Explore MicroStrategy's Bitcoin journey in True North Episode 10. Simple insights on market rallies, quantum risks, and future trends for beginners.
Timestamp Overview
[00:00:25 - 00:03:02] Introduction and Disclaimer
- Jeff Walton welcomes viewers to Episode 10 of MicroStrategy True North, highlighting the stock’s complexity involving topics like debt, Bitcoin, and politics.
- The group discusses the current stock price at $411.40 and Bitcoin at $101,300, noting positive trends in corporate Bitcoin adoption.
- Soleil Nitu provides a disclaimer that the content is not financial advice and encourages personal research.
[00:03:02 - 00:07:09] Merch Announcement and News Updates
- Jeff Walton announces new True North merchandise through HODL Shop, with proceeds supporting young analysts attending a 2025 conference.
- The team shares news about Vancouver becoming Bitcoin-friendly and Microsoft’s low shareholder vote on Bitcoin assessment.
- Soleil Nitu compares Microsoft’s rejection to a movie scene, suggesting it shows resistance despite potential benefits.
[00:07:09 - 00:12:41] Corporate Bitcoin Strategies and Comparisons
- Soleil Nitu and Jeff Walton discuss how Microsoft’s decision might lead to future regrets if competitors like Tesla succeed with Bitcoin.
- Adrian Morris explains that suing companies for not maximizing value is unlikely unless negligence is proven.
- Grain of Salt compares historical company failures like Sears to current tech giants ignoring Bitcoin changes.
[00:12:41 - 00:17:21] Technological Shifts and Bitcoin’s Role
- Jeff Walton mentions MicroStrategy’s market cap growth from $1 billion to $100 billion since adopting Bitcoin.
- Adrian Morris predicts AI and robotics as future tech epochs, noting Nvidia may not need Bitcoin due to its AI focus.
- Grain of Salt emphasizes Bitcoin’s importance for younger generations facing debt, unlike wealthy individuals.
[00:17:21 - 00:23:02] Generational Perspectives and Market Apathy
- Jeff Walton praises older Bitcoin adopters and criticizes traditional views on assets.
- Grain of Salt warns that post-QQQ inclusion, new buyers will be late to significant gains.
- Adrian Morris and Grain of Salt discuss apathy in large companies like Microsoft toward Bitcoin innovation.
[00:23:02 - 00:28:24] Bear Sightings and Criticisms
- Jeff Walton highlights “bear sightings” from critics lacking positions or research on MicroStrategy.
- The team mocks uninformed commentators like Jason Calcanis for overstating debt without understanding.
- Soleil Nitu notes critics should admit ignorance instead of spreading misinformation.
[00:28:24 - 00:34:34] More Bear Critiques and Bitcoin Fundamentals
- Jeff Walton and Grain of Salt challenge bears to short the stock if confident, emphasizing noise without action.
- Grain of Salt explains intangible assets like patents, comparing them to Bitcoin’s value.
- Jeff Walton stresses Bitcoin’s programmability and finite nature, contrasting it with infinite assets like domain names.
[00:34:34 - 00:41:59] Paradigm Shifts and Catalysts
- Jeff Walton describes Bitcoin as a paradigm shift, similar to oil replacing whale oil in history.
- The group discusses QQQ inclusion announcement on December 13, expecting stock boosts from passive investments.
- Soleil Nitu notes Sailor views inclusion positively but not essential for MicroStrategy’s success.
[00:41:59 - 00:47:33] QQQ Inclusion Impacts
- Jeff Walton compares to Tesla’s S&P 500 addition, where front-running led to significant gains.
- Adrian Morris estimates 3-7% near-term price increase from inclusions, with larger long-term effects.
- Dan Hillery warns that being right on inclusion doesn’t guarantee price direction due to volatility.
[00:47:33 - 00:54:23] Capital Raises and Leverage
- Jeff Walton highlights $15.6 billion raised in Q4 2024, reducing leverage to 17% at current Bitcoin prices.
- Adrian Morris views low Bitcoin prices as catastrophic scenarios beyond just MicroStrategy’s concern.
- The team notes permanent capital from ATM sales strengthens the balance sheet against downturns.
[00:54:23 - 01:18:36] Quantum Computing Threats to Bitcoin
- Adrian Morris debunks quantum computers hacking Bitcoin, explaining technical limitations like instability and memory issues.
- Grain of Salt adds that easier targets like banks would be prioritized over Bitcoin.
- Jeff Walton questions economic sense in attacking Bitcoin versus buying it outright.
[01:18:36 - 01:27:13] Quantum Discussion Continuation
- Adrian Morris clarifies quantum uses for theoretical applications, not brute-force hacks.
- The group humorously notes quantum hype often stems from research funding needs.
- Soleil Nitu jokes about understanding quantum as both knowing and not knowing simultaneously.
[01:27:13 - 01:39:49] ATM Usage and Bitcoin Yield
- Dan Hillery analyzes ATM sales as 7% of weekly volume, adjusting dynamically.
- Grain of Salt observes a 10x increase in Bitcoin acquisition rate recently.
- Jeff Walton ties this to potential earnings per share growth under new accounting rules.
[01:39:49 - 01:49:32] Earnings and NAV Premium
- Dan Hillery calculates annualized Bitcoin yield at 842%, leading to high potential earnings.
- Jeff Walton explains NAV premium trading strategies between MicroStrategy and Bitcoin ETFs.
- The team views high premiums as signs of growth, not overvaluation like in banks.
[01:49:32 - 02:14:25] Questions, Options, and Wrap-Up
- Jeff Walton answers on FASB showing full unrealized gains in retained earnings.
- The group advises buying Bitcoin alongside MicroStrategy holdings for diversification.
- Soleil Nitu promotes covered calls strategically, while Jeff Walton teases future volatility.
Notable Quotes
Bitcoin Adoption
We've got more corporations adopting a Bitcoin treasury strategy.
Jeff Walton @punterjeff
Disclaimer
While the information presented may be amazing, it is not to be construed as financial advice.
Soleil Nitu @nithusezni
Microsoft Vote
Point five five percent said yes. Like, oh, we'd rather die. Like, OK, die then.
Soleil Nitu @nithusezni
Company Failures
We've seen this before companies that have done this and for whatever reason the management cannot just understand that they are late and it is a problem.
Grain of Salt @Z06Z07
AI Disruption
The AI rail hasn't even started yet. People think it's overheated. We are maybe 3% of the way into how disruptive that's gonna be.
Adrian Morris @Adrian_R_Morris
Generational Wealth
The person graduating college with two, $300,000 in student loan debt. The only way they can get ahead out of the negative net worth that they have is not by buying stocks.
Grain of Salt @Z06Z07
Bear Challenges
I dare you take the other side of the trade. Just do it.
Grain of Salt @Z06Z07
Bitcoin Programmability
I learned last summer that I knew it was programmable, but I didn't know how.
Jeff Walton @punterjeff
Quantum Myths
Anytime you read this bullshit about a quantum computer hacking Bitcoin, look, I wrote a 30-page paper on it.
Adrian Morris @Adrian_R_Morris
Bitcoin Yield
These numbers that they're hitting, 842% annualized BTC yield, if they continue to acquire Bitcoin at the rate at which they've done so through November.
Dan Hillery @hillery_dan
NAV Premium
I think we will see higher highs and higher lows and we'll see this almost move like a stock in perpetuity kind of grinding upwards.
Jeff Walton @punterjeff
Covered Calls
If you're mechanically selling them, it'll probably underperform just by and hold if you're just kind of reckless with it.
Soleil Nitu @nithusezni
Options Expiry
There's more incentive to exercise those positions than to sell the options, enroll them, or move them forward.
Jeff Walton @punterjeff
Questions & Answers
Question 1: What happens with FASB adoption in Q1 2025 regarding earnings reporting?
Answer: Jeff Walton explains that all existing Bitcoin gains will go to retained earnings at the end of 2024, with Q1 2025 gains or losses rolling through net income based on Bitcoin price changes.
Question 2: What advice for someone with significant MSTR position but no Bitcoin?
Answer: The team advises buying Bitcoin to get off zero, emphasizing learning through cold storage transactions for better understanding of the technology.
Question 3: How does QQQ inclusion affect the stock price?
Answer: Adrian Morris notes typical 3-7% near-term increases from inclusions, with larger long-term impacts, while Jeff Walton compares it to Tesla’s front-run gains.
Question 4: What is the impact of covered calls becoming popular?
Answer: Soleil Nitu suggests strategic use could outperform holding, but recklessness may underperform; popularity might attract more buyers seeking income.
Question 5: What dynamics around January 17, 2025 options expiry?
Answer: Jeff Walton and Grain of Salt discuss potential exercises of deep in-the-money options, possibly leading to market maker borrowing and gamma squeezes if shares are scarce.
People and Organizations Mentioned
- Jeff Walton: Host of True North podcast, discusses MicroStrategy strategies; known as @punterjeff on X, active in Bitcoin community.
- Soleil Nitu: Co-host, provides disclaimers and analogies; @nithusezni on X, focuses on Bitcoin education.
- Adrian Morris: Guest expert on tech and quantum, debunks myths; @Adrian_R_Morris on X, investor in quantum stocks.
- Grain of Salt: Guest analyzing markets and history; @Z06Z07 on X, emphasizes Bitcoin for younger generations.
- Dan Hillery: Guest on data and yields; @hillery_dan on X, creator of MSTR tracker tool.
- Michael Saylor: MicroStrategy CEO, referenced for Bitcoin strategy; founder of MicroStrategy, prominent Bitcoin advocate.
- Vancouver City Council: Mentioned for Bitcoin-friendly motion; Canadian municipal body promoting crypto innovation.
- Microsoft: Discussed for low Bitcoin vote; tech giant, led by Satya Nadella, major in software and cloud.
- Tesla: Compared for market inclusions; EV company led by Elon Musk, holds Bitcoin on balance sheet.
- Nvidia: Noted for AI focus over Bitcoin; semiconductor leader, CEO Jensen Huang, key in AI boom.
- Amazon: Historical comparison to disrupting Sears; e-commerce giant founded by Jeff Bezos.
- MetaPlanet: Adopting Bitcoin treasury; Japanese firm, similar to MicroStrategy’s strategy.
- Riot Blockchain: Miner using Bitcoin strategy; U.S.-based crypto mining company.
- Mara (Marathon Digital): Miner adopting Bitcoin; focuses on Bitcoin mining and holdings.
- Similar Scientific: Buying Bitcoin; likely Semler Scientific, health tech firm adding Bitcoin reserves.
- HODL Shop: Merch partner; online store for Bitcoin-themed products.
- All In Podcast (Jason Calcanis): Criticized for misinformation; tech podcast with hosts like Calcanis, investor and podcaster.
- Andy Constan: Bear sighting mention; financial analyst, known for market commentary.
- Michael Liebowitz: Critic of MicroStrategy; likely Horowitz, economist or commentator.
- DJ Quantum: Bear on fraud claims; pseudonymous X user spreading FUD.
- Fred Krueger: Now buying MSTR; Bitcoin proponent, shifted views on MicroStrategy.
- Donald Trump Jr.: Quoted on Bitcoin; son of former president, crypto supporter.
- Shakira: Tax issue example; singer, faced Spanish tax disputes.
- Warren Buffett: Apathy example; Berkshire Hathaway CEO, critic of Bitcoin.
- Blockbuster: Failure analogy; defunct video rental chain, disrupted by Netflix.
- Sears: Disruption example; former retail giant, bankrupted by online shifts.
- Netscape: Browser history; early internet company, acquired by AOL.
- Mark Anderson: Likely Marc Andreessen, investor in a16z, early Netscape involvement.
- Apple: Potential Bitcoin adopter; tech giant, CEO Tim Cook owns crypto.
- Google: Quantum computing advances; Alphabet subsidiary, leads in AI and quantum research.
- Chase Bank: Easier hack target; JPMorgan Chase, major U.S. bank.
- Rob Hamilton: Bitcoin coding demo; Bitcoin educator or developer.
- Alan: 82-year-old Bitcoin holder; community member with economics background.
- Howard: Older Bitcoin enthusiast; former psychiatrist active in community.
- Kristen Kombucha: Bear spotter; community member highlighting critics.
- Keir Retire One: Bear sighting contributor; X user pointing out podcast FUD.
- Andy Archer: Bear sighting; community member on critics.
- Michael Sullivan: Interaction with bear; community participant.
- Richard Byworth: Convertible debt expert; likely finance professional interviewed on bonds.
- Stoker IO: CMSTR creators; inspired by Blockstream, tokenizes assets.
- Blockstream (Adam Back): Collateral for CMSTR; Bitcoin company, Back invented Hashcash.
- James Invest Answers: ARB strategy user; YouTuber on investments.
- Colleen: True North helper; community support role.
- Steve Ballmer: Microsoft shareholder; former CEO, owns Bitcoin personally.
- Bill Gates: Microsoft reference; co-founder, philanthropist via Gates Foundation.
- Jesse: Interviewer mention; likely podcaster in Bitcoin space.
- Christophe: Difficulty adjustment comment; community member.
- Ben Warpman: Rethink positions; likely Bitcoin thinker.
- Eric: Stock performance question; community asker.
- Smoldemort: Comment on hypothecation; pseudonymous user.
- Vanguard: Betting against Bitcoin; investment firm managing trillions.
- Russell 1000: Index inclusion; tracks large-cap U.S. stocks.
- MSCI World Index: Global index; includes international equities.
- S&P 500: Benchmark index; key U.S. stock measure.
- QQQ (Invesco QQQ Trust): ETF tracking Nasdaq-100; potential MicroStrategy inclusion.
- IBIT: Bitcoin ETF; iShares Bitcoin Trust by BlackRock.
- CMSTR: Tokenized MSTR; collateralized product for trading.
- Ledger: Hardware wallet; criticized for not being open-source.
- Trezor: Hardware wallet; alternative for cold storage.
- Gabe Plotkin (Melvin Capital): Short squeeze example; hedge fund closed after GameStop losses.
- Rockefeller (Standard Oil): Paradigm shift analogy; oil tycoon disrupted whaling industry.
- Fred Trump: Real estate reference; father of Donald Trump, built family wealth.
- Beatles: IP rights example; band sold music catalog for billions.
Links Mentioned
- HODL Shop (Merchandise site mentioned for True North products)
- MSTR Tracker (Tool for tracking MicroStrategy data, referenced by Dan Hillery)