The Austrian School of Economics

GLOSSARY

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November 25, 2024

The Austrian School of Economics

The Austrian school of economics is a school of economic thought that emphasizes the importance of individual human action and free markets in economic decision-making. It has its origins in late 19th-century Vienna and has since grown into a well-known portion of modern economic philosophy.

The Origins of the Austrian School of Economics

In order to fully understand the Austrian school, it is important to explore its historical roots. The school emerged in the late 19th century with the works of Carl Menger, Eugen von Böhm-Bawerk, and Friedrich von Wieser, who explored a new approach to understanding economic phenomena.

Carl Menger, often considered the founder of the Austrian school, challenged the prevailing theories of his time with his groundbreaking work Principles of Economics. Menger argued that economic value is determined by subjective preferences and that individuals act purposefully to attain their desired ends.

Eugen von Böhm-Bawerk, another influential figure, expanded on Menger’s ideas by introducing the concept of time preference, which is the subjective value attached to present goods over future goods and becomes the societal basis for interest rates. This concept added a new dimension to the understanding of how individuals make economic choices, highlighting the importance of considering the time element in decision-making.

Friedrich von Wieser focused on the concept of opportunity cost, arguing that individuals must give up their next-best alternative when making economic choices. By emphasizing the trade-offs involved in decision-making, Wieser provided a deeper understanding of the costs associated with choosing one option over another.

The Sociopolitical Climate and its Influence

The sociopolitical climate of the time greatly shaped the development of the Austrian school. Fin-de-siècle Vienna was a vibrant intellectual hub where scholars were engaged in debates on economic, political, and social issues. This environment fostered the development of a school of thought that challenged prevailing economic theories and provided an alternative perspective.

The Austrian school emerged in a period of significant social and economic change. The late 19th century was marked by rapid industrialization, urbanization, and globalization. These transformations brought about new challenges and opportunities, prompting scholars like Menger, Böhm-Bawerk, and Wieser to question the prevailing economic theories that failed to adequately explain these changes.

Vienna was a melting pot of ideas, its coffeehouses and widespread seminars provided fertile grounds for intellectual inquiries. The city was home to a diverse range of scholars, artists, and thinkers, which created an environment conducive to the exchange of ideas and the development of new theories. The intellectual climate of Vienna played a crucial role in fostering the growth of the Austrian school, and provided a platform for its key figures to engage in intellectual debates and refine their arguments.

Furthermore, the sociopolitical climate of the time deeply influenced the development of the Austrian School, particularly in its contrast and response to the prevailing ideologies in Vienna and broader intellectual currents in Europe. Vienna’s role as a center of political and cultural power was not just limited to a battleground of ideas between laissez-faire economics and interventionist policies but also a pivotal stage for the exploration of socialist ideals. During the era known as “Red Vienna” (1919-1934), the city became a testing ground for socialist policies, focusing on housing, education, and social welfare. This experiment in social democracy provided a contemporary foil to the Austrian school’s advocacy for market freedom and minimal government intervention.

Moreover, the Austrian economists were developing their theories in direct intellectual opposition not only to the interventionist and collectivist ideologies of their locale but also to the methodological approach of the German historical school. The latter emphasized the importance of historical context and empirical data in economic study, challenging the Austrians’ more theoretical and deductive reasoning. The contrast with the German historical school highlighted the Austrians’ unique contribution to economic thought, focusing on individual action, subjective value, and the emergent order resulting from market processes.

The interplay between these diverse ideological and methodological perspectives in the vibrant intellectual milieu of Vienna and beyond was crucial in shaping the distinct Austrian approach to economic theory. It underscored the school’s fundamental belief in the power of individual choice, spontaneous order, and market dynamics as superior mechanisms for social and economic organization, against the backdrop of the collectivist and historicist ideas that were prevalent at the time.

Fundamental Principles of the Austrian School

The Austrian school is characterized by several fundamental principles that set it apart from other economic schools of thought.

The Concept of Praxeology

One of the key concepts of the Austrian school is praxeology, which is the study of human action. Praxeology seeks to understand the purposeful behavior of individuals and argues that economic theory should be based on this understanding. By focusing on human action, the Austrian school provides insights into how individuals make choices, allocate resources, and interact in the marketplace.

Praxeology delves deep into the logical consequences of human action. It explores the various factors that influence decision-making, such as personal preferences, subjective values, and the pursuit of individual goals. Through praxeology, the Austrian school sheds light on the complexities of human behavior and its impact on economic outcomes.

Furthermore, praxeology recognizes that individuals are not bound by rigid rules or predetermined outcomes. Instead, it acknowledges the dynamic nature of human action, which is influenced by ever-changing circumstances and personal wishes and desires. This dynamic perspective allows the Austrian school to provide a nuanced understanding of how individuals adapt and respond to economic changes.

The Role of Individualism

The Austrian school places a strong emphasis on the individual as a fundamental actor in the economy; their actions and choices determine economic outcomes. This stands in contrast to other schools of thought that prioritize collective decision-making, or top-down planning aimed at specific social outcomes.

Individualism, as advocated by the Austrian school, recognizes the unique abilities, knowledge, and preferences possessed by each individual. It acknowledges that individuals have different needs, desires, and aspirations, and that their actions reflect these individual differences. By recognizing and respecting individual autonomy, the Austrians argue for a society that allows individuals to pursue their own goals and aspirations.

Spontaneous order is another topic crucial to the Austrians. The basic idea is that free choices and voluntary exchanges made by individuals create a complex web of economic relationships, leading to the emergence of order and coordination. This “spontaneous” order is seen as superior to top-down planning and control, as it harnesses the diverse knowledge and preferences of individuals to guide economic activities.

The Importance of Free Markets

Most Austrian school economists strongly advocate for free markets and limited government intervention in the economy. They say that the spontaneous order of free markets allows for efficient allocation of resources and promotes individual freedom. The school points to the damaging effects of government intervention and emphasizes the importance of allowing market forces to operate without undue interference.

Free markets, according to the Austrian school, enable individuals to freely engage in voluntary exchange based on their own subjective valuations. These exchanges are driven by the pursuit of self-interest, but doing so also generate mutual benefits and promote overall societal welfare. By allowing market prices to reflect the underlying supply and demand dynamics, free markets provide crucial information that guides individuals’ economic decisions.

Furthermore, the Austrian school highlights the role of competition in free markets. It argues that competition fosters innovation, efficiency, and continuous improvement. In a competitive market environment, businesses are incentivized to offer better products and services at lower prices, driving economic growth and raising living standards. By contrast, government intervention distorts market signals, stifles competition, and hampers economic progress.

Criticisms Surrounding the Austrian School

Like any school of thought, the Austrian school has faced criticisms throughout its history.

The Debate over Empiricism

One of the main controversies surrounding the Austrian school is its tendency to sidestep empirical methods in economic analysis. Critics argue that the school’s reliance on deductive reasoning and the study of human action limits its ability to make accurate predictions about economic phenomena or say much at all about the real world. However, proponents of the Austrian school argue that economic analysis should focus on a priori reasoning and that empirical methods are less reliable.

The Social Impact of Laissez-faire Policies

Another controversy surrounding the Austrian school is its endorsement of laissez-faire policies. Critics argue that unrestricted free markets can lead to income inequality, exploitation, or less-than-ideal outcomes via market failures. Proponents of the Austrian school counter that market forces and voluntary exchanges lead to mutual benefit and overall prosperity for society.

The Austrian School’s Influence on Modern Economics

The Austrian school has had a significant impact on modern economics and has contributed several important theories and concepts.

The Austrian Business Cycle Theory

One of the most notable contributions by Austrian economists is the Austrian business cycle theory. This theory, developed by Ludwig von Mises and further expanded upon by Friedrich Hayek in the first half of the 20th century, explains how monetary intervention by central banks leads to artificial booms necessarily followed by busts in the economy. The theory has provided valuable insights into the causes of economic recessions and has influenced the understanding of monetary policy.

Entrepreneurship Theory

The Austrian school has also made significant contributions to entrepreneurship theory. Scholars such as Joseph Schumpeter — who was from Austria but didn’t align himself with the Austrian school — have emphasized the role of entrepreneurs in driving economic growth and innovation. The school’s focus on individual action and the market process has shed light on the importance of entrepreneurs as drivers of a dynamic economy, with modern scholars like Israel Kirzner, Peter Klein, and Per Bylund making advances in how entrepreneurs contribute to the economic process.

Notable Austrian Economists and their Contributions

Several notable economists have emerged from the Austrian school, each making significant contributions to economic theory.

Ludwig von Mises and The Theory of Money and Credit

Ludwig von Mises is one of the most influential figures in the Austrian School. His work The Theory of Money and Credit provided a comprehensive analysis of the role of money in the economy and the impact of monetary policy on economic affairs. Mises emphasized the importance of sound money and warned against the dangers of inflation and central bank intervention.

Friedrich Hayek and the Road to Serfdom

Friedrich Hayek’s book The Road to Serfdom is another seminal work in the Austrian school. Hayek argued that excessive government intervention in the economy can lead to a loss of individual freedom and ultimately, totalitarianism. His work has had a profound influence on political and economic discourse and continues to be relevant today.

Austrian Economics and Bitcoin

The principles of Austrian economics have significantly shaped the creation and philosophy underlying Bitcoin, aligning closely with Hayek’s ideas of currency competition. Hayek famously advocated for the decentralization of currency as a means to prevent government mismanagement and inflation. A famous quote of his presciently foreshadowed the emergence of bitcoin twenty years before Satoshi:

“I don’t believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can’t take them violently out of the hands of government, all we can do is by some sly roundabout way introduce something they can’t stop,”

This digital currency embodies Hayek’s vision by operating outside the control of any central authority, thus offering a form of money governed by mathematical certainty rather than political whims.

The influence of Austrian economics on Bitcoin extends beyond Hayek’s disdain for centralized monetary control. Phil Salin, another advocate for free-market principles and a Hayekian disciple, contributed to the foundational ideas that paved the way for cryptocurrencies. His work on digital cash systems emphasized the importance of a monetary system that could operate efficiently without the need for trust in a central authority.

Bitcoin, often described as an anarchist form of money due to its decentralized nature — “rules without rulers” — echoes the Austrian school’s emphasis on individual sovereignty and economic freedom. By using blocks issued at a predetermined schedule, Bitcoin creates a system where the supply is capped, transactions are transparent and irreversible, and, most crucially, the currency remains immune to government interference and manipulation. This alignment with Hayekian economics shows a way in which Bitcoin is a practical implementation of Austrian principles, offering a viable alternative to fiat currencies and their inherent vulnerabilities.

Bitcoin Treasury Companies Are Bubbles

Emil Sandstedt

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July 4, 2025

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Half a year has passed since the publishing of my initial report on the company then-named MicroStrategy, now simply Strategy. Other than a name change, the company has since then broadened the arsenal of its financial products, accumulated more bitcoin, and fueled a wide array of companies copying Michael Saylor’s playbook. There seem to be bitcoin treasury companies everywhere.

Due for an update, we will now investigate whether or not these bitcoin treasury companies’ operations are in line with the predictions made in the initial report, and yet again attempt to conclude where all this is eventually going.

A Cause for Alarm

In December last year, the company seemed near invincible: With its bitcoin yield KPI accumulating at a mind-boggling annual rate of above 60%, optimism reigned. It was no wonder then that most of the arguments carefully laid out in the report released at that time were either ridiculed, ignored, or met with snarling challenges to sell the shares short. The share price, denominated either in dollar or bitcoin, is at time of writing flat compared to those days and so far offers little in terms of vindication.

Tragically few understood or even reached the most important conclusion of my December report, which concerns the source of the bitcoin yield. We will therefore iterate what’s wrong with the company’s metric, and why this should be a cause of alarm for any serious investor.

The bitcoin yield — the increase in bitcoin per share — reaching old shareholders comes from the pockets of new shareholders. The new shareholders, many of them buying shares in the hope of getting a high bitcoin yield themselves, provide the bitcoin yield either directly by buying Strategy common shares created in the company’s world-record sized ATM (“at the market”) offerings or indirectly by buying the shares borrowed (and then sold) by delta neutral hedge funds that simultaneously hold the company’s convertible bonds. This is the Ponzi part of company operations — publicly boasting a bitcoin yield far higher than any conventional yield, while obfuscating the fact that the yield stems, not from the sale of company goods or services, but from the new investors themselves. They are the yield, and the harvesting of their hard-earned money will continue as long as they willingly provide it. The size of the harvest is in proportion to the size of the confusion, here measured as the premium of common shares over company net assets. This premium is nurtured by complicated but inviting company narratives, promises, and financial products.

Because the word “Ponzi” has been thrown Bitcoiners’ way for over a decade, they have become accustomed — and rightly so — to simply disregard such critiques altogether. But just because a company within the Bitcoin sector intentionally or inadvertently has constructed a Ponzi scheme, that does not obviously mean that bitcoin itself is a Ponzi. The two assets are separate. During metallic monetary standards of the past, Ponzi schemes existed, but that does not mean the precious metals themselves ever were, or are, such schemes. When I make this claim of Strategy in its current form, I mean it from the point of definition, not from tiresome hyperbole.

The Accumulation Continues

Before drawing any further conclusions, it is first time to pick up where we left off in the initial report, and map relevant company decisions made over the last six months. Strategy announced on December 9 that approximately 21,550 bitcoin had been acquired for about $2.1 billion (average price: approximately $98,783 per bitcoin). This purchase was conducted with proceeds from the ATM outlined in the famous 21/21 Plan initiated earlier the same year. Just a few days later, over 15,000 more bitcoin were purchased, also through the ATM offering, and a few days after that announcement, about 5,000 more were purchased.

The end of 2024 saw the company requesting from its shareholders an amendment to increase the number of authorized shares of class A common stock from 330,000,000 shares to 10,330,000,000 shares — in other words, a 30x. The number of authorized shares of preferred stock was to be increased from 5,000,000 shares to 1,005,000,000 shares — a 200x. All this, though not the same as stating the full amount to actually be issued, was done to give the company more liberty in future financial operations as the 21/21 Plan quickly ran its course. By also focusing on preferred stock, another variant of funding could now be pursued. The full year ended with about 446,000 bitcoin owned by Strategy, and with a company bitcoin yield of 74.3%.

Perpetual Strike Preferred Stock

The new year started with an 8-K filing stating that Strategy was now ready to seek the new funding through preferred stock. The new instrument, as the name implies, was to be senior to the company’s common shares, meaning the owners of the preferred shares had a stronger claim on any future cash flows. Initially, a $2 billion raise was the stated goal. While the new instrument was being prepared, 450,000 bitcoin had been accumulated by January 12. At the end of the month, all 2027 convertible bonds were called on to be redeemed for newly issued shares, as the conversion price was now below the market price of the shares. Any Strategy convertible bond far “in the money” becomes unappealing to the largest buyers of such instruments — the gamma-trading, delta neutral hedge funds — who prefer early conversion followed by new convertible bond issuance over holding the old bonds until maturity.

On January 25, 2025, the company finally filed its prospectus for Strike perpetual preferred stock ($STRK), and about a week later, 7.3 million Strike shares were issued with 8% cumulative dividends on the liquidation preference of $100 per share. In practice, this meant a $2 per share quarterly dividend in perpetuity, or until the shares are converted to Strategy shares in case the price of the latter reaches $1,000. Conversion was defined at the ratio 10:1, meaning 10 Strike shares must be converted for every new Strategy share. In other words, the instrument is akin to a dividend-paying perpetual call option on Strategy common shares. If deemed necessary, Strategy can pay the dividends in the form of its own common shares. On February 10, about 7,600 bitcoin were purchased with the proceeds from the Strike issuance as well as from conventional ATM offering of common shares.

On February 21, Strategy issued $2 billion worth of convertible bonds maturing March 1, 2030, with a conversion price of about $433 per share, representing a conversion premium of about 35%. About 20,000 bitcoin could quickly be purchased with the proceeds. Shortly thereafter, a new prospectus was published, enabling the company to issue up to $21 billion worth of Strike perpetual preferred stock, meaning the already ambitious 21/21 Plan of last year now seemed to morph into something even more massive.

Perpetual Strife and Stride Preferred Stock

As soon as the company had publicly announced its ambitious expansion of its funding plan, yet another instrument was announced; Strife ($STRF), a perpetual preferred stock similar to Strike, was to go live with 5 million shares. It was to offer 10% annual dividends in cash — paid quarterly — instead of 8% in cash or common shares. Strife, unlike Strike, had no equity conversion feature, but was senior to both common shares and Strike. Any dividend delay was to be compensated by higher future dividends, with a maximum of 18% total annual dividend rate. At time of issuance, the initial plan of issuing 5 million shares seems to have been increased to 8.5 million shares, raising over $700 million. With ATM activity for the common shares as well as for Strike, Strategy could finally announce in March that the company held over 500,000 bitcoin. April saw mostly regular common share ATM activities, until that type of funding was all but depleted. Strike ATM activity continued as well, but due to what was likely low liquidity, the dollar amount raised was negligible. With the proceeds, Strategy’s total bitcoin position climbed above 550,000 bitcoin.

On May 1, Strategy announced the intention of launching another $21 billion common share ATM offering. This announcement came very shortly after the ATM arm of the initial 21/21 Plan had been exhausted, and fully vindicated the logic outlined in the previous report as well as on X. As any premium to net assets creates an arbitrage for the company, management is bound to continue to print new shares overvalued relative to underlying bitcoin assets in order to capture it. Issuance started almost immediately, and more bitcoin could be accumulated.

As the fixed income arm of the initial 21/21 Plan already had been extended with the new preferred stock in mind, investors now faced a massive 42/42 Plan, meaning a maximum of $42 billion in common share issuance and $42 billion in fixed income security issuance. May also saw the SEC filing of a new $2.1 billion ATM offering for the Strife perpetual preferred stock instrument. At the end of the month, all three ATM offerings were printing shares for the acquisition of new bitcoin. In the beginning of June, yet another instrument was announced: Stride ($STRD), a perpetual preferred stock asset similar to Strike and Strife, was soon to launch. It was to offer 10% optional, noncumulative dividends in cash, had no equity conversion feature, and was junior to every other instrument except the common shares. A little less than 12 million shares worth about $1 billion were initially issued, paving the way for about 10,000 more bitcoin for the company coffers.

A Dazzling Mosaic of Bitcoin Treasury Companies

With the STRK, STRD, and STRF products launched, and Strategy’s 21/21 Plan in full swing, the full picture of what has been going on in the last six months should be clearer. I pointed out in the initial report that the main rationale behind the convertible bonds was not, despite the claims of the company, to offer bitcoin exposure to a section of the market in need and want of such. The buyers of the bonds were almost all of them delta neutral hedge funds, and, being simultaneously short Strategy shares, they never had any actual bitcoin exposure. It was all a ruse. The true reason that Strategy offered these securities to lenders was that it gave retail investors an impression of financial innovation targeting a multitrillion-dollar industry, as well as facilitating further bitcoin accumulation without equity dilution. And as the investors bid on the common shares, so did the price discrepancy to net assets and the opportunity of risk-free bitcoin yield grow in proportion. The greater the economic confusion, coupled with Michael Saylor’s way with words and vivid analogies, the larger the company’s arbitrage opportunity.

By issuing three different perpetual preferred stock securities over the last six months, in addition to the various convertible bonds already in place, these complicated financial products could now create an appearance of financial innovation, thus spurring further bidding on the common shares.

At the time of writing, the common shares trade near double that of net assets, which is a great feat by company management, given the large size and activity of the common share ATM offerings. It means Strategy can continue to buy about two bitcoin for the price of one in a risk-free fashion.

In 2024, the company could enjoy tailwinds originating from the popular “reflexivity flywheel” theory, where it was argued that the more bitcoin the company purchased, the more its shares would increase in value, resulting in the opportunity to buy even more bitcoin. In 2025, this self-referential stupidity morphed slightly to a “torque” narrative, manifesting itself as official company depictions of fixed income cogwheels rotating the core that is the common shares, with bitcoin yield produced from the machinery as a result. Exactly from where, or how, the yield was created, few investors seemed to be asking themselves, and instead the made-up dynamic was mindlessly celebrated.

Preferred shares are financial assets, and not subject to the laws of physics. Being an engineer, it is not surprising that Saylor should come up with all these fallacious analogies so that bitcoin yield would appear to stem from what can only be viewed as financial alchemy. But since there are no actual company revenues to speak of, no actual banking (the company borrows, but does not lend), the bitcoin yield must in the end stem from the earlier outlined Ponzi element of the company’s business model; retail investors are dazzled by carefully curated narratives, causing them to bid up the price of common shares enough for the bitcoin yield opportunity to materialize. Whatever bitcoin yield originating from the various debt instruments cannot yet be considered settled as debt must eventually be paid off. Only the bitcoin yield stemming from common share ATM offerings is immediate and final — a true profit.

A Bubble of Bitcoin Treasury Companies

Oblivious or not to the fact that narratives can’t influence reality forever, the massively successful bitcoin yield concept of Strategy has spread like a wildfire among management teams of smaller companies all over the world. CEOs have seen how Strategy insiders, by continuously dumping shares on the retail investors currently chasing the shares, have become immensely rich, and so have started copying the playbook. The constant Strategy insider selling can be verified by looking at the numerous Form 144 filings.

Many of these companies have successfully pulled this off, already enriching management and old shareholders at the expense of new ones. But it must all end at one point, and many of these companies, grasping in desperation at the bold, new strategy of becoming bitcoin treasury companies (due to the conventional main business struggling or even failing) will be the first that are compelled to sell their bitcoin assets to pay creditors when things take a turn for the worse. Michael Saylor himself once admitted that he was desperate before stumbling over bitcoin.

Metaplanet was once known as Red Planet Japan and struggled mightily to be profitable in Japan’s budget hotel sector.
Before Méliuz SA desperately adopted a bitcoin acquisition strategy, it had undergone a 100:1 reverse split.
Vanadi Coffee SA drifted ever closer to bankruptcy, managing five cafes and a bakery in Spain’s Alicante region, but its pivot to a bitcoin strategy now seems to have performed miracles for its share price.
The notorious meme stock company Trump Media & Technology, with no revenue to speak of, is now pursuing billions of dollars in funding for the purpose of creating a bitcoin treasury company in order to rescue a share price trading at all-time lows.
Bluebird Mining Ventures Ltd, also in desperation, I would imagine — at least if the share price is any indicator — just recently decided to sell any gold it managed to mine in order to fund bitcoin purchases for its treasury; the shares are at time of writing up almost 500% in a month.
H100 Group, a small and until recently struggling Swedish biotech company, has, at the time of writing returned, to its investors about 1,500% in a month on news that Adam Back, CEO of Blockstream, is funding the company through some type of convertible bonds, for the pursuit of a bitcoin treasury strategy.

The list could go on and on, but I think the point is made; it is not Microsoft, Apple, or Nvidia that are becoming bitcoin treasury companies, but failing companies with nothing to lose. Jesse Myers, a Strategy supporter and a direct influence on Michael Saylor’s bitcoin valuation modeling, admitted that,

“[…] with MicroStrategy, Metaplanet and Gamestop, they are all zombie companies. They all had […] a reason to take a serious look in the mirror and say, we can’t keep doing the strategy that we’ve… the path we’ve been on. We have to radically reinvent our approach to delivering shareholder value.”

All these desperate companies have looked at Michael Saylor and Strategy and believe they have found a clear path to riches. By copying the financial alchemy themselves, they are now all involved in a great transfer of wealth as the bitcoin treasury company bubble runs its course.

When the Mosaic Breaks

Though part of the impressive company mosaic, Strike, Strife, and Stride are all senior to equity. The same is true for the convertible bonds, not all of them are currently “in the money.” Future free cash flow will always have to reach holders of these instruments before whatever is left can go to owners of the common shares. In good times, this is obviously not a problem due to the rather low debt ratio of the company; in bad times, the value of all company assets decline considerably while debt obligations remain — like tall, looming threats to any new creditor. Due to a phenomenon sometimes referred to as debt overhang, any new creditor will be hesitant to lend for the purpose of paying off other debt obligations. What started as an enchanting collection of narratives and exaggerations morphs into something turning on its creator.

This is all exacerbated by the fact that a prolonged bitcoin bear market will cause further sell pressure on the asset by the many bitcoin treasury companies then in distress. The more popular Strategy’s playbook becomes, in other words, the deeper the future bitcoin crash, likely wiping out much of the equity of most companies having pursued such a strategy to the bitter end.

In summary: Michael Saylor likes bitcoin. He, like all of us, prefers more bitcoin to less bitcoin. It is then extremely naive to think that he will let company management pass on what is by definition an arbitrage. When common shares trade at a premium to net assets, the company can create risk-free profits for its old shareholders by transferring wealth from the buyers of newly issued shares. This will continue in the form of ever-larger common share ATM offerings alongside new, obfuscating ”innovative products”, despite protests and mutterings about equity dilution. Evidence of this claim is my prediction made in March, coming true in the form of a new $21 billion ATM offering barely one and a half months later. If Strategy does not act on this arbitrage, all the copy-cats will capture it instead as they attempt to increase their bitcoin treasury in an equally risk-free manner. In the frantic scramble to create and expand all these arbitrage opportunities, companies will take on debt in various forms, and danger abounds.

During the next bitcoin bear market, the Strategy share price will reach — and then break below — net assets per share, inflicting large bitcoin-denominated losses on anyone buying at today’s premium. The best action a Strategy investor can take today is doing exactly what the company and its insiders are all doing: Sell the shares!

Bitcoin is no longer the main strategy of this company, nor of any of the now multiplying bitcoin treasury companies; you are.

This is an edited version of the article posted on the author’s Medium page. A fuller assessment is featured in the next Bitcoin Magazine Print issue — be sure to get your subscription now.

BM Big Reads are weekly, in-depth articles on some current topic relevant to Bitcoin and Bitcoiners. If you have a submission you think fits the model, feel free to reach out at editor[at]bitcoinmagazine.com.

Why Liquidity Matters More Than Ever For Bitcoin

Matt Crosby

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July 4, 2025

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Why Liquidity Matters More Than Ever For Bitcoin

Global liquidity has long been one of the cornerstone indicators used to assess macroeconomic conditions, and particularly when forecasting Bitcoin’s price trajectory. As liquidity increases, so does the capital available to flow into risk-on assets, such as Bitcoin. However, in this evolving market landscape, a more responsive and perhaps even more accurate metric has emerged, one that not only correlates highly with BTC price action but is also specific to the ecosystem.

Global M2

Let’s begin with the Global M2 vs BTC chart. This has been one of the most shared and analyzed charts on Bitcoin Magazine Pro throughout the current bull cycle, and for good reason. The M2 supply encompasses all physical currency and near-money assets in an economy. When aggregated globally across major economies, it paints a clear picture of fiscal stimulus and central bank behavior.

Why Liquidity Matters More Than Ever For Bitcoin 1 — *Figure 1: The Global M2 vs BTC chart has established itself as a key forecasting metric.* View Live Chart

Historically, major expansions in M2, especially those driven by money printing and fiscal interventions, have coincided with explosive Bitcoin rallies. The 2020 bull run was a textbook example. Trillions in stimulus flooded global economies, and Bitcoin surged from the low thousands to over $60,000. A similar pattern occurred in 2016-2017, and conversely, periods like 2018-2019 and 2022 saw M2 contraction aligning with BTC bear markets.

A Stronger Correlation

However, while the raw M2 chart is compelling, viewing Global M2 vs BTC Year-on-Year provides a more actionable view. Governments tend to always print money, so the base M2 supply nearly always trends upward. But the rate of acceleration or deceleration tells a different story. When the year-over-year growth rate of M2 is rising, Bitcoin tends to rally. When it’s falling or negative, Bitcoin typically struggles. This trend, despite short-term noise, highlights the deep connection between fiat liquidity expansion and Bitcoin’s bullishness.

Why Liquidity Matters More Than Ever For Bitcoin 2 — *Figure 2: Switching to the Global M2 vs BTC YoY chart reveals a stronger correlation between these two metrics.* View Live Chart

But there’s a caveat: M2 data is slow. It takes time to collect, update, and reflect across economies. And the impact of increased liquidity doesn’t hit Bitcoin immediately. Initially, new liquidity flows into safer assets like bonds and gold, then equities, and only later into higher volatility, speculative assets like BTC. This lag is crucial for timing strategies. We can add a delay onto this data, but the point remains.

Stablecoins

To address this latency, we pivot to a more timely and crypto-native metric: stablecoin liquidity. Comparing BTC to the supply of major stablecoins (USDT, USDC, DAI, etc.) reveals an even stronger correlation than with M2.

Why Liquidity Matters More Than Ever For Bitcoin 3 — *Figure 3: Historically, changes in stablecoin liquidity have coincided with Bitcoin cycles.*

Now, just tracking the raw value of stablecoin supply offers some value, but to truly gain an edge, we examine the rate of change, particularly over a 28-day (monthly) rolling basis. This change in supply is highly indicative of short-term liquidity trends. When the rate turns positive, it often marks the beginning of new BTC accumulation phases. When it turns sharply negative, it aligns with local tops and retracements.

Why Liquidity Matters More Than Ever For Bitcoin 4 — *Figure 4: Plotting the stablecoin supply rate of change shows how liquidity trends tightly align with BTC price action.*

Looking back at the tail end of 2024, as stablecoin growth spiked, BTC surged from prolonged consolidation into new highs. Similarly, the major 30% drawdown earlier this year was preceded by a steep negative turn in stablecoin supply growth. These moves were tracked to the day by this metric. Even more recent rebounds in stablecoin supply are starting to show early signs of a potential bounce in BTC price, suggesting renewed inflows into the crypto markets.

Why Liquidity Matters More Than Ever For Bitcoin 5

Figure 5: In the past, the indicator triggered by the liquidity rate crossing above zero has been a reliable buy signal.

The value of this data isn’t new. Crypto veterans will remember Tether Printer accounts on Twitter dating back to 2017, watching every USDT mint as a signal for Bitcoin pumps. The difference now is we can measure this more precisely, in real-time, and with the added nuance of rate-of-change analysis. What makes this even more powerful is the intracycle and even intraday tracking capabilities. Unlike the Global M2 chart, which updates infrequently, stablecoin liquidity data can be tracked live and used on short timeframes, and when tracking for positive shifts in this change, it can provide great accumulation opportunities.

Conclusion

While Global M2 growth aligns with long-term Bitcoin trends, the stablecoin rate-of-change metric provides clarity for intra-cycle positioning. It deserves a spot in every analyst’s toolkit. Using a simple strategy, such as looking for crossovers above zero in the 28-day rate of change for accumulation, and considering scaling out when extreme spikes occur, has worked remarkably well and will likely continue to do so.

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Senator Lummis’ New Bill Enables Tax-Exempt Bitcoin Spending — But Thresholds Are Too Low

TAKES

Frank Corva

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July 3, 2025

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Senator Lummis’ New Bill Enables Tax-Exempt Bitcoin Spending — But Thresholds Are Too Low

Senator Lummis’ New Bill Enables Tax-Exempt Bitcoin Spending — But Thresholds Are Too Low 6

Today, Senator Lummis unveiled a bill that would enable U.S. citizens to spend up to $300 worth of bitcoin on goods and services, with a yearly cap of $5,000, without having to pay capital gains taxes on the transactions.

The proposed legislation also stipulates that the threshold for spending will be adjusted for inflation starting in 2026.

Such provisions were initially conceptualized as an amendment that Senator Lummis pushed to have included in the One Big Beautiful Bill (OBBB), but wasn’t.

In the wake of Senate Finance Committee Chairman Mike Crapo not putting Senator Lummis’ amendment up for a vote in the marathon amendment session for the OBBB that occurred earlier this week, Senator Lummis said she would continue to work on legislation regarding tax reform around bitcoin spending.

The bill she released this morning was evidence of her remaining true to her word — which should be acknowledged and appreciated.

However, the details around the de minimis exemptions regarding bitcoin spending were met with some justifiable critique.

Trey Walsh, founder of The Progressive Bitcoiner and contributor to Bitcoin Magazine, stated on X that the “thresholds are SO low” and that “there should be NO CAP for goods and services.”

“Make it about spending/payments. This is good for consumers,” Walsh added.

“You’re not taxed on your money (dollars) for spending. You shouldn’t be taxed on your money (bitcoin) for spending either.”

Zach Herbert, founder of Foundation Devices, expressed his discontent with the bill in fewer words:

this is so weak
— Zach Herbert 🇺🇸 (@zachherbert) July 3, 2025

And Nick Anthony, Policy Analyst at the CATO Institute’s Center for Monetary and Financial Alternatives, proposed an alternative to spending thresholds for purchases:

While I'm happy to see the threshold will be adjusted for inflation, the $300 transaction cap and $5,000 annual spending cap are disapointing.

It would be better to drop both caps while maintaining that qualifying purchases are those for goods and services. https://t.co/MO6J7ZNwna
— Nick Anthony (@EconWithNick) July 3, 2025

Personally, I can live with certain spending caps, but I feel they should be substantially larger.

I’d like to see the de minimis exemption applied to transactions valued at up to $600 (the original level Lummis proposed for the amendment to the OBBB) and for the yearly threshold to be closer to $25,000.

Now, certain John Lennon lyrics may come to mind as I put the notion of spending up to $25,000 worth of bitcoin per year without being taxed on it out there into the universe:

“You may say I’m a dreamer…”

But that line warrants finishing when considering that a number of other prominent voices in the Bitcoin space have also spoken up to ask that the provisions in the bill regarding bitcoin spending be more substantial:

“…but I’m not the only one.”

So, if you agree with where we’re coming from, perhaps some of you will join us in politely raising your voices to request that Senator Lummis consider increasing the spending thresholds in the bill — while also expressing your gratitude for Senator Lummis’ dedication to crafting and advancing legislation that treats bitcoin as a medium of exchange.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Senator Lummis Introduces Digital Asset Tax Legislation

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Oscar Zarraga Perez

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July 3, 2025

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Senator Lummis Introduces Digital Asset Tax Legislation

Today, U.S. Senator Cynthia Lummis (R-WY) has introduced a comprehensive digital asset tax legislation that could significantly boost the use of Bitcoin and other cryptocurrencies by cutting the bureaucratic red tape, modernising outdated tax rules, and supporting Bitcoin and crypto innovation.

JUST IN: 🇺🇸 Senator Lummis introduced legislation to ease taxation on #Bitcoin and crypto. pic.twitter.com/zC21PCSha1
— Bitcoin Magazine (@BitcoinMagazine) July 3, 2025

“In order to maintain our competitive edge, we must change our tax code to embrace our digital economy, not burden digital asset users,” said Lummis. “This groundbreaking legislation is fully paid-for, cuts through the bureaucratic red tape and establishes common-sense rules that reflect how digital technologies function in the real world. We cannot allow our archaic tax policies to stifle American innovation, and my legislation ensures Americans can participate in the digital economy without inadvertent tax violations.”

The proposal introduces a de minimis exemption that would exclude small digital asset gains or losses from taxation, with a limit of $300 per transaction and $5,000 annually, and an inflation adjustment beginning in 2026.

The bill ensures Bitcoin and other crypto lending is not taxed as a sale, aligning it with traditional securities lending and improving capital efficiency. It also applies the 30-day wash sale rule to digital assets, closing a loophole and promoting tax fairness across asset classes.

The bill allows digital asset dealers and traders to elect mark-to-market tax treatment, aligning Bitcoin and other crypto with existing rules for securities and commodities. This allows a more accurate income recognition based on fair market value, eliminating arbitrary discrimination based on asset type.

It also defers taxation on mining and staking until the assets are sold, reducing the burden of being taxed on unrealized income. In addition, the bill removes appraisal requirements for charitable donations of actively traded digital assets, making it easier to contribute to Bitcoin and crypto nonprofits and treating it like publicly traded stock.

“The legislation is estimated by the Congressional Joint Committee on Taxation to generate approximately $600 million in net revenue during the 2025-2034 budget window,” stated the press release.

Senator Lummis emphasized the importance of public input in shaping a fair and forward looking approach to Bitcoin and the broader digital asset economy. “I welcome public comments on this legislation as we seek to get this package to the President’s desk,” she said.

Bitcoin Miner Riot Produces 450 Bitcoin In June

NEWS

Oscar Zarraga Perez

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July 3, 2025

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Bitcoin Miner Riot Produces 450 Bitcoin In June

Today, Riot Platforms, Inc. (NASDAQ: RIOT) reported the production of 450 Bitcoin in June 2025, a 12% decrease from May but a 76% increase year-over-year. The company also saw a surge in power credits, totalling $5.6 million, more than double from the previous month.

Riot Announces June 2025 Production and Operations Updates.

Riot mined 450 #bitcoin in June, increasing total bitcoin holdings to 19,273. The Company had a deployed hash rate of 35.5 EH/s and an all-in power cost of 3.4¢/kWh.

Read the full press release here:… pic.twitter.com/V6Y0D1A1pQ
— Riot Platforms, Inc. (@RiotPlatforms) July 3, 2025

Riot sold 397 Bitcoin for $41.7 million, representing a 21% decrease in volume and a 19% decline in proceeds from May, but at a higher average price per coin ($105,071). The company ended the month holding 19,273 Bitcoin, more than double the amount held in June 2024.

The average operating hash rate decreased 5% month-over-month to 29.8 EH/s, but remains 162% higher than a year ago. Fleet efficiency held steady at 21.2 J/TH, an 18% improvement over the prior year.

“Riot mined 450 bitcoin in June, which also represented the start of ERCOT’s Four Coincident Peak (“4CP”) program,” stated the CEO of Riot, Jason Les. “Riot’s power strategy, which includes economic curtailment and voluntary participation in the 4CP and other demand response programs, significantly contributes to grid stability while enhancing Riot’s competitive positioning.”

Bitcoin Production and Operations Updates for June 2025

June’s performance follows a similar April, in which Riot produced 463 Bitcoin, sold 475 Bitcoin for $38.8 million at an average price of $81,731, and completed a major acquisition. The company acquired all tangible assets of Rhodium at its Rockdale Facility, including 125 MW of power capacity.

“April was a significant month for Riot as we closed on the acquisition of all of the tangible assets of Rhodium at our Rockdale Facility, including 125 MW of power capacity, and mutually ended all outstanding litigation,” said Les. “This transaction ends the hosting agreement with our last hosting client and marks the complete exit of Riot from the bitcoin mining hosting business.”

Bitcoin at UATX: A New Era of Intellectual Sovereignty

Juan Galt

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July 3, 2025

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Bitcoin at UATX: A New Era of Intellectual Sovereignty

UATX, The University of Austin, Texas, is rediscovering and redefining academic pursuit. Founded in 2021, the start-up university stands as a protest to the intellectual dogma and the “woke” radicalization of major universities in recent years, focusing instead on entrepreneurship and preparing students for a technologically and culturally complex future.

These old values, rekindled by the chaos of modernity, have led UATX to Bitcoin: “The first principles of this institution share the same space, language, and ethos as the first principles behind Bitcoin: freedom of speech, freedom to transact, individual and institutional sovereignty, distributed decentralized governing structure,” Anthony J. Rosario, major gifts and bitcoin endowment officer at UATX, told Bitcoin Magazine.

UATX has been making waves in recent weeks and months with a variety of Bitcoin-related announcements, among them the publication of “The Satoshi Papers,” a book comprising a collection of political, social, and economic essays debating the impact and nature of Bitcoin, echoing the Federalist Papers (popularized during the founding of the United States). They also announced a bitcoin endowment fund, one of the first in the country, and they boast a Bitcoin and cryptocurrency curriculum led by Dr. Thomas L. Hogan, which gives students hands-on experience with the technology and industry. So much so that Brian Armstrong, CEO of Coinbase, recently tweeted he’ll be “recruiting new college grads from UATX,” adding that, “It aligns well with our apolitical culture. Let’s hope we see more apolitical universities emerge over time.”

.@coinbase will be recruiting new college grads from UATX when they're ready (hopefully some interns in the mean time)

It aligns well with our apolitical culture. Let's hope we see more apolitical universities emerge over time, and a continued shift toward MEI. https://t.co/XZvhv2paI7
— Brian Armstrong (@brian_armstrong) November 25, 2024

A Protest Against Cancel Culture and Intellectual Rigidity in Academia

“A lot of our faculty and staff came to UATX because they were tired of the intellectual rigidity and cancel culture at their previous institutions,” Maggie Kelly, chief advancement officer at UATX told Bitcoin Magazine. She added that, “We’re really trying to create a place where people can come and think freely and explore ideas without fear of being canceled or silenced, which is a huge problem in academia today.”

UATX was founded by journalist Bari Weiss, historian Niall Ferguson, venture capitalist Joe Lonsdale, at the time the president of St. John’s College, and Pano Kanelos, who had criticized the “illiberal” nature of traditional universities in modern times.

We got sick of complaining about how broken higher education is. So we decided to do something about it.
Announcing a new university dedicated to the fearless pursuit of truth: @uaustinorg:https://t.co/ZqRLXcF2n0
— Bari Weiss (@bariweiss) November 8, 2021

Kanelos, founding president and now chancellor of the University, put it best in a Free Press article in 2021, “Nearly a quarter of American academics in the social sciences or humanities endorse ousting a colleague for having a wrong opinion about hot-button issues such as immigration or gender differences.”

Citing a report by the Center for the Study of Partisanship and Ideology. Kalenos pointed out that “over a third of conservative academics and PhD students said they had been threatened with disciplinary action for their views and four out of five American PhD students are willing to discriminate against right-leaning scholars.”

Daring to think differently and forced to take on a start-up mindset, despite being a 501(c)(3) nonprofit, the UATX has a strong focus on entrepreneurship, history, economics, and classical Western philosophical thought — powerful and fundamental ideas that inevitably led them to Bitcoin.

The UATX Bitcoin Curriculum

The Bitcoin and the cryptocurrency curriculum at the University of Austin is led by Associate Professor of Economics Dr. Hogan, who has deep experience in economics and academia. He was formerly the chief economist for the U.S. Senate Committee on Banking, Housing, and Urban Affairs, and has worked at the American Institute for Economic Research (AIER), the Cato Institute, the World Bank, and Merrill Lynch’s commodity trading group, among others.

“Our introductory course is a combination of knowledge acquisition and practical skills. Students study the origins of Bitcoin, the mechanics of the network, and how Bitcoin helps protect human rights. At the same time, they get to install a wallet, make trades on Bitcoin and Lightning, and spin up their own Bitcoin miner,” Dr. Hogan told Bitcoin Magazine.

Unlike other online resources and educational materials, UATX leans into its close connections with the Bitcoin industry in Texas, unlocking a personal and hands-on experience with the technology. Jack Platts from Hypersphere Ventures donated bitcoin to the students, while Cholla Inc, Gideon Powell, and Brad Cuddy donated Antminer S9 miners that students set up in their dorms (which they used to join a mining pool). Pierre Rochard has given guest lectures, guiding students through Lightning Network transactions. The class even had a field trip to Riot’s mining facility in Rockdale, Texas, where an old aluminum smelting facility has been turned by Riot into a Bitcoin mine. Students received books like “Gradually, Then Suddenly,” “The Satoshi Papers,” “Resistance Money,” and “The Genesis Block.”

While the Bitcoin curriculum has not been advertised much, Rosario revealed that the course “was the second most popular course that students bid on using our free market bidding system where they use points to select their courses. The only course that beat it out was a special elective by Niall Ferguson.”

“Beyond Bitcoin, the students learn about the unique aspects of other tokens and blockchains. They program and deploy basic smart contracts and explore how these tools can be used to build systems for Decentralized Finance (DeFi) and Decentralized Physical Infrastructure (DePIN),” added Dr. Hogan, who believes the public and verifiable nature of cryptographic finance has the potential to phase out fraud and corruption found in legacy finance.

When asked about the novel risks of crypto scams and Ponzi schemes, meme coins, rug pulls, and so on — especially how the university deals with those topics from an educational perspective — Rosario addressed the concern by saying that, “The best way we teach students about fraud, not just in digital assets but in their careers and lives, is by providing an intellectual foundation at the core of our curriculum that builds their mind and character. Our students are highly agentic, here to build an institution, not just attend a university. Our tagline is the fearless pursuit of truth, teaching the intellectual foundations of the Western tradition, from ancient Greeks to modern philosophers and economists. When teaching half on Bitcoin and half on cryptocurrency, UATX is ecumenical. To build the life of the mind, students must be introduced to different ideas.”

Dr. Hogan emphasized the transparency and reliability of blockchains as compared to traditional financial networks. “Unlike an opaque financial company, the funds in a smart contract can easily be verified on the blockchain. Unlike a bank transfer or stock trade that might take days to clear, transactions on the blockchain can be verified within minutes,” he explained, adding that, “In contrast, failed companies like FTX and the Celsius Network were not decentralized companies built on blockchain technology. They were traditional financial companies that failed for the same old reasons: excessive risk and outright fraud. Moving to blockchain-based systems will help prevent such collapses in the future.”

Dr. Hogan shared the original schedule of classes and guest lecturers with Bitcoin Magazine, as seen below:

Part 1: Bitcoin

Week 1: Intro to Bitcoin and blockchains

Week 2: The Bitcoin and Lightning networks (Pierre Rochard)

Week 3: Bitcoin and human rights (Craig Warmke)

Week 4: Bitcoin mining and energy economics

Week 5: The future of Bitcoin (Will Cole and Parker Lewis)

Part 2: Cryptocurrency and blockchain technology

Week 6: Cryptocurrency and smart contracts

Week 7: Decentralized finance (DeFi)

Week 8: Webpage and blockchain interactions (Phil Greenwald)

Week 9: Utility tokens and decentralized physical infrastructure (Kyle Samani)

Week 10: The future of crypto and blockchains

Bitcoin in Academic Discourse: The Satoshi Papers

Beyond teaching Bitcoin to their students, UATX has led a conversation about the societal meaning and impact of Bitcoin in academic circles. In February of 2025, the university hosted the Satoshi Papers Symposium, a day of academic lectures celebrating the launch of the book by the Texas Bitcoin Foundation (TBF).

The Satoshi Papers, published by the Bitcoin Policy Institute (BPI) and edited by TBF executive director and BPI fellow Natalie Smolenski, “draws inspiration from the 18th-century American debate between the Federalists and Anti-Federalists about the role of government in preserving the liberties of individuals and communities.”

The book features a series of essays from a variety of scholars including economists, historians, anthropologists, and other social scientists, discussing the relationship between money and state in a post-Bitcoin world.

A Bitcoin Endowment In Self Custody

In addition from their educational and academic contributions to Bitcoin, UATX also hold the asset in a custom-designed Bitcoin Endowment, and unlike many other universities who also carry bitcoin exposure via ETFs, the university has a strong belief in self custody, securing the funds in multisignature wallets in collaboration with Unchained Capital, an instrumental partner in the university’s foray into Bitcoin.

Joe Kelly, CEO and co-founder of Unchained, donated 2 bitcoin to the Endowment to kick-start it; the university is actively raising a $5-million fund in bitcoin, which they have committed to holding in cold storage for at least five years.

During the announcement made in June 2024, Kelly said, “Both UATX and the Bitcoin community are building innovative institutions for the future. By choosing Unchained as a partner, the university is signaling its assessment of bitcoin’s function as a freedom-preserving technology, with our custody model helping to ensure there is no single point of failure to UATX’s long-term bitcoin holdings.”

Blue Star Capital Secures £1.25M For Bitcoin and Crypto Treasury Expansion

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Oscar Zarraga Perez

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July 3, 2025

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Blue Star Capital Secures £1.25M For Bitcoin and Crypto Treasury Expansion

Blue Star Capital plc (AIM: BLU) has announced it has completed a £1.25 million fundraising to support a major push into Bitcoin and crypto markets through its portfolio company SatoshiPay Ltd, marking a strategic move to capitalize on growing institutional interest in Bitcoin treasuries.

🚨JUST IN: 🇬🇧 Blue Star Capital raised £1.25 million ($1.71 million) which will be used to buy their first #bitcoin (indirectly through SatoshiPay.) pic.twitter.com/quEPB93Z99
— NLNico (@btcNLNico) July 3, 2025

The investment company, which focuses on blockchain, esports, and payments, raised £1.15 million through a placing, and an additional £100,000 from an oversubscribed Broker Option, with all new shares issued at £0.18 each.

“This Fundraise allows Blue Star shareholders to participate in the increased global interest in businesses operating in crypto related fields and associated treasury positions,” stated the Chairman of the Company Anthony Fabrizi. “In particular, SatoshiPay’s long standing experience in, and the use of, crypto treasury management in their core business combined with the added support this will provide to its Vortex project provides Blue Star shareholders with two benefits and places both companies in a strong position to grow.”

£1 million of the proceeds will be deployed as a secured loan to SatoshiPay, aimed specifically at expanding its Bitcoin and other crypto treasuries. The loan will be backed by the value of the digital assets acquired, giving Blue Star indirect exposure to potential Bitcoin gains while retaining downside protection through collateral.

“The board of SatoshiPay advises that the enlarged treasury function will strengthen Vortex’s core offering through aspects such as supporting stable swap pricing through deepening liquidity and deploying assets in secured DeFi protocols, which can also be used in pools on Pendulum, the DeFi blockchain that serves as Vortex’s foreign exchange backend,” said the announcement. .

By positioning Bitcoin as a core treasury reserve asset, Vortex aims to strengthen its presence in the crypto space. This shows a growing institutional shift toward viewing Bitcoin as a strategic financial instrument capable of enhancing both capital efficiency and long term growth.

Geyser Launches $10K Nostr Wallet Connect Grant to Spark Open-Source Innovation

Mick Morucci

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July 3, 2025

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Geyser Launches $10K Nostr Wallet Connect Grant to Spark Open-Source Innovation

Geyser, a Bitcoin crowdfunding and grants platform, announced the NWC Hackathon Grant this week, inviting projects that leverage Nostr Wallet Connect (NWC) – a communication protocol that enables programmable, non-custodial Bitcoin payments and seamless interactions between apps and wallets. NWC uses the Nostr relay network as an always-on, encrypted message layer linking applications to users’ wallets, so apps can request payments or fetch data without custodial intermediaries. This design allows Bitcoin to move more freely between services. “The timing feels right… There’s growing excitement around leveraging NWC for Lightning development,” said Mick Morucci, co-founder of Geyser, underscoring the momentum behind this technology.

Two Grant Tracks for Builders

The $10K NWC Grant will be distributed across two categories. Track 1: New NWC Apps focuses on fresh ideas and prototypes built from scratch, this can include “vibe-coding” tools. Track 2: Mature NWC Apps is for established projects that have not yet received investor funding. Geyser indicated there may be up to four winners per track, assessed on criteria including impact, need, proof of work, and early potential. The initiative isn’t just about prize money – it comes with a supportive structure of workshops and mentorship. Over the coming weeks (June 30 – July 11), participants can join educational livestreams, remote workshops, and feedback sessions, culminating in a livestreamed pitch day on July 8 and final winners announced July 11. This approach aims to nurture builders through the development process, not just reward a finished product.

NWC Unlocks New Use Cases

Nostr Wallet Connect’s versatility is a key motivation for the grant. “We want to bring Bitcoin out of cold storage and into real use: automated, seamless, and sovereign,” said René Aaron, a developer at Alby (one of the grant’s sponsors), highlighting how NWC bridges Lightning to everyday applications (listen to his interview here). By acting as an open bridge between any wallet and app, NWC removes friction for both users and developers. NWC has been described as “the missing link” that unlocks new Bitcoin use cases – “subscription models, non-custodial flows, programmable payments & much more” (source). This means ideas like pay-as-you-go subscriptions, IoT micropayments, Bitcoin-powered developer tools, Discord tipping bots or even automatic credit card top-ups can all be built using NWC.

Sponsors and Early Applicants

The grant is backed by sponsors including Alby, Flash, Primal, and BtcCuracao. Several projects have already applied to the program, reflecting a diverse range of NWC applications. These include ZapGoals – a Nostr app for fundraising sats towards personal goals, Swapido – a service enabling one-click Lightning-to-Mexican Peso bank transfers, Flotilla – a Nostr-based communities platform, and Medical Binder – an initiative for sovereign health records. More applicants are expected as the Bitcoin builder community rallies around this open challenge.

How to Get Involved

Geyser is encouraging any Bitcoin or Nostr builders with an idea to apply for the NWC Grant. Applications are open on the NWC Hackathon Grant page until Monday 7th of July. Pitch day is Tuesday the 8th. With this initiative, the organizers hope to spark fresh innovation and prove out what’s possible when Lightning meets Nostr’s permissionless communications. By funding and mentoring developers, Geyser and partners aim to accelerate the growth of a “self-sovereign” Bitcoin payments ecosystem open to all.

This is a guest post by Mick Morucci. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

The Scroll: A Brief History of Wallet Clustering

Yuval Kogman

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July 3, 2025

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The Scroll: A Brief History of Wallet Clustering

Our previous post in this series introduced the basic idea behind wallet or address clustering, the trivial case of address reuse, and the merging of clusters based on the common input ownership heuristic (CIOH), also known as the multi-input heuristic.

Today, we’ll expand on more sophisticated clustering methods, briefly summarizing several notable papers. The content here mostly overlaps with a live stream on this topic, which is a companion to this series. Note that the list of works cited is by no means exhaustive.

Early Observational Studies – 2011-2013

As far as I’m aware, the earliest published academic study that deals with clustering is Fergal Reid and Martin Harrigan’s An Analysis of Anonymity in the Bitcoin System (PDF). This work, which studies the anonymity properties of bitcoin more broadly, in its discussion of the on-chain transaction graph, introduced the notion of a “User Network” to model the relatedness of a single user’s coins based on CIOH. Using this model, the authors critically examined WikiLeak’s claim that it “accepts anonymous Bitcoin donations.”

Another study that was not published as a paper was Bitcoin – An Analysis (YouTube) by Kay Hamacher and Stefan Katzenbeisser, presented at 28c3. They studied money flows using transaction graph data and made some remarkably prescient observations about bitcoin.

In Quantitative Analysis of the Full Bitcoin Transaction Graph (PDF), Dorit Ron and Adi Shamir analyzed a snapshot of the entire transaction graph. Among other things, they note a curious pattern, which may be an early attempt at subverting CIOH:

We discovered that almost all these large transactions were the descendants of a single large transaction involving 90,000 bitcoins [presumably b9a0961c07ea9a28…] which took place on November 8th, 2010, and that the subgraph of these transactions contains many strange looking chains and fork-merge structures, in which a large balance is either transferred within a few hours through hundreds of temporary intermediate accounts, or split into many small amounts which are sent to different accounts only in order to be recombined shortly afterward into essentially the same amount in a new account.

Another early confounding of this pattern was due to MtGox, which allowed users to upload their private keys. Many users’ keys were used as inputs to batch sweeping transactions constructed by MtGox to service this unusual pattern of deposits. The naive application of CIOH to those transactions resulted in cluster collapse, specifically the cluster previously known as MtGoxAndOthers on walletexplorer.com (now known as CoinJoinMess). Ron and Shamir seem to note this, too:

However, there is a huge variance in [these] statistics, and in fact one entity is associated with 156,722 different addresses. By analyzing some of these addresses and following their transactions, it is easy to determine that this entity is Mt.Gox

Although change identification is mentioned (Ron & Shamir refer to these as “internal” transfers), the first attempt at formalization appears to be in Evaluating User Privacy in Bitcoin (PDF) by Elli Androulaki, Ghassan O. Karame, Marc Roeschlin, Tobias Scherer, and Srdjan Capkun. They used the term “Shadow Addresses,” which these days are more commonly referred to as “change outputs.” This refers to self-spend outputs, typically one per transaction, controlled by the same entity as the inputs of the containing transaction. The paper introduces a heuristic for identifying such outputs to cluster them with the inputs. Subsequent work has iterated on this idea extensively, with several proposed variations. One example based on the amounts in 2 output transactions is if an output’s value is close to a round number when denominated in USD (based on historical exchange rates), that output is likely to be a payment, indicating the other production is the change.

This early phase of Bitcoin privacy research saw the theory of wallet clustering become established as a foundational tool for the study of Bitcoin privacy. While this wasn’t entirely theoretical, evidential support was limited, necessitating relatively strong assumptions to interpret the observable data.

Empirical Results – 2013-2017

Although researchers attempted to validate the conclusions of these papers, for example, by interviewing Bitcoin users and asking them to confirm the accuracy of the clustering of their wallets or using simulations as in Androulaki et al.’s work, little information was available about the countermeasures users were utilizing.

A fistful of bitcoins: characterizing payments among men with no names (PDFs: 1, 2) by Sarah Meiklejohn, Marjori Pomarole, Grant Jordan, Kirill Levchenko, Damon McCoy, Geoffrey M. Voelker, and Stefan Savage examined the use of Bitcoin mixers, and put the heuristics to the test by actually using such services with real Bitcoin. On the more theoretical side, they defined a more general and accurate change identification heuristic than previous work.

In his thesis, Data-Driven De-Anonymization in Bitcoin, Jonas Nick was able to validate the CIOH and change identification heuristics using information obtained from a privacy bug in the implementation of BIP 37 bloom filters, mainly used by light clients built with bitcoinj. The underlying privacy leak was described in On the privacy provisions of Bloom filters in lightweight bitcoin clients (PDF) by Arthur Gervais, Srdjan Capkun, Ghassan O. Karame, and Damian Gruber. The leak demonstrated that the clustering heuristics were rather powerful, a finding which was elaborated on in Martin Harrigan and Christoph Fretter’s The Unreasonable Effectiveness of Address Clustering (PDF).

Attackers have also been observed sending bitcoin, not through a mixer as in the fistful of bitcoins papers, but small amounts sent to addresses that have already appeared on-chain. This behavior is called dusting or dust¹ attacks and can deanonymize the victim in two ways. First, the receiving wallet may spend the funds, resulting in address reuse. Second, older versions of Bitcoin Core used to rebroadcast received transactions, so an attacker who was also connected to many nodes on the p2p network could observe if any node was rebroadcasting its dusting transactions and that node’s IP address to the cluster.²

Although Is Bitcoin gathering dust? An analysis of low-amount Bitcoin transactions (PDF) by Matteo Loporchio, Anna Bernasconi, Damiano Di Francesco Maesa, and Laura Ricci offered insights in 2023, exploring dust attacks, the data set they analyzed only extends to 2017. This work looked at the effectiveness of such attacks in revealing clusters:

This means that the dust attack transactions, despite being only 4.86% of all dust creating transactions, allow to cluster 66.43% of all dust induced clustered addresses. Considering the whole data set, the transactions suspected of being part of dust attacks are only 0.008% of all transactions but allow to cluster 0.14% of all addresses that would have otherwise remained isolated.

This period of research was marked by a more critical examination of the theory of wallet clustering. It became increasingly clear that, in some cases, users’ behaviors can be easily and reliably observed and that privacy assurances are far from perfect, not just in theory but also based on a growing body of scientific evidence.

Wallet Fingerprinting – 2021-2024

Wallet fingerprints are identifiable patterns in transaction data that may indicate using particular wallet software. In recent years, researchers have applied wallet fingerprinting techniques to wallet clustering. A single wallet cluster is typically created using the same software throughout, so any observable fingerprints should be fairly consistent within the cluster.³

As a simple example of wallet fingerprinting, every transaction has an nLockTime field, which can be used to post-date transactions.⁴ This can be done by specifying a height or a time. When no post-dating is required, any value representing a point in time that is already in the past can be used, typically 0, but such transactions haven’t been post-dated when they were signed. To avoid revealing intended behavior and address the fee sniping concern, some wallets will randomly specify a more recent nLockTime value. However, since some wallets always specify a value of 0, when it’s not clear which output of a transaction is a payment and which is change, that information might be revealed by subsequent transactions. For example, suppose all of the transactions associated with the input coins specify nLockTime of 0, but the spending transaction of one of the outputs does not, in this case it would be reasonable to conclude that output was a payment to a different user.

There are many other known fingerprints. Wallet Fingerprints: Detection & Analysis by Ishaana Misra is a comprehensive account.

Malte Möser and Arvind Narayanan’s Resurrecting Address Clustering in Bitcoin (PDF) applied fingerprinting to the clustering problem. They used it as the basis for refinements to change identification. They relied on fingerprints to train and evaluate improved change identification using machine learning techniques (random forests).

Shortly thereafter, in How to Peel a Million: Validating and Expanding Bitcoin Clusters (PDF), George Kappos, Haaroon Yousaf, Rainer Stütz, Sofia Rollet, Bernhard Haslhofer and Sarah Meiklejohn extended and validated this approach using cluster data for a sample of transactions provided by a chain analytics company, indicating that the wallet fingerprinting approach is dramatically more accurate than only using CIOH and simpler change identification heuristics. Taking fingerprints into account when clustering makes deanonymization much easier. Likewise, taking fingerprints into account in wallet software can improve privacy.

A recent paper, Exploring Unconfirmed Transactions for Effective Bitcoin Address Clustering (PDF) by Kai Wang, Yakun Cheng, Michael Wen Tong, Zhenghao Niu, Jun Pang, and Weili Han analyzed patterns in the broadcast of transactions before they are confirmed. For example, different fee-bumping behaviors can be observed, both via replacement or with child-pays-for-parent. Such patterns, while not strictly fingerprints derived from the transaction data, can still be thought of as wallet fingerprints but about more ephemeral patterns related to certain wallet software, observable when connected to the Bitcoin P2P network but not apparent in the confirmed transaction history that is recorded in the blockchain.

Similar to the Bitcoin P2P layer, the Lightning network’s gossip layer shares information about publicly announced channels. This is not typically framed as a wallet fingerprint but might be loosely considered as such, in addition to the on-chain fingerprint lightning transactions have. Lightning channels are UTXOs, and they form the edges of a graph connecting Lightning nodes, which are identified by their public key. Since a node may be associated with several channels, and channels are coins, this is somewhat analogous to address reuse.⁵ Christian Decker has publicly archived historical graph data. One study that looks at clustering in this context is Cross-Layer Deanonymization Methods in the Lightning Protocol (PDF) by Matteo Romiti, Friedhelm Victor, Pedro Moreno-Sanchez, Peter Sebastian Nordholt, Bernhard Haslhofer, and Matteo Maffei.

Clustering techniques have improved dramatically over the last decade and a half. Unfortunately, widespread adoption of Bitcoin privacy technologies is still far from being a reality. Even if it was, the software has not yet caught up to the state of the art in attack research.

Not The Whole Story

As we have seen, starting from the humble beginnings of address reuse and the CIOH described by Satoshi, wallet clustering is a foundational idea in Bitcoin privacy that has seen many developments over the years. A wealth of academic literature has called into question some of the overly optimistic characterizations of Bitcoin privacy, starting with WikiLeaks describing donations as anonymous in 2011. There are also many opportunities for further study and for the development of privacy protections.

Something to bear in mind is that clustering techniques will only continue to improve over time. “[R]emember: attacks always get better, they never get worse.”⁶ Given the nature of the blockchain, patterns in the transaction graph will be preserved for anyone to examine more or less forever. Light wallets that use the Electrum protocol will leak address clusters to their Electrum servers. Ones that submit xpubs to a service will leak clustering information of all past and future transactions in a single query. Given the nature of the blockchain analysis industry, proprietary techniques are at a significant advantage, likely benefiting from access to KYC information labeling a large subset of transactions. This and other kinds of blockchain-extrinsic clustering information are especially challenging to account for since, despite being shared with 3rd parties, this information is not made public, unlike clustering based on on-chain data. Hence, these leaks aren’t as widely observable.

Also, bear in mind that control over one’s privacy isn’t entirely in the hands of the individual. When one user’s privacy is lost, that degrades the privacy of all other users. Through the process of elimination, which suggests a linear progression of privacy decay, every successfully deanonymized user can be discounted as a possible candidate when attempting to deanonymize the transactions of the remaining users. In other words, even if you take precautions to protect your privacy, there will be no crowd to blend into if others don’t take precautions, too.

However, as we shall see, assuming linear decay of privacy is often too optimistic; exponential decay is a safer assumption. This is because divide-and-conquer tactics also apply to wallet clustering, much like in the game of 20 questions. CoinJoins transactions are designed to confound the CIOH, and the topic of the next post will be a paper that combines wallet clustering with intersection attacks, a concept borrowed from the mixnet privacy literature, to deanonymize CoinJoins.

1

Not to be confused with a different kind of dust attack, such as this example analyzed taking clustering into account by LaurentMT and Antoine Le Calvez.

2

A notable and somewhat related attack on Zcash and Monero nodes (Remote Side-Channel Attacks on Anonymous Transactions by Florian Tramer, Dan Boneh and Kenny Paterson) was able to link node IP addresses to viewing keys by exploiting timing side channels on the P2P layer.

3

More precisely: fingerprint distributions should be consistent within a cluster, as some wallets deliberately randomize certain attributes of transactions.

4

Note for nLockTime to be enforced the nSequence value of at least one input of the transaction must also be non-final, which complicates things both for post-dating and in terms of the different observable patterns this gives rise to.

5

Channel funds are shared by both parties to the channel but the closing transaction resembles a payment from the funder of a channel. Dual-funded channels may confound CIOH, similarly to PayJoin transactions.

6

New Attack on AES – Schneier on Security

The Nakamoto Strategy: Seeding Bitcoin Treasury Companies in Every Capital Market

Nick Ward

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July 3, 2025

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The Nakamoto Strategy: Seeding Bitcoin Treasury Companies in Every Capital Market

NOTE: This article presents the author’s perspective on the likely structure and future implications of Nakamoto’s strategy. It is a forward-looking analysis, not a statement from Nakamoto or its employees. Until the proposed merger closes, Nakamoto’s strategic execution remains subject to change. The analysis reflects public materials, early actions, and directional signals observed to date.

Introduction: From Treasury Strategy to Global Bitcoin Refinery

The Nakamoto strategy offers a new framework for capital formation in the age of Bitcoin. Rather than viewing Bitcoin solely as a reserve asset, Nakamoto is pursuing an approach that uses Bitcoin as a foundation for constructing a more dynamic and globally integrated capital structure.

The strategy involves more than simply accumulating BTC on a balance sheet. Nakamoto treats Bitcoin as a base layer of value and pairs it with public equity as a leverage layer—strategically deploying capital into smaller, high-potential public companies. The goal is to compound exposure, improve market access, and support the growth of a decentralized, Bitcoin-native financial ecosystem.

Already, UTXO Management has provided examples by seeding and supporting several high-profile Bitcoin treasury companies:

Metaplanet (TSE: 3350) – Japan’s fastest-growing public Bitcoin company with 13,350 BTC, and #1 performing public company of 2024 out of 55,000 globally.
The Smarter Web Company (AQUIS: SWC) – A UK-based web services firm that IPO’d with a BTC treasury strategy and has returned more than 100x since listing.
The Blockchain Group (Euronext: ALTBG) – Europe’s first Bitcoin treasury company, with over 1000% BTC yield YTD 2025.

Backed by over $750+ million in capital, Nakamoto can scale this strategy globally—market by market, exchange by exchange, one Bitcoin treasury company at a time.

As Bitcoin increasingly functions as the emergent global hurdle rate for capital—strategies that generate returns in excess of Bitcoin itself become especially valuable. Nakamoto’s model is designed not just to preserve value in BTC terms, but to compound it. In that context, firms capable of consistently outperforming Bitcoin through disciplined BTC-denominated strategies are likely to earn outsized attention—and may increasingly attract capital as investors seek returns above the Bitcoin benchmark.

The Nakamoto Strategy Explained

The strategy rests on a straightforward insight: market access constraints are as important as Bitcoin itself. In many jurisdictions, institutional capital cannot buy or custody Bitcoin directly. But that same capital can buy public equities that hold Bitcoin as a treasury reserve.

This creates a specific opportunity:

Seed new Bitcoin treasury companies: These are established in jurisdictions where access to BTC is structurally constrained, or where no such companies yet exist.
Deploy Bitcoin strategically: BTC may be contributed directly or indirectly through equity financing mechanisms like PIPEs, warrants, or structured investments.
Enable public market revaluation: These companies may begin to trade at a premium to the value of their BTC holdings (an mNAV expansion).
Recycle capital through appreciation: Nakamoto can participate in this cycle and may reinvest in additional companies or accumulate further BTC.

The Nakamoto Flywheel below illustrates how equity premiums from public markets are strategically converted into long-term Bitcoin reserves. This repeatable model compounds Bitcoin-denominated value with each cycle—building balance sheet strength at global scale.

The Nakamoto Flywheel Converts Premiums Into More Bitcoin Reserves

Key Mechanics: How the Strategy Multiplies Value

mNAV Arbitrage and Strategic Premium Capture

The Nakamoto strategy generates value by leveraging the structural dynamics of public markets and the constrained nature of Bitcoin access in many jurisdictions. One of the foundational mechanisms of the Nakamoto strategy is mNAV (multiple of Net Asset Value) arbitrage. When Nakamoto allocates capital to a Bitcoin treasury company in a jurisdiction where no other compliant BTC exposure vehicles exist, that company often begins trading at a multiple of its net Bitcoin holdings. This outcome assigns a strategic premium to Nakamoto’s deployed capital and effectively increases the market value of Bitcoin originally acquired at or near spot.

BTC Yield as the Core Performance Metric

Rather than focusing on traditional accounting metrics, Nakamoto evaluates performance in Bitcoin-denominated terms—specifically by tracking Bitcoin per diluted share. This measure, referred to as BTC Yield, captures the compounding benefit when a treasury company increases its Bitcoin holdings at a rate faster than its equity issuance. This reinforces long-term alignment with Bitcoin-native value creation.

Nakamoto also tracks look-through BTC ownership—its proportional claim on Bitcoin held across portfolio companies—as a secondary KPI, ensuring every equity move is benchmarked in Bitcoin terms.

While most Bitcoin treasury companies rely heavily on repeated equity issuance—diluting existing shareholders in order to grow BTC-per-share, Nakamoto can compound holdings without dilution by running what is referred to as the mNAV² strategy. In practice, this means:

Seed at Intrinsic Value: Nakamoto launches or invests in a Bitcoin treasury company at or near 1× mNAV—meaning the equity is priced roughly in line with the company’s net Bitcoin holdings.
Unlock the Premium: Public markets re-rate the company, assigning a valuation multiple above its Bitcoin holdings due to scarcity, strategic positioning, or narrative momentum—creating an mNAV premium.
Recycle Without Dilution: Nakamoto harvests a portion of the appreciated equity, redeploying the proceeds into additional BTC or new ventures—without issuing new Nakamoto shares, enabling BTC-per-share growth through capital efficiency.

As competition among listed treasury vehicles intensifies, markets are likely to reward the firms that can expand BTC-per-share through non-dilutive mechanisms. mNAV² makes that outcome native to Nakamoto’s playbook, turning balance-sheet efficiency itself into a competitive moat.

Closing the Institutional Access Gap

Jurisdictional limitations prevent many institutional investors from directly holding Bitcoin. However, they are often permitted to invest in public equities that hold BTC as a treasury asset. Nakamoto addresses this asymmetry by seeding and supporting regionally compliant public vehicles that serve as legal and practical conduits for institutional Bitcoin exposure.

Advantages of Operating Through Public Markets

By using public markets as its operational arena, Nakamoto benefits from transparency, ongoing liquidity, and efficient price discovery. These attributes allow it to recycle capital efficiently and expand into new geographies quickly. Unlike traditional private market structures, this approach supports scale, visibility, and regulatory alignment in real-time.

The 40% Rule: Redeploying Gains Into Bitcoin

A key structural requirement of the Nakamoto strategy is compliance with the Investment Company Act of 1940, which mandates that no more than 40% of Nakamoto’s balance sheet can consist of securities such as public equities. Bitcoin, classified as a commodity, does not count toward this limit.

This regulatory boundary shapes how Nakamoto must operate:

As equity positions in Bitcoin treasury companies appreciate, Nakamoto is compelled to sell down those stakes to stay within the 40% threshold.
This naturally reinforces the strategy’s focus on cycling gains from equity back into Bitcoin—accelerating BTC accumulation.
To manage this constraint, Nakamoto has begun using innovative structures such as Bitcoin-denominated convertible notes. These instruments help fix asset exposure, enabling gradual conversion and avoiding sudden threshold breaches.

The cap is not a limitation on ambition—it’s a forcing function for capital discipline and strategic BTC reinvestment. As Nakamoto’s balance sheet grows, so does its capacity to hold larger equity positions—always with Bitcoin as the core reserve asset.

Strategic Instruments: Bitcoin-Denominated Convertible Notes

To manage compliance with the 40% securities threshold and mitigate volatility exposure, Nakamoto is likely to rely on Bitcoin-denominated convertible note structures in future deployments. These instruments offer a flexible way to structure exposure—allowing Nakamoto to fix the value of an investment on its balance sheet while retaining the option to convert into equity over time.

This structure presents several strategic advantages:

Regulatory Buffer: Because conversion is optional and can be staged, these notes help delay classification as securities—preserving balance sheet headroom under the 40 Act.
Gradual Entry and Exit: Nakamoto can incrementally convert notes as needed, smoothing market impact and aligning exposure with evolving balance sheet capacity.

This approach has already shown promise in models pursued by The Blockchain Group and H100, where similar structures have enabled Bitcoin-native capital deployment without triggering regulatory friction. If scaled appropriately, Bitcoin-denominated convertibles could become a defining instrument in Nakamoto’s toolkit—one that aligns capital strategy with both performance and compliance.

Addressing Criticism of the Nakamoto Strategy

Navigating Tax Complexity

A recurring concern centers around the tax consequences of transferring Bitcoin between entities. In many jurisdictions, such transfers can trigger taxable events, reducing capital efficiency. Nakamoto mitigates this risk by avoiding direct BTC transfers and instead utilizing equity-based structures—such as PIPEs, warrants, and joint ventures—that provide exposure without incurring immediate tax obligations.

Interpreting mNAV Premiums and Narrative Risk

Critics often question the durability of mNAV premiums, suggesting they may be driven more by market hype than fundamentals. Nakamoto responds to this concern by focusing on Bitcoin-per-share growth rather than valuation multiples alone. The firm emphasizes BTC Yield as a more reliable metric and prioritizes tangible BTC accumulation through recapitalizations and disciplined capital deployment.

Governance and Operational Influence

Some observers have expressed concern about Nakamoto’s degree of influence over the companies it supports. Nakamoto does not aim to control daily operations but ensures strategic alignment through governance rights, board representation, and equity stakes. This structure allows Nakamoto to influence treasury policy and maintain Bitcoin-centric discipline without compromising the autonomy of each company.

Managing Market Volatility and Compression Risk

The potential for mNAV compression—particularly in risk-off environments—is a known challenge. Nakamoto mitigates this risk by focusing on jurisdictions with low initial valuations and unmet demand for Bitcoin exposure. Even if valuation multiples contract, the companies Nakamoto supports continue to hold BTC on their balance sheets, preserving intrinsic value regardless of market sentiment.

Capturing Value in a Bitcoin-Denominated Model

A related concern involves how Nakamoto captures tangible value from the companies it helps establish or support. Unlike models that rely on dividend payments or near-term liquidity events, Nakamoto benefits through long-term strategic equity stakes, pre-IPO warrant structures, and equity appreciation tied directly to BTC-per-share growth. This approach enables value capture that aligns with its thesis of Bitcoin-denominated performance, without compromising the capital structure or autonomy of the underlying companies.

Differentiation from Traditional Private Equity Models

Comparisons are often drawn between Nakamoto’s strategy and private equity investing. While there are structural similarities, Nakamoto distinguishes itself through its liquidity profile, public market transparency, and alignment with Bitcoin-native accounting. Rather than operating as a fund, Nakamoto functions as a public infrastructure builder—identifying underserved markets, constructing regulatory frameworks, and absorbing early-stage risk in order to unlock institutional Bitcoin access at scale.

The Role of Nakamoto vs. Direct Investment

Some critics question whether Nakamoto is simply a middle layer between investors and the companies themselves—arguing that sophisticated capital could bypass Nakamoto and invest directly. In practice, however, Nakamoto delivers differentiated value by sourcing deals in overlooked markets, architecting compliant listing structures, and catalyzing early demand. It acts as a bridge between Bitcoin-native capital and traditional financial systems, taking on the narrative and structural lift that many institutions are unwilling or unable to initiate alone.

The irreplaceable edge for Nakamoto is deal flow. Nakamoto can source, structure, and price transactions at the moment of inception—access that simply isn’t available to most outside capital until valuations have already moved.

Conclusion: Nakamoto and the Formation of Bitcoin-Native Capital Markets

The Nakamoto strategy represents an emerging capital architecture centered around Bitcoin. By enabling market access, accelerating public-market velocity, and aligning incentives around BTC-per-share accumulation, Nakamoto is helping build a new generation of treasury-first public companies.

With over $750 million raised, operating examples across Tokyo, London, and Paris, and a growing network of prospective listings, Nakamoto is executing on a strategy designed to bridge the gap between capital markets and Bitcoin adoption.

As traditional financial institutions continue to face structural and regulatory barriers to holding BTC directly, the model Nakamoto is developing may offer a scalable, compliant path forward. It’s not just a capital strategy. It’s a structural response to Bitcoin’s growing role in global finance.

Disclaimer: This content was written on behalf of Bitcoin For Corporations, and is not a statement from Nakamoto or Kindly MD, Inc. This article is intended solely for informational purposes.

The Austrian School of Economics

The Origins of the Austrian School of Economics

The Sociopolitical Climate and its Influence

Fundamental Principles of the Austrian School

The Concept of Praxeology

The Role of Individualism

The Importance of Free Markets

Criticisms Surrounding the Austrian School

The Debate over Empiricism

The Social Impact of Laissez-faire Policies

The Austrian School’s Influence on Modern Economics

The Austrian Business Cycle Theory

Entrepreneurship Theory

Notable Austrian Economists and their Contributions

Ludwig von Mises and The Theory of Money and Credit

Friedrich Hayek and the Road to Serfdom

Austrian Economics and Bitcoin

A Cause for Alarm

The Accumulation Continues

Perpetual Strike Preferred Stock

Perpetual Strife and Stride Preferred Stock

A Dazzling Mosaic of Bitcoin Treasury Companies

A Bubble of Bitcoin Treasury Companies

Global M2

A Stronger Correlation

Stablecoins

Conclusion

A Protest Against Cancel Culture and Intellectual Rigidity in Academia

The UATX Bitcoin Curriculum

Bitcoin in Academic Discourse: The Satoshi Papers

A Bitcoin Endowment In Self Custody

Two Grant Tracks for Builders

NWC Unlocks New Use Cases

Sponsors and Early Applicants

How to Get Involved

Early Observational Studies – 2011-2013

Empirical Results – 2013-2017

Wallet Fingerprinting – 2021-2024

Not The Whole Story

Introduction: From Treasury Strategy to Global Bitcoin Refinery

The Nakamoto Strategy Explained

Key Mechanics: How the Strategy Multiplies Value

mNAV Arbitrage and Strategic Premium Capture

BTC Yield as the Core Performance Metric

Closing the Institutional Access Gap

Advantages of Operating Through Public Markets

The 40% Rule: Redeploying Gains Into Bitcoin

Strategic Instruments: Bitcoin-Denominated Convertible Notes

Addressing Criticism of the Nakamoto Strategy

Navigating Tax Complexity

Interpreting mNAV Premiums and Narrative Risk

Governance and Operational Influence

Managing Market Volatility and Compression Risk

Capturing Value in a Bitcoin-Denominated Model

Differentiation from Traditional Private Equity Models

The Role of Nakamoto vs. Direct Investment

Conclusion: Nakamoto and the Formation of Bitcoin-Native Capital Markets

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