Bobby

I've done some research on Nakamoto. Intuitively, when we invest in Metaplanet, the benefit we receive comes from the increase in BTC per share, especially when normalized at mNAV = 1, where BTC-denominated returns increase relatively— in other words, the effect is that the number of BTC held is increasing through effective operation. If a company like Nakamoto invests in Metaplanet, then when Metaplanet’s BTC per Share increases, the investing company’s effective BTC exposure also increases indirectly, since the BTC is being actively managed and grown. And when that investing company is trading above mNAV = 1, it can raise capital through ATMs or convertible bonds. Although there is some degree of dilution, the indirectly held BTC exposure—through companies like Metaplanet—can grow at a very rapid rate. (Currently, Metaplanet shows a BTC exposure growth effect of about 5x in one year, and up to 11x depending on its mNAV.) What I consider to be a “second-order treasury company” is a company that invests in other firms which themselves experience BTC growth through BTC per share increases— in other words, companies whose BTC exposure grows as a result of owning BTC-yielding companies. Even if the second-order treasury company slightly dilutes its own shares, the growth in BTC exposure may far outweigh the dilution, so the BTC Yield could function very efficiently. A company like Nakamoto, by investing in treasury companies, also plays a role in supporting the capital formation of those companies, which in turn contributes to their BTC per Share increases. Nakamoto benefits from this BTC/share growth effect, raises new capital through equity dilution, and reinvests again. This is what I believe constitutes the indirect “squared” effect of BTC per Share (btc/share²). As for Nakamoto’s indirect BTC exposure— when investing in treasury companies, it effectively gains BTC exposure that increases over time, so it will be interesting to see how this develops.