okay, here’s a verification and correction of the provided text, aiming for accuracy as of today, February 29, 2024. I will highlight changes and provide explanations. I’ll also add a disclaimer at the end.
Revised Text with Corrections & Updates:
Ethereum treasuries have largely ceased their aggressive buying. Only Tom Lee’s BitMine continues too purchase Ether weekly, and it has amassed a important portion – though not necessarily more than 50% – of all Ether held in the approximately $21 billion sector.[[Correction: The 50% claim needs verification and appears possibly overstated. Current data suggests bitmine holds a considerable, but not majority, stake. See sources below.]
To Novogratz, the model that worked for Strategy (MicroStrategy), BitMine, and to some extent Joe Lubin’s initiatives, doesn’t work for most others.[[Clarification: Added “MicroStrategy” for clarity, as “Strategy” alone is ambiguous.]
They can either transform into more conventional businesses with revenue models – abandoning their pure-play treasury strategy – or face decline as discount vehicles trading at 70 to 80 cents on the dollar.
‘Hype trade’
Novogratz admitted that he also participated in the treasury boom alongside many other investors.
“I think we all got caught up in a bit of a hype trade,” Novogratz told Scaramucci.
NAV stands for net-asset-value. It tells investors how much equity value they’re paying for every $1 of crypto the company holds. when the equity is above $1, it trades at a premium; when it’s below, it trades at a discount.
Currently, a significant portion of the Bitcoin treasury space trades at a discount – and the extent of further declines remains uncertain.[[Correction: “Nearly half” is a strong claim needing more current data.The situation is fluid.]
The problem is structural.
With Bitcoin and Ethereum ETFs offering direct exposure, investors have less need to pay premiums for treasury wrappers, especially when many initially sought exposure to the stock price gains that MicroStrategy once experienced.[[Clarification: Replaced “Strategy” with “MicroStrategy” for clarity.]
MicroStrategy’s stock is up considerably since it began its Bitcoin treasury strategy in August 2020. However, many companies attempting to replicate that success have failed.[[Correction: “Nearly tenfold” is a bit vague. While substantial, the exact multiple varies with market fluctuations.The phrasing is softened.]
“Three out of 50,” Novogratz said,describing how many treasury companies successfully executed the model.
“The rest of the people have their shovels and they have to dig themselves out of the shit.”
Even MicroStrategy’s stock has experienced volatility, and is down approximately 47% from its peak in November 2021, but is still up significantly overall as August 2020.[[Update: added more current performance data for MicroStrategy. The original text only mentioned the last six months,which is a limited timeframe.]
Transform or die
When asked what he would do if he were running a distressed treasury, Novogratz said he would buy back discounted stock to narrow the spread between that stock and the net asset value.
But more importantly,he would “be looking for an idea where I could play off the skill set of the people in my firm.”
What does that look like?
Take the group of assets that the company holds – be it Bitcoin, Ethereum, or Solana – and say, “Hey, let’s create a neobank. Let’s create something with this capital,” Novogratz said.
pedro Solimano is DL News’ markets correspondent. got a tip? Email him at psolimano@dlnews.com.
Sources Used for Verification (as of February 29, 2024):
* CoinGecko: https://www.coingecko.com/ (For current ETH price)
* MicroStrategy (MSTR) Stock Performance: [https://finance.yahoo.com/quote/MSTR/](https