#1577 Will Clemente & Ben Harvey | The Truth About Bitcoin Treasury Companies
🎯 Summary
Podcast Episode Summary: #1577 Will Clemente & Ben Harvey | The Truth About Bitcoin Treasury Companies
This episode of the Pomp Podcast features Anthony Pompliano interviewing Will Clemente and Ben Harvey from Keyrock about their comprehensive research report, “Bitcoin Treasuries Uncovered.” The discussion centers on the rapid proliferation, financial engineering, and market impact of publicly traded companies that hold significant amounts of Bitcoin on their balance sheets (Bitcoin Treasury Companies).
1. Focus Area
The primary focus is a deep dive into Bitcoin Treasury Companies (e.g., MicroStrategy, DJT, etc.). Key themes include their capital structures (debt vs. equity), the mechanics of their NAV premiums, the concept of Bitcoin per Share (BPS) growth, and the sustainability of these strategies in the broader macro environment.
2. Key Technical Insights
- Bitcoin Per Share (BPS) as the Core Driver: The primary justification for the high NAV premiums (often 78% above spot) is the aggressive accumulation of Bitcoin relative to outstanding shares. Aggregate BPS for these companies has grown at a 63% Compound Annual Growth Rate (CAGR) over five years, effectively acting as an “engine” on top of Bitcoin’s price appreciation.
- Capital Structure Risk Differentiation: Companies utilize varied financing methods, ranging from high-interest debt (10-15% interest payments, risking forced selling) to convertible notes (risk of dilution but lower immediate cash obligations). Proof-of-Stake (PoS) treasuries (like ETH holders) can potentially use staking yield to service debt, a mechanism unavailable to Proof-of-Work (PoW) Bitcoin holders.
- Emerging Financial Engineering: The next phase involves using existing Bitcoin reserves as collateral in institutional lending markets to acquire cash-flowing assets (like short-dated Treasuries or cash-flow businesses) to service debt or dividends, adding a layer of management execution risk.
3. Market/Investment Angle
- Significant Accumulation: Bitcoin Treasury companies collectively hold approximately 725,000 BTC, which is over half the amount held by all spot Bitcoin ETFs combined, representing about 3.64% of the total Bitcoin supply.
- Market Impact is Lower Than Perceived: On average, these treasuries accounted for only 60 basis points (0.6%) of daily Bitcoin trading volume/price impact. However, on specific announcement days (e.g., MicroStrategy purchases), this impact could spike up to 9%.
- Convertible Debt Arbitrage: A significant portion of the capital raised ($8.2B+ in equity offerings) is likely tied up in convertible debt arbitrage strategies, where sophisticated players hedge delta/duration and go long volatility, creating a “firewall effect” that can temporarily boost premiums.
4. Notable Companies/People
- Will Clemente & Ben Harvey (Keyrock): Authors of the research report, providing granular analysis of the sector.
- MicroStrategy (MSTR): Highlighted as the pioneer whose successful strategy has spawned numerous copycats. The discussion detailed their complex preferred share structures (SDRK, SDRF, SDRD) with varying dividend and conversion terms.
- DJT (Trump Media & Technology Group): Mentioned as a recent, high-profile entrant into the treasury space.
5. Regulatory/Policy Discussion
The discussion touched upon the macro environment (inflation, interest rates) influencing market froth. While not a direct regulatory deep dive, the reliance on public equity markets for capital raises highlights the intersection of traditional finance structures (debt, preferred shares) with a novel asset strategy. The ability of PoS companies to generate yield via staking was framed as a potential narrative advantage over Bitcoin in servicing corporate obligations.
6. Future Implications
The conversation suggests the Bitcoin Treasury model is evolving beyond simple “Bitcoin exposure vehicles.” They are becoming “accumulation machines” leveraging financial engineering to grow BPS. The next frontier involves these entities using their Bitcoin holdings as collateral to generate yield or acquire cash-flowing businesses, shifting the investment thesis from pure Bitcoin correlation to evaluating management execution skill.
7. Target Audience
This episode is highly valuable for Crypto/Web3 Investment Professionals, Equity Analysts, Institutional Investors, and sophisticated Retail Investors interested in understanding the mechanics, risks, and performance drivers of publicly traded Bitcoin-proxies.
🏢 Companies Mentioned
đź’¬ Key Insights
"Whenever the percentage of total open interest for futures in crypto, Alt flips that of Bitcoin, so basically anything non-BTC or ETH, that has been a very good local top indicator on a couple of week basis."
"Suddenly, when vol spiked up in the market, we are seeing premium on these kind of debt shoot through the roof, which creates a bit of a firewall effect, right? Because then that CEO or whoever else can go and harvest that premium, increase their Bitcoin pressure, and then suddenly that premium goes up even more because people think, 'Great, I can afford to pay more of a premium for future growth.'"
"A lot of what is going on there is it is convertible debt arbitrage. Right? So, um, MicroStrategy has, I think it is even in the top 86% of open interest in options; it is above Microsoft. It is absolutely in terms of options open interest."
"Now there is kind of this conversation around these things of, can you acquire—use the Bitcoin on the balance sheet that you have, that you have taken on—and can you go out and acquire even, you know, even short-dated treasuries, right, and pull some sort of yield, or, you know, go out and purchase cash-flow businesses to then, you know, use that to service any debt or dividend payments as you have to make?"
"Something like that is strictly reliant on this idea that you are going to have this perpetual premium to NAV that you are able to withstand. And, you know, if that kind of reflexive loop starts to, starts to lose momentum, then it could be problematic for those types of structures."
"MetaPlanet where they are taking advantage of, you know, essentially, you know, putting on a, you know, short, short Japanese bonds, long Bitcoin trade by, you know, basically taking advantage of the fact that, you know, Japan is subsidizing their, their, you know, bond market via, you know, yield curve control."