Is More Bitcoin Per Share True Yield? | Bitcoin 2026

Hello everybody and good afternoon. It's day three in Vegas so props to everybody for being here and kind of grinding through. Appreciate the support. My name is Matt Ballensweig. I'm managing director and head of trading at BitGo, which is one of the world's largest digital asset infrastructure providers. And I'm here with Richard Byworth of BEES Partners and Alexander Blum from Two Prime. So the panel today is called is more Bitcoin per share true yield. And really what we're going to try and do you're going to hear a lot from these two guys here, but we're going to try and unpack how this mechanism is really working today. So the emergence of all these different digital asset and specifically Bitcoin treasury companies are unlocking a incredible amount of value for shareholders and they're doing it in pretty novel ways with the financialization of their balance sheet issuing securities in different forms, whether that's an equity or the form of debt or preferreds to then ultimately buy more Bitcoin such that the value per share continues to rise for investors. Now obviously there's an argument, you know, is that true yield or is it packaged leverage or is it something else altogether? Those are going to be the topics that we dive into and also kind of weighing what that yield kind of looks like from a risk return perspective relative to you know, true yield on spot Bitcoin through either lending that Bitcoin for a fixed interest rate or selling you know, call options on your BTC to generate yield and how those these kind of mechanisms differ. But I guess before we we jump in why don't Richard and Alexander you guys want to introduce yourselves, give a little bit about your background, you know, what your companies are focused on and and your journey in the space. Sure. So Rich Byworth managing partner at BEES Partners. We are an alternative asset management firm. Our key product that we launched at the end of this year we built in our previous firm is a Bitcoin denominated fund of crypto hedge funds designed to make three to eight percent a year in Bitcoin terms. My background is traditional finance. I was a convert trader originally in my early career and then moved into distribution of derivatives across equity derivatives, futures and options, um convertible bonds, and that whole piece. I then I ran a crypto company uh as the CEO for a while, uh which was a little bit difficult and a challenge as a Bitcoin maxi uh running a crypto company. So, uh Yeah, that was a that was one of my first sort of value misalignment problems. Thanks. Uh I'm Alex Blum. I'm the founder and CEO of Two Prime. Uh first of all, I'm just grateful to be here, and thanks for y'all listening in. Uh Two Prime is a Bitcoin financial services business. We focus on generating Bitcoin-denominated returns primarily through derivatives trading. And we're also one of the largest Bitcoin-backed dollar lenders in the world. I think we've originated originated about 3 1/2 billion of uh Bitcoin-backed loans over the last 24 months or so with, you know, no bankruptcies. Uh beyond that, you know, we offer separately managed accounts, so we work with institutional clients, a number of I think nine public companies, and try to solve problems, unique problems for each one. Uh those vary group to group. Awesome. So, I think to to get into the meat, I you know, I've been in the space since 2017. I came from a big macro hedge fund, Bridgewater Associates, kind of took the leap of faith, joined a very nascent market structure in crypto, and have seen has you know, I've seen really from from the center of the ecosystem how yield on Bitcoin has evolved over time and what yield really is and how it's expressed in the space and it started with lenders just lending out their Bitcoin unsecured all the way through 2022. Um and you know, those lenders would would would earn somewhere between 3 to 6% annualized on their Bitcoin, which seemed like a great deal at the time, um until, you know, major credit events happened and caused a a massive contagion uh with the likes of three arrows Alameda and and you know FTX. And you know so what looked like a great return at the time happened to be really picking up pennies in front of a steamroller. Yield since then has matured a lot. You know it's come a long way in the last four years. There's now yield through selling options on spot Bitcoin. There is still over secured lending that happens in the space. There is there is arbitrage between spot and futures markets to capture yield. But more recently there's this concept of kind of yield through BTC accumulation almost a form of digital credit. That's obviously been you know I think popularized by strategy but now there's many other funds and firms out there that are seeing the benefit of that. So the first I guess question I have and maybe Richard you want to start is like how would you frame what this yield is? Mechanically how does it work? How is the value being created? So maybe a little bit more like operationally from a balance sheet perspective like what's going on behind the scenes here to to create that yield for investors? Sure. So essentially what strategy and many other of these companies is doing is arbitraging the capital structure at different times to be able to add more Bitcoin per share for common shareholders. It's three main products that are being used. So sales of common equity at a premium to the NAV. So if you've got your stock trading at a let's say two times premium to the NAV and you go out and you say let's say you're a 200 you got 200 million dollars of Bitcoin you have a 400 million market cap and so you go okay we're going to do another 200 million capital raise. You double the base of your Bitcoin. You were trading at a two times MNAV. You've turned your company from a 400 million dollar company into a 600 million dollar company. Let's just say that your MNAV stays the pricing stays constant. And you've doubled the amount of Bitcoin. >> [clears throat] >> Essentially it's cheaper in terms of MNAV premium because you're now only at 1.5 times. So, we've seen this. Obviously, now we're in a bit of a bear market for these companies, and so it's difficult for them to be raising money on a really meaningful basis when you're trading like strategy at 1.05, 1.2, that sort of um band. And actually, some of the one I'm I'm obviously from Europe, you may be able to tell from my accent. Um but I if you look at many of these companies, they're trading at a discount to MNAV. And so, they can't use that mechanism right now. So, the other mechanism that people are using is convertible bonds. So, convertible bonds essentially have a strike price that is higher. So, you can ratchet that sort of synthetic MNAV higher by leveraging the volatility that Bitcoin gives you as a as a company into a higher strike in the stock. Now, there's a problem with that, obviously. If the stock doesn't go up, you end up with a debt burden in 3 or 5 years time based on either the put or the maturity of that product. So, while you can get some very interesting coupons on this debt, because the volatility is so high, and hedge fund managers will pay you for that volatility, and happily almost do zero coupon bonds, um it it comes with this debt burden. And this is where we've gotten into the third tranche of these products, which Saylor again led through the preferred equity. So, preferred equity is very compelling for this type of strategy because there's no obligation to pay back the notional amount, you just have an obligation to pay the dividend on either a bi-weekly now or a a monthly or a quarterly or an annual basis. Um and that can be quite a meaningful amount, but if you're of the opinion, which I think most investors are who are investing in these companies, that Bitcoin is a long-term sustainable play to the the then obviously this is a way for you personally to do a carry trade to essentially borrow money for the very long term, and then take the upside of Bitcoin. You're sacrificing what is it, 10 to 15% depending on the product, um but you're getting that keger of Bitcoin, which you know, I think historically we've looked at 50, you know, even if you're conservative looking forward to say 25 to 30, you're still making a very nice bit of upside over the longer term. So, those are the three key products that are being used today by these companies, and obviously that all those different functions increase the amount of Bitcoin per share that the common shareholder has. So, I guess part of this panel is to try and define what we should be calling that. My view is that the closest word to this is BTC yield. I think it's an accurate description. Um and so, I think that's where the discussion stops. Yeah, and I think it is a valid argument um because it is almost philosophical in a sense. Is it true yield, like Richard says, or is it you know, dressed as yield but it but it's actually something else. Um Alex, I know you're you're more of the skeptic as it as it comes to this topic. In your perspective, is what Richard's describing yield for investors, or how do you think about like the risk to return of this trade generally? No. >> [laughter] >> Um when I think of the word yield in finance, I think of being compensated for the time value of money, for putting something into a treasury, the most safe, predictable, highest credit rating kind of thing you could participate in. And I think all of these things are describing unsecured lending, covered call selling, capital markets operations through DATs, um have so many layers of risk in them that are almost couldn't be farther away from a like a risk-free return. You have the risk of active management company. You have the risk of keyman risk of Michael Saylor. You have uh regulatory risk. You have all sorts of different capital markets risks. Even how strategies accumulating Bitcoin over time has shifted, their policy around how they created has shifted. And so, I've no I think that's totally a valid way to try to make money or to make more money than um just holding Bitcoin alone. I just think that by calling it yield, especially for a retail product that people are buying with maybe not so much uh financial experience, it's deeply uh misrepresentative of of what's going on. And I don't think people understand what they're getting. They just think, "Oh, I have like um it's Bitcoin plus something else good." And it's really basically an actively managed hedge fund. If If I could just add something to to what Alex said, uh I I completely see your angle. I find it a little bit weird that we're sitting in a Bitcoin conference talking about risk-free rate being US dollar Treasuries. Um the thing is that with US Treasuries, of course, yeah, they can print money to pay the coupon forever. But what you're missing is the risk of the denominate is hidden in the denominator, right? That's the debasement of money as a result of the printing of this oversized debt burden. And I would say that actually the risk-free rate is where the problem is. If you're talking about language and you're getting upset with BTC yield on sort of where you're seeing amplification of the amount of Bitcoin that a company owns by Bitcoin per share, but growth being referred to as BTC yield, I have a way bigger problem with the risk-free rate, right? That's misleading people. That's fiat design language to make you believe in government debt so they can keep refinancing the Ponzi, right? So, if we're going to get focused on language here, let's talk about the fact that the risk-free rate is not, by any definition, a risk-free rate. Yeah, I guess I mean there's there's risk inherent in any sort of yield-bearing asset, I would say, right? Like you're you're getting compensated a return by holding the asset because you're choosing to incur some sort of risk. That those risks can be inherent in in different types of assets in different ways, and for Bitcoin, like I you know, I don't I I'm not going to get on either case and say, you know, it should be called yield yield or should be not. You are earning a yield in some some way, shape, or form. But to Alex's point, you're you're of course taking, right? You're taking risk on the asset, you're taking risk on the counterparty, but you're also doing that when you're lending out your Bitcoin or when you're selling calls or when you're uh you know, trading basis. So, there's there's always some sort of inherent risk. My next question is for the for this specific uh you know, BTC accumulation, obviously we saw it work really well in a bull market. We've seen kind of how it's managed more defensively in in a bear market. But, you know, this is this is it reminds me very much of a reflexive product, right? Where the more people buy, the higher the price goes. The more securities issued, the more BTC bought, the higher the price goes. What Is there a danger to the reflexivity on the way down? Like is this like a house of cards situation? And if it's not, like how is it not going to be? What what what is like the the risk mitigation on Bitcoin trading down to 25, 30K? How do these companies actually then still you know, have shareholders not not get, you know, stuck holding the bag there? So, look, I mean, if we see it trade down to 25, 30K, then, you know, that's half the value of the Bitcoin sort of the value of the Bitcoin cut in half. Saylor at this point, I think he's at 4.2 times over collateralized for the pref products. So, you know, this is another reason a lot of people don't understand why is he running the ATM and the MSTR common is because he's trying to keep that buffer on the baseline of the collateral to keep it sustainable. Now, obviously what he's doing with these prefs is creating a forward carry trade. This is the trade that we all, as long-term believers in Bitcoin, want to be doing, right? And so, Saylor's enabling us to do that by issuing these products. We can't issue infinite product. We're not connected to the fiat ponzi where, you know, uh fixed income managers needs to be allocating, um based on, you know, the various different interest rates, or equity portfolio managers needs to be allocating, despite the fact that the mag seven look completely, you know, uh mispriced in terms of risk. That's the real fiat ponzi that is being unwound into Bitcoin by Saylor. And so, this is the thing, like, when you look at all of this and you say, do I think that Bitcoin can be successful? If you don't think that Bitcoin is going to be successful, you shouldn't be invested in these companies. That's the end of the conversation, really. But, like, if it drops to 20,000, 25,000, you're still absolutely fine with the collateralization rate. Does that then present different risks for lower collateralized companies that are trying to do this? Yeah, that's a different conversation, but I would definitely say that the way that Saylor's running this, he's not taking a huge amount of risk if you believe in the long-term viability of Bitcoin. And how how about the the new product, STRC or stretch, right? So, this is a preferred equity that pays 11 and 1/2% roughly annualized to, um you know, to to the holders of of the asset. And I think it's now being paid twice on a monthly basis, denominated in Bitcoin. But, if you're a general equity holder of MicroStrategy, >> denominated in Bitcoin? Or is it is it cash? >> It's fiat. >> Yeah. Um if you're a common equity holder of MicroStrategy, and there is the continued issuance of STRC, which is senior on the cap table, how like how should you think about that as a common equity holder? I don't think you should feel good. Uh first of all, I think that if you think my concern is even if Bitcoin does well, these stocks can do poorly. Like if you buy into something at a 3x MNAV and Bitcoin goes up and your MNAV contracts to two, you've you're you're fewer Bitcoin in dollar terms of the share price. I think with the stretch product, how is it funded? It's funded through the sale of the equity MSTR. And so if you're holding the main equity because you think Bitcoin's going to go up forever, then funding the debt payments to stretch is against your interest. And then if you think Bitcoin's going up 30, 50% a year, why would I trade it for an 11% upside? If it's so risk-free and so great, why does it have to pay 11 and 1/2% to get people to use it? Like there's a lot of and the whole thing's a brand new mechanism on top of it with a track record of I think eight or nine months. It's just there's a lot of unknowns to the whole thing and I think it is fundamentally the MSTR value and the stretch value are at odds with each other. So, just to clarify a couple of things. So, MSTR doesn't finance the sales of STRC. STRC is >> It does. They sold they fund they sold MSTR to get dollars instead of buying Bitcoin with the sale of MSTR and that debt services the STRC. >> Are you talking about the the US dollar reserve that he's created? They They sold MSTR and kept it in billions of dollars instead of buying Bitcoin like they were doing before in order to service the debt on STRC. So, you practically didn't buy Bitcoin and you bought dollars instead. Yeah, okay. What you need to understand though is that there if you're looking at STRC as a pure credit investor you need to be able to assess and that's literally how fixed income people look at the world is can I get my money back, right? If I could get my money back, I'm fine. So, Saylor's like, "Okay, shut up. I'll raise two and a half billion. I'll pay my coupons for the next two years. It's okay. I can definitely do that." And he did that by the way in one week, right? With common ATM. So, this is This is the thing that a lot of people are failing to understand, that the mechanism, the machine that he has built, is actually extremely powerful. He's able to do this. So, yeah, okay, he put 2.5 billion aside at a 65-70 billion market cap, it's not the end of the world that he's sitting in a portion of cash to just make sure that he's got those coupons so that these people feel a level of comfort to be able to pay the MSTRC coupon or dividend for the next 2 years. And that's the thing. Um so, I think it it's really sort of misleading to try and say that because he's sitting on cash, that's a problem and you're wasting the dilution effect on the MSTR common holders. The thing is, the MSTR common holders want to be, as I keep saying throughout this, they want to be in this carry trade that they cannot engineer themselves personally. Long-term borrowing money, fiat, which is definitely going to keep depreciating. We talked about the risk in US Treasuries, that that's definitely going to keep depreciating over time. So, you want long-term to be exposed to Bitcoin without ever having to pay pay back that debt. No individual is able to do that. Saylor's actually able to do that on your behalf through the common equity. And today, you're buying at what? 1.05 times 1.1 times MNAV? I mean, if there's ever a time to be looking at MicroStrategy stock, it's it's probably now. To me, the thing with disconnect for me is just cuz a company owns a bunch of Bitcoin and I own shares of that company, I cannot redeem my shares for Bitcoin. I can't trade the stretch for Bitcoin. It's all tied to supply and demand of for stretch or for MicroStrategy. Whether or not Bitcoin goes up 10x, if people don't like this stock, the stock will go down and I can't force them to give me Bitcoin back. And so, I think much like we saw before Grayscale had converted to an ETF, this was this risk-free. You buy the shares and you could sell them at a premium in 6 months. But, people lost faith in the product. People had less demand for Bitcoin during a bear market, and the thing traded at a discount to NAV of 30 or 40%. Strategy has more mechanisms to try to stay away from that outcome, but at the end of the day, these products are based on supply and demand for the stock. So, there could be money to service the debt, but if I have in the management company or other aspects, or people just get scared and there's a run on the bank, the product can go below par. And there's a way for Strategy to keep it from going above par, cuz they keep selling more of it. They don't have some clear mechanism to bring it back up other than ratcheting up this interest rate higher and higher and higher, which they've already done, I think, seven times. And the danger of that, too, is I mean, we've seen it play out in massive bear bear cycles in markets before over the last 10 years, where the market can always go lower than you think, and the psychology does matter a lot, especially in some of these locked assets, where there is no redemption mechanism. We saw with GBTC, we've seen it with the Steve ETH trade, we've seen it with other other kinds of instruments, where like when folks want liquidity and there's no redemption mechanism, the price can really really depeg and trade much lower. So, I do think that is inherent risk, but but I think to Richard's point, the the number of ways and the avenues to to utilize the balance sheet to to risk mitigate that is really important. Look, MSTR has traded at a discount to to MNAV before, and I think you know, part of that was because he had straight debt with Silvergate that people were concerned about. His liquidation level was about $3,000. So, when we hit 14 or $15,000 post-FTX, obviously, you know, that's what we call squeaky-bum time. Um, when you start to feel the risk and you're like, "Okay, I'm getting a little bit close to this situation. I'm not very happy about it." So, Saylor was probably looking at that going, "I'm never living through that again." >> Yeah. And this is what's happened. So, he's restructured that debt, and this is why he's not, by the way, doing converts anymore, is because he doesn't want to ever have to have that situation where he has any level of debt obligation, which is why the prefs are a completely different game changer in this situation. I think >> with that. You know, the power of that, yeah, okay, he might eventually have to pay 15% in a in a bear market. But at the end of the day, when it comes back to what we've talked about, if he's well collateralized in the Bitcoin, and you believe in Bitcoin as an investor, there's you should feel quite a level of comfort with this product. >> Yeah, I feel that. >> Welcome to Predict. [music] The world is a market. Everything is a market. Every headline moves the line. Every moment is your market. Call the moves. Bet on your instinct. Your prediction, your edge. Duelbits, predict where everything is a market. In the last 5 minutes we have, let's shift gears a little bit to to look ahead. Um we've kind of dissected, right, like what what is the value creation today? What's the mechanism that that that's functioning? What are the risks and returns associated with it? How do you guys see this whole phenomenon playing out over the next, you know, 2 to 3 years? Are we going to see other incumbents start to start to take market share away from strategy? Um you know, how how does the world look from from a kind of digital asset treasury perspective over the next 2 to 3 years? I don't want to go out further than that because we we all know how crypto works. You can only look so far. But what does it look like? Uh I think that there's a broad range of digital asset treasuries, but I think that I've no direct relationship or like they're not a client of ours currently, but uh like BSTR, they describe themselves as the Berkshire Hathaway of Bitcoin. They're going to try to take Bitcoin they're going to trade it, they maybe acquire companies, create insurance products, and turn this Bitcoin into a productive asset. But represented a way where it's I wouldn't go to Berkshire Hathaway for my yield on my dollars, and I wouldn't go to BSTR for my yield on my Bitcoin, but I would hire an actively managed company to do interesting things and have access to institutional products that I probably can't access, most people can't access by themselves. And so I think you'll see increasing competition to create interesting structured products, build operating businesses inside of companies, manage Bitcoin like a pension fund would manage Bitcoin with a multi-manager diversified portfolio. And I think there'll be a few large winners of that and a lot of big losers. Uh and even if you did all that stuff right, you know, I don't I don't know Berkshire Hathaway's multiple, but um there should be a multiple on repeatable income from creating a real business extrinsic of just arbing your own stock, and I think that's the only sustainable path for a few of these companies, but they're effectively publicly traded actively managed hedge funds, and that's fine. I just wouldn't call it yield, I would call it a publicly traded actively managed hedge fund. Yeah, I mean look, we we can finish on that last point in a second, but I I think for to answer your question, um I think that you're absolutely right. I agree with you that we're going to see treasuries being put to work. One of the reasons we have the fund that we built at at Beast Partners and at our previous firm that we're now moving over there is is essentially because we see this need. Everyone who is a Bitcoiner wants more Bitcoin. Whether you're a Bitcoin treasury company or an individual or even a sovereign, um you want more Bitcoin once you understand what this asset is. And so I think putting Bitcoin to work and trying to create some level of yield around it in the lowest risk possible way, to your point Alex, giving it to professional managers to be able to allocate and eke out these types of returns. That's what we're trying to do. We're trying to target a 3 to 8% return in Bitcoin depending on, you know, the vibrancy of the year and basis expansion, these types of things. But essentially, that's what's going to happen. I think one thing that we haven't talked about is a tool that's underutilized in this space for the Bitcoin treasury companies. >> [snorts] >> If you've got an active ATM, so you're selling stock into the market constantly. And so you're at the end of any week, you're buying Bitcoin with the proceeds of those stock sales. One thing that you can do, which we sort of seen Metaplanet do a little bit, but really haven't done it in in this type of way is pair the ATM with a put underwriting strategy. So at the beginning of the week, you sell one-week puts at the money. You're like, I'm happy to buy Bitcoin at that level. You have a good estimate based on previous weeks and volumes, etc. to be able to estimate how much Bitcoin you're going to be able to buy at current prices, etc. So you just sell that amount of puts. You have your cash coming in. You know you have some level of cash coming in. As long as you're trading at about one times MNAV, this is accretive. So I think this is a tool that hasn't really been properly utilized by the market. As I said, Metaplanet do it to some degree with a very small portion of their stack. Um but I think let's just sort of circle back on what the the subject of this discussion is. And by the way, I think the team at BST AR are absolutely doing the right thing by trying to look at different ways to leverage their Bitcoin to do uh different things and create more value for their investors. But let's just come back to the key point. Bitcoin per year share growth is growth. Like we'll all agree that that is growing the amount of Bitcoin that you have as a shareholder. Right? When I first bought MicroStrategy, it was 2020. I'd been sat in a Bitcoin ETF in my pension. By the way, negative yield, paying 2 and 1/2% annual fee was the only Bitcoin ETF I could get in my pension in the UK. Saylor comes along, 2020, buys Bitcoin on the balance sheet. I'm like, right, I'm switching out. Switch out. If I'd stayed in that ETF product, I'd have been the last 6 years I'd have paid 15% of fees, right? Instead, Saylor's performance has outperformed Bitcoin by 100%. So, I call that yield. I think it's certainly not risk-free, but neither are US Treasuries, by the way. So, you know, what what do we want to call this? Is it BTC carry? Is it BTC accretion? Frankly, I think the best word is yield. >> BTC yield. I think the the one thing we've realized is that there there are clear differences and there there are different ways of viewing kind of the same thing. So, it's all it's all around how you think about that philosophically or practically or you know, based on your own mental model, but we're out of time, unfortunately. Appreciate you gentlemen getting up here. Thanks everybody for listening and great job. >> [music] >> Every year, this community comes together [music] to celebrate, to debate, to build what comes [music] next. And every year, the stage gets bigger. >> [music] >> Sound money, center stage. So, where do you go to celebrate the next chapter in Bitcoin history? [music] You come home. Nashville, July [music] 2027.