The Hurdle Rate Podcast✓

In this week’s Hurdle Rate, the crew breaks down Strive’s biggest buy ever, 6,182 BTC to reach 43,000, plus the new $1B $SATS ATM and hitting 61% amplification on $ASST. They also discuss SpaceX’s $SPCX $40B GPU deal, why perpetual Digital Credit beats time-bound chip financing, and whether capital is the last moat. Here’s the latest with @PunterJeff, @Werkman, @IIICapital, @AdamBLiv, and @TimKotzman. Timestamps: 00:00 - Intro 01:39 - 43,000 BTC And The SATS ATM 04:41 - Our Largest Bitcoin Buy Ever 10:35 - Engineering Amplified $BTC 14:25 - Is The Bear Market Over? 21:49 - Inside SpaceX’s $40B GPU Deal 26:57 - GPUs Vs. Bitcoin As Collateral 31:29 - Why Perpetual Beats Time Bound 39:08 - Is Capital The Last Moat? 51:25 - Will AI Labs Hold Bitcoin? 56:05 - The Future Of Income 01:00:27 - Risk Is Mispriced

Strive $ASST’s beta to $BTC: 1.28 over the last 30 days, 1.7 over the last 90, and 1.82 over the last six months. @AdamBLiv explains why that beta expands more as Bitcoin rises, and what hitting 61% amplification means for the common. “You can see the beta really start to expand more as Bitcoin goes up rather than goes down, which is really by design.”

Jeff Walton explains why Strive $ASST now has two perpetual preferreds… “Having the ability to access the capital markets with a little bit more flexibility with $SATS provides some optionality for us.” - @PunterJeff

Banks and insurers use a well-capitalized balance sheet to create financial products. So do Bitcoin treasury companies. @Werkman revisits @saylor’s comparison and explains why he expects the sector to split into different business models. “It’s a known business model. It just feels different in the market because it’s $BTC.”

Jeff Walton reveals why the largest IPOs in history could be shaking up the capital markets… “That capital needs to come from somewhere and that generally results in some volatility in the capital markets.” - @PunterJeff

Borrowing against chips that age is not new. Bitcoin miners tried it in 2021. @IIICapital on why GPU-backed debt may not hold up forever. “It can work for a little bit of time, but it may not actually work forever.”

Most people can’t afford to be speculators. @Werkman says households have bills to pay and institutions have mandates to meet. Strive’s $ASST approach is to take $BTC volatility on its own balance sheet and build income products for those investors. “We’ll take on the volatility of Bitcoin... and transform that into something far more stable that’s providing a very attractive income for people.”

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Two ~35% $BTC drawdowns. Very different accumulation. @PunterJeff compares Strategy $MSTR adding roughly 11,000 BTC in 2022-23 with Strive $ASST adding about 30,000 BTC in the recent drawdown. “We’re in a completely new regime where there’s now credit instruments... tapping a new pool of capital that previously didn't exist back in 2022.”

A loan-to-value question gets complicated when there are no loans. @PunterJeff explains why he treats perpetual preferred equity and its dividend obligation differently from a loan.

An 18-month dividend reserve doesn’t have to become 17 months next month. @IIICapital says continued access to capital markets can keep the reserve funded while the company keeps adding $BTC. “You can actually be fortifying the balance sheet through the bear market.” $ASST $SATA $SATS

$3B-$5B of new capital means very different things for Strive and Strategy. @ColeMacro says Strategy $MSTR needs to find tens of billions in future demand. For Strive $ASST, another $3B-$5B could roughly double its amplification ratio. “That would double our amplification ratio. That is material for us.” - @ColeMacro

High-yield credit was getting hit hard as Strive $ASST came to market with a new preferred. @PunterJeff points to CCC spreads widening 201 bps in a month, while BBB moved just 6. He argues that investors were weighing assets already on the balance sheet against future cash flows that still had to prove themselves.

94% of Strive’s $ASST warrants were exercised. @Werkman says the warrants some feared would weigh on the company ended up becoming fuel for its next stage of growth. “It became a massive asset to the company.”

Jeff Walton explains why $SATS gives the company another way to access credit capital markets when $SATA issuance is unavailable. “Having a vehicle like SATS gives us the ability to access... the credit capital markets any day of the week.” - @PunterJeff

Welcome Back to The Hurdle Rate Episode 78: Bitcoin Fell, We Grew 6x In this week’s Hurdle Rate, the crew breaks down the $700M SATS IPO, Strive’s first year as a public company, and growing from 5,886 to 36,818 $BTC through a bear market. They also discuss why $SATS is a 15% fixed rate preferred junior to $SATA, how the $ASST amplification engine was built, and what TradFi investors asked during a high yield selloff. Here’s the latest with @ColeMacro, @PunterJeff, @Werkman, @IIICapital, and @AdamBLiv. Timestamps: 00:00 - Intro 00:54 - Strive’s First Year 06:58 - 6x the Bitcoin in a Bear Market 14:40 - The Amplification Engine 22:18 - The Dream Bear Market 25:22 - Why SATS Is 15% Fixed 34:32 - Designing SATS 42:27 - Treasury Breakeven ARR 46:40 - The Digital Credit Bubble 55:54 - Pricing Through a High Yield Selloff 01:01:13 - What’s Your LTV? 01:06:30 - The 18-Month Dividend Reserve

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No Hurdle Rate this week. See you next week.

America’s stock and bond markets are 69% as large as the rest of the world combined. @AdamBLiv puts the scale in perspective: - $61T in fixed income - $130T in stocks and bonds - 40% of all equity capital raised He sees that liquidity and scale as an advantage for companies building in America. “America definitely is an objective advantage.”