Twenty One Aims to Buy as Much Bitcoin as Possible. Can It Succeed? - Ep. 824
🎯 Summary
Podcast Summary: Twenty One Aims to Buy as Much Bitcoin as Possible. Can It Succeed? - Ep. 824
This episode of Unchained, hosted by Laura Shin, features Matthew Siegel, Head of Digital Assets Research at VanEck, focusing heavily on the accelerating trend of public companies adopting a MicroStrategy-style Bitcoin accumulation strategy, highlighted by the launch of a new venture called 21.
1. Focus Area
The primary focus is the corporate adoption of Bitcoin as a treasury reserve asset, specifically analyzing the new venture, 21, formed by Tether, SoftBank, and Cantor Fitzgerald’s affiliate. The discussion delves into the mechanics, risks, and strategic implications of using corporate equity and debt structures to aggressively acquire Bitcoin, alongside the intersection of Bitcoin, AI infrastructure, and energy.
2. Key Technical Insights
- The Bitcoin Yield Engine: The core mechanism relies on these companies issuing equity or convertible debt while their stock trades at a premium to their Net Asset Value (NAV) based on Bitcoin holdings. This premium allows them to issue securities and buy more Bitcoin accretively, effectively generating a “Bitcoin yield.”
- Risk of Discount: The strategy breaks down if the stock trades at a discount to its underlying Bitcoin value, as financing BTC via equity then becomes value-destructive for shareholders.
- Structural Arbitrage: Innovative financial instruments like convertible debt and preferred securities (as seen with MicroStrategy) attract different buyer classes (e.g., arbitrageurs, pension funds), widening the total addressable market for capital formation directed toward Bitcoin.
3. Market/Investment Angle
- Accelerating Corporate Adoption: Year-over-year Bitcoin accumulation by corporations has recently outpaced that of ETFs, with over 100 firms now following the model.
- SoftBank as a Bellwether: The involvement of SoftBank (a mega-cap tech stock) and Tether signals a significant institutional validation and entry point into the Bitcoin ecosystem in the US market.
- Volatility and Risk: These Bitcoin-heavy stocks are significantly more volatile than Bitcoin itself (often twice as volatile), posing substantial downside risk if the premium collapses during a bear market. Investors are advised to manage position sizing carefully.
4. Notable Companies/People
- 21: The new entity aiming to acquire as much Bitcoin as possible, launching with 42,000 BTC ($3.9B).
- SoftBank (Masayoshi Son): A major participant, viewing Bitcoin through the lens of its intersection with AI infrastructure (via negotiations to back Stargate AI) and energy.
- Tether: Gaining a US regulatory foothold by holding a portion of its assets under the US nexus.
- MicroStrategy (Michael Saylor): The established blueprint for this corporate accumulation strategy, known for its retail-facing communication skills.
- Jack Mallers (CEO of Strike): Named CEO of 21, expected to leverage his retail communication skills, while the CFO, Steve Mehan (investment banker), will handle the capital markets execution.
5. Regulatory/Policy Discussion
- The discussion touched upon geopolitical financial inflection points, noting Tether’s role in exporting dollars and SoftBank’s low-cost funding advantage derived from Japan’s monetary policy.
- An example of regulatory friction was cited in Japan, where high-income earners face up to a 55% tax on Bitcoin gains versus lower capital gains rates on securities, creating an arbitrage opportunity for companies structured to hold BTC.
6. Future Implications
The trend of corporate Bitcoin accumulation is expected to continue across different stock markets, driven by tax arbitrage and the desire to capture the equity premium. However, the proliferation of these “levered clones” raises concerns about potential systemic blow-ups if Bitcoin enters a prolonged downturn, as noted by Ryan Watkins. The conversation suggests a future where specialized financial products (like VanEck’s planned On-Chain Economy ETF) will emerge to help investors navigate and selectively invest in the winners within this category.
7. Target Audience
Crypto and Traditional Finance Professionals, Institutional Investors, and Sophisticated Retail Investors. This episode provides deep analysis on corporate finance strategies within the crypto space, making it valuable for those tracking institutional adoption, asset allocation, and market structure.
🏢 Companies Mentioned
đź’¬ Key Insights
"This is the first step in rebuilding trust with the community, but far from the last, Mullin wrote on X. The burn represents 99.5% of Mullin's OM holdings, with only 800,000 tokens remaining in his possession."
"Vitalik Buterin has proposed replacing the Ethereum Virtual Machine, the network's foundational smart contract engine, with RISC-V, an open-source instruction set architecture widely used in modern computing."
"instead of looking at does one person or one entity own 20% of the total supply of tokens, it's more like does one person have more than 20% of the voting power to change how this program works? Can they unilaterally block people from using their platform and change how the piece of technology works on their own without any input from the community? If they can, maybe that's something more like a security."
"So my sources were basically able to outline what that test is. I would encourage people to read the article to get all the technical details. And of course, we won't know for sure until we actually see this discussion draft, but I try to give us at least an idea of where this bill might be going."
"There's always been problems because over one key issue: when is a token a security and when is it a commodity? Because that would delineate which federal regulator, the SEC or CFTC, would have primary oversight."
"though publicly, he only said that he wants a stablecoin bill on his desk by August, apparently, privately, the White House has been urging Congress to also pass a market structure bill by then."