Source: Bonnie Blockchain

Compiled and Translated by: TechFlow

Guest: Simon Gerovich, CEO of Metaplanet

Host: Bonnie & David Lin

Podcast Source: Bonnie Blockchain

Original Title: The Strongest Stock Company in the World is in Japan! Extremely Simple Model! Without Even Any Products! Metaplanet CEO Simon Gerovich [Bonnie Blockchain]

Key Highlights Summary

· You must tell all your friends and family, as well as those you care about, that now is the time to buy Bitcoin.

· Bitcoin is an unparalleled high-quality monetary asset, with no other asset on the market comparable to it.

· Bitcoin is a superior version of gold, and it can be called "digital gold." Due to its scarcity and decentralization, Bitcoin should be a key option in the financial planning of every CFO, and cash should not be the only asset in asset allocation.

· Bitcoin financial companies provide an indirect investment route for investors who find it difficult to directly access Bitcoin. The innovation of Bitcoin financial companies in this regard is a disruptive change. This trend is like a capital black hole, attracting a large amount of funds to flow into Bitcoin through Bitcoin financial companies.

· If you want to invest in Bitcoin financial companies, you must ensure that these companies are fully committed, not only to not selling Bitcoin but also to making every effort to continuously increase their Bitcoin reserves.

· If you ask us if we will sell Bitcoin, my answer is absolutely not.

· Companies that are action-driven, focused, and disciplined will gain higher market recognition, while those lacking these qualities will be eliminated.

· Bitcoin is a unique asset with limited supply and increasing demand. As more people focus on Bitcoin, its price may continue to rise over time.

· We are currently in the first stage of the Bitcoin journey, which can be called the "Gold Rush" stage. In this stage, our goal is to accumulate as much Bitcoin as possible. In the second stage, when the price of Bitcoin rises significantly, stock prices will truly reflect the actual value of many publicly listed companies.

· In the current context, Bitcoin is not an ideal form of currency. However, it does not need to be a currency because it is an excellent store of value.

· A standout feature of a Bitcoin reserve company is that it does not need to innovate in a real sense; its core business is to buy Bitcoin, and innovation comes in the way you raise funds.

· I believe that in the future, there will be multiple "Bitcoin superpowers" rising. While the United States may currently be the largest Bitcoin powerhouse, we aim to help Japan become such a country through Metaplanet.

Bitcoin Asset Companies and Premium

David: Today, we have invited Simon Gerovich, the President of Metaplanet, to discuss the future development of Bitcoin asset holding and the potential use of Bitcoin in the hospitality industry.

Bonnie: The latest news today is that Metaplanet's Bitcoin premium has reached close to $600 per coin, and some articles say this price is too high. What are your thoughts? Is MNAV a good metric to evaluate Bitcoin asset companies?

Simon: Recently, many key performance indicators have indeed been proposed to evaluate Bitcoin asset companies. Among them, I believe that "Bitcoin Yield" is the most important metric, reflecting the company's per-share Bitcoin amount and growth rate. This metric has become a common tool for sell-side analysts, and now Bitcoin asset companies worldwide are also adopting similar evaluation methods. Therefore, when evaluating a company, one should not rely solely on a single metric but needs to consider multiple factors comprehensively.

MNAV (Market Net Asset Value) is an important reference metric. Its calculation involves taking the company's market value plus debt enterprise value and then dividing by the company's Bitcoin holdings. This metric fluctuates with market interest in the company's stock and the activities the company engages in. I believe that Metaplanet's premium is justified. For example, there are significant differences in tax policies for investors looking to directly hold Bitcoin in different countries. Taking Japan as an example, ordinary investors need to pay up to 55% personal income tax when purchasing Bitcoin directly. By buying shares in a publicly listed company like Metaplanet, investors can indirectly hold Bitcoin in a more tax-efficient manner.

This has also driven our flywheel effect. The reasonableness of MNAV depends on various factors, with the most crucial being the company's ability to increase the "per-share Bitcoin" quantity. We are currently one of the fastest-growing companies globally in this field, especially in enhancing the per-share Bitcoin aspect. We are committed to keeping MNAV between 3 and 5 so as not to dilute the stock price through excessive stock issuance but to effectively increase the value of per-share Bitcoin, thereby creating greater benefits for all shareholders.

Dilemma Situation

Bonnie: Based on your earlier point, I thought of a dilemma situation. Currently, some companies have ample cash flow and a healthy operating condition, while others are struggling. These struggling companies may choose to transition into Bitcoin treasury companies because they pose little risk and may even reap huge rewards. If these companies see a significant stock price surge as a result, potentially surpassing those of originally well-performing companies, how do you think this situation will unfold?

Simon: I find it interesting that Bitcoin treasury companies provide a way for investors who find it challenging to directly access Bitcoin to invest indirectly. After all, nearly everyone has a brokerage account, and buying stocks is a familiar process to them. However, requiring people to open exchange accounts involves additional steps. Furthermore, considering the past incidents of cryptocurrency exchanges being hacked, many individuals might hesitate to enter the Bitcoin and cryptocurrency space. Additionally, some traditional investment funds outright do not allow direct Bitcoin purchases, but they can buy shares of publicly listed companies. Therefore, I believe that the innovation of Bitcoin treasury companies in this aspect is a disruptive change. This trend is like a capital black hole, attracting a significant amount of funds to flow into Bitcoin via Bitcoin treasury companies.

Of course, extra caution is needed when choosing Bitcoin treasury companies. The company's historical performance will become increasingly essential. For example, we already have a 14-month long-term performance record, while MicroStrategy has a 5-year record. Additionally, the CEO's stance is crucial, such as whether they genuinely believe in Bitcoin. Will they sell their Bitcoin holdings?

This reminds me of a conference I attended in Tokyo a few weeks ago, mainly focused on Japanese stocks. At that time, someone asked me, "Apart from Bitcoin, what else would you invest in?" I then made a very disgusted expression, which many captured and shared on social media. But what I want to emphasize is that Metaplanet only invests in Bitcoin, never in other assets, and certainly never sells our Bitcoin holdings. Michael Saylor also consistently conveys the same message. So, I believe that if you want to invest in Bitcoin treasury companies, you must ensure that these companies are fully committed, not only to holding onto Bitcoin but also to making every effort to continually increase their Bitcoin reserves.

Metaplanet Fund Structure Transformation

David: Simon, could you talk to us about the initial stage of the company's transformation? You mentioned that the company was originally a struggling hotel business, which sounds fascinating. How did you initially raise funds to purchase Bitcoin? How has the funding strategy evolved over the years?

Simon: At that time, we owned a series of hotels. During the initial discussion about transitioning to a Bitcoin asset company, we decided to raise seed funding by selling part of the hotels. Additionally, we received financial support from some like-minded investors, some of whom are also present at this meeting today. For example, UTXO Management Company, the sponsor of this Bitcoin conference, became one of our early shareholders. Moreover, we had a very competent board of directors, many of whom participated in our private fundraising at that time.

At the beginning of last year, we completed the first round of Bitcoin purchases with the raised funds, followed by a rights issue. A rights issue is when a company offers existing shareholders the opportunity to purchase additional shares. Traditionally, a rights issue is often seen as a negative signal because it usually indicates that the company is in urgent need of funds.

However, in hindsight, this was actually our most prudent choice at that time. We had around 13,000 to 14,000 shareholders who filled out a significant amount of paperwork to provide us with the funds to buy Bitcoin. This also allowed our Japanese shareholders to establish initial connections with the company as their funds were directly used to purchase Bitcoin. When you buy shares in the market, you are essentially buying them from other sellers; but when you subscribe to new shares, that money goes directly to the company, and you feel that the funds are specifically used to help the company acquire Bitcoin. That was our modus operandi at the time.

This happened last summer when we raised approximately $60 to $70 million. By the end of the year, we launched the first "Callable Equity Warrant." This type of warrant is a financing mechanism similar to the U.S. "At-The-Market" stock issuance. In the U.S., companies can sell new shares directly to the market, like what MicroStrategy did; however, this approach is not feasible in Japan. So, we devised the structure of the Callable Equity Warrant and issued it to partners, allowing them to sell shares in the market and use the proceeds to exercise the warrant, ultimately gaining newly issued shares. In the end, the effect of this mechanism is similar to the U.S. "At-The-Market" issuance.

Through this method, we successfully raised a substantial amount of funding. We completed the first issuance in December last year, and the most recent one started in February this year, which was just exercised last week. We also officially announced that we raised approximately $600 million in equity through this operation. As the company grows, we will be able to issue more shares to acquire more Bitcoin. We plan to continue using a similar "At-The-Market" operational model.

Looking ahead, we may issue convertible bonds or preferred stock in the future, but for now, we remain focused on equity financing. This financing method is the most effective because it is permanent capital that does not need to be repaid and can be entirely used to purchase Bitcoin.

A Bunch of Bitcoin-Cloning Companies?

Bonnie: Going back to the topic you just mentioned. Obviously Michael Saylor and you, like-minded Bitcoin enthusiasts, have received a lot of support from the Bitcoin community for being Bitcoin treasury companies (companies that incorporate Bitcoin into their balance sheets). Today, many people, after seeing your successful model, want to imitate it. But you were one of the best-performing stocks globally last year, right? This makes people feel like your model is a kind of "success recipe." However, many people enter this field with the wrong mindset, yet claim to be Bitcoin companies. How do you view this?

Simon: Overall, more companies adopting the Bitcoin standard is a good thing. I believe this applies not only to companies like us that have had a troubled past but also to successful companies holding a large amount of idle cash.

Of course, there will always be some bad actors who see this as a shortcut to quick riches. They might think, "If Bitcoin can pump my stock price, why not do it?" But I believe investors are rational. As more and more Bitcoin treasury companies emerge, investors will more easily compare these companies, for example, by monitoring metrics such as their BTC return on investment and per-share Bitcoin holdings on some platforms. Ultimately, companies with strong execution, focus, and discipline will gain higher market recognition, while those lacking these qualities will be eliminated.

Recently, I saw a company announce the sale of Bitcoin, and I thought that was a bit foolish. They announced the purchase of Bitcoin just a few months ago, and now they are selling Bitcoin to show some profit in the last quarter. This behavior will severely damage their reputation because investors will no longer see them as a stable Bitcoin investment channel. So, I believe that over time, the performance of different companies will gradually diverge, and investors will be clearer about which companies they support and why.

However, I also understand that the motivations for different companies to incorporate Bitcoin into their balance sheets may vary. There are many complex factors to consider in this regard.

We Will Continue to Buy Bitcoin Forever

David: Is there a price that would stop you from buying Bitcoin or at least slow down your purchases? If Bitcoin were to rise to $500,000 next week, would you continue to buy? Even if its price quintupled in a week?

Simon: I love your hypothetical. If Bitcoin were to surge to $1 trillion tomorrow, we might think it's overvalued and needs reevaluation, but our plan is to continue buying Bitcoin indefinitely. However, at the current moment, Bitcoin's price is nearing its all-time high again. Bitcoin is a unique asset with a limited supply and increasing demand. As more people focus on Bitcoin, its price may continue to rise over time.

If you ask whether we would sell Bitcoin, my answer is absolutely not. We want our shareholders to be able to decide freely when to buy or sell our stock. Our goal is to be the best leveraged proxy for Bitcoin, and our most important task is to stay focused and disciplined, executing our plan diligently. Regardless of market changes, we will not change our stance or make decisions that confuse investors.

Bitcoin Asset Company Growth in Two Phases

Bonnie: Michael mentioned that MSTR's leverage is equivalent to 1.5 times Bitcoin. Many investors believe that when the Bitcoin price reaches an all-time high, MSTR or other Bitcoin treasury companies' stock prices should also reach an all-time high. Why is this not the case in reality?

Simon: I believe it's crucial to look at the issue from a long-term perspective. From a strategic viewpoint, a company's current situation may be similar to what it was four or five months ago, but the most significant change is the substantial increase in the amount of Bitcoin they hold per share. While the stock price may not fully reflect this, the company's actual value has significantly increased.

Bonnie: Right, but what I'm trying to say is that many people don't truly understand Bitcoin. So how should they view Bitcoin? If you had to explain it to my 70-80-year-old grandmother, how would you put it?

Simon: If your grandmother is already 70-80 years old, I might not recommend that she holds Bitcoin herself, but she can consider it as a long-term investment for her descendants. We are currently in the first phase of the Bitcoin journey, which can be called the "Gold Rush" phase. In this phase, our goal is to accumulate as much Bitcoin as possible. The total supply of the entire Bitcoin network is only 21 million, and our company currently holds more Bitcoin than any other publicly traded company, with hardly anyone coming close to catching up. We aim to be a leader in the industry. As we move into the second phase, when the Bitcoin price significantly rises, stock prices will truly reflect the actual value of many publicly traded companies. In this process, the supply-demand mechanism, Bitcoin price volatility, stock volatility, and the company's financing execution capability will all have a significant impact on the outcome.

In this first stage, it is important for people to understand that stock price does not always reflect the intrinsic value of a company. Just like Amazon in its early days, despite growing revenue, the stock price did not perform well due to thin margins. At that time, Amazon was reinvesting most of its earnings into advertising, marketing, and network expansion. Therefore, I believe that any investor in a Bitcoin treasury company should not have a short-term profit goal. Similarly, if you invest in Bitcoin, you should not aim for short-term gains. However, in the medium to long term, a Bitcoin treasury company has the ability to generate higher returns by increasing the amount of Bitcoin per share. By purchasing stock in a Bitcoin treasury company, you can have the company do the heavy lifting for you, such as Bitcoin reserves and management. A few years down the line, when you look back, you will find that your Bitcoin investment exposure has significantly increased.

Bitcoin Asset Company Explosive Growth Stage

Bonnie: You mentioned earlier that we are currently in the first stage, right? This is a stage similar to the wild west gold rush, and we need to wait for the arrival of the second stage. So, when is the second stage expected to arrive?

Simon: The second stage may arrive in three to five years, or even five to seven years later. By then, Bitcoin will be widely adopted globally, and its price may surpass $1 million, even reaching $5 million. At that time, banks will have the ability to custody Bitcoin. If you have your own treasury, stock investment portfolio, or even real estate, you can deposit these assets in a bank and use them to obtain loans. However, the Bitcoin field has not yet achieved this functionality. Although some banks have announced plans to offer Bitcoin custody services, it will take time to truly implement and provide more attractive interest rates for Bitcoin.

In the second stage, Bitcoin will become a key part of high-quality balance sheets. I hope that by then, we can have tens of trillions of dollars' worth of Bitcoin on our balance sheets. These Bitcoins can be deposited in major banks to obtain low-interest loans, which can then be used to acquire businesses focused on the Bitcoin ecosystem. For example, applying for a digital banking license or acquiring local banks to provide customers with Bitcoin-related financial services. The second stage will be full of endless possibilities, as having Bitcoin as a high-quality asset on the balance sheet will open up new avenues for enterprise development.

International Game Theory

Bonnie: A few days ago, when I was talking to the head of an Asian exchange, he mentioned a viewpoint: as almost all trades are currently denominated in US dollar stablecoins, the United States may already have an advantage in the Bitcoin field. Does this mean that other countries are lagging too far behind and are finding it difficult to catch up?

Simon: I believe the adoption of Bitcoin will take time. Moreover, the U.S.'s strategy in the Bitcoin space may be more deliberate than we imagine. I believe that the U.S. is actually quietly buying Bitcoin behind the scenes, just not publicly. If they were to announce their purchases publicly each time, it would actually drive up the price of Bitcoin, making it difficult for them to continue buying at lower prices. However, at the same time, there are also many countries openly disclosing their Bitcoin purchases. For example, El Salvador and Bhutan are typical cases of publicly purchasing Bitcoin. I have also learned that some countries in the Middle East are announcing their Bitcoin holdings in different ways. Therefore, I believe there will be multiple "Bitcoin superpowers" rising in the future. While the U.S. may currently be the largest Bitcoin superpower, I believe other countries also have the opportunity to play a significant role in this field.

We hope to help Japan become such a country through Metaplanet. Currently, Metaplanet is the largest Bitcoin holding company in Japan and even Asia. We hope that through our efforts, we can encourage Japan to follow in the footsteps of the U.S. in the Bitcoin space. So, even if you feel that the adoption of Bitcoin is slow now, there is no need to be disappointed. All of this takes time, and that also means we have more opportunities to buy before the Bitcoin price rises to a level that the average person cannot afford.

You must tell all your friends and family, as well as those you care about, that now is the time to buy Bitcoin.

Unique Bitcoin Demand in the Japanese Market

Bonnie: I remember you mentioned in an interview that if investors in the Japanese market want to get involved in Bitcoin assets, they basically need to go through your company, is that correct?

Simon: In fact, there are multiple options in the market. Investors can directly purchase Bitcoin through local exchanges, but this approach would entail a higher tax burden. Therefore, when investors wish to invest in Bitcoin in a more tax-friendly manner and seek returns beyond Bitcoin itself, they often choose us. The returns from directly purchasing Bitcoin are entirely dependent on Bitcoin's price fluctuations; and if investors invest through U.S. Bitcoin ETFs, the returns usually do not outperform Bitcoin itself due to the correlation between ETFs and Bitcoin prices. In contrast, the advantage of a Bitcoin financial company like ours is that we are an operating company that can flexibly utilize various tools in the capital market, such as issuing stocks, convertible bonds, or preferred shares, to effectively enhance the value of each Bitcoin share.

Bonnie: What are the differences among the three metrics you mentioned—per Bitcoin share, BTC returns, and BTC gains?

Simon: "BTC Yield" refers to the percentage increase in the amount of Bitcoin per share between different time periods. This year, our BTC Yield is approximately 190%, meaning we have successfully increased the amount of Bitcoin per share by 190%.

On the other hand, "BTC Gain" is the conversion of BTC Yield into a specific quantity of Bitcoin. The calculation method involves multiplying the Bitcoin holding at the end of the previous period by the BTC Yield. In the case of our company, this year we added around 3,500 Bitcoins through Bitcoin operations (considering dilution). Subsequently, multiplying these 3,500 Bitcoins by the current Bitcoin price gives us the "BTC USD Gain."

This metric is primarily designed to help the traditional financial market understand the actual value we have created behind the scenes. This year, our BTC USD Gain is approximately $400 million. I prefer to see it as a representation of profit, though it is not actual accounting profit. However, it does demonstrate potential value creation. If calculated on an annualized basis, our BTC USD Gain could potentially reach $1 billion. So, how much should a company be valued at that can create $1 billion in value for its shareholders annually?

The current challenge lies in the fact that the traditional financial market has limited tools when evaluating companies. They can only use traditional frameworks to measure, such as revenue and profit. However, Bitcoin treasury companies are different from traditional operating companies. We do not have significant revenue, nor do we have profits in the traditional sense. Therefore, other evaluation tools need to be utilized, such as BTC Yield, BTC Gain, and BTC USD Gain. These metrics can help analysts better understand the value our company is creating.

Becoming a Bitcoin Company: Metaplanet

David: Before we delve into your philosophy on Bitcoin, I'd like to understand your view on Metaplanet. Your company is often compared to MicroStrategy, and some even call you the 'Asian MicroStrategy.' What are your thoughts on this?

Simon: "I am extremely honored to be compared in this way. Michael Saylor has had a profound impact on me. I often mention that during the pandemic, when my hotel business was in dire straits, I found solace by listening to Michael Saylor's podcasts. He shared his vision of how public companies could transform and embrace Bitcoin, which was almost unimaginable at the time."

This inspired me and made me determined to transform our struggling hotel business. Therefore, over the past year, adopting Bitcoin as our core financial asset has completely changed our situation.

David: As you drove this transformation, did investors show any resistance? Especially considering Bitcoin as a new asset class unrelated to the core business, how did you address this opposition?

Simon: One could say that this was a blessing in disguise. Because our business situation at the time was far from ideal, we had almost no choice but to seek transformation. The board of directors and shareholders said to me, "Simon, find a way, any way that can save the company is worth trying." Therefore, I did not face much opposition from the board of directors.

However, this reminded me of a few years ago when the company was performing well, and I proposed to the board of directors to accept Bitcoin payments in our hotels. At that time, it seemed like a very natural next step, but I was met with ridicule from the board.

They asked me, why would we risk our business with such an unpopular thing as Bitcoin? So, I had to abandon that idea. But I always wondered if there would be an opportunity in the future to integrate Bitcoin into our core business. In the end, we achieved this at the right time.

Local Currency and Bitcoin

David: How much did the performance of the local currency influence your new Bitcoin acquisition strategy? For example, over the past 15 to 20 years, the yen has continued to depreciate against the US dollar and other currencies. If this had not happened, would you still have made this shift?

Simon: Definitely. I believe Bitcoin is an unparalleled quality currency asset, with no other asset on the market comparable to it. If you are in a currency devaluation market, such as the US, you will find many people talking about the excessive printing of the dollar and the country's massive debt burden.

The situation in Japan is similar. Many G7 countries face similar issues. Calculated as a percentage of GDP, Japan is the most indebted country globally, a situation that is very significant. The purchasing power of the yen has plummeted. Previously, many Japanese people could proudly vacation in Hawaii, but now it's difficult due to the depreciation of the yen. But I believe this is not just a yen or dollar issue, but a problem with the entire fiat currency system. Governments can print these currencies at will, which means the wealth you have worked hard to earn may be diluted due to the arbitrary printing of currency. Therefore, fiat currency is not an ideal choice for long-term wealth preservation.

Bitcoin and Deflation?

David: We all know that Bitcoin is considered to be able to resist inflation. But what about deflation? For example, Japan in the early 1990s and beyond experienced deflation. If in such an environment, the purchasing power of cash increases over time, then what theoretical value and demand does an asset like Bitcoin have?

Simon: This is a very profound question. However, I believe the price has already started to rebound. Japan went through a huge asset bubble, mainly driven by post-war economic reconstruction. I remember in the 1980s when I lived in Japan, people even wrote books calling Japan "Number One in the World." I also hope one day Japan can reach such heights again. But it did come down from an absolute peak, and now we're seeing inflation again.

If in an environment where the currency's value is rising over time, that is, in a deflationary situation, the reasons for buying Bitcoin may not seem so obvious. However, Bitcoin has a key feature, its total supply is fixed, at only 21 million. Even for an appreciating currency, it cannot directly compare to this aspect of Bitcoin. Therefore, Bitcoin's value does not depend on any single currency system; it can exist independently. Compared to the phenomenon of massive currency printing and inflation on a global scale, Bitcoin is undoubtedly the best store of value tool available today.

Why Don't People Just Buy Bitcoin Directly?

Bonnie: With so much Bitcoin, how do you ensure the security of these assets?

Simon: A significant advantage of the Bitcoin Treasury Company is that it helps users overcome many of the technical barriers to holding Bitcoin. As mentioned earlier, losing your private key means losing Bitcoin permanently, unlike a bank password that can be retrieved over the phone so easily. Once Bitcoin is lost, it's lost forever. Therefore, if you choose to invest in the Bitcoin Treasury Company, or invest in Bitcoin through an ETF, you can sleep soundly knowing that your Bitcoin assets are securely held.

In fact, many Bitcoin holders have not informed their spouses or children of their private key information. If something unexpected happens, these Bitcoins could be lost forever.

As a company, we place great importance on transparency. We disclose all Bitcoin public addresses on the dashboard. This practice is crucial for gaining the trust of investors and Japanese shareholders. Additionally, by legal requirement, we must store Bitcoin in third-party custodial institutions approved by regulatory bodies. Therefore, we strictly adhere to this regulation. As our Bitcoin holdings grow, we will introduce more professional custodians to ensure the security of the assets. We always choose the best custodial institutions and distribute assets across multiple institutions to reduce risk.

Will a Bitcoin Reserve Company Never Sell?

Bonnie: If a company claiming to be a Bitcoin reserve company engages in buy low, sell high trading, and they are very good at it, what impact would this behavior have on the whole system? We strongly agree with Michael Saylor's proposal of a long-term Bitcoin holding strategy, but if I choose to sell my Bitcoin, besides disappointing investors, what other consequences would there be?

Simon: Then you are not truly a Bitcoin reserve company. I think a company engaged in Bitcoin trading is more like a Bitcoin hedge fund. The primary purpose of a Bitcoin hedge fund is to profit in the Bitcoin market through various trading strategies, and there are indeed many investment tools in the market to help you achieve this.

I know some tools focus on utilizing Bitcoin-related trading strategies to generate returns, but this is completely different from the concept of a Bitcoin reserve company. We need to increase the amount of Bitcoin per share over time, which requires constantly accumulating Bitcoin rather than selling it.

Would You Use Bitcoin for Payment?

David: Why don't hotels currently accept Bitcoin as payment for room fees? Will this situation change in the future?

Simon: This reminds me of the Bitcoin pizza story. Early on, someone bought two pizzas for 10,000 bitcoins, and later the price of Bitcoin skyrocketed to millions of dollars. If you paid for a night's stay with Bitcoin and Bitcoin surged to $1 million, then that would be a very expensive room for one night.

David: Hindsight is 20/20, but you can't predict the price of Bitcoin tomorrow. Is this why Bitcoin has not been widely used as a payment tool? Because everyone believes its value will continue to rise.

Bonnie: Indeed. People may be more inclined to spend weaker currencies.

David: Do you think there will come a day when not only Bitcoin, but stablecoins will also be widely used for hotel payments, or other blockchain-based transaction scenarios?

Simon: Blockchain is fundamentally just a ledger, and there are many types of ledgers in the market. In Japan, people are already very accustomed to using electronic currency. You can tap your phone to pay at a hotel. In the U.S., Apple Pay is already very popular. For consumers, transaction speed is most important. In the early days, buying coffee with Bitcoin required a 15-minute wait for transaction confirmation. In the current situation, Bitcoin is not an ideal form of currency. But it doesn't need to be a currency because it is an excellent store of value. In the future, there may be Bitcoin-based applications that make micro-payments a reality.

However, as a hotel company or any other business, accepting Bitcoin payments is a smart choice. This allows you to gradually increase your Bitcoin holdings and use it as an asset reserve. But the reality is, most companies need to use revenue to cover day-to-day expenses. If you are a hotel company, profits are usually very thin, which means you may not be able to hold onto Bitcoin income long-term and may have to sell it to cover operational costs. Nevertheless, I believe more and more companies will choose to accept Bitcoin as a form of payment in the future. In the Middle East region, many people have already used Bitcoin to purchase cars and apartments. Sellers are willing to accept because they see Bitcoin as an asset with long-term growth potential.

Metaplanet Story

Bonnie: Michael Saylor has talked about how he started investing in Bitcoin, mentioning the need for companies to compete with big names like Microsoft during the pandemic. What is your story?

Simon: To be honest, my story isn't as complicated. We were under immense pressure at the time. Our hotel was forced to close, with three out of four markets in Southeast Asia and Japan having our hotels shut down. Revenue was reduced to zero, but expenses were ongoing. We were in a survival mode, trying to figure out how to navigate through the tough times. Our auditors added a "going concern" note to the financial statements, basically warning us that we didn't have enough cash to sustain the company's operations for the next 12 months. It was a really tough period.

Inspired by Michael Saylor, I shared some of his insights at a board meeting, and the response was very positive. So we decided to hold a shareholder meeting and propose to the shareholders to invest Bitcoin as a core financial asset. When we announced this plan, the market quickly responded positively, which further solidified our direction. Now, our Bitcoin strategy has been in place for 13 to 14 months, and I am very excited about the future, willing to face higher expectations and challenges.

Bonnie: How did this story unfold? Were you already buying Bitcoin before this? Or did you learn about it through YouTube? You must believe in Bitcoin and this strategy first to continue, right? So how did your story come about?

Simon: I actually started buying Bitcoin at the end of 2012 or the beginning of 2013. At that time, I was living in Japan and using Mt. Gox, which was the platform where many early Bitcoin buyers first encountered Bitcoin. I can say that I have been a long-time fan of Bitcoin. This interest has also helped me when operating the hotel business. Whenever the hotel business faced challenges that made me feel frustrated, I would think of Bitcoin and regain my composure. Over the years, I have been looking for opportunities to integrate my interests with business, and the crisis during the pandemic provided me with such an opportunity.

Bitcoin as a Moral Responsibility

David: I remember you once said that Bitcoin is a moral responsibility. What does that mean?

Simon: I might have said it is a moral obligation. I believe that I and others in the industry have a responsibility to help more people understand Bitcoin. In Japan, currently, it is not easy to get exposure to Bitcoin. The ways to acquire Bitcoin through private transactions are not common, and the visibility is low. Moreover, the account opening process is very complex. Since the Mt. Gox incident, Japan has strengthened its regulation of digital assets, which, although necessary, has led to many traditional regulatory hurdles still in place, increasing the barriers to entry. Therefore, we aim to provide a simpler, more tax-friendly way for Japanese investors to buy Bitcoin.

In addition, we have also obtained a publishing license for Bitcoin Magazine in Japan. In March of this year, we released the first issue, with the next one set to be published at the end of June. Through this magazine, we hope to guide the Japanese people to better understand Bitcoin. We see it as our responsibility to educate people and elevate their financial literacy. Therefore, the goal of Bitcoin Magazine is not profit-driven but rather serves as a platform to spread the Bitcoin narrative.

Furthermore, we have acquired a hotel and renamed it to the 'Bitcoin Hotel'. This is an opportunity for people to experience Bitcoin in real life. Guests can enjoy hotel services, visit the Bitcoin Art Museum, and we plan to collaborate with global Bitcoin artists to showcase their creations. Additionally, we will establish a Bitcoin Museum to introduce the history and development of Bitcoin. The hotel lobby may even feature a wax figure of Satoshi Nakamoto for photo opportunities. Of course, we would be delighted if you could visit when the hotel opens by the end of next year.

Metaplanet Future Strategy

David: Speaking of the hotel, besides accommodation and leisure functions, Simon, what are the future plans for Metaplanet? You have successfully turned the company around through effective strategies, do you have new strategic developments now? Are there expansion plans? With only one hotel left now, will you consider purchasing more hotels?

Simon: No. The reason we keep this hotel is that it is an asset retained from a bygone era. There are many reasons for retaining it, with the most critical being that the operational losses associated with the hotel can be used for tax deductions. This means, as long as we retain this hotel, we can offset the tax losses against the future earnings of other businesses. Therefore, retaining this hotel is very valuable to us. However, apart from this hotel, we have now completely transformed into a company that is 100% focused on Bitcoin.

One highlight of a Bitcoin Reserve Company is that you don't really need to innovate; your core business is simply to buy Bitcoin, and the innovation comes in how you raise funds. Therefore, our main fundraising method right now is a mobile warrant, similar to a market-price equity issuance.

Does Every Company Need Bitcoin on Its Balance Sheet?

David: So what do you think about companies that adopt a hybrid strategy? For example, Elon Musk once bought a large amount of Bitcoin for Tesla, but they are not a company focused on a Bitcoin treasury. Tesla at some point incorporated Bitcoin into its financial system, possibly for reasons different from those of Metaplanet. For companies whose core business is not centered around Bitcoin, do you think they should consider including Bitcoin in their asset allocation as a cash alternative?

Simon: Absolutely they should. As we have discussed before, Bitcoin as an asset is a very meaningful choice. Idle cash leads to depreciation, which is not something we want to see. I understand that some Asian companies already have gold and Bitcoin on their balance sheets, and I think Bitcoin is a superior version of gold; it can be called "digital gold." Due to Bitcoin's scarcity and decentralized nature, it should be a significant option in every CFO's financial planning, and the asset allocation should not consist solely of cash.

Original Article Link

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia