Aker ASA, a Norwegian holding company that is majority owned by billionaire Kjell Inge Røkke, has announced the formation of a new company called Seetee in a letter to shareholders. The company will focus on investing in Bitcoin-focused projects and will hold all liquid assets in bitcoin.
“First, we will use bitcoin as our treasury asset and join the community,” the letter, penned by Røkke, reads. “In Bitcoin speak, we will be hodlers... Second, Seetee will establish mining operations that transfer stranded or intermittent electricity without stable demand locally — wind, solar, hydro power — to economic assets that can be used anywhere. Bitcoin is, in our eyes, a load-balancing economic battery, and batteries are essential to the energy transition required to reach the targets of the Paris Agreement...Third, we will build and invest in projects and companies in Bitcoin’s ecosystem. This is where our true passion is!”
The letter also noted that Seetee will commit to not only holding bitcoin as a reserve asset, but also actively investing in the physical and digital infrastructure being built on top of and around the network.
This news is extremely bullish because, as Røkke himself addresses, the Bitcoin protocol and the underlying value of bitcoin the asset is a function of the utility it provides to its users and stakeholders. With the statements made in the shareholder letter, Seetee announced its intention to be involved in all aspects.
“Not Investing Is The Riskiest Decision”
“Risk is not an obvious concept. What’s commonly considered risky is frequently not. And vice versa. We are used to thinking that cash is risk free. But it’s not. It’s implicitly taxed by inflation at a small rate every year… Inflation is very good for debtors. And the U.S. is the world’s largest debtor. They owe the bond owners. And they owe pensions. Both groups may be out of luck in the long term.”
In what is becoming an increasingly-accepted view, the shareholder’s letter raised concerns about the fragility and long-term stability of the global fiat monetary system that has been in place since 1971. While bitcoin may still have significant day-to-day volatility, at the base layer, bitcoin is the antithesis of volatility and fragililty, with a hard-capped supply of 21 million paired with perfect supply inelasticity. Røkke also addressed the asymmetric upside offered by bitcoin and involvement in the broader ecosystem.
“...it may be irresponsible not to include some exposure to bitcoin given the asymmetric return properties. Even if you don’t get the underlying cypherpunk and libertarian ideals, which I find most interesting, you still need to consider the potential diversification benefits of bitcoin: ‘Schmuck insurance’ in the words of Social Capital’s Chamath Palihapitiya.”
As the bitcoin market cap grows in size and liquidity, along with the fact that it has been the best performing asset of the last 10, five, three and single years, it is no longer acceptable to hold a 0 percent allocation in a portfolio. In a reinforcing feedback loop, the probability of bitcoin emerging as the dominant global monetary system increases the larger it becomes, and more investors like Røkke are taking notice.
Turning Challenges To Opportunities
“I was skeptical of bitcoin for many years and my arguments were more or less consistent with everyone else’s: the network’s electricity consumption is wasteful, the network is not scalable, its ideals of anonymity play into the hands of criminals, and so on.”
Røkke went into detail and swiftly addressed why these common arguments made by Bitcoin skeptics are in most cases naive and ill informed. In particular, Røkke’s comments on the utility of Bitcoin mining were especially meaningful, given Aker ASA’s broad endeavors in the energy industry.
“The financiers of mining operations will insist on using the cheapest energy and so by definition it will be electricity that has no better economic use. Bitcoin then acts like an economic battery. What otherwise was of little value locally, is turned into an economic asset that can be used globally.”
The letter also addresses the potential of the Lightning Network to empower billions across the global economic system, the possibilities of micropayments with a digital bearer asset and the applications that arise as a result, comparisons to gold as a monetary asset, the power of digital network effects, the “bond fire” coming to debt markets and much more.