Bitcoin Magazine CEO and conference host David Bailey is leading a new bitcoin (BTC) treasury company, Nakamoto, that is similar to MicroStrategy and announced its merger onto public markets at 7am Monday morning.
By 9:30am, traders were valuing the company at over 23X its forecasted BTC holdings.
However, it’s been crashing ever since. Shares closed Wednesday’s trading session down 66% from its initial high.
Today, incoming CEO Bailey decided to explain why Nakamoto, unlike MicroStrategy, has a plan to possibly sell the BTC in its treasury.
Bitcoin treasury companies, new and improved
In a round of TV interviews after announcing the listing on public markets, Bailey repeated a familiar refrain inculcated over years of listening to MicroStrategy founder Michael Saylor.
Specifically, he promised to reward Nakamoto shareholders with an ever-increasing quantity of BTC per share.
Instead of using profits to make those purchases like a traditional business, however, Bailey explained that Nakamoto would focus on offering financial products to increase leverage, acquire foreign businesses, advertise to investors through his magazine and conferences, and conduct other offerings to raise capital.
Read more: The corporate interests taking over Bitcoin development
Already a curious explanation — yet still similar to Saylor’s explanations of MicroStrategy — a recent cohort of BTC treasury companies has also promised to accrete BTC per share on a fully diluted basis through, essentially, financial engineering.
For what it’s worth, Bailey’s company appears no different in this regard.
A treasury of bitcoin that might be sold
However, Bailey has promised something this week that no other BTC treasury company has ever promised: He would sell BTC under the right circumstances.
Initially, some listeners thought the admission was a vocal gaffe or simply a mistake. However, he appears quite serious about his promise.
Indeed, in a late-night tweet after repeating the warning several times this week, Bailey unambiguously asked his fans to explain why he shouldn’t sell BTC.
In Bailey’s mind, there’s a compelling reason to sell. If the share price of Nakamoto were to decline below the value of the BTC on its balance sheet, then he believes he would have encountered a free money glitch.
He could sell 1 BTC and buy more than its value worth of Nakamoto shares.
Other people were less convinced. Understandably cautious after observing years of fraud and corruption — perennial features of the crypto industry — many people shared their concerns as comments below Bailey’s post.
“Because then people don’t assume your BTC is permanent capital,” posted MicroStrategy bull Gladiator. “Who would get rid of hard money to buy a paper share in a company?” asked another.
Some raised concerns about taxes and execution risks. “Don’t really see the point of giving up my BTC in cold storage for an IOU,” warned one.
Despite these comments, Bailey seemed entirely unmoved in his conviction that selling BTC for cheap equity is a sound decision.
“My assessment of the comments is people don’t understand the difference between arbing and trading,” he concluded simplistically.
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