Compiled & Edited by: TechFlow

Translator: Naetitia

"You have to tell all your friends, family, and those you care about — now is the time to buy Bitcoin."

Guest: Simon Gerovich, CEO of Metaplanet

Hosts: Bonnie & David Lin

Podcast Source: Bonnie Blockchain

Key Insights Summary

• You have to tell all your friends, family, and those you care about—now is the time to buy Bitcoin.

• Bitcoin is an unparalleled apex monetary asset; there is no other asset in the market that can compare to it.

• Bitcoin is a superior version of gold, often referred to as "digital gold." With its scarcity and decentralized nature, Bitcoin should be a critical option in every CFO's financial planning. Asset allocation should not solely rely on cash.

• Bitcoin treasury companies provide an indirect investment pathway for investors who find it challenging to directly access Bitcoin. The innovation brought by Bitcoin treasury companies is transformative. This trend acts like a black hole for capital, attracting significant funds into Bitcoin through these companies.

• If you intend to invest in Bitcoin treasury companies, you must ensure these companies are fully committed—not only refraining from selling Bitcoin but also making every effort to continuously increase their Bitcoin reserves.

• If you ask whether we would ever sell Bitcoin, my answer is absolutely not.

• Companies that execute effectively, remain focused, and maintain discipline will achieve higher market recognition, while those lacking these qualities will be eliminated.

• Bitcoin is a unique asset with a finite supply and increasing demand. As more individuals take notice of Bitcoin, its price is likely to continue rising over time.

• We are currently in the first phase of the Bitcoin journey, which can be described as the "gold rush." During this phase, our objective is to accumulate as much Bitcoin as possible. In the second phase, when Bitcoin's price has significantly increased, stock prices will truly reflect the actual value of many public companies.

• At this moment, Bitcoin may not serve as an ideal form of currency, but it doesn’t need to be—it excels as a store of value.

• One highlight of Bitcoin treasury companies is that they don’t require groundbreaking innovation. Their core business is simply acquiring Bitcoin, while the innovation lies in how they raise funds.

• I believe multiple "Bitcoin superpowers" will emerge in the future. While the United States may currently be the largest Bitcoin superpower, we aspire to help Japan become one through Metaplanet.

Bitcoin Asset Companies and Premiums

David: Today, we are honored to have Simon Gerovich, President of Metaplanet, join us to discuss the future development of Bitcoin asset holdings and the potential applications of Bitcoin in the hotel industry.

Bonnie: The latest news today is that Metaplanet's Bitcoin premium has reached nearly $600 per coin. Some articles suggest this price is too high. What’s your take on this? Is the MNAV metric a good indicator for evaluating Bitcoin asset companies?

Simon: Recently, many key performance indicators have been proposed to evaluate Bitcoin asset companies. Among them, I believe "Bitcoin yield" is the most important metric. It reflects the amount of Bitcoin held per share by a company and its growth rate. This metric has become a common tool for sell-side analysts, and Bitcoin asset companies worldwide are now adopting similar evaluation methods. Therefore, when assessing a company, one cannot rely solely on a single metric but must consider a combination of factors.

MNAV (Market Net Asset Value) is an important reference metric. It is calculated by dividing a company’s enterprise value (market capitalization plus debt) by the amount of Bitcoin the company holds. This metric fluctuates based on market interest in the company’s stock and its activities. I believe Metaplanet's premium is justified. For instance, tax policies vary significantly across countries for investors who wish to directly hold Bitcoin. In Japan, for example, individual investors face personal income taxes as high as 55% when purchasing Bitcoin directly. By investing in publicly listed companies like Metaplanet, investors can indirectly hold Bitcoin in a more tax-friendly manner.

This has also fueled our flywheel effect. The reasonableness of MNAV depends on various factors, the most critical of which is the company’s ability to increase its "Bitcoin per share" metric. We are currently one of the fastest-growing companies globally in this field, particularly in terms of enhancing Bitcoin per share. We are committed to maintaining MNAV within a range of 3 to 5, ensuring that we do not dilute our stock excessively, which could lower share prices. At the same time, we aim to effectively increase the value of Bitcoin per share, thereby creating greater benefits for all shareholders.

A Dilemma

Bonnie: Based on your earlier points, I’ve been thinking about a dilemma. Currently, there are some companies with strong cash flow and healthy operations, while others are struggling and facing difficulties. These struggling companies might choose to pivot into becoming Bitcoin treasury companies because the risks are relatively low, and the potential rewards could be significant. If these companies see their stock prices soar, even surpassing those of originally well-performing companies, how do you think this scenario will unfold?

Simon: What’s fascinating is that Bitcoin treasury companies provide an indirect investment pathway for investors who find it challenging to directly access Bitcoin. After all, almost everyone has a brokerage account, and buying stocks is a familiar process for them. However, opening an account on a cryptocurrency exchange involves additional steps. Considering past incidents of crypto exchanges being hacked, many people may shy away from Bitcoin and cryptocurrencies altogether. Moreover, some traditional investment funds are not allowed to directly purchase Bitcoin, though they can invest in the stocks of publicly listed companies. Therefore, I believe Bitcoin treasury companies represent a disruptive innovation in this regard. This trend acts like a capital black hole, attracting significant funds into Bitcoin through Bitcoin treasury companies.

Of course, caution is essential when selecting Bitcoin treasury companies. A company’s track record will become increasingly important. For example, we at Metaplanet already have 14 months of long-term performance history, whereas MicroStrategy boasts a five-year record. Additionally, the attitude of the CEO is crucial — do they genuinely believe in Bitcoin? Will they sell the Bitcoin they hold?

This reminds me of an event I attended a few weeks ago in Tokyo, which focused on Japanese equities. Someone asked me at the time, “Besides Bitcoin, what else would you invest in?” I responded with an extremely disapproving expression, which ended up being captured by many attendees and shared widely on social media. But I want to emphasize that Metaplanet will only invest in Bitcoin. We will never invest in other assets, nor will we sell our Bitcoin. Michael Saylor has consistently conveyed the same message. So, I believe that if you want to invest in Bitcoin treasury companies, you must ensure these companies are fully committed — not only refraining from selling Bitcoin but also making every effort to continuously increase their Bitcoin reserves.

The Transformation of Metaplanet's Capital Structure

David: Simon, could you share with us the initial stages of your company’s transformation? You mentioned earlier that Metaplanet started as a struggling hotel business, which sounds intriguing. How did you initially raise funds to purchase Bitcoin, and how has your financing strategy evolved over the years?

Simon: At the time, we owned a portfolio of hotels. During our initial discussions about transitioning into a Bitcoin asset company, we decided to sell some of our hotels to raise the seed capital. Additionally, we received funding support from like-minded investors, some of whom are present at this conference today. For instance, UTXO Management, one of the sponsors of this Bitcoin conference, became one of our early shareholders. We also had an outstanding board of directors, many of whom participated in our private fundraising rounds.

In early last year, we used the funds we raised to complete our first round of Bitcoin purchases. Subsequently, we conducted a rights issue, which is a method of offering existing shareholders the opportunity to purchase new shares. Traditionally, rights issues are often seen as a negative signal because companies typically resort to them when they urgently need funds.

Looking back, however, this was the smartest decision we could have made at the time. We had approximately 13,000 to 14,000 shareholders who filled out extensive paperwork to provide us with the funds to purchase Bitcoin. This also established an initial connection between our Japanese shareholders and the company, as their contributions were directly used to acquire Bitcoin. If you buy shares in the market today, you’re essentially purchasing them from other sellers. But when you subscribe to new shares, the money goes directly to the company, and you feel that your funds are being specifically allocated to help the company buy Bitcoin. That’s how we operated back then.

This took place during the summer of last year, when we raised approximately $60 million to $70 million. By the end of the year, we introduced our first "mobile exercise warrants." These warrants are a financing mechanism similar to "at-the-market stock offerings" in the U.S. In the U.S., companies can directly sell new shares to the market, as MicroStrategy has done. However, this approach isn’t feasible in Japan. So, we designed the mobile exercise warrant structure, issuing them to our partners, who then sell shares in the market and use the proceeds to exercise the warrants, ultimately receiving newly issued shares. This mechanism achieves a similar effect to "at-the-market stock offerings" in the U.S.

Through this method, we successfully raised substantial funds. We completed our first issuance in December of last year, while the most recent issuance began this February and was just exercised last week. We officially announced that this operation raised approximately $600 million in equity capital. As the company grows, we are able to issue more shares, allowing us to acquire more Bitcoin. We plan to continue using similar "at-the-market" operational models.

Looking ahead, we might consider issuing convertible bonds or preferred stock. However, for now, we remain focused on the equity financing phase. This method is the most effective because it represents permanent capital that doesn’t require repayment and can be fully utilized to purchase Bitcoin.

Bitcoin Companies: A Wave of Success Model Copycats?

Bonnie: Let’s circle back to the topic you mentioned earlier. Clearly, Michael Saylor, like your team, is a steadfast supporter of Bitcoin, and Bitcoin treasury companies—those integrating Bitcoin into their balance sheets—have garnered substantial support from the Bitcoin community. Today, many people see your successful model and want to emulate it. After all, your stock was one of the best-performing globally last year, right? It feels like your approach is a “recipe for success.” However, many newcomers to this space seem to have the wrong mindset yet still claim to be Bitcoin companies. What’s your take on this?

Simon: Overall, I think it’s a good thing that more companies are adopting the Bitcoin standard. This approach isn’t just beneficial for struggling businesses like ours but also for successful companies with large amounts of idle cash reserves.

Of course, there will always be bad actors who treat this as a shortcut to quick riches. They might think, “If Bitcoin can boost my stock price, why not do it?” But I believe investors are rational. As the number of Bitcoin treasury companies grows, investors will have more tools to compare them, such as platforms that monitor metrics like BTC yield (investment returns from Bitcoin) and Bitcoin holdings per share. Ultimately, companies that are disciplined, focused, and execute their strategies well will gain higher market recognition, while those lacking these qualities will be weeded out.

Recently, I noticed a company announcing they were selling Bitcoin, and I thought that was quite foolish. Just a few months ago, they had declared their Bitcoin purchase, and now they’re selling it merely to secure some profits for the final quarter. Such behavior severely damages their credibility, as investors will no longer view them as a stable channel for Bitcoin investment. Over time, the performance gap between different companies will widen, and investors will have a clearer understanding of which companies to support and why.

That said, I do understand that the motivations for integrating Bitcoin into a company’s balance sheet can vary widely. There are many complex factors at play in these decisions.

We Will Keep Buying Bitcoin Forever

David: Is there a price at which you would stop buying Bitcoin or at least slow down your purchases? For instance, if Bitcoin surged to $500,000 next week, would you still continue buying, even if its price quintupled in just a week?

Simon: I like your hypothetical scenario. If Bitcoin were to jump to $1 trillion tomorrow, we might consider it overvalued and reassess our strategy. However, our plan is to continue purchasing Bitcoin indefinitely. For now, Bitcoin’s price is approaching its historical highs again. Bitcoin is a unique asset with a limited supply, while demand continues to grow. As more people pay attention to Bitcoin, its price may keep rising over time.

If you’re asking whether we would ever sell Bitcoin, my answer is absolutely not. We want our shareholders to have the freedom to decide 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 remain focused and disciplined, executing our strategy rigorously. Regardless of market fluctuations, we will not change our stance or make decisions that might confuse our investors.

Two Phases of Growth for Bitcoin Asset Companies

Bonnie: Michael mentioned that MSTR’s leverage effect is equivalent to 1.5 times Bitcoin. Many investors believe that when Bitcoin reaches its all-time high, the stock price of MSTR or other Bitcoin treasury companies should also hit their peak. Why isn’t that the case in reality?

Simon: I think it’s important to adopt a long-term perspective. Strategically speaking, a company’s current situation might be similar to what it was four or five months ago, but the biggest change is the significant increase in the amount of Bitcoin held per share. While the stock price may not fully reflect this yet, the company’s intrinsic value has undoubtedly grown.

Bonnie: Exactly, but I want to point out that many people don’t truly understand Bitcoin. How should they view it? Let’s say you were explaining it to my grandmother, who’s in her seventies or eighties—how would you do that?

Simon: If your grandmother is in her seventies or eighties, I probably wouldn’t recommend she personally hold Bitcoin, but she could consider it as a long-term investment for her descendants. Right now, we are still in the first phase of the Bitcoin journey, which I call the “gold rush.” At this stage, our goal is to accumulate as much Bitcoin as possible. The total supply of the entire Bitcoin network is capped at 21 million, and our company currently holds more Bitcoin than any other publicly listed company. It’s nearly impossible for others to catch up. We aim to be the leader in this industry.

The second phase will come when Bitcoin’s price rises significantly, and stock prices will then truly reflect the actual value of many publicly listed companies. During this process, factors like supply and demand dynamics, Bitcoin’s price volatility, stock fluctuations, and the company’s ability to execute financing strategies will play crucial roles.

In this first phase, people need to understand that stock prices don’t always reflect a company’s intrinsic value. It’s similar to Amazon in its early days—despite growing revenue, its stock performance wasn’t great due to thin profits. At the time, Amazon reinvested most of its earnings into advertising, marketing, and network expansion. So, I believe that investors in Bitcoin treasury companies shouldn’t expect short-term profits. Similarly, if you’re investing in Bitcoin, you shouldn’t aim for short-term gains either. However, in the medium to long term, Bitcoin treasury companies have the ability to deliver higher returns by increasing the amount of Bitcoin held per share. By purchasing shares of Bitcoin treasury companies, you let the company handle the heavy lifting, such as Bitcoin reserves and management. Years later, when you look back, you’ll find that your Bitcoin exposure has grown significantly.

Explosive Growth Phase for Bitcoin Asset Companies

Bonnie: You mentioned earlier that we are currently in the first phase, right? A phase akin to the Wild West gold rush, and we need to wait for the second phase to arrive. So, when do you think the second phase will happen?

Simon: The second phase might arrive in three to five years, or even five to seven years. By then, Bitcoin will have achieved widespread global adoption, with its price potentially exceeding $1 million, or even reaching $5 million. At that point, banks will have the capability to custody Bitcoin. If you own a treasury, a stock portfolio, or even real estate, you’ll be able to deposit these assets into banks and use them as collateral for loans. Currently, this functionality hasn’t been fully realized in the Bitcoin space. While some banks have announced plans to offer Bitcoin custody services, it will take time for these services to be implemented and for Bitcoin to offer more competitive interest rates.

In the second phase, Bitcoin will become a critical component of high-quality balance sheets. I envision that by then, our balance sheet could hold trillions of dollars worth of Bitcoin. These Bitcoins could be deposited into major banks to secure loans at low interest rates, which could then be used to acquire companies focused on the Bitcoin ecosystem. For example, we could apply for digital banking licenses or acquire regional banks to provide Bitcoin-related financial services to customers.

The second phase will be filled with endless possibilities, as holding Bitcoin as a premium balance sheet asset will open up entirely new avenues for corporate growth.

Game Theory in International Bitcoin Adoption

Bonnie: A few days ago, I had a conversation with the head of an Asian exchange, and he mentioned an interesting perspective: since nearly all transactions are currently denominated in dollar-pegged stablecoins, the U.S. might already have an advantage in the Bitcoin space. Does this mean that other countries have fallen too far behind to catch up?

Simon: I believe Bitcoin adoption takes time, and the U.S.'s strategy in the Bitcoin domain might be more calculated than we imagine. I suspect the U.S. is quietly accumulating Bitcoin behind the scenes without openly announcing it. If they were to publicly disclose every purchase, it would drive Bitcoin prices higher, making it harder for them to continue accumulating at lower prices.

At the same time, there are countries openly revealing their Bitcoin purchases. El Salvador and Bhutan are prime examples of nations that have publicly disclosed their Bitcoin holdings. I've also learned that some Middle Eastern countries are announcing their Bitcoin reserves in various ways. This leads me to believe that multiple "Bitcoin superpowers" will emerge in the future. While the U.S. may currently hold the title of the largest Bitcoin powerhouse, I’m confident other nations have the opportunity to carve out significant positions in this field.

Through Metaplanet, we aim to help Japan become one of these nations. As of now, Metaplanet is the largest Bitcoin-holding company in Japan and even Asia. Our goal is to encourage Japan to follow in the U.S.'s footsteps in Bitcoin adoption. So, even if Bitcoin adoption seems slow at the moment, there’s no need to feel discouraged. This gradual pace actually provides us more opportunities to accumulate Bitcoin before its price skyrockets to levels that are unaffordable for the average person.

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

Japan's Unique Bitcoin Market Demand

Bonnie: I recall you mentioned in an interview that if Japanese investors want to venture into Bitcoin assets, they essentially need to go through your company. Is that correct?

Simon: Actually, there are multiple options available in the market. Investors can directly purchase Bitcoin through local exchanges, but this approach often comes with significant tax burdens. Therefore, when investors seek a more tax-efficient way to invest in Bitcoin while achieving returns beyond Bitcoin's price performance, they often turn to us. Directly buying Bitcoin means returns are entirely dependent on Bitcoin's price fluctuations. Similarly, investing in U.S.-based Bitcoin ETFs yields returns closely tied to Bitcoin's price performance, without exceeding it.

In contrast, Bitcoin treasury companies like ours offer distinct advantages. As an operating company, we can leverage various capital market tools, such as issuing stocks, convertible bonds, or preferred shares, to effectively enhance the value of Bitcoin per share.

Bonnie: You mentioned three metrics — Bitcoin per share, BTC yield, and BTC gain. Can you explain the differences between them?

Simon: "BTC yield" refers to the growth rate of Bitcoin per share over different periods. This year, our BTC yield is approximately 190%, meaning we successfully increased the amount of Bitcoin per share by 190%.

"BTC gain" translates BTC yield into a specific amount of Bitcoin. It is calculated by multiplying the Bitcoin holdings at the end of the previous period by the BTC yield. For example, in our company, this year we added approximately 3,500 Bitcoins through Bitcoin operations (after accounting for dilution). Then, multiplying these 3,500 Bitcoins by the current Bitcoin price gives us the "BTC dollar gain."

This metric is primarily designed to help traditional financial markets understand the tangible value we create. For this year, our BTC dollar gain is approximately $400 million. I consider it a form of profit representation, although it isn't traditional accounting profit. Still, it clearly demonstrates the potential value created. If annualized, our BTC dollar gain could reach $1 billion. So, how should a company capable of generating $1 billion in annual value for its shareholders be valued?

The current challenge lies in the limited tools available to traditional financial markets for evaluating companies. They rely on conventional frameworks such as revenue and profit. However, Bitcoin treasury companies differ from traditional operating companies—we don't have significant revenue or conventional profit. Therefore, alternative evaluation tools like BTC yield, BTC gain, and BTC dollar gain must be adopted to help analysts better understand the value our company creates.

Becoming a Bitcoin Company — Metaplanet

David: Before we delve into your philosophy regarding Bitcoin, I’d like to hear your thoughts on Metaplanet. Your company is often compared to MicroStrategy, with some even calling you the “MicroStrategy of Asia.” What’s your take on this comparison?

Simon: I feel incredibly honored to be compared in this way. Michael Saylor has been a profound influence on me. I often mention that during the pandemic, when my hotel business was struggling to survive, I found solace in listening to Michael Saylor’s podcasts. He shared his vision of how publicly listed companies could transform themselves and embrace Bitcoin—a concept that was almost unimaginable at the time.

His insights inspired me and gave me the courage to pivot my hotel business, which was on the brink of collapse. Over the past year, we’ve completely turned things around by adopting Bitcoin as our core treasury asset.

David: When you made this pivot, did you encounter resistance from investors? Especially considering Bitcoin is a novel asset class and seemingly unrelated to your core business, how did you address opposition?

Simon: Interestingly, it was a case of fortune amidst adversity. At the time, our operations were far from ideal, and we had few alternatives but to seek transformation. The board and shareholders essentially told me, “Simon, come up with something—anything that might save the company.” As a result, I didn’t face much opposition during the board discussions.

This reminds me of an earlier time, several years ago, when the company was performing well. Back then, I proposed to the board the idea of accepting Bitcoin payments in our hotels. It seemed like a natural next step, but the board ridiculed me.

They questioned why we would risk our business on something as unpopular as Bitcoin. I had no choice but to abandon the idea then. However, I kept wondering if there would ever be an opportunity to integrate Bitcoin into our core business. Eventually, we seized the right moment to make it happen.

Local Currency vs. Bitcoin

David: How much does the performance of domestic currencies influence your new Bitcoin acquisition strategy? For instance, over the past 15 to 20 years, the Japanese yen has consistently depreciated against the US dollar and other currency baskets. If this hadn’t occurred, would you still have made the same pivot?

Simon: Absolutely. I believe Bitcoin is an unparalleled premium monetary asset, and there’s nothing else in the market that compares to it. If you live in a country experiencing currency depreciation, like the U.S., you’ll notice many discussions about the excessive printing of dollars and the country’s enormous debt burden.

Japan faces a similar situation. In fact, many G7 nations are grappling with comparable issues. Japan, in particular, stands out as the most indebted country globally when measured as a percentage of GDP. This has had a significant impact on the purchasing power of the yen. Once, many Japanese citizens could proudly afford vacations in Hawaii, but now, such trips have become increasingly unattainable due to the yen’s depreciation.

However, I believe this isn’t just a yen or dollar problem—it’s an issue inherent to the fiat currency system as a whole. Governments can print these currencies at will, which means the hard-earned wealth of individuals can be diluted through arbitrary monetary expansion. As a result, fiat currencies are not ideal for long-term wealth preservation.

Bitcoin and Deflation?

David: We know Bitcoin is often regarded as a hedge against inflation. But what about during deflationary periods? For instance, Japan experienced deflation in the early 1990s and beyond. In such an environment, where the purchasing power of cash increases over time, what theoretical value or demand would Bitcoin have?

Simon: That’s a deeply insightful question. However, I believe we’re already seeing prices begin to rise again. Japan went through a massive asset bubble, primarily driven by post-war economic reconstruction. I remember living in Japan during the 1980s when people were even writing books proclaiming Japan as “Number One in the World.” I still hope Japan can regain such heights someday. But back then, the country fell from an absolute peak, and now inflation is making its return.

In a scenario where the value of a currency increases over time—essentially a deflationary environment—the rationale for buying Bitcoin might appear less compelling. However, Bitcoin has a key characteristic: its supply is fixed at 21 million. Even an appreciating currency cannot directly compare to this feature. Bitcoin’s value doesn’t depend on any single monetary system; it exists independently.

When you consider the global phenomenon of excessive currency printing and widespread inflation, Bitcoin undoubtedly stands as the best tool for preserving value in today’s world.

Why Don’t People Just Buy Bitcoin Directly?

Bonnie: You hold a significant amount of Bitcoin. How do you ensure the security of these assets?

Simon: One of the key advantages of a Bitcoin Treasury Company is that it helps users overcome many of the technical barriers associated with holding Bitcoin. As we’ve mentioned before, losing your private keys means losing your Bitcoin permanently—it’s not like forgetting a bank password that you can recover with a phone call. Once lost, Bitcoin is irretrievable. Therefore, if you choose to invest in a Bitcoin Treasury Company or through a Bitcoin ETF, you can sleep soundly knowing your Bitcoin assets are securely safeguarded.

In reality, many Bitcoin holders fail to inform their spouses or children about their private keys. If something unfortunate happens, those Bitcoin could be lost forever.

As a company, we prioritize transparency. We publish all Bitcoin public addresses on our dashboard. This approach is crucial for earning the trust of our investors and Japanese shareholders. Additionally, by law, we are required to custody Bitcoin with third-party custodians approved by regulatory authorities. We strictly adhere to this regulation. As our Bitcoin holdings grow, we bring in more professional custodians to ensure asset security. We always select the best custodians and diversify our holdings across multiple institutions to mitigate risks.

Do Bitcoin Treasury Companies Never Sell?

Bonnie: If a company claiming to be a Bitcoin Treasury Company engages in buying low and selling high — and they excel at it — what impact would that have on the entire system? We strongly agree with Michael Saylor's long-term Bitcoin holding strategy, but if I chose to sell my Bitcoin, aside from disappointing investors, what other consequences might arise?

Simon: In that case, you wouldn’t truly be a Bitcoin Treasury Company. I believe companies engaging in Bitcoin trading are more akin to Bitcoin hedge funds. The primary goal of a Bitcoin hedge fund is to profit from the Bitcoin market through various trading strategies, and there are indeed many investment tools available for such purposes.

I’m aware of some tools that focus on leveraging Bitcoin-related trading strategies to generate returns, but this is fundamentally different from the philosophy of a Bitcoin Treasury Company. Our mission is to increase the amount of Bitcoin per share over time, which requires accumulating Bitcoin rather than selling it.

Would You Pay with Bitcoin?

David: Why don’t hotels accept Bitcoin for room payments now? Do you think this will change in the future?

Simon: This reminds me of the famous Bitcoin pizza story. In the early days, someone spent 10,000 Bitcoin to buy two pizzas, and later, Bitcoin's value skyrocketed to millions of dollars. If you paid for a night’s stay with Bitcoin and its price surged to $1 million, that would make for an incredibly expensive room.

David: That’s hindsight bias, but you can’t predict Bitcoin’s price tomorrow. Is this why Bitcoin hasn’t yet become a widely-used payment tool—because people believe its value will continue to rise?

Bonnie: Exactly. People are more likely to spend weaker currencies.

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

Simon: Blockchain, at its core, is simply a ledger, and there are various types of ledgers out there. In Japan, people are already very accustomed to using electronic money. You can pay at hotels with just a tap of your phone. In the U.S., Apple Pay is widely adopted. For consumers, transaction speed is paramount. Early Bitcoin transactions, like buying coffee, required waiting 15 minutes for confirmation. Under current circumstances, Bitcoin isn’t an ideal currency for everyday payments. But it doesn’t need to be — it’s an excellent store of value. In the future, we might see Bitcoin-based applications that make micropayments feasible.

As for hotels or other businesses, accepting Bitcoin payments is a smart move. It allows them to gradually accumulate Bitcoin and treat it as a reserve asset. However, the reality is that most companies need their revenue to cover daily expenses. If you’re a hotel company, your profit margins are typically thin, meaning you may not be able to hold onto Bitcoin income long-term and would have to sell it to cover operational costs. Still, I believe more companies will choose to accept Bitcoin as a payment method in the future. In the Middle East, many people are already using Bitcoin to purchase cars and apartments. Sellers are willing to accept Bitcoin because they see it as an asset with long-term appreciation potential.

The Metaplanet Story

Bonnie: Michael Saylor once shared how he started investing in Bitcoin, mentioning that during the pandemic, his company had to compete with giants like Microsoft. What’s your story?

Simon: Honestly, my story isn’t as intricate. At the time, we were under immense pressure. Our hotels were forced to shut down, and out of the four markets we operated in—Southeast Asia and Japan—three were ordered to close. Revenue dropped to zero, but expenses continued to pile up. We were in a survival crisis and had to figure out how to weather the storm. Our auditors added a “going concern warning” to our financial report, essentially signaling that we didn’t have enough cash to sustain the company for the next 12 months. It was a truly difficult period.

Inspired by Michael Saylor, I shared some of his perspectives during a board meeting, and the response was overwhelmingly positive. We decided to hold a shareholder meeting to propose investing in Bitcoin as a core financial asset. When we announced this plan, the market reacted positively and swiftly, reinforcing our decision. Now, our Bitcoin strategy has been in place for 13 or 14 months. I’m excited about the future and ready to embrace higher expectations and challenges.

Bonnie: How did this story unfold? Had you already started buying Bitcoin before this? Did you learn about it through YouTube? First, you must believe in Bitcoin and this strategy to move forward, right? So, what’s your story?

Simon: I actually started buying Bitcoin in late 2012 to early 2013. At the time, I was living in Japan and using Mt. Gox, which was the platform where many early Bitcoin buyers first encountered Bitcoin. You could say I’ve been a long-term Bitcoin enthusiast. This interest helped me while running my hotel business. Whenever challenges in the hotel industry frustrated me, I would think about Bitcoin and regain my motivation. Over the years, I’ve been looking for ways to combine my passion with business, and the crisis during the pandemic provided just the opportunity I needed.

Bitcoin as a Moral Responsibility

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

Simon: I might have phrased it as a moral obligation. I believe that I, along with others in the industry, have a responsibility to help more people understand Bitcoin. In Japan, accessing Bitcoin isn’t particularly easy at the moment. Private transactions to acquire Bitcoin are uncommon, and its exposure is quite limited. Moreover, the process of opening an account is incredibly complex. Since the Mt. Gox incident, Japan has tightened its regulations on digital assets, which, while necessary, has left many traditional regulatory hurdles in place, making entry more challenging. As a result, we aim to provide Japanese investors with a simpler and tax-friendly way to purchase Bitcoin.

Additionally, we’ve obtained the publishing license for Bitcoin Magazine in Japan. This March, we released the first issue, and the next one is set to launch at the end of June. Through this magazine, we hope to guide Japanese citizens in better understanding Bitcoin. We feel a responsibility to educate people and enhance their financial literacy. Thus, Bitcoin Magazine’s primary goal isn’t profit but rather serving as a platform to share Bitcoin’s story.

Furthermore, we’ve retained one of our hotels and renamed it the “Bitcoin Hotel.” This provides people with an opportunity to interact with Bitcoin in real life. Guests can experience hotel services, visit a Bitcoin art museum, and we plan to collaborate with Bitcoin artists from around the world to showcase their works. We’ll also establish a Bitcoin museum to introduce the history and development of Bitcoin. The hotel lobby might even feature a wax figure of Satoshi Nakamoto for visitors to take photos with. Of course, if you could visit when the hotel opens at the end of next year, we would be thrilled.

Metaplanet's Future Strategy

David: Speaking of hotels, beyond their traditional role of offering accommodation and rest, Simon, what’s next for Metaplanet? You’ve successfully turned the company around with an effective strategy. Do you have new strategic developments or expansion plans? With only one hotel left in operation, will you consider acquiring more hotels?

Simon: No, we won’t. The reason we’ve kept this hotel is because it’s a legacy asset from the old era. There are several reasons for holding onto it, but the most important one is that the operating losses associated with the hotel can be used for tax deductions. This means that as long as we retain the hotel, we can offset future profits from other business ventures with its tax losses. For us, keeping this hotel is highly valuable. But aside from this hotel, we’ve now completely transformed into a company that is 100% focused on Bitcoin.

One of the advantages of being a Bitcoin reserve company is that there’s no need to innovate in the traditional sense — your core business is simply buying Bitcoin. The innovation lies in how you raise funds. Right now, our primary fundraising method involves mobile execution warrants, which operate similarly to at-the-market equity offerings.

Should Every Company Hold Bitcoin?

David: What’s your take on companies adopting a hybrid strategy? For instance, Elon Musk once purchased a significant amount of Bitcoin for Tesla, but Tesla isn’t a company focused on Bitcoin reserves. At one point, Tesla integrated Bitcoin into its financial system, likely for reasons different from Metaplanet. For companies whose core business isn’t centered around Bitcoin, do you think they should include Bitcoin as a cash alternative in their asset allocation?

Simon: Absolutely, they should. As we’ve discussed before, Bitcoin is a very meaningful choice as an asset. Idle cash leads to devaluation, which is something we want to avoid. I’ve noticed that some Asian companies already hold gold and Bitcoin on their balance sheets, and I believe Bitcoin is a superior version of gold—it’s often referred to as “digital gold.” Given Bitcoin’s scarcity and decentralized nature, it should be a key option for every CFO in their financial planning. Asset allocation shouldn’t consist solely of cash.