Keynote: Jack Mallers

What's going on, Bitcoin? How are we?

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All right. Thank you guys for joining me today. The title of my keynote is The Bitcoin Company. For those of you that don't know, I'm actually the CEO of two Bitcoin companies. I was talking with my chief of staff, and I said, you know, everyone's always talking about how I'm wearing multiple hats, and I have things to say about both my companies. So as I was packing for Las Vegas, I figured I would bring both my hats.

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Here's what we're going to do. First, I'm going to put on the Strike hat. We've got a ton of new, exciting products that I think you guys are going to love. We'll put the Twenty One hat down right here. We'll get back to Twenty One in a second. Let's talk about Strike.

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I've got some exciting stuff for Bitcoiners. You can think of Strike like a global Bitcoin bank. Now, the asterisk at the bottom is super important. We're not actually a bank. That requires a license that I don't have. But you can think of us like a bank. We sell Bitcoin financial services.

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We're known predominantly for these products. We have buying and selling Bitcoin. In fact, you can acquire Bitcoin with no fees on our platform. You can withdraw that Bitcoin to cold storage with no fees. You can get your direct deposit into Strike. You can pay bills with Strike. We have two different credit products. We have Bitcoin-backed loans. We have a Bitcoin line of credit.

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I personally live my life on this product. I got debanked by Chase not too long ago, and my company became my primary financial account. It suits me perfectly, and many others as Bitcoiners.

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Recently, on this stage last year, we announced Strike Lending. Part of this product was deeply inspired by my friend Ross Stevens. I want to read this quote to you guys that he wrote in his Stone Ridge 2024 shareholder investor letter. He said, "We hope our money keeps its value long enough for us to trade it in the future for something that we actually want: an education, a dream house, a wedding, a bucket list trip. Every never-sell hodler will need to sell someday. They'll need liquidity someday. That's the entire point of having money in the first place."

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Last year I talked about this idea that money is ultimately a means to an end. I don't value my Bitcoin because I can eat it, because I can live in it, because I can get married to it, because I can fly it, because I can drive it. I value my Bitcoin because of how good it is at protecting the wealth that I've earned and allowing me to exchange it for those things when I need them.

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So we launched this Bitcoin-backed lending product as a way to allow Bitcoiners to get liquidity and change their lives with Bitcoin. For many of you in the room, Bitcoin has probably changed your life. An asset that's going up 30%, 40%, 50% a year on average, depending on when you bought, that's real wealth. You want that wealth to impact your family, impact your kids, take you on a nice vacation, get you a nicer house. But you don't want to part with the Bitcoin. You don't want to sell the sats. Is there a way to get liquidity without having to part with the sats? Never sell your Bitcoin, right?

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This product has been a smashing hit for us. I've been working on Bitcoin for almost 14 years at this point. I just turned 32. I started working on Bitcoin when I was 18 years old. These Bitcoin credit products are the most successful products I've ever launched in my entire life. I've been all around the block and back. I've failed many times over. These products have found such product-market fit for the reason that they allow Bitcoiners to let Bitcoin benefit their life without having to part with the Bitcoin.

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I have some announcements for you guys on our Bitcoin lending product. For starters, we now have our Bitcoin-backed loans and our Bitcoin line of credit in almost the entire map of the United States. These loans are also available in countries around the world, including the European Union and some countries.

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We are unbelievably excited to finally have both fixed-term loans and a Bitcoin line of credit, which acts almost like a HELOC, like a rolling, real-time loan that you can live your life on, pay your bills on Strike, get your groceries, and make sure that you can live. The way I use the product is I live on my credit cards. I go to Whole Foods, get a couple steaks, swipe my credit cards, and my Bitcoin line of credit pays off my credit card, pays my rent, pays my mortgage, pays my car note.

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Next, I know you guys on Twitter. I recognize some of these faces. You want us to lower our pricing? I'm really excited that we were able to lower our pricing quite significantly. The way we price our products is by tiers. It depends on the size of the loan, but we're able to bring our pricing all the way down to as low as 7.49%. Thank you, I appreciate that.

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Of course, as a business, we want to be the most competitive and hopefully the most accessible and trusted way for you guys to conduct finances with Bitcoin. We're all here for Bitcoin. Bitcoin is a material part of our lives, and we do not want to be offering you the highest rates. We want to be as competitive, as cheap as we possibly can, as trusted as we possibly can. We're very excited about that.

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Another one: proof of reserves. It's interesting serving multiple Bitcoin products. For folks that buy Bitcoin on Strike, the best thing you can do to prove that your Bitcoin is your Bitcoin is withdraw to cold storage. We offer that for free. You can withdraw your Bitcoin to cold storage for free. We highly recommend that. We encourage it. You can always reach out to our support staff, and we're very happy to walk you through it.

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For our lending product, it's been interesting because obviously when you're posting collateral for a loan, you can't withdraw that collateral. Customers have said, hey, we would really appreciate if you could bring about more transparency that our collateral is sitting there, more transparency that we can trust you with such an important transaction in the financing of our lives. Bitcoin for many of us is our savings account. It's arguably the most important financial piece of our lives.

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We are super proud to announce that we are also publishing our first iteration of our lending proof of reserves. You'll be able to find this on our website. We aim to publish these quarterly with external auditors so that our customers know that your collateral is there, we are who we say we are, and we don't blame the community and our customers for wanting that level of transparency and trust. We actually are really excited to be able to deliver on it. You guys will be able to find this on our website and in our FAQ for all the customers that want to see our lending proof of reserves.

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Next, we have partnered with Tether on a slew of really exciting features and facilities that are either available to use for certain customers or are upcoming for all of you guys. Big shout out to Tether. Obviously you guys know my relationship with them. Unbelievable business, great Bitcoiners, and we're really excited to unveil a few things.

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One, as part of our lending product, we're going to offer segregated-address collateral for customers with certain size loans. Some customers came to us and said, hey Jack, if I'm giving you 50 Bitcoin for a loan, do you mind putting it in an address that I can wake up and look at and see on the blockchain, and verify with my own eyes that it's sitting there? We said absolutely, that's a great idea. Of course we can do that.

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Tether, as one of our facilitators of loans, worked with us on enabling the most ultimate transparency we can possibly give to you Bitcoiners, and ensuring that if you want to get a loan against your Bitcoin, get a line of credit against your Bitcoin, you can see the collateral in an address. You can wake up, you can cuddle, you can sit with your phone in bed and just stare at the collateral, knowing that it's there and that it's safe and that we are who we say we are.

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For customers that are interested in this, we are currently offering it as part of our private client desk. You can reach out to private at strike dot me if you're interested in opening a loan, or you have an existing loan where you want to segregate the collateral into a separate address that you can observe, you can watch, and you can ensure that there's never any rehypothecation. There's never any funny business. We are a principled, Bitcoin-only firm that is dedicated to serving Bitcoiners.

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Now this next one is arguably my favorite feature. I'm going to play a little video. This is easily the number one request we get for people that are interested in Bitcoin-backed lending, interested in potentially improving their lives by accessing their Bitcoin wealth without having to get rid of the Bitcoin itself.

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The volatility is real. Bitcoin's volatility. Volatility. Speed bumps for volatility. Technology and human nature sometimes are a volatile mix, aren't they?

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We are super excited to announce a new product that we'll be rolling out called Volatility Proof Loans. The idea is extremely simple. Customers say, Jack, what if the price wicks down? What if there's some volatility? What if there's a headline from the U.S. government? Or what if the stock market crashes? I don't want you to liquidate my Bitcoin. That's my greatest fear. As long as I know that the collateral is sitting in an address, you have proof of reserves, nothing is rehypothecated, I just don't want to get liquidated.

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We thought and we worked with Tether really hard on this. We don't want to liquidate anybody. Of course we don't. There's got to be a way to allow customers to pay a fee and say, no matter what, don't touch my Bitcoin. I'll either default on the loan or everything will work out, but if the price wicks down, leave me all of it.

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We have built that product. It was not easy. I'm super excited about it. Big thanks to Tether. Shout out to the Strike team. This is the number one feature request we get: if I can know that my collateral is sitting there and that I'm not going to get liquidated, I finally feel comfortable getting liquidity against my Bitcoin without selling it.

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This product, again, please reach out to private at strike dot me. We're going to roll this out to selected customers first. If you're interested in a Volatility Proof Loan, a loan where you will not get liquidated, please let us know. Please reach out. The product will roll out as part of a white-glove service, and then very soon, hopefully in the coming weeks or months, we're able to put it in the app for all of our customers all over the world.

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The last big announcement is the new credit facility that we have with Tether. I called the Tether guys. I said, hey, listen, the biggest inhibitor to the growth of credit in the Bitcoin space, giving Bitcoiners a slew of financial products, not just a 12-month Bitcoin-backed loan, but what about a line of credit? What about a Bitcoin-backed credit card? There's so much we at Strike can do and the ambitions that we have. But the problem is, who's going to finance it? Where's the money going to come from?

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Unfortunately, Bitcoin-backed loans don't have implicit government guarantees yet. It's been very difficult for the space to be able to find financing. Tether said, we got your back, and I'm all out of capital. You let us know. We're here for Bitcoiners with you guys.

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We are going to start out with a $2.1 billion facility to make sure that we can meet any amount of demand, any order size. I challenge you guys to try me. Try me, and try to give me an order that you don't think I can fill. I promise you Tether and I can fill that order. We're tremendously excited to bring that level of scale to the Bitcoin-backed credit market so that Bitcoiners have all sorts of luxurious options, hopefully in the coming years, to utilize their Bitcoin without selling it.

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Don't be shy. Thank you guys. Thank you.

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From the Strike side, I still got my Strike hat on. Here's the summary of our announcements. Our lending arm of the business has been unbelievable. To all of our customers, thank you guys. Thank you guys for trusting in us. Thank you guys for coming to us with your business. It's been the fastest-growing product I've ever launched in my Bitcoin career, and this is a summary of how we're improving arguably the most popular suite of products that we have at the company.

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All right. Time for a dress change. Back to my two hats. Let me take my Strike hat off, lawyers hat off, and let me put my Twenty One hat on, because I want to talk about Twenty One.

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You guys may have seen that my co-founders, who are also the largest shareholder in the business, issued a press release today with a strategic plan that they support for the next phase of the business. That plan is a set of proposed transactions that would merge Twenty One and Strike, my other company that I just mentioned, and Twenty One and Electron, Tether's Bitcoin infrastructure mining business.

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The press release goes on to state Strike is a global financial services firm. As I just explained to you guys, you can buy, you can sell, you can hold. We're regulated and licensed all over the world with an ability to distribute Bitcoin products to anybody where we're available. We can distribute credit products, brokerage products, custody products. It's a Bitcoin distribution company that is able to service any Bitcoiners in the world. We just have to build it.

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The other piece of the proposed transaction is Electron. This business is huge. There's 50 EH/s of hash rate across the platform. It represents roughly 5% of the current Bitcoin network. As I talked to you guys, Tether, my co-founders, have poured a tremendous amount of resources into physical Bitcoin infrastructure, into things like mining, not only for economic benefit, to make Bitcoin, be able to produce Bitcoin, a high-margin profitable arm of their company, but also for philosophical reasons.

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Bitcoin has a physical piece of the network and the asset class, and wanting to contribute to and protect the Bitcoin network and the Bitcoin asset was within Tether's philosophical beliefs and the responsibility that they believe they carry. They also proposed to merge this business into Twenty One as well. So you want to clap? Go ahead. Thank you.

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I'm talking to them, obviously my co-founders, and I said, well, I'm going on stage at the Bitcoin conference. I should probably say something, shouldn't I? I should probably give my opinion. So I want to talk to you guys as the CEO of Twenty One, what I think about the strategic direction of merging Strike, merging Electron, and creating a new proposed strategy for Twenty One.

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Simply put, I think it's a great idea. I love the idea. Ultimately, when I founded this business with Tether, the goal was always to be a Bitcoin company, produce Bitcoin products, ideally produce cash flow with our businesses, and show our conviction in Bitcoin through our balance sheet. So I want to tell you guys what I think about this strategy, what my strategy is as the CEO of the company, and talk to you about my thoughts, what we're working on, and comment on Tether's proposed plan.

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To understand my opinion, my beliefs, what I think we should do, I pose you all this question: what is the ideal Bitcoin company? Just think about it for a second. If you can close your eyes and snap your fingers, what would be the perfect Bitcoin company to you? Everyone can have a different answer. Bitcoin is nobody's to define and own outright. But I want to walk you guys through what I think the ideal Bitcoin company would be, and what I want to build, and where I would like to see Twenty One go.

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To do this, I created this little diagram. I'm no artist here, but it's pretty straightforward. On one axis, you have extremely low conviction in Bitcoin, companies that don't necessarily care that much about Bitcoin, versus companies that are extremely highly convicted in Bitcoin. They believe Bitcoin is the best money, you should capitalize your balance sheet on Bitcoin, and that Bitcoin is the future.

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On the other axis, you have businesses that are low operating income. They don't focus or care about their operating company. On the other side, you have high operating income, some of the most successful companies in the world that produce loads and loads of cash flow and have an ability to finance the world they want to see through the productive business that they're building. Makes sense.

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I personally would put crypto exchanges in this quadrant. Crypto exchanges are extremely high operating income businesses. These businesses, from an economic standpoint, are awesome. Looking at the earnings of something like a Binance or a Coinbase or a Robinhood, or even now learning of the prediction markets, Polymarket, Kalshi, these businesses make tons of money. They're worth tens of billions of dollars. At some point, some of these businesses have been worth hundreds of billions of dollars.

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But I would also describe them as low conviction in Bitcoin. I read Coinbase's Q4 shareholder letter, and I was looking at some of their financials, and Coinbase holds over $10 billion of fiat on their balance sheet, $1 billion of Bitcoin. Coinbase economically is an incredible company. I would love for Twenty One to get to the point where we are doing the same amount of revenue, with the same amount of customers, and the same amount of operating profits as Coinbase. I think in this room, we all would like to see that, at least if you're a fan of me and you want me to do well. Yeah, that'd be great. Thank you.

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But I would say that this does not display Bitcoin conviction, does it, to you guys? When I looked at this, I was like, does Coinbase even believe in what we're working on? I thought we were trying to replace the old financial system and build a new one. Holding ten times the amount of fiat as you do Bitcoin doesn't display to me incredibly high conviction in Bitcoin. It's a great business, unbelievable business. I just don't know how much conviction Coinbase has in Bitcoin.

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This tweet, and I have to preface, I know Jim Chanos is the ultimate short seller and is perceived to sound bearish anytime he talks. I actually know the CEO of Robinhood, Vlad. Unbelievably sweet guy. He's been nothing but nice to me, so I have to caveat my words here carefully. But this tweet from Jim Chanos I think is really interesting.

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He says it looks like HOOD customers lost about 5% in February. Total platform assets dropped $10.2 billion in the month to $314.2 billion, but that includes $5.6 billion in net deposits. So the implied loss of $15.8 billion was 4.9% of end-of-January total platform assets of $324.4 billion. The S&P 500 was only down 90 basis points.

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That might sound like a lot of financial gibberish to some of you guys in the audience. What Jim is trying to say is the S&P 500 was only down less than a percent, but somehow Robinhood customers lost 5%. What Jim is implying here is not that Robinhood is a bad company. In fact, of all the companies I've mentioned, Robinhood might be the most valuable. It might do the most revenue. It might be experiencing the most growth, and it might have the most operating income.

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But the platform is for hyper-speculation. You go to Robinhood to speculate on crypto coins. You go to Robinhood to speculate on the weather. You go to Robinhood to punt options on an earnings that you might not know a lot about. Robinhood is very open about being the place to pick stocks, speculate on what's the next GameStop, what's the next meme. Again, I would say that this business is extremely successful from an economic standpoint, but what's the ideal Bitcoin company? I would say they don't have a lot of conviction in Bitcoin. I'm not sure they care much about Bitcoin. In fact, I have no idea. But from their financials, from their messaging, from their products, it's not clear to me they're highly convicted in Bitcoin.

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Now, Bitcoin treasury companies I personally would place in this quadrant, in the bottom right. I would say Bitcoin treasury companies are the opposite. Bitcoin treasury companies sell Bitcoin conviction. That's why they're here. They are capital markets plus Bitcoin conviction. That's what they're about. That's what they do. That has produced some of the greatest success stories in the history of Bitcoin. These companies are also tremendously successful. MicroStrategy, Metaplanet, these have been tremendous success stories on net for Bitcoin.

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But I would also say they don't focus on their operating business. They're not focused on bringing Bitcoin products to Bitcoiners. They're not focused on generating cash flow necessarily. They're not focused on building a high operating income business. When you look at the top 100 public Bitcoin treasury companies, I think it's super interesting because Strategy, Twenty One admittedly as of today, Metaplanet, Bitcoin Standard Treasury Company, these businesses don't talk about or mention or focus on their operating company at all. I actually don't know if these businesses have customers or cash flows or growth or exciting products they're working on to advance their worldview and where they want to see the world going.

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So I find it interesting. On one side of the spectrum, for me, you have extremely successful businesses that have no conviction in Bitcoin at all. On the other side of the spectrum, you have extremely convicted businesses in Bitcoin, and they never sell, and they want to stack all the Bitcoin they can, but they don't necessarily focus on building products and cash flow and growth.

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In my dream, the ideal Bitcoin company, why I started Twenty One with Tether, and what we want to do together, and why I am supportive of their latest press release for this new strategic direction, is because we want to land in this quadrant. How exciting would that be? To be honest with you guys, that's always been the Bitcoin company that I've wanted to work for, that I've wanted to own equity in, that I've wanted to use as a customer. That's my dream. That's my dream of a Bitcoin company.

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So that's what I think we're going to do with this proposed strategic direction, and I want to walk you guys through a little bit more detail on the vision and why I think Twenty One and my vision fit within this quadrant.

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What is the ideal Bitcoin company? Here's my opinion. One, the ideal Bitcoin company has a financial services arm where it can service any Bitcoin financial product and distribute that product globally. Every financial product the Bitcoin economy needs, distributed in as many markets where it's compliant and regulated to do so. I'm talking about brokerage, where you can buy and sell Bitcoin; custody, where you can hold Bitcoin; lending and credit; payments and rails; treasury services; prime services; banking services; structured products. Can Strike be this for Twenty One? I think it can.

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This is a financial services and distribution arm of a Bitcoin company that is able to build and service Bitcoin products for the Bitcoin economy, for Bitcoin customers, and do so profitably while generating cash flow and optimizing for growth.

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The next chapter of the ideal Bitcoin company and where I'd like to take Twenty One is Bitcoin infrastructure, physical infrastructure, industrial-scale Bitcoin production at the lowest cost. This is where Tether has poured a tremendous amount of their time, energy, capital, resources, and money into what I call the physical layer of the Bitcoin economy.

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The no-coiners get really upset. I can't see the Bitcoin. I can't touch the Bitcoin. I can't bend the Bitcoin. Where is the Bitcoin? But what's funny is you can see miners. You can see physical sites. You can see energy contracts. The second division of the ideal Bitcoin company is the physical layer, industrial-scale, low-cost production of a vertically integrated division of the business that goes from pure energy to producing Bitcoin.

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The business ideally doesn't just buy Bitcoin with cash flow and with capital markets access, but it mines Bitcoin, it produces Bitcoin, and it's a participant in securing the network and participating in the physical economy that is the Bitcoin network.

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The next division is capital markets. Just because I want to build products, and I want to service you guys with unbelievable tools that hopefully push Bitcoin and this mission that we're all here for in the right direction, we can absolutely still use capital markets to further our agenda and our vision. Using our treasury to grow and using cash flow to ideally have non-dilutive leverage. What if Twenty One can issue a preferred, theoretically, or issue a convertible bond, theoretically, but not have to sell common stock to finance it? Able to finance these things with cash flow?

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What would be possible for the ideal Bitcoin company in the capital markets? This could be the financing engine for the dream. We could issue against our treasury. We can originate against the network. We can securitize things like mining, things like lending. We can securitize our loan book. We can securitize our mining revenue. We can build structured products, fixed income products, and bonds, can have Bitcoin-backed debt.

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With a company that lives in that upper right quadrant, that's building businesses, that's producing cash flow, that's able to build a network of companies that's so integrated and invested in the space, access to the capital markets takes on a different meaning, totally and completely.

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The last division of the business is mergers and acquisitions. As I've mentioned, I've been in the Bitcoin space for almost 14 years, since I was 18 years old. There are plenty of unbelievable companies and assets that live in this space, and we think that at an attractive valuation, they'd actually be better off joining this ideal company and joining this mission, and joining us in both producing amazing products and amazing cash flow, and moving the world in what we think is the right direction, while also displaying our conviction on our balance sheet, acquiring as much Bitcoin as we can, and not being afraid to use leverage, to use our cash flow, and to use capital markets to do so.

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What would that look like? Ideally, we're interested in acquiring profitable Bitcoin companies and strategic Bitcoin assets. There are so many. This space is full of unbelievable builders that are convicted along the same vision that I am. We can compound other companies' cash flows. We can compound the valuable assets that other businesses have that will grow our network effect, grow our economies of scale, and really grow this Bitcoin machine that I'm laying out in front of you guys, that Tether and I are really aligned in proposing and executing as the future of Twenty One.

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In my opinion, this to me is the ideal Bitcoin company. It's the dream Bitcoin company. It's a Bitcoin company that's able to produce cash flow, produce profits, change the world with its products, participate in the physical Bitcoin economy with energy and miners and electricity and production of the commodity itself, while also continuing to stack as much Bitcoin as possible for our shareholders, continuing to innovate and take Bitcoin even further in the capital markets, and pursue extremely exciting strategic mergers and acquisitions.

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This is the vision for Twenty One. Twenty One will live in the top right quadrant. That's my vision. That's why I support our largest shareholder and my co-founder in this new strategic direction, and why I'm tremendously excited about it as the CEO. Ultimately, just to be candid with you guys, that's why I'm here. This is why I'm here.

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I have to be careful because at this point, people will clip my videos and my words and they'll sometimes quote me out of context. So I want to be extremely clear: Robinhood, Coinbase, Binance, those are incredible businesses. They produce tons of cash. They've experienced tons of growth. I would love to hit those financial metrics someday. But I personally believe too much in Bitcoin and too much about how it can change the world and do right for society to list other crypto coins, to encourage people to do sports gambling via prediction markets. That's not me, and that's not going to be my company.

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I also want to be clear that I absolutely admire Michael Saylor. Somehow the internet works in mysterious ways; people think I don't. Of course I do. What a genius. What he did is one of the more remarkable stories in the history of finance. Bitcoin treasury companies are great. I think they've been a net positive for the space. I think Saylor has orange-pilled more people than arguably anyone ever. You can certainly make the argument.

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But for me, I want to build things. I'm a builder. To me, Bitcoin not only lives on a balance sheet, but also in the hands of the people. We need to build products. I want to see Bitcoin improving everyone's life in ways that we couldn't have imagined 20 years ago. I want to be able to get a Bitcoin line of credit. I want to be able to live on a Bitcoin financial services platform. I think Bitcoin can change the world so much further than just capital markets.

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To me, my company will aim to do both. As long as I am the CEO and I set the direction, that's who we are. Ultimately, this is who we are.

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To end the Twenty One section, that ultimately is what I want you guys to understand. When I say I don't view Twenty One as a Bitcoin treasury company, historically people will say, well, what do you mean by that? You guys have the second most corporate holdings in the world. You guys have 43,514 Bitcoin. Do you guys know what I mean now?

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When I say I don't want to build a crypto casino, I don't want to be the next Coinbase, and investors say, what do you mean by that? Do you guys understand now? I want to build something different. I want to build the ideal Bitcoin company. That's why I'm here. That's why I started it, and that's why I'm at this conference.

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My hope, and my co-founders' hope, and the largest shareholder's hope, is that we're back to work and we're going to go execute and build something truly different that we believe represents Bitcoin in one of the most exciting equities in the capital markets and will change the world.

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With that, I'm back to work. I thank you guys for all the support. Where's my other hat? I'll exit stage like I'm in a rap music video or something. Thank you guys for the support, and I look forward to building for you.