ETH? Brotha, eww. Don't get rekt by ETH treasury scams. Learn why the Bitcoin standard is the only way for corporate treasuries. The Hurdle Rate breaks down the coming altcoin implosion.
Timestamped Overview
[00:00:31 - 00:08:58] The War for Bitcoin Talent
- Tim kicks off the episode by noting the five-year anniversary of Strategy’s (formerly MicroStrategy) giga-chad Bitcoin strategy, which has seen 100x growth.
- Ben Werkman discusses Bo Hines leaving the government for the private sector, calling it a predictable move in the “war for talent” as the Bitcoin industry commands top minds.
- Matt Cole agrees, stating government service should be temporary, not a career for grifters. He notes that while a strategic Bitcoin reserve is the goal, the political will isn’t there yet.
- The guys speculate on where Bo might land, with Jeff Walton guessing a Bitcoin treasury company, while Ben suggests major exchanges or stablecoin issuers with deep pockets are also in the running.
[00:08:58 - 00:12:53] The ETH Treasury Scam Unpacked
- Jeff Walton addresses the recent hype around Ethereum treasury companies, fueled by fiat-pumper Tom Lee.
- He breaks down the simple math: for an ETH treasury company like Bitminer (BMNR) to even touch Strategy’s network dominance, it would need to raise nearly $12 billion.
- Jeff points out that raising this kind of capital through debt is incredibly difficult for a shitcoin-backed company, as Bitcoin has a massive head start and far more institutional trust.
- The guys conclude that mathematically and structurally, the Ethereum ecosystem is light-years behind Bitcoin and will never catch up.
[00:12:53 - 00:19:03] House on Rock vs. House on Sand
- Matt Cole expresses long-term concern for ETH treasury companies, calling them a house built on sand. He explains the Bitcoin treasury thesis works because it’s a hedge against fiat debasement.
- Matt argues that the ETH thesis is tied to shaky network usage and stablecoins, which could easily be disrupted by a competitor like Solana or Tron. It’s not digital gold; it’s a disaster waiting to happen.
- Ben Werkman hammers the point home, highlighting Ethereum’s history of constant changes, lack of certainty, and centralized control. You can’t build a long-term treasury on an asset that’s constantly changing its rules.
- Ben contrasts this with Bitcoin’s stability, predictability, and clear use case as a hedge against monetary debasement, making it desirable to everyone from individuals to nation-states.
[00:19:03 - 00:27:27] Why Plebs Get Rekt on Altcoins
- Jeff Walton explains the story an ETH treasury company would have to sell to capital markets is weak and unconvincing compared to the clear, powerful narrative of a Bitcoin treasury.
- Tim Kotzman asks if this is just another case of the market confusing “crypto” with Bitcoin. Jeff agrees, saying people feel they missed the boat on Strategy and are now gambling on riskier shitcoin alternatives.
- Matt Cole warns that this is a classic crypto cycle where average investors, driven by greed, pile into the “next big thing” after missing the initial move, only to get completely rekt when the market turns.
- Ben Werkman suggests this is the new rotation: from Bitcoin to alt season, and now from Bitcoin treasuries to altcoin treasuries. He calls investing in altcoins “playing chicken with innovation.”
[00:27:27 - 00:32:29] The Inherent Centralization of Shitcoins
- Jeff Walton poses a thought experiment: what if one company buys up 95% of a shitcoin like Ethereum? This would expose its centralized nature and likely destroy its value proposition.
- Ben Werkman points out the absurdity of people claiming Strategy is “centralizing” Bitcoin with a mere 3% of the supply. It shows a fundamental misunderstanding of scale and decentralization.
- Ben argues that if a company can accumulate a huge percentage of a coin without the price moving, it’s a massive red flag. It means nobody else wants it.
- In contrast, acquiring Bitcoin is a battle because everyone wants it, proving its desirability and robust, competitive market.
[00:32:29 - 00:41:15] The Unconference: A Citadel for Signal
- Tim Kotzman explains the concept of his “Unconference” in New York, inspired by a successful event in Santa Monica.
- Unlike boring fiat conferences, the Unconference is participant-driven, where the audience contributes to the discussion, creating a “real-life Twitter space” for high-signal conversation.
- Tim notes the incredible global response and cooperation between supposedly competing Bitcoin companies, a stark contrast to the cutthroat world of traditional finance.
- The crew discusses how the Bitcoin space offers massive opportunities for anyone willing to put in the work and prove their value, as evidenced by Tim’s own rapid rise.
[00:41:15 - 00:51:42] Five Years of Giga-Chad Strategy
- The guys circle back to celebrate the 5-year anniversary of Strategy’s Bitcoin strategy.
- Jeff Walton highlights the mind-boggling numbers: from a $500 million company to holding $75 billion in Bitcoin, averaging $400 million a day in value creation.
- Ben Werkman reflects on how Strategy unlocked creativity and forced investors to think differently, breaking free from outdated financial models that don’t apply to Bitcoin.
- Matt Cole concludes that following companies like Strategy is like getting a Ph.D. in finance, and hilariously notes that Vanguard now owns a massive stake in MSTR, sneaking Bitcoin into their clients’ portfolios against their own anti-crypto rules.
Notable Quotes
The Bitcoin Standard
The whole game with regard to Bitcoin is that we are debasing fiat currencies and if you can take intelligent long-term leverage on one side and buy Bitcoin on the other side, that that trade will work out over the long run. That trade does not work with altcoins.
Matt Cole @ColeMacro
Altcoin Risk
My concern always falls back to stability and certainty. And when I look at the history of Ethereum, I see anything but stability and certainty.
Ben Werkman @BenWerkman
Strategy's Success
On average, over the last 1,825 days, Strategy's made $400 million a day in either capital raise or appreciation of the assets that they hold. And that is just an insane number.
Jeff Walton @punterjeff
Market Cycles
What I've seen is that almost every average investor loses money... they come in and like, I'm too late. What's the next thing? Because I missed strategy. And so the risk curve will likely buy many of these altcoin treasury companies. And then how it's worked historically... it just ends in shambles.
Matt Cole @ColeMacro
Bitcoin Education
I've learned so much in following the stock more than I've learned in MBA or in college taking finance classes because it's actual real-life application.
Jeff Walton @punterjeff
Thinking Differently
To become a Bitcoiner, you already had to think differently. You had to allow yourself to get out of the traditional norms... what you've learned is going to put you in a cage. And you need to escape from that cage if you're going to achieve success yourself.
Ben Werkman @BenWerkman
The War for Talent
This is one of those industries now where there's a war for talent. And Bo is obviously one of those guys because of the visibility he had working with the White House.
Ben Werkman @BenWerkman
Vanguard's Hypocrisy
Vanguard is now the second largest holder of MSTR, which is just like, hilarious because they won't allow their clients to buy Bitcoin, but yet strategy and Bitcoin treasury companies like ours are, you know, sneaking into the portfolios of their clients.
Matt Cole @ColeMacro
Questions & Answers
Question 1: Why are Ethereum (ETH) treasury companies getting so much attention?
Answer: The speakers explain that the attention is largely driven by fiat talking heads like Tom Lee, who has been publicly promoting them. This hype attracts investors who feel they missed the massive gains from Strategy’s Bitcoin strategy and are now looking for the “next” big thing, causing them to move further out on the risk curve into shitcoins.
Question 2: Can an ETH treasury company realistically compete with a Bitcoin treasury company like Strategy?
Answer: Jeff Walton, Matt Cole, and Ben Werkman all conclude that it’s highly unlikely. Jeff Walton breaks down the math, showing that an ETH treasury company would need to raise an immense amount of capital just to match a fraction of Strategy’s dominance. Furthermore, Matt and Ben argue that the fundamental thesis is flawed. An ETH treasury isn’t a hedge against monetary debasement, its protocol is unstable and changes frequently, and it faces constant threats from competing technologies, making it a house built on sand.
Question 3: What is the primary risk of using an altcoin for a corporate treasury instead of Bitcoin?
Answer: The speakers identify several key risks. Matt Cole states the core problem is that altcoins are not tied to the debasement of fiat currency, which is the foundational thesis for a Bitcoin treasury. Ben Werkman adds that altcoins like Ethereum lack stability and certainty, as their underlying technology, tokenomics, and governance can and do change. This technological risk means they could be made obsolete by a newer, cheaper, or faster competitor, making them an unreliable long-term store of value.
Question 4: What has been the impact of Strategy’s Bitcoin strategy over the last five years?
Answer: The speakers describe the impact as monumental. Jeff Walton points to the astonishing financial performance, growing from a $500 million company to holding over $75 billion in Bitcoin. Ben Werkman emphasizes that Strategy has forced investors to think differently and creatively, breaking free from outdated financial models. This has provided a real-world education in capital markets, making finance cool again and creating a playbook for other companies to follow onto the Bitcoin standard.
People and Organizations Mentioned
- Bo Hines: A former White House advisor for digital assets. Mentioned because he is leaving his government role to move to the private sector, highlighting the intense “war for talent” in the Bitcoin space.
- Strategy: The pioneering public company, led by Michael Saylor, that adopted a Bitcoin treasury strategy. Mentioned frequently as the benchmark for success and the trailblazer for the entire corporate Bitcoin movement. Its 5-year anniversary was a key discussion point.
- Tom Lee: Co-founder of Fundstrat Global Advisors. Mentioned as a Wall Street analyst who is now publicly pumping the Ethereum treasury narrative, which the speakers view as a misguided and risky thesis.
- Bitminer (BMNR): An Ethereum treasury company. Used as the primary example to compare the scale, math, and viability of an ETH treasury versus a Bitcoin treasury. The consensus is that it’s a weak imitation.
- Circle: A digital financial technology firm and the issuer of the USDC stablecoin. Mentioned as a potential destination for talent like Bo Hines due to their deep pockets and political interests.
- Fred Krueger: A Bitcoin investor and personality. Mentioned as the organizer of the Santa Monica Unconference that inspired Tim Kotzman’s event.
- Michael Saylor: Co-founder and Executive Chairman of Strategy. Mentioned as the keynote speaker for Tim’s upcoming Unconference. The giga-chad who started it all.
- Andy Constan: Founder of Damped Spring Advisors. Mentioned as a no-coiner critic who still calls Strategy a “Ponzi scheme” despite being wrong about Bitcoin for years. A classic example of staying poor.
- Lynn Alden: Investment strategist. Mentioned as the host of the podcast where Andy Constan made his bearish comments.
- Vanguard: One of the world’s largest investment companies. Mentioned because they hypocritically block their clients from buying spot Bitcoin ETFs but have become the second-largest institutional holder of Strategy (MSTR), thereby giving their clients back-door Bitcoin exposure.