JD Durkin: Raphael Zagury joins me now, CEO of Twenty One Capital. Nice to see you here today. Thanks for taking some time.
Raphael Zagury: Thank you. Nice to be here.
JD Durkin: You said Twenty One needs to become more than a Bitcoin treasury. Give us, first and foremost, a bit of an introduction to your work for anyone unfamiliar. And what do you see the company ultimately becoming from here?
Raphael Zagury: Absolutely. Yeah. So Bitcoin treasury companies, usually what they do is they start with the Bitcoin, then they build financial engineering around that, right? So if you look at MicroStrategy, for example, what they’ve done very successfully through time is that they’ve built their balance sheet, and they leverage their balance sheet by doing mostly financial engineering, issuing more equity, more debt, preferred, right?
We’re going to do that as well with Twenty One. That’s been the plan. That’s one of the verticals of what we do. But more importantly, we’re looking to build an operating Bitcoin company.
So the way we’re going to build the treasury is by looking into buying profitable, cash-flow-positive companies, and then gradually building our balance sheet and our treasury through that.
I think a good way to think about that is, if you think about, you know, hedge funds, the way that they allocate capital is very akin, I think, to how MicroStrategy or other treasury companies do. We’re going to do something that is more similar to what Berkshire Hathaway does, which is bringing operating companies that are profitable, good growth, inside of the Bitcoin and adjacent ecosystems as well.
JD Durkin: As you were talking, you mentioned Strategy. I’m thinking to myself, there’s a little Warren Buffett here going, there’s a little Berkshire Hathaway. How else do you see that playing itself out as a potential would-be blueprint to your ambitions right now?
Raphael Zagury: That’s exactly right. That’s the way that we’re thinking about building the company. Of course, it’s an ambition, as you said. It will take time, but that’s how we have started.
And the good news is that, given that we are in a bear market in Bitcoin, it’s very opportunistic. There are a lot of potential M&A opportunities for us to look at right now.
JD Durkin: It is ticker symbol XXI, which is awesome, by the way. I love a really good one that represents your company.
Raphael Zagury: Do you know why Twenty One?
JD Durkin: No, please.
Raphael Zagury: Because Bitcoin, the maximum amount of Bitcoins that are ever going to be printed, is 21 million.
JD Durkin: There you go. So we’re hard-capped?
Raphael Zagury: Yeah, of course.
JD Durkin: There we go. That’s your hard cap. Why should an investor, you think—what ultimately is the argument for an investor to hold on to XXI, excuse me, as opposed to something like a spot or another comparable Bitcoin-related offering?
Raphael Zagury: It’s a great question. It’s something that we think about all the time. At the end of the day, the reality is, if you have $1, go buy Bitcoin. It’s the best thing you can do.
But if you’re looking at asset allocation and diversifying, what we’re looking to do is to optimize and have better risk-adjusted returns in Bitcoin in the long term.
So our KPI, at the end of the day, is look at our stock price and shareholder value in Bitcoin terms and try to deliver better risk-adjusted returns for them in the long term.
JD Durkin: What do you attribute Bitcoin’s recent price action to? Obviously, we’re well off those highs of last October, but we’re all well familiar with the now-infamous liquidation event, how far BTC fell, but especially this pretty incredible rally it has of late, holding right around 84,000.
Raphael Zagury: Yeah. Listen, I think the reality is that Bitcoin is still in its very, very early days, right? So because of that, first of all, you should expect volatility, right? Any new asset that is still in price discovery, naturally you’re going to have volatility.
But when I look at Bitcoin, for me, it’s a savings technology. I think it’s the best savings technology that we’ve ever seen.
So comparables for the total addressable market would be gold, real estate, stocks. And I think gradually it will continue to capture some of the monetary premium in a lot of these, right?
Bitcoin today is $1.7 trillion. Gold is $30 trillion. Real estate, you’re talking about $300 trillion, $400 trillion, depending how you look at it, right? So it’s a drop in the bucket of liquidity in the world.
And gradually, I think, you know, what we’ve seen now is just that it’s been capturing more monetary premium from other assets.
JD Durkin: Raphael Zagury, CEO of Twenty One Capital, and his ticker symbol XXI, appropriately so. Thanks for being here. Congratulations.
Raphael Zagury: Thank you so much. Great to be here.
