Summary Bitcoin 2024 Conference in Nashville featured POTUS candidates and a Senator discussing a Bitcoin Reserve for the US, generating excitement in the Bitcoin community. I think the real highlight was Bitcoin treasury strategies by publicly traded companies. The private sector's adoption of BTC as a treasury asset may drive government acceptance and regulatory support for Bitcoin, potentially leading to massive price appreciation. I cover some nuances about these BTC treasuries from the conference and synthesized from research. The Bitcoin 2024 Conference took place in Nashville last week. This is an annual event sponsored by BTC Inc, the company behind the popular publication Bitcoin Magazine and the parent company to the venture fund UTXO Management. While I personally did not make it to Nashville, I went through many different clips and posts on social media to get a sense of what was happening. Bitcoin Magazine posts all the keynote speeches on YouTube, so anyone could get the primary source over there too. Perhaps the most talked about aspect of Bitcoin 2024 was the participation of two POTUS candidates: Robert Kennedy Jr. and former-POTUS Donald Trump. Senator Cynthia Lummis of Wyoming also made an appearance. All three have alluded to or explicitly mentioned a Bitcoin Reserve for the United States, much to the excitement of the Bitcoin community. The narrative of the political importance of Bitcoin (BTC-USD) and crypto has been building over the course of this year. The SEC performed a rather high-profile pivot on their hawkishness on crypto when they approved the Ethereum spot ETFs in May. As I read more about the Bitcoin Conference, I began to realize that the most important stuff was not the highly publicized participation of politicians, including a former POTUS. An interesting fact is that Trump is actually the first US president in history to attend a conference on digital assets, so this was arguably a big stamp of credibility for the entirety of Bitcoin and crypto. I believe the real “signal” at the conference can be found in the panel involving Eric Semler from Semler Scientific (SMLR), Andrew Kang from MicroStrategy (MSTR), Simon Gerovich from MetaPlanet (TYO: 3350), and Dylan LeClair (moderating, from Bitcoin Magazine). The topic of the panel was Bitcoin Treasury strategies for corporations. My thesis is that corporate adoption of BTC as a treasury asset will be the most powerful driver of BTC returns in the coming years. While talks of a US strategic BTC reserve is interesting, I think people are getting very carried away on political campaign promises which are easy to make but tough to keep. Government or Private Sector? Here is why the corporate BTC treasuries are a big deal. The private sector leads and catalyzes government and regulatory acceptance. This has largely been the case in America. The utility of disruptive tech is first realized by the private sector and then, through either lobbying or raw popular sentiment (or both), laws are created which fit around the existing use cases of disruptive tech. This is more or less the pattern that tech companies have taken, how social media has developed, and now we are seeing it develop with electric vehicles and crypto. Being anti-crypto and anti-Bitcoin is politically unwise because people who find crypto useful are going to be extremely hostile towards politicians who try to flippantly dismiss their livelihood. Incentives drive human action. At some point along the adoption curve, it becomes hard for the incentives to be anti-crypto to seriously compete against the incentives to be pro-crypto. What is actually driving the private sector to see the value of Bitcoin, which is compelling politicians to respond with energetic support? There are many things. Jobs are probably the biggest. If you kill jobs, you are killing your own political career. Beyond that, people want Bitcoin for its properties as a superior asset class, which is quickly being recognized for its unique quality of excelling at preserving long-term value. Any 4-year period has seen monumental gains in the price of BTC, signifying its role as a superior long-term store of value. People are recognizing it, and they want this superior asset class. This is why BlackRock helped push the spot ETFs to approval, even as the SEC foot-dragged on Grayscale for years . Corporate Bitcoin Treasuries The Bitcoin Conference showed three publicly traded companies which have found success in a Bitcoin treasury strategy. MSTR, SMLR, and MetaPlanet (which is publicly traded in Japan) have implemented Bitcoin treasuries and all of them saw notable increases in their share price thanks to Bitcoin. Representatives from each company talked about how they arrived at their Bitcoin treasury strategy and what they are doing to make it work. I believe this was the most impactful moment of the Bitcoin Conference because it suggests the beginning of the private sector’s adoption of BTC as a pristine treasury asset. I think that given enough time, this is an extremely compelling incentive which will eventually force government acceptance and regulatory dovishness for Bitcoin. In short, the politicians were there to earn political brownie points with their speaking, but corporate adopters seeing success in BTC was the real signal. I think the corporate Bitcoin strategy is still something that confuses a lot of investors, especially those who are skeptical about BTC as an investable asset. I want to summarize some of the main takeaways from the video and also synthesize some other points based on my research about this topic. First of all, note that these three companies are not the only ones with Bitcoin treasuries. Bitcoin miners hold a lot of BTC, even after selling some of their proceeds to cover electricity and maintenance costs. Marathon ( MARA ) recently added to its BTC treasury and holds over 20,000 BTC now. For a much larger list of corporate Bitcoin treasuries, you can reference this website here . MSTR, SMLR, and MetaPlanet have core businesses totally unrelated to BTC, yet they chose to invest in BTC rather than issuing dividends, doing buybacks, or making acquisitions. It seems like their success will only cause more to follow, and this would be the real catalyst for explosive price appreciation in BTC. Hurdle Rates and What To Do With Excess Cash? The Bitcoin treasury strategy basically argues that the best use of cash is to purchase BTC. Traditionally, cash should be returned to the shareholders, either via dividends or buybacks. If not, cash should be reinvested into the business or used to acquire competitors to grow the top line. The main gist is that if you have unencumbered liquidity, you should spend it on increasing value. The breakthrough of the Bitcoin treasury strategy is observing that there is almost nothing which can easily outperform the CAGR of BTC. This standalone observation makes purchasing BTC with excess cash quite justifiable, in the perspective of someone running a Bitcoin treasury. You can think of this as using BTC itself as the hurdle rate. When evaluating different investments, think of their chance of outperforming BTC. If it cannot feasibly do so, just buy BTC instead. That’s the rough idea of the logical first step. Now, think about this in relation to the other four choices: dividends, buybacks, reinvest, and acquisitions. Buybacks and reinvest is just seeing if the CAGR of your business beats the CAGR of BTC. For nearly all publicly traded companies, this answer is no. Acquisitions are just evaluating the CAGR of other companies, so the answer is still no. Dividends are worse than buybacks because of double taxation, so it is even more value destructive to the shareholder. This means that anyone running a Bitcoin treasury is just going to prioritize buying BTC with their excess cash. Financing From the Capital Markets As soon as BTC becomes a hurdle rate to these companies, it now arguably makes sense to go to capital markets and raise more dollars to buy more BTC. This is what MSTR has been doing since 2021. It is also what SMLR is applying to do with their recent S3 Filing . The idea is to issue equity and debt to buy more BTC, because this is accretive to shareholders. This makes sense from a financial perspective when we return to the question of hurdle rates. If BTC is the hurdle rate under this strategy, then you should always try to get dollars at a lower cost of capital than BTC’s expected return. Since the cost of capital for a publicly traded company comes from equity and debt markets, and they are both based on the company’s CAGR (which we already established generally does not exceed that of BTC), it almost always makes sense under this logic to issue equity and debt to purchase BTC. Financing From Convertibles and Warrants While issuing equities and debt are interesting, I thought the most interesting part of this discussion was exploiting the volatility of BTC and leveraged balance sheets with BTC to raise money at even better costs of capital via options markets. This seems a bit convoluted at first, but it's actually very interesting and reasonable. Convertible debt is debt with an equity call option attached and given to the lender. Option values are determined by implied volatility. When a company has BTC and debt on the balance sheet, its equity starts to resemble a leveraged version of BTC. Since BTC is very volatile, this means the stock has a very, very high implied volatility. That increases the value of the options embedded within the convertible debt, which justifies a lower interest rate on the convertible. This is precisely how MSTR is borrowing at under 1% interest rates to buy BTC, while the risk-free rate is 5%. The convertibles give MSTR money upfront to buy BTC, and if the conversion option is ever exercised, the company will get another cash inflow at the exercise price, at that point in the future. The same can be said about issuing warrants. These are basically extremely long-dated call options on the stock. Again, the higher stock volatility due to embedded leveraged BTC exposure allows the warrants to be priced quite high, which allows the company issuing them to receive more capital upfront. I think the coolest part about these option variations for capital raises is that there is a small chance that it isn’t even dilutive. For instance, the share price might not grow enough to justify convertible debt holders to exercise their option, so in that case the company would have been borrowing at extremely low-interest rates for a multi-year period! Of course, given the core thesis behind a Bitcoin treasury is that BTC will go up, this might not be something that the company is counting on. But is all this dilution bad? This discussion must ultimately be received with the proper framing. You see, the endgame is, like many of the other things mentioned here, complicated. What is the Endgame? The endgame is to maximize value for the shareholder, but what does this look like for a company doing such an abnormal strategy? I think the simplest answer is to just maximize the amount of BTC per share. If this number is going up, then all of the actions that the company is taking is technically accretive. It’s a lot like a REIT issuing shares to buy more properties. If the portfolio is getting bigger and income is growing because there are more properties, then issuance was accretive. As long as BTC keeps increasing in dollar terms, a rising BTC per share means a rising book value per share (assuming no major changes to EBIT and EBITDA and no major changes on the balance sheet), which will justify a continued premium of share price to the underlying BTC held by the company. This is why MSTR trades at 2x its NAV of BTC holdings: MSTR is able to strategically take advantage of the capital markets to increase BTC per share. Holding shares of MSTR is in some sense better than just holding BTC because the BTC you own through MSTR shares will increase over time, while the BTC you hold by just holding BTC does not increase. It’s only if BTC goes down in dollar terms that the dollar value of book value will start to collapse. The leveraged capital structure of such companies can also work against the shareholder because it would be holding a higher beta against BTC. However, the collapse of BTC in dollar terms is mitigated and backstopped by the absolute scarcity of BTC. While dollars must continue to be printed for the US government to pay back its burgeoning debt load, BTC cannot be created like that. Also, as more companies start to do this, the buying pressure on BTC will not be able to support lower prices for BTC. So the real endgame is actually to hold the BTC forever. As more companies start to use this strategy to boost their balance sheets, more and more value will accrue to BTC and therefore to the balance sheets of earlier adopters. This might sound a bit like a Ponzi scheme, but in this case, there is no intention to “cash out” because the asset BTC has utility as a superior store of value, which is precisely the original intention of companies adopting this strategy: to preserve the value of the excess cash they have, sourced from either their operating business or from capital markets. Of course, not everyone will “never sell.” Some will adopt this strategy to get a short-term gain and then cash out. Others might sell when they realize a genuine investment opportunity to beat the CAGR of BTC. In which case, they will divest parts of the BTC treasury and commit the proceeds as capex for the business. (There will be tax implications for liquidating BTC, and these must be weighted against the expected return of the capex. At any rate, companies could also borrow against their BTC treasuries to unlock liquidity without creating taxable liabilities.) The point is that the long run trend of what will happen is, in my opinion, more than clear. The playbook for adding BTC to corporate treasuries is out. Every CFO who desires to deliver superior performance to shareholders has, at this point, multiple case studies to review. I think it will only be a matter of time before even more BTC is added to the treasuries of even more companies. That will be a lot of buying pressure. Risks BTC is a reflexive asset, and this thesis is highly dependent on the innate reflexivity of the whole system. If everyone tried to sell their BTC tomorrow, the price would obviously crash and a lot of shareholder value would be destroyed. I am certain that there is plenty of skepticism around a Bitcoin treasury strategy today. This skepticism exists in MBA programs, on corporate boards, and amongst institutional investors. It can drag out for a very long time and severely slow the adoption rate of BTC in corporate treasuries. BTC could also suffer a correction, and this would discourage boards to approving such a plan. Generally, these kinds of decisions do not happen when sentiment is awful. It just doesn’t have the momentum to overcome existing inertia. You will notice that SMLR’s Bitcoin treasury was only approved after BTC had run back up to all-time highs. Today, SMLR is still down on their BTC purchases, even though the stock is up quite a bit. Serious corrections in the price of BTC could cause boards and executive teams who were otherwise committed to a treasury strategy to backtrack. This could lead to more selling into a correction, which could increase the volatility of BTC. A treasury strategy ideally requires some high conviction to execute, and the conventional wisdom of not adding volatile assets to a balance sheet is certainly going to get louder when the volatility turns adversarial. Of course, as I mentioned in the section about convertibles financing, volatility can be very helpful for accreting more BTC because it pumps the value of embedded options. There are pros and cons, and every company has to weigh these factors before committing to acquiring BTC as a strategy. Personally, I think the risk of prolonged skepticism is decreasing as the sentiment and institutional acceptance of BTC seems to be improving. We now have major actors in the financial sector who have a vested interest in the near-term success of BTC. BlackRock and Fidelity will both make tons of money from the spot ETF fees, and they will probably continue to push a narrative that BTC protects you . The good thing about BTC treasuries is that Bitcoin's decentralization will not be affected by some entities holding large stashes of BTC. Control over the network is not conferred through ownership of BTC . This neutrality is why BTC, and not a proof-of-stake crypto, is a far better corporate treasury asset. Higher concentrations are risky, however, from the perspective that the BTC price could be affected in the short term if a whale decides to liquidate their position. For instance, when Germany was selling its 50,000 BTC a few weeks ago, BTC pulled back to about $56,000. But if BTC acquisition becomes a widely adopted corporate strategy, then there will almost always be buyers to absorb that kind of sell pressure. The Bottom Line BTC is a Buy. Lots of interesting things happened at the Nashville conference. I tend to be skeptical about the impact of politics and political promises, but I do recognize that these are bullish signs. To me, the practical reality of corporations taking on Bitcoin treasury strategies is the most compelling thesis for outperformance in the next few years. I think it is unlikely the US government adopts a strategic BTC reserve before some more companies in the S&P 500 do so. SMLR is a profitable company with a solid product. They have no debt and have consistently grown revenues. In that discussion, Eric Semler mentioned how the board realized that they were a “zombie company” which was doing good on the traditional metrics and yet was failing to receive attention from the market. That was what pushed them to take a chance with Bitcoin. I think many small and mid-caps may be in this position. I know that MSTR was in this position a few years ago, and now it is big enough for the S&P 500. My main takeaway from the conference was that this story of Bitcoin adoption is probably just starting to take off, which means the upside is still enormous. Editor's Note: This article was submitted as part of Seeking Alpha's Best Growth Idea investment competition , which runs through August 9. 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