In an article in Coindesk, Torbjørn Bull Jenssen, CEO of K33, is critical of Bitcoin Treasury companies that lack a plan beyond buying and holding Bitcoin. Without an operational alpha, the premium on bitcoin treasury companies will collapse, he writes.
In his commentary, Bull Jensen takes as a starting point the big trend of the year, where publicly traded companies are quickly transformed into Bitcoin Treasury tools with high institutional support and strong price expectations. Although Bull Jensen concedes that the trend may seem sensible, he argues that there is a problem: Most of these companies have acquisition plans without a business plan.
Simply bringing in bitcoin funds to hunt for “bitcoin returns” is not a sustainable business model, according to Bull Jensen.
Bull Jensen also poses the question: Why should one invest through a publicly traded company that trades at a significant premium over net asset value (NAV), when almost any investor can buy bitcoin outright? Bull Jensen himself gives the answer: You shouldn't, unless the company has a clear strategy for using its bitcoin in a way investors can't easily copy. Holding BTC must serve an operational purpose. If not, the company should return the capital and allow shareholders to buy bitcoin on their own terms.
The K33 boss also believes that the concept of bitcoin yield, i.e. Percentage increase in BTC per share over time is a niteressant CPI to keep an eye on, but that alone does not justify a premium over NAV. “If an investor's goal is to get maximum bitcoin exposure per dollar invested, the investor should only buy BTC outright,” Bull Jenssen believes.
Bull Jenssen is also not a fan of the trend in which many e-treasury companies raise capital through various types of convertible loans. “The result is a leverage on bitcoin, with full downside risk and limited upside,” he argues.
So what does Bull Jenssen put into a Bitcoin-based business and business model?
"A strong bitcoin balance sheet can serve as a powerful foundation for an operational business. In finance, balance sheets are the basis for lending, trading, structuring, and more, and some of the current Bitcoin treasury companies will likely emerge as financial giants of the future. Brokerage, liquidity provision, collateralized lending and structured products are all examples of operational models that can scale, generate revenue, and justify premium valuations."
According to Bull Jenssen, returns going forward will be measured in Bitcoin. “To beat BTC, companies need to do more than just buy and hold. They need to figure out how to build a Bitcoin-based business,” he concludes.
You can read Bull Jenssen's full comment here at Coindesk.
In an article in Coindesk, Torbjørn Bull Jenssen, CEO of K33, is critical of Bitcoin Treasury companies that lack a plan beyond buying and holding Bitcoin. Without an operational alpha, the premium on bitcoin treasury companies will collapse, he writes.
In his commentary, Bull Jensen takes as a starting point the big trend of the year, where publicly traded companies are quickly transformed into Bitcoin Treasury tools with high institutional support and strong price expectations. Although Bull Jensen concedes that the trend may seem sensible, he argues that there is a problem: Most of these companies have acquisition plans without a business plan.
Simply bringing in bitcoin funds to hunt for “bitcoin returns” is not a sustainable business model, according to Bull Jensen.
Bull Jensen also poses the question: Why should one invest through a publicly traded company that trades at a significant premium over net asset value (NAV), when almost any investor can buy bitcoin outright? Bull Jensen himself gives the answer: You shouldn't, unless the company has a clear strategy for using its bitcoin in a way investors can't easily copy. Holding BTC must serve an operational purpose. If not, the company should return the capital and allow shareholders to buy bitcoin on their own terms.
The K33 boss also believes that the concept of bitcoin yield, i.e. Percentage increase in BTC per share over time is a niteressant CPI to keep an eye on, but that alone does not justify a premium over NAV. “If an investor's goal is to get maximum bitcoin exposure per dollar invested, the investor should only buy BTC outright,” Bull Jenssen believes.
Bull Jenssen is also not a fan of the trend in which many e-treasury companies raise capital through various types of convertible loans. “The result is a leverage on bitcoin, with full downside risk and limited upside,” he argues.
So what does Bull Jenssen put into a Bitcoin-based business and business model?
"A strong bitcoin balance sheet can serve as a powerful foundation for an operational business. In finance, balance sheets are the basis for lending, trading, structuring, and more, and some of the current Bitcoin treasury companies will likely emerge as financial giants of the future. Brokerage, liquidity provision, collateralized lending and structured products are all examples of operational models that can scale, generate revenue, and justify premium valuations."
According to Bull Jenssen, returns going forward will be measured in Bitcoin. “To beat BTC, companies need to do more than just buy and hold. They need to figure out how to build a Bitcoin-based business,” he concludes.
You can read Bull Jenssen's full comment here at Coindesk.
