About This Episode
The Hurdle Rate goes LIVE at the Bitcoin Treasuries Conference in New York, back where the Strive and Semler deal started a year ago. The panel looks back on that deal, which brought the two companies’ roughly 6,000 and 5,000 Bitcoin together, and explains why getting bigger was what made SATA possible. Matt explains the game theory behind SATA’s daily dividend now that Strategy is following suit, and why the two companies are playing different games. The panel also covers why Strive is aiming for total returns rather than Sharpe ratio, Matt’s call for $500K Bitcoin by 2030, and what comes next for Bitcoin balance sheet companies. Here’s the latest with Matt Cole, Jeff Walton, Ben Werkman, and Joe Burnett.
In This Episode
- 00:00:00 — One Year Since Semler
- 00:05:25 — The Game Theory of Daily Dividends
- 00:12:18 — Strategy Follows Suit
- 00:16:28 — Why Amplification Matters
- 00:23:43 — The Future of Bitcoin Balance Sheets
Episode Summary
Key Themes: Strive’s evolution; SMLR acquisition scale; daily dividends; trust; amplification; total returns; friendly competition; optionality.
The Conference That Changed Strive’s Trajectory
The episode was recorded live at the same conference where conversations with Semler about an acquisition began a year earlier. Ben said the acquisition was pivotal because it gave Strive enough scale to successfully launch and grow SATA.
Scale Unlocks Institutional Capital
SATA was initially roughly a $125 million offering, but some institutions hesitated because the product was too small for them to take meaningful positions without owning an excessive percentage of the total issuance. Strive increased the offering to $250 million and quickly became oversubscribed. The lesson was straightforward: in institutional markets, larger scale can actually make raising capital easier.
Daily Dividends Were Built Around Par
Matt said SATA’s daily dividends came from a first principles objective: keeping it at par as many days as possible. SATA pays the same dividend each business day rather than accruing extra interest over weekends, effectively paying three days’ worth of dividends on Mondays. Strive believes that makes the security more attractive to algorithms seeking dividend income during normal US trading days and could ultimately lead to more stability and liquidity.
Strategy Adopts Daily Dividends
Strategy’s decision to introduce daily dividends validated the concept rather than threatening SATA. Jeff said Strive had long expected Strategy would eventually adopt the structure and believes multiple daily paying securities should increase trading across the entire digital credit market. Different weekend accrual methodologies could even create opportunities for investors and algorithms to rotate between products.
Different Companies, Different Games
Matt emphasized that Strive and Strategy are not competing under identical constraints. Strategy already owns more than 800,000 Bitcoin and needs digital credit to become dramatically larger to maintain meaningful amplification as Bitcoin rises. Strive’s smaller balance sheet means it can maintain high amplification with much less SATA issuance. Strategy therefore benefits from growing the entire digital credit market, which also benefits Strive.
Trust Enables Higher Amplification
When SATA first launched, some institutional investors were uncomfortable with Strive exceeding roughly 30% amplification. After watching Strive execute through a Bitcoin bear market, Matt said those same investors have become comfortable with levels closer to 60%. The company’s ability to increase amplification therefore depends partly on continuing to prove its capital management and build trust with SATA investors.
Total Return Is the Objective
Matt said Strive is explicitly trying to maximize total return, not Sharpe ratio. That means accepting volatility and concentration while controlling enough downside risk to ensure the company survives bear markets. With Bitcoin near its 200 week moving average and Matt underwriting roughly a 50% annualized Bitcoin return through 2030, he wants amplification as high as Strive can responsibly sustain.
Amplification Drives the Math
Matt argued that if Bitcoin compounds near that assumed rate, the amplification ratio matters far more to ASST’s long-term returns than small differences in SATA’s cost of capital. In his model, amplification could account for more than 90% of total returns, while differences between a 12%, 13% or 14% preferred dividend represent a much smaller factor.
High Amplification Still Requires Risk Controls
Ben emphasized that amplification should not simply remain high at all times. Strive wants greater amplification when Bitcoin is near historically low valuation bands, while retaining the ability to reduce risk closer to cycle peaks. Cash reserves and stress testing are designed to ensure the company can survive severe Bitcoin drawdowns without sacrificing the upside exposure shareholders expect.
Bitcoin As Usable Capital
Jeff sees the long-term trajectory of Bitcoin treasury companies as broader balance sheet businesses with optionality. Strive holds Bitcoin alongside cash and STRC, creating multiple duration assets and additional optionality. The innovation of SATA is that investors receive a senior claim against Strive’s broader balance sheet rather than directly against Bitcoin, effectively transforming Bitcoin into a new form of collateral that can support traditional financial products.
Preserving Bitcoin’s Upside
Ben cautioned against generating yield by simply selling options against Bitcoin because doing so can cap the upside. Cash secured strategies can create the opposite problem by consuming liquidity precisely when markets become stressed. The objective is therefore to find uses for the balance sheet that create attractive returns without sacrificing Bitcoin’s asymmetric upside.
Bitcoin Is Power
Jeff closed by arguing that balance sheet scale fundamentally changes the opportunities available to a company. When Strive was much smaller, large institutions could easily dismiss it; with a balance sheet approaching billions of dollars, those conversations change. Bitcoin therefore becomes more than an appreciating asset—it’s financial strength that can power new products and transactions.
Main Takeaway: Strive views SATA, amplification and growing Bitcoin holdings as pieces of a broader capital markets and balance sheet system: build scale, earn trust, preserve Bitcoin’s upside and use digital credit to maximize total returns.