others in terms of, I assume what Adam is going to do with his own treasury company is going to be successful.

I think what Jack's doing at 21 is likely to be.

And those ones I put down to just the sheer size of them for starting out.

I think there's then a lot of also-rans that see Bitcoin as kind of a get-out-of-jail-free card for a failing company.

And they're the ones that I'm incredibly skeptical of.

I don't know how they're going to weather any kind of bear market.

Maybe it's worth getting your opinion on just like the entire market here.

Okay.

So stepping back a few months and possibly even years, I originally had slight misgivings around Michael Saylor buying all the Bitcoin.

Not least because if you take it to an absurd extent, if Saylor holds all of the Bitcoin, then it's completely pointless.

No one will be using it as money.

No one will be paying with it.

No one will be self-custodying it.

And all of those three things, I think, are fundamentally important to Bitcoin and its nature.

So without those, what on earth is the point.

I would like to say, let's stop buying so much and leave something for the rest of us.

But at the same time, I think what he's done is crucially important in opening the gates to a gigantic total addressable market.

So, and again, here's the conflict between my suitcoin in nature and my bitcoin in nature.

I very strongly adhere to the principles of self-custody, but I also concede that for some people, self-custody is either difficult or impossible.

Whether you are talking about someone who wants to get tax-favored exposure to Bitcoin through buying an ETF, and that's fine.

I'm a free market capitalist.

I believe that you should be free to deploy your money however you see fit.

Or if you're someone, maybe you're an elderly person who doesn't understand how to use their phone, so good luck using a cold card.

Brilliant products So they are.

So there's one pool of capital which is definitely underexposed to Bitcoin.

And I think secondly once you have achieved the size of a strategy then you are able to attract more attention from other industry players which will bring more capital into the industry And we don't need to rehash exactly what Saylor is doing, but that is completely what he's doing.

He's tapping into the equity capital markets, the debt capital markets, and those are gigantic pools of capital.

Interestingly as well, some of those pools of capital are effectively what's called mandated capital.

So in other words, they will be running pools of capital or wealth funds that are invested according to certain rules that are determined by their risk committee, by their investment committee, and so on.

And many of those will simply be unable to hold self-custody Bitcoin.

And again, this is where some of the conflict arises.

If I believe that all investors deserve exposure to Bitcoin and to the Bitcoin industry, then those mandated pools of capital also deserve that.

I agree.

And I think it's worth, maybe before we drill on even further, it's worth focusing on, I think, one of the business angles that we believe is under addressed.

So we've already explained that we think that the total pool of capital that wants exposure to Bitcoin probably doesn't have it yet.

So from an investor perspective, you're talking about a total addressable market that could hockey stick up from where we are at the moment.

Just putting some numbers on that, total market cap of Bitcoin is roughly $2 trillion at the moment.

We are talking about a total pool of wealth that is in the hundreds of trillions.

So the amount of exposure to Bitcoin is tiny.

in pure number terms in america we think maybe 50 million people hold it in the uk maybe 7 million and i think those numbers are really high yeah i agree i don't think it's that high and it could those could include people who've you know got a hundred satoshis that someone sent them in the wallet of satoshi so the investment investment thesis there is very simple and this applies whether you're talking about bitcoin or a bitcoin treasury company lots and lots of capital out there under allocated a Bitcoin.

That's the first point.

And the second point is, we like to think of, certainly at B-Hodl, we like to think of the three aspects of the Bitcoin industry.

First is Bitcoin itself as an asset.

And then second, we have the network.

It's both of those things and more.

It's also an ecosystem of businesses that are growing up around exposure to use of custody of that asset.

And that includes, you know, businesses like Debify or like AnchorWash, you know, which are offering lending or insurance products and so on.

And then in terms of the network, all of the pay tech businesses, the Lightning implementations, mini bits and the e-cash developments that we're seeing, all of the software development and hardware development, actually, in terms of point-of-sale devices and bolt cards, there's a huge...

a huge pay tech piece as well.

And each of those three, we believe, again, in a fly beyond system, are further, I suppose, building out and growing each of the others.

All three of those are important.

And we aim to sit at the epicenter of those three different pillars of what we see as the Bitcoin industry.

So when you're looking at this, a lot of the treasury companies that are popping up don't actually really have a business model.

This is no shade on MetaPlanet, but the The hotel part of the business doesn't matter.

You can't stay in a Metaplanet hotel?

I have not.

Not yet.

I think so, yeah.

And when it comes to strategy, again, that has become a very insignificant portion of the business.

Some of these flat out really don't have anything.

Are you going to have an actual business?

The actual business is going to be firstly the acquisition, and then secondly the deployment of Lightning.

So it's worth explaining how that deployment of Lightning works.

Sure.

Yeah, I'm very happy.

So if no one's ever run a Lightning node before, the basic principle is that you peg in and peg out from the base layer.

I mean, you know this as well, if not better than I do.

So you have an initial transaction to open the channel.

And then once your channel is opened, your node then connects to other participants in the Lightning network, almost like a mesh.

So it's not a one-to-one correspondence.

It's literally a network.

And the way that you derive revenue from using that is you are able to charge as a routing fee a proportion of the amount of Bitcoin you have locked in that channel.

So we are leasing a top 100 rated Lightning node on day one from Coin Corner.

And that will be owned, managed, and run for the period of that rolling lease by B-HODL.

And it's important to note that the ranking is very important.

Ranking is based on both age of the node and also capacity.

So the one that we're acquiring from day one is going to be one of the knows with the best reputation globally for routing and secure payments.

And we're really starting as we mean to go on.

We believe that paychecks is integral to the success of Bitcoin.

And it happens to be a way that you can legitimately charge revenue in Bitcoin from day one and immediately derive income into the company simply from the acquisition of the asset Bitcoin itself.

So in a nutshell, that is the business model.

and then maybe to finish off in percentage terms, the routing fees will range between 1 and 9.7%.

So that's the interesting part to me that I want to try and dig into a little if we can.

I mean, I was talking to Alan Farrington probably less than that.

And this is where the yield actually comes from.

Yes, it is.

But when you say that the range goes from, I think you said 1% to 9%, I think those figures that you're talking about is, I'm pretty sure Block came out and said they were getting 9% on their Lightning node.

from what I understand, I could be wrong.

The reason they get such high numbers is because they essentially set the fees for anyone sending transactions from Cash App.

I know River have come out with a report.

They run a really large Lightning node.

I think they said they get about 1.5%.

So where do you think you can sit on that?

We would be looking to hit a range of about 2, 2, 2.5%.

Okay, that seems achievable.

Yeah, we hope so.

And remember that this is a flywheel as well.

So the more Bitcoin you acquire, the more we will be able to deploy it to Lightning.

And at the same time, it becomes a virtuous circle because the more reliable your node infrastructure is, the fewer failed payments there are.

And ideally, the more people will build on the Lightning network.

And that supports the third piece of the stool that I spoke of before, which is the ecosystem of businesses.

So the more reliable your PayTech network, the more people will be looking to start companies and to launch payment processing businesses, et cetera, et cetera.

And then each of the three limbs begin to support each other.

Okay, that makes sense.

So we've got, on the business model, there's running a Lightning node as one part of it.

Is there anything else in the roadmap that you can talk about yet?

There are other things in the roadmap, but I'm not able to talk about those at the moment.

There are two, if not three, different business opportunities we're also exploring.

but this will become public in due course.

Okay, well you have to let me know when you can talk about it and you come back on the show.

So what do you think will, again, when I come back to the fact that I'm skeptical on treasury companies, one of the things that I am skeptical about is the idea of a treasury company that's just copy-paste but in a different jurisdiction to me is not that interesting because if you're in the UK and you want exposure to a treasury company, you can still buy strategy.

It doesn't matter that you're in the UK.

But with these new kind of novel business models, I think that does make it interesting.

So what is your differentiator?

I think we've spoken about it to an extent, and maybe I'd add one more.

So you mentioned earlier that a lot of these companies seem like zombie companies or failing companies that saw Bitcoin as a Hail Mary pass.

We're actually not that at all.

We are, in fact, definitively a new company that is starting from day one with a clean business plan and a clean balance sheet.

And our focus is very much on Bitcoin.

I haven't aired this with the team so far, but I don't know if you know the myth of Athena's birth.

No, I don't.

Tell me.

Well, Athena sprang fully formed from the head of Zeus.

Okay.

Zeus had an affair with her mother Metis, who was a goddess of wisdom.

And Metis was a shapeshifter, and Zeus swallowed her.

And then after she turned into a fly, he thought he'd got rid of her.

And then Zeus had an absolutely terrible headache, and Prometheus splits his head open with an axe.

Obviously Zeus was an immortal, so it might have hurt him but didn't kill him.

And then Athena, goddess of wisdom and war, springs fully formed from the head of Zeus.

So in that context, we're aiming to enter the market fully formed as a Bitcoin business from day one with a business model that's focused on Bitcoin and growth and development plans that are focused purely on Bitcoin and the Bitcoin industry.

So that, for me, is a key differentiator.

I love that analogy.

So when it comes down to like the long-term viability of these companies, again, an idea I've had in my head for a long time, which may be proven to be wrong, and that's great if it is, is that we're going to have these treasuries companies crop up, hoover up Bitcoin, and then depending on things like the terms on their debt, they're going to end up having to spit that out in a bear market.

And I don't know how it will play out, But I could see a scenario where if it doesn't cause the next bear market, it certainly exacerbates the next bear market.

So how are you thinking about that?

That's a brilliant question.

And that actually is probably my key worry about Bitcoin treasury companies as well.

And I think because of that, it's something that I am laser focused on and the team is laser focused on.

So maybe backtracking to some of my previous career, I mentioned the prepack.

So a prepack admin is when a company has effectively become insolvent on the administration, and it is then restructured, and its debts are either repaid or refinanced and so on.

So I spend a lot of time as a restructuring and insolvency lawyer.

So I've seen how bad debts poorly managed can be for a company, and how these things can very easily precipitate insolvency.

In the Bitcoin world, I'm still very alive to what happened in summer of 2022.

And I think the Lunar Foundation Guard and what happened with that organization as Bitcoin is a good cautionary tale for all of us involved in this space.

you'll remember that LFG accumulated, I mean, God knows how many Bitcoin.

Yeah, I can't remember.

It was a huge amount.

Yeah.

And then there was a fire sale as they tried to maintain the peg.

And that, I think, is a key risk for the sector.

You know, if you enter a market downturn and you become a forced seller, then that snowballs.

And to be honest, that's the same for any asset.

If there's more selling pressure than buying pressure, the price drops.

It's very simple.

It's not hard maths.

And if you have any form of leverage at some point, it's not whether you want to sell or you have to sell.

Exactly.

And so worth addressing that point up front, we are entering the market with no leverage.

We are purely raising funds through equity finance, which, yes, is dilutive, but at the same time, it enables us to acquire more Bitcoin.

And so the more Bitcoin we have, the more we will be able to deploy and so on.

And so we create the virtuous circle.

Secondly, in terms of becoming a forced seller, because the team is so acutely focused on downside risk, and I should mention that the CoinCorner guys, the ones who are joining our board, they have got experience of weathering two, if not three, bear markets.

Yeah.

For anyone who's listening who doesn't know who CoinCorner are, they're probably the best exchange in the UK.

Really solid team.

Been going for a long time.

Completely agree with that.

That's the principal reason why I'm doing this.

Yeah, the quality of the team, I think, is unmatched.

And one of the things I was very keen to understand was how they had managed to steer their business through two, if not three, bear markets since they first launched.

2014, I think, they kicked off.

And so they are super focused on that.

So am I.

The absolute red line for me is becoming a forced seller of B-Hoddle's Bitcoin into effectively a buyer's market.

I don't want that to happen.

And there are two ways of avoiding that, being very simplistic about it.

One is being very careful about the amount of debt you take on and whether you can service that debt.

So in some ways, it doesn't matter how much debt you have so long as you have sufficient free cash flow to service that debt.

Time and time again in my restructuring work, you would see people taking on too much debt when interest rates are low and thinking that we're going to remain low forever.

And then suddenly when you come to refinance, you have to refinance at 7.5% rather than at 5%.

And the free cash flow generated by your business is no longer sufficient to pay the coupon on that debt or to pay your interest.

At that point, that's when you begin to get into trouble.

So drawing on all of my experiences as a restructuring and insolvency lawyer, this is something that I'm acutely cautious of.

So the way that the team have decided to focus on that, and credit to Dave in particular for modeling this, the initial raise, we will hold back sufficient working capital to fund four years' worth of operations, which should take us, even if we do have another 50% to 80% downturn of the Bitcoin price, which I personally think is unlikely, given the current state of the market, but we've all been wrong before.

Yeah, I don't know.

It's one of those things where I don't think it's going to happen, but I would not be shocked if it did happen.

Exactly.

And even though I don't think it might happen, I'm like 60% at most.

So if you do go into that drawdown, you're saying the only issue is if you have debt.

I understand if you've got no leverage, you have no need to sell.

But are you planning on taking leverage against that Bitcoin at some point?

Not initially.

Okay.

And any such decision would be one for the board to do.

And we would only take that decision provided that it was in the best interests of both the company and our shareholders at the time.

So our focus as board members and minor CEO is on maximizing value for shareholders.

And that is absolutely primary.

So initially, we'll begin with no leverage.

And as I say, we will retain sufficient working capital from that first raise to make sure that we can run for four years without actually having to generate any income at all.

What percentage of the Bitcoin you're raising has to be put to one side for work into capital?

I can't put an exact percentage on it for the purposes of this interview, but I can say the vast majority of the initial raise will be deployed immediately into Bitcoin purchases.

And then we want to continue accumulating Bitcoin from further raises as aggressively as we possibly can.

So the plan is to raise more money to stack more Bitcoin, but you're not going to take on debt to to stack more bitcoin not initially no and like i said unless the board determine that it's in the best interest of the company and shareholders to do so yeah and i think it's worth backtracking to something we said about strategy you can't do that until you hit a certain size yeah um and until you have exposure to those vast pools of institutional capital that we talked about as well bitcoin is absolutely ripping and in every bull market there's always a new wave of investors and with it a flood of new companies, new products and new promises.

But if you've been around long enough, you've seen how this story ends for a lot of them.

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So that would be another one of the big questions I have around treasury companies is how long does just selling equity to buy Bitcoin remain interesting?

Because we've seen strategy come out and they've done all these preferreds and I think some of those products are really interesting.

I think they're going to drive massive demand.

Is there still a market for just purely selling equity to buy Bitcoin?

Potentially, but I also counter that by saying that we're doing more than that.

We're selling equity to buy Bitcoin to use the Bitcoin.

Yep.

So I think I triangulate that in terms of B-HODL for what we're actually trying to do in terms of the Bitcoin industry.

And pretty much the first page of our marketing deck sets out that we want to be a Bitcoin infrastructure and services company.

So for us, this is just the beginning.

and some of those additional business lines that I talked about are things that we're actively going to explore over the next few years with a dual mandate, really, of keeping costs and expenses low while absolutely maximizing the amount of other income that comes in to the business.

And again, worth flagging the example you gave, the zombie companies.

We very much don't want to be a zombie company and we can't be because we're brand new.

Mm-hmm.

And we want to be an integral part of the Bitcoin industry, potentially globally, but definitely in the United Kingdom.

And maybe worth getting on one of my hobby horses, if you don't mind.

I've said before, I've been to a lot of events in Parliament and lobbying and so on, where they are full to the brim of shitcoiners.

Yep.

And Web3 people who are creating companies and products backed by VC money, products that have no product market fit, for which there will likely never be an addressable market, let alone a total addressable market.

And yet they are making a lot of noise.

And I've often felt as though Bitcoin is this like 800 pound gorilla sitting in the corner, while all of these tiny little marmosets are scurrying around.

And the gorilla's just sitting there doing nothing.

I want him to get up and start beating his chest.

And creating a company like this, growing at the scale we hope to grow, we want to be a part, not just of that conversation, but also in part of being an integral player in the Bitcoin industry in the UK, which we think is aggressively underserved.

And I mean, I totally agree.

We were talking about this just before.

Like the number of products that they have in the US that you can't get access to in the UK and the same in Australia where I live is shocking.

There's so much space for people to innovate there.

But the problem is just the regulations and the law gets in the way.

So are you still going to be doing the policy work that you're doing now?

Yes, I will.

So I think we're delving into that a little bit.

I was just on a panel here in Riga talking about Bitcoin in state.

And again, it's the suit corner dilemma, isn't it?

Suit.

Exactly.

Some of us think there's no point in engaging with politicians.

But one of the points I made on stage is that if you don't engage with politicians, They just made bad laws.

And we need to do everything in our power to make sure that they're inevitably going to make laws.

So if that's the case, let them be as good as they possibly can be.

And unless we stand up for ourselves and make noise, they won't be.

So in terms of policy work, we are hoping to also deploy some of the funds raised towards advocacy efforts, whether those are via BPUK or otherwise.

And as part of that, in order to remain completely objective, I've stepped off the board of BPUK, so I will no longer take operational decisions at the company.

I will still write policy papers for them on a more fellowship basis, perhaps more akin to the way that BPI function.

But the current management team will take operational decisions, and I'll still be ideally going to Parliament and negotiating with regulators, with HMRC, Treasury, and so on.

I already have a line of direct communication with Lord Vasey, who is co-chair of the new cryptocurrency and digital assets all-party parliamentary group.

See, I know nothing about this.

What is this?

Oh, do you remember Lisa Cameron, who came to Edinburgh a few years back?

No, I don't.

I didn't go to Edinburgh.

Oh, okay.

So, in the UK, we have various different all-party parliamentary groups, which bring together Lords and MPs from both sides of the table to talk about important issues, and effectively push for those issues in Parliament and decision-making.

So Lisa Cameron was chair of the APBG.

I used to attend and I've given evidence a couple of times there.

And Lord Vasey has recently reconstituted it.

He is, I think, hesitantly quite good news for the space.

In the ride over here, I was describing the car, how we had used an analogy of sort of blue-tip companies listed on a market as more akin to Bitcoin and new codes that I established in my kitchen as more akin to a meme coin on Solana.

He understood that immediately, the different risk profiles of those two assets.

And we obviously have a principle in the UK and elsewhere, which is same risk, same regulation.

If you concede that two assets have a different risk profile, then provided you still believe in same risk regulation, same risk, same regulation, you should also then differentiate the way that you regulate those assets.

So that's a chink in the armor.

He liked that.

I wrote to him just yesterday congratulating him on the new APPG.

So I definitely want to exploit that relationship.

I have a direct line in also to the head of FinTech at the Department for Business, Industry and Trade.

We very, very much want to act as a loud voice in the United Kingdom for Bitcoin and the Bitcoin industry.

And this is a personal bugbear of mine, as you probably know.

Britain's fantastic at finance, and we were fantastic at information technology.

It is almost criminal that Bitcoin, which sits at basically the Venn diagram, that is a circle, is criminal that we have let that opportunity just pass us by.

I think it's the most frustrating thing I've ever seen a country do is when Brexit happened, no matter whether you thought it was good or bad, the fact that the UK didn't incentivize as much business as possible comes to the UK and on top of that incentivize Bitcoin is the biggest mess.

Yeah, completely.

And it's shocking to see.

And the fact that it's only got worse is just, it's honestly embarrassing at this point.

And it's still getting worse.

It's utterly, utterly extraordinary.

Yeah.

Yeah.

I don't know how closely you follow our work, but the direct communications we've had with Treasury over the past year and a half got increasingly frustrating.

Andrew Griffith and the last government and Bim Afalami were not bad.

We even had a cordial exchange with Tulip Sadiq once she came into government.

Emma Reynolds, bless her, I'm not going to slander her, but it's clear from her correspondence with us that she doesn't understand Bitcoin at all, and likely never will.

Yeah.

That's the thing.

It's not in their interest to understand it because it just disrupts the power that they already have.

And that's why I'm both very appreciative of the work that you are doing here.

But I also think at some point, something has to change.

This is one of those situations where change happens one funeral at a time, I think.

Yeah, I love that quote.

I mean, being slightly more elaborate, I think it was Max Planck who said that, you know, people don't convince other people of the truth of new ideas.

What really happens is that the adherents of the old die out over time until they are replaced by the new.

Yours is much neater.

I actually have never heard the real one, but there we go.

Yeah, no, that's true.

So are you seeing the policy side of this?

Like you said, the company may help support these policy institutes in the UK as almost an insurance plan for the main treasury company.

In generic terms, I'd say that all industries have lobbying arms.

And you will have seen recently photographs of Brian Armstrong at 10 Downing Street.

Pretending to be a Bitcoiner.

What exactly?

Although he's got a great haircut.

He has a great haircut.

I totally agree.

I would, I mean, not bigging myself up, but I would much prefer that it was me standing.

Oh, I agree wholeheartedly, yeah.

Oh, thank you.

I'll shave my head out of respect.

So, I mean, one of the key issues, and I default to this all the time, there is a complete failure of politicians, regulators, to understand the difference between Bitcoin and the very broad crypto market.

I mean, it's got to the point where I feel that crypto is so broad a term, it's almost useless now.

A hundred percent.

Yeah, I'm glad you agree.

Because it's very, very difficult to see that an NFT of a cat has anything to do with a non-state, globally accessible, completely decentralized, peer-to-peer digital money.

How are those two things the same?

They are as different as you watching, I don't know, a trailer for the new Bond film, or doing Excel spreadsheets.

They're completely different.

They both happen to use computers.

And to a degree, your UX is similar and that you may be accessing through a keyboard.

But other than that, they have nothing in common with each other.

And so do you almost see this as a way of getting more attention from policymakers in the sense that if you are a real business that has a proven track record, they might actually listen to you more than being just a policy group in the UK?

Yeah.

Personally, I think that's a good summary.

And the BPUK will continue doing its work and will continue writing papers and hopefully holding events and pushing forwards.

But as you were talking a moment ago, I strongly feel a lot of the incentives here are ultimately going to be market-driven.

So you said that there's no incentives for politicians to understand, but it will take away some of their power.

That's true.

But at some point, they may realize that they can actually get more money and more power by embracing it rather than resisting it.

And I think that's a tipping point.

And I've mentioned before that in some respects, I've always felt that commercial banks were going to be an ally in the fight against CBDCs.

Largely because CBDCs have the potential to disintermediate.

To circumvent that.

Yeah, exactly, exactly, exactly.

Yeah, you get it.

So at some point, once banks and other institutions and businesses realize and are demonstrating that there's a lot of money to be made in the space, then it's your incentives are bringing it into line with those of politicians who finally just want to tax businesses and tax people in order to make more laws, which hopefully won't be bad ones, because we'll be lobbying them.

And I don't even think that, I think you're 100% right.

That's not even speculation at this point, because we've seen what's happened in America with Larry Fink.

He has gone from being someone who was strongly pushing this ESG narrative, which was very negative, especially for Bitcoin mining, to being like a pretend Bitcoiner who's now pushing Bitcoin.

And I can see that thing happening to the UK as well.

But it's just, I mean, we're still so far behind.

Yeah.

And honestly, I don't sadly have a good answer as to why we are so far behind.

Because, I mean, return to Adam Back, who you mentioned earlier, you know, we've got an incredible reputation in this space.

Some of the best minds who worked on this stuff have been Brits.

And yet our government and our political class are full of people who don't understand and don't care.

And honestly, I try to be nice to them.

I believe a lot of them went into the jobs they do for good intentions.

And sometimes I wonder whether we should simply just pay them more.

Well, I mean, I don't disagree though.

You would probably know the figure, but the Prime Minister of the UK earns a shockingly small amount of money for the job that they're doing.

Yeah, I mean, not blowing my own trumpet, but when I was a senior associate at Ropes & Greer, I was earning more than the prime minister.

Yeah, and that's insane.

Like, there's no way a job of that...

I mean, I was working hard on him.

Yeah, well, but maybe if you paid more, you'd work harder.

Well, yeah.

Yeah, exactly.

But I totally agree with that.

I think the answer could be to pay these people more.

Just getting back to the new business, how much are you raising?

We've not even got there yet.

How much Bitcoin are you going to stack?

I can't give you an exact figure because the round hasn't closed yet.

and it's not public yet, but it will be very soon.

So we are, I think I can say we're raising a very healthy amount from a number of well-respected investors, some of whom you may know personally.

That's just Danny Knowles, for example.

I've heard of him.

And like I say, we will deploy the vast majority of that immediately into Bitcoin.

and then we'll get back on the road.

And we're looking to raise more money to tell the equity story to more people and raise more and more Bitcoin.

We want to grow as aggressively and as fast as possible.

And to be honest, I really admire what Andrew at Smaller Web has done.

And I like the fact that we have a very strong competitor.

And in some ways, having them ahead of us is kind of fun.

Did you ever run track when you were a kid?

I know you played very...

I was very slow.

You were slow.

Yeah, no, I never run track.

I threw the discus, but I never run track.

Discus was fun.

I used to run track.

I used to be first leg in our 4x100.

And...

You don't look like you should be fast.

You're fucking massive.

I was a lot smaller.

And I used to be fast as well.

But yeah, running the, in lane one, running the inside bend was wonderful.

Because you could literally see how far ahead everyone was of you.

And when you come around the bend, you suddenly realize you've overtaken them all.

And that's the mental model I have in my mind here.

I like the fact there are people ahead of us.

It gives us something to aim for and something to overtake.

So we should talk about Smart Web Company.

Because they, I think it's the most successful IPO in UK history.

Is that right?

believe so on their metrics in terms of share price growth.

And they launched on Atquis, which is a small exchange in the UK compared to the LSE.

Yeah.

You're launching on the same one.

Yeah.

I think I probably know the answer to this, but why are you launching on that one?

Well, in some ways, it's quicker to market, and it's also a growth-focused exchange.

So for those, and perhaps another thing to mention, is that they also have a degree of familiarity with this type of business model.

So those things are helpful.

The process of going through an IPO is extremely rigorous.

And I won't go into details here because it's easy to look them up.

But just for context sake, a lot of regulation has to be complied with, a lot of disclosures have to be made, and an awful lot of paperwork has to be done.

For example, every statement that you make in your prospectus or your offering document, which is the basis on which investors are putting their money into your company needs to be verifiably true.

And each of those statements need to be checked in rigorous detail by your lawyers, your accountants, your financial advisor.

So the process of launching on any exchange is rigorous.

Having an exchange that understands your business model is helpful.

And also launching on a growth market is also helpful because, frankly, as I mentioned before, we're not a zombie company.

We're a day one business.

And effectively, our first day of trading is also you could be thought of as effectively our first day of actually doing business because it the day on which we can commence our business model When it comes to Aquis I see there being kind of positives and negatives to being on an exchange of that size.

And the benefit there is like if this is retail driven, it's real like spot driven market without all that kind of financial engineering on top.

But does it also limit your upside potential without the real big money being there?

I think that's fair.

and this is a comment made generally about the wider market, not simply B-Hodl and our company.

I think that's a fair categorization.

So you've got to think about what's the size of the pool in which you're swimming and who might join that pool and what's the total size of that pool.

So SmarterWeb grew to about a billion market cap quite quickly, largely driven from retail and high-knit worths.

A billion is great, but to access bigger pools of capital, you would ideally also list, and you would potentially move your listing from Acquist maybe to AIM or eventually the LSE.

And I probably can't give too many details about this, but in order to access pools of capital that are larger than what might be available on Acquist, that would be something that the board would consider.

And again, at all times with a view on maximizing shareholder value and is it in the best interest of the company.

But there is a potential pathway to move into those other exchanges.

It's perfectly possible to move the listing and it's even possible to move a listing from one country to another.

Some countries are dual listed.

So some companies, Carnival Cruise Ships, from, they used to be dual listed on London and New York's Aquis Exchange.

Okay, but you don't see the fact that Aquis being mainly, well, first of all, it's a very small market compared to LSE, mainly retail.

You don't see that as a negative.

Could it be a positive for you?

Ideally, positive initially.

And that's why we've chosen to go there.

Speed to market, word of mouth, and hopefully supportive of the rate at which we hope to grow.

And so when, again, back to SmarterWebCompany, they had an insane rise.

They did incredibly well.

Share price is down quite a lot from the top that they put in.

Is that because they've diluted, or is that just the way that the market's gone?

I think they've suffered from a general market-wide reduction because Coincilium suffered a similar drop in share price at roughly the same time.

And actually, MicroStrategy's stock hasn't been performing particularly well over the same period as well.

So it's possible that's a wider macro market reaction.

And, I mean, we've been in Bitcoin for a long time.

We know what happens when a price goes vertical.

It goes the other way quite quickly.

Well, yeah.

It swings and roundabouts.

It's the little meme of the guy on the roller coaster, isn't it?

Yeah.

So let's go into the MNAV stuff because I don't actually know what strategy is at.

I think it's under two at the moment.

I think Metaplanet's at like three and a half or something like that.

A bit higher.

What do you think a realistic, mature MNAV for a company like this should be?

I think the answer would depend on where you are in Bitcoin's history.

So eventually over the very long term, I would have thought that most MNAVs would trend to one, wouldn't they?

Because once all of the Bitcoin has been issued and acquired, and absent any underlying operating business, then your multiple is, well, actually, perhaps that's not fair.

So maybe let's think about how companies are traditionally valued.

So you'll be familiar with the different ways of valuing companies just to rattle a few off.

You have an EBITDA multiple, a discounted cash flow multiple.

For an asset management business, you might have an AUM multiple.

And all valuations are forward-looking.

They're about the expectations of a future value or future cash flow.

So when I take one of the most basic being an EBITDA multiple, that's your earnings before interest, tax, depreciation, and amortization.

So when I was working in private equity, we would see EBITDA multiples between five going up to 12 times, which was pretty nuts in a private equity business.

And what that translates to in actual cash terms is that today's value of the company includes the expectations of between 5 and 12 years of future cash flow at that same level.

And that's the basic principle on which MNAV potentially works.

So MNAV is obviously the...

It's a ratio between the enterprise value of the company and the asset value of the Bitcoin that you hold, basically.

So it's exposed to the wide variations and fluctuations in the Bitcoin price, and also the rate at which the company can aggressively acquire it.

So in some ways, valuing a company on an MNAV that is greater than one isn't necessarily illogical, because what you're assuming there is that there are two things really, I think.

Firstly that the Bitcoin which you hold is likely to continue appreciating, I forget what the cargo of Bitcoin is at the moment.

It's about 40%.

37%, something like that, yeah.

Yeah, there you go.

So if you're doing an MNAR valuation, you're looking at a 40% annual increase over X period of time.

And in the example I just gave on EBITDA, even in the PE industry, that was 5 to 12.

The tech giants in the US, I think some of them are on insane multiples, you know, 30, 40, 50.

I think Costco's at like 20-something.

It's insane.

which is functionally insane.

That's a whole different conversation around why are those valuations so high and is that because people are parking their money.

Well, exactly.

People are parking their money in them because they can't leave it in the bank account.

So I think potentially, slightly backtracking on what I said a moment ago, an MNav greater than one if you factor into the MNav the future gains that you see in your Bitcoin holdings.

So even if you never bought another Bitcoin, Let's say you get, I don't know, nice round number, 2100.

Even if you never bought another Bitcoin, if the cargo stays reasonably high, the compound annual growth rate, then for the period that you hold the stock, you might look to see appreciation based on the number of years you hold it multiplied by the compound annual growth rate.

So even were you never to buy any more Bitcoin, you could potentially see an MNAV of greater than or significantly greater than one.

It's because, to me, I think these treasury companies have to keep an MNAV of greater than one.

Otherwise, I don't see why anyone would buy them.

Well, yes, it's an elegant point well made.

But so when you look at this, obviously, there's always the growth period of a company like this where MNAVs tend to go high.

Whether that happens or not, who knows?

That's up to the market to decide.

but what I can't quite figure out is what the end game for these companies is like is one and a half MNAV enough to make it interesting to investors or like because at some point you have to factor in risk of parting with your keys essentially like if the comparison is you either buy one of these treasury companies or you buy Bitcoin you can buy Bitcoin at 1x MNAV yourself with no risk or the risk is with you so like what is the amount above one that these treasury companies have to retain to make them an interesting proposition?

I think that's an interesting question.

I can't answer for other companies, but I think certainly for ours, the answer is quite simple, that we are going to be a Bitcoin business, not just a Bitcoin holding business.

And so for us, being and developing the Bitcoin infrastructure and services side is an additional kicker that you would have in terms of our valuation.

And so being an actual operating business that derives cash flow and revenues from additional services in the Bitcoin industry is another way in which you could value the business.

In fact, over time, it might not be unfair to value us on an EBITDA multiple basis, for example.

Or if our business models, proposition, and forecast are successful, you could even value us on a DCF basis.

So, I mean, there are all kinds of different ways of valuing companies, and you're not restricted in using one or the other.

And I mentioned private equity earlier.

A lot of private equity houses will have their own in-house secret source valuation models that they will use.

I think it's an interesting question.

I think you really got to drill down into what the business actually does.

If all your business does is buy and hold Bitcoin...

It's not interesting.

Exactly.

Well, other than academically, if you're watching your stock ticker.

if all your business does is own and hold Bitcoin then perhaps that's the only valuation metric that you should use but if your business doesn't more than just hold it then it's interesting to consider other valuation methodologies that may also be applicable yeah okay so like looking further out because it's funny this podcast at the moment almost feels like a Bitcoin treasury podcast it comes up in every show it's all people want to talk about and like to be fully transparent I find a lot of it boring and the reason being like this is not why I got into Bitcoin.

I got into Bitcoin for sort of the freedom money side of things.

At the same time, I would never have done this investment if I didn't think this was something a little bit unique and honestly the big thing was the team behind it.

Like I trust these are actual Bitcoiners and there's a lot of people that are just sort of cosplaying as Bitcoiners doing this thing.

But if you look further out as this matures, at the moment we're seeing a Bitcoin treasury company literally every week.

Do you think that is going to diminish or increase?

I suspect the spate of Bitcoin trading companies will probably slow down.

And that's just my personal view, not one from B-Hodl.

I also think the space for businesses working in the sector hopefully will increase.

And again, taking a very, very sort of bird's eye view of this, I think it's a principle that all of the team hold, that eventually all companies will hold Bitcoin on their balance sheet.

That's something I'm very bullish on.

I want to see the big companies that have cash flows buying Bitcoin.

That's way more interesting to me than some random coffee company in some tiny country doing a Bitcoin treasury play to try and save their balance sheet.

But I think what you said there, you've pinpointed exactly why you would do it.

why would you hold Bitcoin on your balance sheet if you're a small company?

It's because you don't want to see the value of your cash treasury be the melting ice cube that Saylor talked about years ago.

And if you think about it in a percentage term, it's utterly astonishing.

I forget how much cash Apple had on its balance sheet, but at one point it was sitting on something at 70 billion.

And at the rate of inflation at the time, that was evaporating.

And yet they did nothing with it.

They kept it in cash.

I find that decision inexplicable.

I agree.

Why wouldn't they allocate even 1% into the best-performing asset of all time?

They would have...

I mean...

And again, looking at it in risk-adjusted, I love it when people bring up Bitcoin risk.

Risk is a part of life.

Risk is fun.

And all you need to decide is what's your level of risk tolerance and to whom do you owe the duties to.

So if I'm a manager of someone else's money, I owe...

I have fiduciary responsibilities to them to manage the money as responsibly as I possibly can with a level of risk to which they are accustomed and happy with.

So if they are happy for me to take a slightly riskier position with 1% of their capital, their worst case now is they lose 1% of their capital, completely gone forever.

So that's your absolute worst case.

Well, I think the actual worst case is maybe different to that.

And correct me if I'm wrong here, but the way I think about the reason companies like Apple don't do it is probably, one, they're very conservative in nature.

And I think what they'd be worried about, although I do not think this would happen, is if they decided to allocate 1% of their cash position to Bitcoin, what happens to the share price?

And I think they'd be worrying the share price then falls, which I don't think would happen.

I could be wrong.

I suspect, I mean, I'm just playing that through.

If Apple were to buy Bitcoin, would their share price fall?

No, it wouldn't.

I really don't think it would fall, but I think that's the risk that they're trading off.

Well, yeah.

Remember, your decision-making at a company that big is very slow and very cumbersome, which is why we've seen Bitcoin adoption largely by smaller companies.

So for Apple to make a decision like that, it would need to go through the risk committee.

You would have many different board meetings.

There would be investor relations calls, and a lot of the investors might say, we don't like exposure to Bitcoin, don't do this.

You probably saw the recent proposition of Microsoft's board, whether Microsoft should adopt Bitcoin.

When Saylor did his call with them.

Yes, exactly.

And they voted no.

I was completely unsurprised by that.

Yeah, me too.

I was completely unsurprised.

And you've got to remember that, this is a slightly geeky point, but one that's important.

A lot of the shares of these very big companies are held not by active, motivated investors who go to shareholder meetings and vote.

They are held by funds like BlackRock or like Hargreaves-Lanstan.

And those institutions will will hold those shares on behalf of millions and millions of small investors.

You know, I own some Microsoft shares, not many, three or four, something like that.

Shitcoiner.

I still use a PC.

But I didn't vote on their shareholders because Hargoose lands on hold so on my behalf.

And most of the fund providers and platforms will have a policy in place that they will vote on shareholder votes in accordance with the recommendations of the board.

and the board recommends vote no on adopting Bitcoin.

So the vast majority of people vote no.

And the reason people notice activist investors is because they're so extraordinarily rare.

There's an activist investor at Disney who's like, I think he holds like two, three percent.

He's been making a nuisance of himself over the last few years in a relatively amusing way.

But people notice him because he's obsessed.

What's he been doing?

I can't remember.

He's been, I think he's been having a go about the direction of the company and filmmaking decisions and so on.

About Snow White.

Well, who wouldn't?

Actually, in fairness, I haven't seen Snow White, so I probably should be rude about it.

Me neither.

Apart from, I have been watching the original version with my daughter.

Oh, sweet.

Yeah.

But I've not seen the new one.

Freddie, is there anything that you want to talk about about this company that we've not covered yet?

I think it's worth reiterating our long-term vision for it.

Day one, it's about acquiring as much Bitcoin as we can.

But we want to be an absolutely integral part of the Bitcoin infrastructure system.

And that's starting with our participation as a Lightning Node Runner, which will have two benefits, both generating revenue and secondly, making the network more stable.

And then we really want to be a focal point for the growth of the Bitcoin industry in the United Kingdom.

And if we can achieve those things, I'll go to bed happy that I've been able to deliver value for shareholders and also promote the adoption of Bitcoin in the United Kingdom.

I think that's a very honorable goal.

We need that to happen.

And I'm sorry if I've come across skeptical at any of this, but truthfully, I am skeptical of a lot of these treasury companies.

I've literally put my money here, which is like a vote of confidence in the sense that I do think you guys can do something different.

I hope you can.

I'm going to be watching it pretty closely.

We are, I mean, look, I think you're a mate.

And not only do I owe your fiduciary duty to you, but I absolutely want to see you make the best of your investment.

Do you work for me now?

I suppose actually I do.

There we go.

It's the meme on the boat.

I'm the captain.

Well, I'm excited for this, Freddie.

Thank you for the time.

And when you can talk about kind of the future business plans for this company, I'd like to do it again.

I'd love to come back.

Thank you so much.

All right.

Appreciate you.

Thank you, man.

Thank you.

Cheers.