Bitcoin Treasuries

[fillippone]

Digital Assets just announced quarterly results.
Obviously are good, as largely dependent from BTC price appreciation.

Galaxy Digital, the crypto merchant bank headed by noted crypto evangelist Mike Novogratz, reported net income of $44.3 million in the third quarter of 2020, up from a loss of $68.2 million in the year-ago period.

• Galaxy Digital's total assets eclipsed $536 million, nearly $225 million of which was in cryptocurrencies.
• Volume at subsidiary Galaxy Digital Trading (GDT) was up 75% year over year to a record $1.4 billion.
• Galaxy attributed the soaring trading volume to momentum in bitcoin (BTC, -0.98%) markets.
• GDT on Friday acquired crypto trading firms DrawBridge Lending and Blue Fire Capital for an undisclosed sum.
• GLXY was trading up 30 basis points around $5.37 CAD (US$4.08) on the Toronto Stock Exchange at press time.

https://www.coindesk.com/galaxy-digital-earnings-q3-2020

What I liked reading this news is that our spreadsheet was actually very good at forecasting the total cryptocurrency held at the firm.
Of course this is also worrying, as this also means they didn’t increase their net exposure during the bull run: some thing I have also expected, and that is worrying, as other firms have been significantly increasing their AUM (Grayscale) or directly held BTC (Square).

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[jaysabi]

We see that despite rising market price the share of the Bitcoin investment is surprisingly not increasing the percentage of the company that can be considered "bitcoin".
Since their last investment, not to overcomplicate the analysis, bitcoin is up 53% (up 16,200 from 10,600), while the share price is up only 37% (195 USD from 145).
I think that, going further, if BTC bull run continues, the market capitalisation will  better track the BTC price, as the "bitcoin investment" part of the firm will overwhelm the "business part", being ultimately the only factor to be priced in.

You should compare these percentages also to the S&P 500 as a comparison, because a 37% rise in the stock price is quit an increase in this period of time.  If the market is up in the same ballpark as the stock, this would suggest the stock is just undergoing the same macro trends as the market generally. However if there is a large disparity, that would further suggest that the rise is attributable to the bitcoin holdings driving the stock price increase as bitcoin appreciates in value. 

[Karartma1]

Digital Assets just announced quarterly results.
Obviously are good, as largely dependent from BTC price appreciation.

Galaxy Digital, the crypto merchant bank headed by noted crypto evangelist Mike Novogratz, reported net income of $44.3 million in the third quarter of 2020, up from a loss of $68.2 million in the year-ago period.

• Galaxy Digital's total assets eclipsed $536 million, nearly $225 million of which was in cryptocurrencies.
• Volume at subsidiary Galaxy Digital Trading (GDT) was up 75% year over year to a record $1.4 billion.
• Galaxy attributed the soaring trading volume to momentum in bitcoin (BTC, -0.98%) markets.
• GDT on Friday acquired crypto trading firms DrawBridge Lending and Blue Fire Capital for an undisclosed sum.
• GLXY was trading up 30 basis points around $5.37 CAD (US$4.08) on the Toronto Stock Exchange at press time.

https://www.coindesk.com/galaxy-digital-earnings-q3-2020

What I liked reading this news is that our spreadsheet was actually very good at forecasting the total cryptocurrency held at the firm.
Of course this is also worrying, as this also means they didn’t increase their net exposure during the bull run: some thing I have also expected, and that is worrying, as other firms have been significantly increasing their AUM (Grayscale) or directly held BTC (Square).

Maybe we have a very simple answer to your question: every net exposure increase must be discussed, probably voted and availed. We could argue that this time they considered their exposure enough already (I don't see them behaving like traders, every time they work on their balance sheet they must follow strict procedures). Thanks for the update

[exstasie]

My reasoning behind the above post is basically they are going to profit more and more from their BTC investment than their "Real" business.
So that they will eventually become a proxy for Bitcoin investment, as the greater part of the company valuation it will simply be the Mark to Market of their Bitcoin Investment at it will outnumber any possible profit of their characteristic business.

Yep. I also think, like RIOT, that they'll act as a proxy for BTC investment because there are so few options available for BTC exposure in the equity markets. When an ETF with low carry cost is finally launched, these kinds of proxies will lose their luster. And so will overpriced instruments like GBTC.

[redsun114]

https://decrypt.co/48277/grayscale-buys-240m-in-bitcoin-in-largest-capital-raise-week-ever   if you check this out, grayscale buys another 240 million dollars worth of bitcoin once again and raising their position in bitcoin. They are really not holding back at this point and they are going to own the largest bitcoin ownership we know since satoshi himself.

I know this is something we really like to see because it means bitcoin is going as mainstream as mainstream can get but it also means that we are giving power to these companies to manipulate the price way too much. Think of a scenario where grayscale suddenly decides to close shop and not be involved with bitcoin anymore? That would destroy the price of bitcoin and that is not a power I would like to give to just one company.

[JayJuanGee]

https://decrypt.co/48277/grayscale-buys-240m-in-bitcoin-in-largest-capital-raise-week-ever   if you check this out, grayscale buys another 240 million dollars worth of bitcoin once again and raising their position in bitcoin. They are really not holding back at this point and they are going to own the largest bitcoin ownership we know since satoshi himself.

I know this is something we really like to see because it means bitcoin is going as mainstream as mainstream can get but it also means that we are giving power to these companies to manipulate the price way too much. Think of a scenario where grayscale suddenly decides to close shop and not be involved with bitcoin anymore? That would destroy the price of bitcoin and that is not a power I would like to give to just one company.

Do "we" have a choice, redsun114?

How are "we" going to stop them?

Break them up, for example,.. into 20 or more pieces and each ONLY has 1/20th (or less) the total amount?

Maybe I am not thinking creatively enough?  What do you have in mind, redsun114?  to stop giving them power?  Buy up the BTC before they do?

[fillippone]

<...>
Think of a scenario where grayscale suddenly decides to close shop and not be involved with bitcoin anymore? That would destroy the price of bitcoin and that is not a power I would like to give to just one company.

I cannot see this scenario. Why should they? They are earning more of 27 bitcoin daily, every given day, every 24 hours, every sunrise on Earth just because they sit on 500k bitcoins.
Why should they stop doing what they are doing?

[doomloop]

At this point grayscale is not using bitcoin as a cash reserve but more like an investment. It shows the world that they are not afraid of buying at 16k neither, when they first bought it at 10k people were saying "of course they would, it went up 50%+ so they made a good decision to buy early" but these guys are buying even at the 3 year all time high as well, ever since early 2018 we haven't seen anything above 15k ever and right now we are at 16k and they are still buying as much as they can.

This is not just cash reserve type of situation, this is literally putting all your money into crypto and I feel like they are going to reach to a point where they will be biggest bitcoin owners in the entire world, since we don't know satoshi and no idea how much Craig Wright has, grayscale could be known biggest in the market.

[inoes]

I found on Reddit a nice website.

https://bitcointreasuries.org/


As I already was keeping track of companies staking Bitcoins, I decided to create my own version of this website, using Google Drive:

Bitcoin Treasuries (Link to Google Spreadsheet)





I opened several threads on the subject:

• MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’
• Square invests 50 million USD in BTC: instrument of economic empowerment
• Everything you wanted to know about Grayscale BTC Trust but were afraid to ask!

I will work to improve this spreadsheet, trying to monitor the trickle down effect kickstarted by Microstrategy decision.
Square was an obvious follower. Now I am really curious who’s going down the same path.

I was actually surprised by this move, in fact MicroStrategy has recognized Bitcoin as a legitimate investment asset that can outperform cash. to dare to make Bitcoin the main holder in the financial reserve strategy. In fact, in 2013, Saylor tended to be less friendly
and do not believe in Bitcoin until it has predicted that bitcoin will die. But in fact, the price of Bitcoin has increased many times over and this year changed their view of the King of Crypto Assets, until they finally made a big investment.

[Karartma1]

At this point grayscale is not using bitcoin as a cash reserve but more like an investment. It shows the world that they are not afraid of buying at 16k neither, when they first bought it at 10k people were saying "of course they would, it went up 50%+ so they made a good decision to buy early" but these guys are buying even at the 3 year all time high as well, ever since early 2018 we haven't seen anything above 15k ever and right now we are at 16k and they are still buying as much as they can.

I think it's both: investment (read insurance policy against a stock market crash) and reserve asset (the same that gold is for central banks).
If bitcoin keeps the promise it will become the asset of choice for companies to show their health status.
Central banks' gold holdings represent the last resort asset if things go wrong, meaning that if countries start offloading their reserve, and don't replenish them means, something is happening. The same could easily happen for these Bitcoin Treasuries. We will see.

[fillippone]

You should compare these percentages also to the S&P 500 as a comparison, because a 37% rise in the stock price is quit an increase in this period of time.  If the market is up in the same ballpark as the stock, this would suggest the stock is just undergoing the same macro trends as the market generally. However if there is a large disparity, that would further suggest that the rise is attributable to the bitcoin holdings driving the stock price increase as bitcoin appreciates in value. 

It’s done. I added this on the spreadsheet.



Sadly the percentage doesn’t looks so good for the moment, but if I could bet on it, I would say it’s meant to grow a lot.

[fillippone]

Next in line: SkyBridge.

Multi-Billion Dollar Fund SkyBridge Capital Might Soon Buy Bitcoin

Skybridge Capital, an alternative assets investment fund run by former Goldman Sachs banker and previously White House official Anthony Scaramucci, just revealed its intention to invest in Bitcoin.

Compulsory follow then is @scaramucci to be notified about investment.

[JayJuanGee]

At this point grayscale is not using bitcoin as a cash reserve but more like an investment. It shows the world that they are not afraid of buying at 16k neither, when they first bought it at 10k people were saying "of course they would, it went up 50%+ so they made a good decision to buy early" but these guys are buying even at the 3 year all time high as well, ever since early 2018 we haven't seen anything above 15k ever and right now we are at 16k and they are still buying as much as they can.

I think it's both: investment (read insurance policy against a stock market crash) and reserve asset (the same that gold is for central banks).
If bitcoin keeps the promise it will become the asset of choice for companies to show their health status.
Central banks' gold holdings represent the last resort asset if things go wrong, meaning that if countries start offloading their reserve, and don't replenish them means, something is happening. The same could easily happen for these Bitcoin Treasuries. We will see.

Yeah, but I did not know about Grayscale fitting in the same exact category as some of the other companies that are actually putting bitcoin into their treasuries and like microstrategy making a BIG move (percentage-wise) in that direction.

Seems that Fillippone already made this point about Grayscale, too.

Does Grayscale own any bitcoin in their actual corporate treasuries?  I am not sure about that.

I believe that Grayscale merely buys when various of their clients buy stakes in their GBTC stock.. and therefore, all (or nearly all) of Grayscales purchases of BTC are backed by client funds.. and accordingly GBTC is a kind of custodian.. even though the clients own the stock rather than the actual bitcoin.. but the BTC are ultimately dedicated to investments that clients had made.

Am I wrong?  Does Grayscale have some amount of corporate treasuries in BTC, too?

Yes, I recall that you, Fillippone, had mentioned that they earn around 27BTC per day by merely managing the funds... which surely is not a small amount of daily income to cover whatever expenses that they might have... which is probably far less than 27 BTC per day.

[fillippone]

.. even though
<...>
 Does Grayscale have some amount of corporate treasuries in BTC, too?

Yes, I recall that you, Fillippone, had mentioned that they earn around 27BTC per day by merely managing the funds... which surely is not a small amount of daily income to cover whatever expenses that they might have... which is probably far less than 27 BTC per day.

You stand correct: the infamous 500,000 BTC Grayscale “owns” are merely custody of their client’s money. That is, the profit of Grayscale is not from the profit of the AUM going up or down, but only for the 2% management fee they collect every year (of course this 2% is greater, for various reasons, when Bitcoin rallies, but this is another reasoning).

The point is that while GBTC (Grayscale Bitcoin Fund) is a traded object and thus obliged to report their balance sheet, I am not sure about Grayscale the managing firm. Because it is on that balance sheet I expect to find those Bitcoin from the collected fees.
I will dig into that trying to figure out for you.
Stay tuned.

[redsun114]

Do "we" have a choice, redsun114?

How are "we" going to stop them?

Break them up, for example,.. into 20 or more pieces and each ONLY has 1/20th (or less) the total amount?

Maybe I am not thinking creatively enough?  What do you have in mind, redsun114?  to stop giving them power?  Buy up the BTC before they do?

"We" have a choice of making sure everyone else buys bitcoin as well, it is not going to suddenly happen and in reality we can't do it because people have to decide on it themselves and we can't cap how much one person or a company can have bitcoin, that is why it is decentralized.

However the solution is simple, have as many people as possible buy bitcoin, not right away, the goal here is ownership, they can all buy in the next 10 years all I care, but as long as we have "billion" people owning bitcoin eventually and more, we could say that we are doing fine and just one company can't hurt us. Still when the huge chunk of the market is owned by one place, that means market is in big danger and could be hurt by the same people as well. Hopefully that will not happen as long as price stands at good levels like this.

[JayJuanGee]

Do "we" have a choice, redsun114?

How are "we" going to stop them?

Break them up, for example,.. into 20 or more pieces and each ONLY has 1/20th (or less) the total amount?

Maybe I am not thinking creatively enough?  What do you have in mind, redsun114?  to stop giving them power?  Buy up the BTC before they do?

"We" have a choice of making sure everyone else buys bitcoin as well, it is not going to suddenly happen and in reality we can't do it because people have to decide on it themselves and we can't cap how much one person or a company can have bitcoin, that is why it is decentralized.

You are coming off as pie in the sky, redsun.  Barry Silbert is appealing to people to use his services because it is one of the ONLY vehicles in which traditional institutional investors can get into BTC through their various heavily regulated funds.

Silbert ended up playing his cards very well in terms of getting into that niche and having institutional players throwing money at him, even at a premium.

Regular peeps do not seem to be enlightened enough, and they buy into a lot of the fearmongering about BTC.. and they even get confused by BTC, so even they are going to go to someone like Barry rather than even attempting to hold their own coins.

However the solution is simple,

Yeah.. right.. easier said than done.. we have less than 1% of world-wide adoption, and we have more informed peeps hoarding larger amounts of stash..

Even someone hoarding 10 BTC is going to be considered to be sitting on a BIG amount of BTC stash compared to the amount that regular peeps are going to be able to garner...

This is the way that the world works, anyhow in some sense... and sure some people are going to come around to bitcoin sooner than others, but we still have a lot of lagging masses.

have as many people as possible buy bitcoin, not right away, the goal here is ownership, they can all buy in the next 10 years all I care, but as long as we have "billion" people owning bitcoin eventually and more, we could say that we are doing fine and just one company can't hurt us.

Yeah, of course, more and more regular peeps are going to get into bitcoin, but they are going to have to continue to pay higher and higher prices in order to get a bit of a stake... and Barry's company is going to continue to accumulate, too.  I doubt anything gets resolved in terms of more fair distribution or trying to direct some kind of more fair distribution..

People who have information and have some kind of means to act on the information are going to get ahead..

Still when the huge chunk of the market is owned by one place, that means market is in big danger and could be hurt by the same people as well. Hopefully that will not happen as long as price stands at good levels like this.

Sure... large holders could turn evil.. that is possible... but again, I cannot really see you proposing any kind of meaningful way to address the issue or the "what if" fear that you seem to be wanting to focus upon.

[Webetcoins]

I found on Reddit a nice website.

https://bitcointreasuries.org/


As I already was keeping track of companies staking Bitcoins, I decided to create my own version of this website, using Google Drive:

Bitcoin Treasuries (Link to Google Spreadsheet)





I opened several threads on the subject:

• MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’
• Square invests 50 million USD in BTC: instrument of economic empowerment
• Everything you wanted to know about Grayscale BTC Trust but were afraid to ask!

I will work to improve this spreadsheet, trying to monitor the trickle down effect kickstarted by Microstrategy decision.
Square was an obvious follower. Now I am really curious who’s going down the same path.

I was actually surprised by this move, in fact MicroStrategy has recognized Bitcoin as a legitimate investment asset that can outperform cash. to dare to make Bitcoin the main holder in the financial reserve strategy. In fact, in 2013, Saylor tended to be less friendly
and do not believe in Bitcoin until it has predicted that bitcoin will die. But in fact, the price of Bitcoin has increased many times over and this year changed their view of the King of Crypto Assets, until they finally made a big investment.

That was on October 9th and not today neither. Because today we are talking about over a billion dollars in bitcoins held by these companies, not just because they have bought more which they did buy more, just recently grayscale increased another 300 million dollars or so all by themselves which makes it nearly a billion, but also bitcoin price has increased since October 9 a lot and made this a huge amount.

So, it is safe to say that bitcoin treasuries in these companies are getting closer to 2 billion dollars or may have even surpassed 2 billion dollars today if there are some we do not know about.

I am also a firm believer that many big companies have invested directly into bitcoin as well, when you put them into calculation we must be in high single digits of billions of dollars.

[fillippone]

.. even though
<...>
 Does Grayscale have some amount of corporate treasuries in BTC, too?

Yes, I recall that you, Fillippone, had mentioned that they earn around 27BTC per day by merely managing the funds... which surely is not a small amount of daily income to cover whatever expenses that they might have... which is probably far less than 27 BTC per day.

<...>
The point is that while GBTC (Grayscale Bitcoin Fund) is a traded object and thus obliged to report their balance sheet, I am not sure about Grayscale the managing firm. Because it is on that balance sheet I expect to find those Bitcoin from the collected fees.
I will dig into that trying to figure out for you.
Stay tuned.

Mission Failed, for the moment.
Grayscale Investments is a private firm. As such, their reporting requirements are very limited. I wasn't able to fine anything about them but some obvious details about their address and managing team, led by Barry Silbert.
But I will try harder.
I just created the @fillippone Twitter account. I'll try to use it to ask Barry (this is the best idea it came to my mind).

[tbterryboy]

You stand correct: the infamous 500,000 BTC Grayscale “owns” are merely custody of their client’s money. That is, the profit of Grayscale is not from the profit of the AUM going up or down, but only for the 2% management fee they collect every year (of course this 2% is greater, for various reasons, when Bitcoin rallies, but this is another reasoning).

If they are taking 2% management fee from their clients, with current rate of bitcoin, the 2% of the client’s 500,000 BTC that are currently in their possession will fetch them around $180 million! So, that’s really a big amount. That aside, whether they are the owners of the 500k BTC or it belongs to clients, it’s still doesn’t change the fact that the money was invested in Bitcoin.

So, it’s still going to boost the market in some ways, and I can’t wait to see that happen soon. The op was talking about how the money that’s being invested can help the BTC market to keep rising.

[jaysabi]

At this point grayscale is not using bitcoin as a cash reserve but more like an investment. It shows the world that they are not afraid of buying at 16k neither, when they first bought it at 10k people were saying "of course they would, it went up 50%+ so they made a good decision to buy early" but these guys are buying even at the 3 year all time high as well, ever since early 2018 we haven't seen anything above 15k ever and right now we are at 16k and they are still buying as much as they can.

This is not just cash reserve type of situation, this is literally putting all your money into crypto and I feel like they are going to reach to a point where they will be biggest bitcoin owners in the entire world, since we don't know satoshi and no idea how much Craig Wright has, grayscale could be known biggest in the market.

Grayscale isn't using bitcoin for anything. Grayscale holds bitcoin for investors. Grayscale does not (to my knowledge) hold any bitcoin itself.  Drawing any conclusions about how good Grayscale thinks Bitcoin is an investment based on how much Bitcoin they're holdings is erroneous because it starts from a false premise that they bought the Bitcoin themselves, which they haven't.  Grayscale holds bitcoin for institutional investors, and charges a ridiculous fee for it.