Compiled & Edited by: TechFlow

Translator: Naetitia

Ethereum has yet to experience the explosive growth seen with Bitcoin, but numerous applications and projects are already being built on its foundation.

Guest: Charles Allen, CEO and Chairman of the Board at BTCS

Host: Paul Barron

Podcast Source: Paul Barron Network

Key Points Summary

Companies with Ethereum strategic reserves have become favorites in the U.S. stock market, with their stock prices showing varying degrees of growth.

The key drivers and leaders behind these companies are playing a significant role in the surge of crypto asset reserve strategies.

(Related Reading: ETH Reserve Companies Analysis: Four Star Enterprises and Their Driving Forces)

Recently, BTCS Inc. announced its strategic plan to raise $100 million in 2025 to acquire Ethereum and expand its ETH-centric infrastructure model.

This episode of the podcast features Charles Allen, CEO of BTCS, who explains how the company’s strategy aims to create long-term value by increasing ETH holdings per share, scaling revenue growth, and minimizing shareholder equity dilution.

Highlights

• Ethereum has the largest potential for upside because it has yet to experience the explosive growth seen with Bitcoin, despite having numerous applications and projects built on its foundation.

• Ethereum is poised to become the core financial infrastructure supporting the operation of the digital economy.

• Ethereum represents a light-asset model where your assets are productive rather than non-productive. They appreciate in value rather than depreciate.

• An estimated $2 billion to $10 billion could flow into digital asset-related financial strategies and public companies. As more institutions and investors join, they tend to become "follow-the-leader" players.

• BTCS has built 2.7% of the blocks on the Ethereum network. In other words, 2.7% of all transactions on Ethereum are processed by BTCS’s block builder.

• Sharplink and Bitmine executives typically serve as chairpersons of their companies but are not directly involved in daily operations. In contrast, BTCS’s team is deeply engaged in the technical aspects, running its own nodes and handling block building.

• BTCS has now ranked among the top five block builders globally, which sets the company apart in the industry.

• BTCS recently announced plans to raise $100 million to purchase additional Ethereum, run validator nodes through Rocket Pool, and personally handle the entire staking process. With more funds raised, BTCS has the capability to significantly boost revenue and ETH per share.

• If a company like Tom Lee’s, valued at 8 to 10 times NAV, expresses interest in acquiring BTCS, the offer will be seriously considered.

• Unless you personally operate validator nodes and participate in the consensus mechanism, you’re merely handing control to others, and those managing the staking process hold the real power.

• Transforming a sub-$10 million NASDAQ-listed company into a $250 million project within a month might sound simple, but it requires a solid management team, a reliable wallet service provider, and a stable infrastructure provider to get operations running.

• Bitcoin maximalists are unlikely to ever join the Ethereum ecosystem due to fundamental differences in token issuance structures and philosophies.

Ethereum Reserve Strategy

Paul: Today, we’re joined by Charles Allen, CEO of BTCS Inc. It’s been a while since our last in-depth discussion, and a lot has changed for your company during this time. Could you give us an overview of BTCS Inc.’s overall development? Specifically, how does your performance compare to other digital asset companies, such as Ethereum-focused enterprises? With Bitcoin’s market cap currently sitting at around $46 billion, what’s your strategy and current outlook?

Charles: Our Ethereum reserve strategy is actually an integral part of our operations. Recently, we’ve adjusted the way we market this strategy because it’s undoubtedly a hot topic in the market. I believe we’re currently the only publicly traded company solely focused on Ethereum and genuinely committed to developing and operating Ethereum infrastructure. We achieve this by running independent validator nodes, supporting nodes for Rocket Pool, participating in block building, and vertically integrating these functions. These measures are the core drivers of our revenue growth.

Bitcoin vs. Ethereum Business Models

Paul: Comparing the current situation to the phase where Bitcoin previously received more attention, I’ve noticed differences in business models between Ethereum and Bitcoin. One significant factor is the disparity in asset structures, especially between Bitcoin holdings and the operational assets within the Ethereum ecosystem. Does your business model shift imply that Bitcoin’s market value has been underestimated?

Charles: I believe it has. We shifted our business model from Bitcoin to Ethereum back in 2021, becoming the first publicly traded company focused on Ethereum. At the time, I don’t think many people truly understood what we were doing. Now, with figures like Tom Lee and Joe Lubin involved, Wall Street has gained greater recognition of Ethereum’s value in public markets.

We’ve adopted a business model centered around productive assets, which is entirely different from the traditional approach of simply holding Bitcoin on the balance sheet or operating as Bitcoin miners.

While we were the world’s first publicly listed Bitcoin miner, we ultimately decided to abandon that capital-intensive model. Ethereum, on the other hand, represents a light-asset model where your assets are productive rather than non-productive. They appreciate in value rather than depreciate.

Tom Lee on Circle IPO

Paul: This highlights the core differences between Bitcoin-focused financial companies and Ethereum-focused ones. To better understand this, I’d like to play a short video featuring Tom Lee, where he shares his views on future strategies. Let’s take a look.

Tom Lee: Did you participate in Circle’s IPO or hold its stock? Circle went public 10 days ago at $31 per share, and its stock price has already risen to $242. The ticker symbol is CRCL. Circle’s success is closely tied to the Ethereum ecosystem because its operations rely on the Ethereum network, and stablecoin issuance primarily runs on Ethereum. Therefore, I believe Ethereum’s value is poised for significant rebound.

Over the next five years, Circle could become one of the most promising investment targets. Its price-to-earnings ratio is as high as 100 times that of many traditional funds, providing investors with substantial returns this year and even propelling some into the global top 1% wealth bracket. Circle’s stock is regarded as a god-tier investment, and the stablecoin market is growing rapidly. Currently, the total market cap of stablecoins is about $250 billion, accounting for roughly 30% of Ethereum’s gas fees. If stablecoin creation scales up tenfold, it will have an exponential impact on Ethereum’s gas fees, further solidifying Ethereum’s position as the direct beneficiary of Wall Street’s attempt to equity-tokenize cryptocurrencies.

Charles: They are using Ethereum’s Layer 2 solutions to achieve tokenized equity.

BTCS Rebranding and Record Revenue

Paul: When analyzing your business model and operations, I noticed you have multiple revenue centers. I also saw one of your tweets detailing how these centers are structured. On your website, these are clearly categorized, such as builders, node operations, and chains. Since your business has fully transitioned to the Ethereum ecosystem, why not directly change the company name to make it clearer to the public that this is an Ethereum-related business rather than Bitcoin-focused?

Charles: That’s an interesting question. BTCS stands for Blockchain Technology Consensus Solutions, and the name is indeed fitting. We focus on blockchain technology’s consensus mechanisms, providing consensus services, running infrastructure, and handling block building, so the name is quite reasonable.

We have considered rebranding the company, but it requires significant effort and resources. While many have suggested incorporating “Ethereum” into the name, we’ve chosen to stick with the current name for now. Additionally, we are building blocks on Financial Chain, which is a fork of Ethereum. Block building has already become our primary revenue source, accounting for 80% of our first-quarter revenue. We anticipate setting a new revenue record for the second quarter, surpassing the $2.3 million generated in Q4 last year.

To help everyone better understand, the blocks we build on the Ethereum network constitute 2.7% of all blocks. In other words, 2.7% of all transactions on Ethereum are processed by our block builder. If our validator nodes can consistently provide consensus and our block builder operates stably, our business scale will expand further.

We view the block builder as a standardized technology module, similar to a device running at 120 volts. By adding adapters, we can integrate with other chains that offer higher scalability. In fact, we’ve successfully implemented this for Binance. Imagine upgrading the device to run at 240 volts—this is why we adhere to the name “Blockchain Technology Consensus Solutions” rather than directly branding it as Ethereum-related.

Nonetheless, Ethereum remains our core financial asset. Our goal is to continuously increase Ethereum holdings per share while driving sustained revenue growth. We aim to achieve this through stock price appreciation, strategic capital raising, and combining DeFi with traditional financial metrics.

Sharplink vs. BTCS & Aave Lending

Paul: Sharplink and Bitmine seem to adopt strategies that are completely different from yours. Could you elaborate on the main distinctions between your approaches?

Charles: We are indeed very different from these companies. First, Sharplink and Bitmine executives typically serve as chairpersons of their companies, but they aren’t directly involved in daily operations. For example, I serve as a board member for another company and only attend meetings four times a year, so their actual involvement in operations is limited.

In contrast, our team is deeply engaged in technical aspects, directly running our own nodes and handling block building. We’ve now ranked among the top five block builders globally, which sets us apart in the industry.

Additionally, our capital market strategy differs significantly from theirs. Before entering the crypto space, I had ten years of investment banking experience and successfully took the company public in 2014. Today, we are the only publicly traded company utilizing DeFi (Decentralized Finance) as a funding source. We borrow funds through the Aave platform, with a current lending ratio close to 40%. This year, we plan to raise $100 million and expect the lending ratio to remain around 40%, with funding sourced through convertible bonds. Convertible bonds are debt instruments that can be converted into company stock in the future.

Recently, we reached an agreement with ATW Partners LLC to successfully borrow approximately $7.8 million and actively participated in this financing activity. By combining these funds with Aave platform lending and ATM (Automated Teller Machine) sales, we can optimize operational efficiency while minimizing equity dilution, thereby strengthening the company’s balance sheet. This strategy stands out as particularly advantageous when compared to competitors.

Buying $100 Million More in ETH!

Paul: I noticed your performance in strategic ETH reserves. On this list, the Ethereum Foundation and Sharplink are at the top, while BTCS is steadily climbing and seems poised to surpass Arbitrum DAO. Building on our previous discussions, do you have plans to further increase your Ethereum holdings to improve your ranking on this list?

Charles: As I mentioned earlier, we recently announced a plan to raise $100 million to purchase additional Ethereum, which will support our staking operations. We intend to run validator nodes through the Rocket Pool platform while vertically integrating with our block-building business. Unlike other companies that hand over Ethereum to third-party custodians for staking and pay fees, we choose to personally handle the entire staking process. I believe that as we raise more funds, we have the capability to significantly boost revenue and Ethereum holdings per share.

Tom Lee: ETH Company Mergers on the Horizon?

Tom Lee: Your current strategy also leverages the relationship between market price and net asset value (NAV), as well as the advantages of company equity. Additionally, some financial companies trade at valuations far above their NAV (SLA). For example, if a company’s stock price is three times its NAV, you might consider acquiring these financial companies. Through such consolidation, we can create businesses dedicated to supporting the DeFi ecosystem, such as providing Ethereum staking services.

Ethereum staking is a tremendous advantage because it allows users to earn rewards by validating transactions—a mechanism that is unavailable in the Bitcoin network. This approach not only scales businesses but also further solidifies Ethereum’s central role in the DeFi ecosystem.

BTCS and Tom Lee Merger?

Paul: Tom Lee mentioned the potential for mergers with other stakeholders. I’m curious about your perspective, as I see that your technologies and tools could help companies like Sharplink address current challenges. Have you considered the possibility of a merger?

Charles: I believe mergers are a possibility, but the specifics depend on valuation. If a company wants to acquire us and our valuation is close to NAV, we would seek a higher premium. If Tom Lee’s company, for example, is valued at 8 to 10 times NAV, we would seriously consider such an opportunity.

Over time, NAV may decline and gradually align with ETF valuation methods, as ETFs typically trade at NAV. However, if a company holds financial assets on its balance sheet, we can trade at a premium.

There are several reasons behind this. Firstly, we can leverage mechanisms that ETFs cannot, such as borrowing funds on the Aave platform, which we’ve been doing and plan to expand further. Additionally, we can raise funds through convertible bonds to enhance financial flexibility. These methods increase company value and justify premium trading.

For us, financing strategies and operational efficiency are key. This is also what differentiates us from other Ethereum financial companies. Many companies simply place assets on their balance sheets, while we focus on operating validator nodes. We’ve been deeply involved in Ethereum since 2021 and have been in the crypto industry since 2014. Our goal is to build the financial infrastructure and framework needed for the future Ethereum ecosystem, providing robust support for industry growth.

Bitcoin Flowing into Ethereum

Paul: The critical question is, how much Bitcoin will shift from the Bitcoin network to Ethereum? If we look at companies investing in digital assets, especially those adopting new financial models, how much Bitcoin might flow into Ethereum? What do you think the market size could be?

Charles: In my judgment, roughly $2 billion to $10 billion could flow into digital asset-related financial strategies and public offices. As more institutions and investors join, they tend to become “follow-the-leader” players.

For Bitcoin, you can see Michael Saylor’s strategy standing out, along with MetaPlanet and David Bailey’s active participation. But in public markets, these types of transactions generally follow a fixed success pattern. Typically, a high-profile individual serves as the chairman of a new company, which usually has a market cap below $10 million and a struggling business model. Then, through a series of operations, the company’s market cap may rapidly grow. When these companies file resale registration statements, many investors choose to exit the market, essentially opening the door for stock resale.

Currently, these companies often trade close to NAV and begin to recover. But I believe trading at a premium far above NAV is usually a short-term speculative behavior rather than a sustainable business model. Overall, if lucky, such companies might achieve twice MicroStrategy’s valuation, but if unlucky, maybe three times. However, trading at 10 times NAV is a very difficult proposition because smart hedge funds would step in—they might short your stock or arbitrage by purchasing other stocks with different NAV premiums.

So, overall, if the market is rational—and the market isn’t always rational—digital asset-related financial companies should trade at some form of premium, typically based on the company’s operational capabilities and actual performance. However, if valuation discrepancies between companies are too large, the market will eventually notice and push these valuations back to more reasonable levels.

Schwab Excited About Tokenized Stocks

Paul: Here’s a video from the Schwab network discussing how tokenization could impact Ethereum and potentially disrupt Bitcoin even further. Let’s take a look.

Video Content: “They plan to tokenize private securities, particularly companies like SpaceX. They’re also looking for more targets, including some AI companies currently accessible only to qualified investors, while retail investors have yet to gain access to these opportunities.”

“I can imagine seeing more announcements like this in the future. Could this impact demand for Bitcoin? That’s the question I want to pose. Will we see some of the demand originally flowing into Bitcoin shift towards these tokenized products?”

“We’ve already witnessed the rise of various investment methods. In the past, Bitcoin and its related assets were almost the only digital investment options, but that’s no longer the case today. I think the latest trend of tokenization is an incredibly exciting field, with many thrilling discussions happening every week.”

Ethereum Boom on the Horizon

Paul: Bitcoin might face some impact, while Schwab is eyeing the upcoming Ethereum boom. Do you believe this boom will really happen? What kind of effects might it have on your operations?

Charles: I think this will be incredibly exciting. Our current Ethereum balance sheet is in excellent shape. If you look at Ethereum’s price now, it’s almost level with its 2021 levels, right? And four years from now, its price could potentially reach Bitcoin’s all-time high.

I believe Ethereum has the greatest potential for upward growth because it hasn’t yet experienced the explosive surge that Bitcoin has, yet many applications and projects are already built on it. As you mentioned, almost all stablecoins are established on Ethereum. Many institutions are flocking to the Ethereum ecosystem, and tokenized assets are primarily conducted on the Ethereum network. Therefore, as these trends develop and the market increasingly tilts towards Ethereum, I think Ethereum’s potential is like a tightly compressed spring, ready to release massive energy at any moment.

This is not just hype but is based on real-world tokenization practices of numerous assets. This isn’t a short-term market frenzy. In my view, Ethereum is poised to become the core financial infrastructure supporting the operations of the digital economy. If you agree with this perspective, then Ethereum’s current price, at its 2021 levels, is still in its infancy, with enormous room for growth ahead. This is also why we recently announced plans to raise $100 million to purchase more Ethereum.

Tom Lee: Ethereum’s “Wall Street Protection”

Paul: What role does Wall Street play in the Ethereum ecosystem?

Tom Lee: Wall Street is essentially forming what I call a “structural protection” mechanism. For example, the U.S. government might choose a strategy like using the existing 600,000 assets and being willing to pay a 200% premium. This is far more cost-effective than directly paying $1 million for Bitcoin. This mechanism is referred to as “sovereign protection,” right?

In the Ethereum ecosystem, because it’s a staking-supported token, if asset reserve companies hold 5% of ETH, their importance to the entire ecosystem becomes very significant. This impact could even multiply. If these companies run operations on Ethereum the way Goldman Sachs issues dollars, they would not only ensure the security of the Ethereum network but also drive widespread adoption of Ethereum. In the end, these companies might purchase large amounts of Ethereum. However, some state-owned entities already hold Ethereum, and they may only need to buy from these state-owned entities. So you could say these state-owned entities essentially have Wall Street’s protection.

Paul: What’s your take on this, Charles?

Charles: To some extent, I agree with this view. However, I think it overlooks a critical issue: the details matter. Most institutions that purchase and stake Ethereum don’t directly participate in staking themselves but rely on third parties for management. In fact, the staking market is currently almost monopolized by a few small players, even though users can switch between different services. So merely holding cryptocurrency doesn’t equate to genuine participation in staking.

If you’re passively holding and letting other institutions manage and stake for you, it’s akin to the centralization problem with Bitcoin miners—it’s not truly decentralized. I believe unless you personally operate validator nodes and participate in the consensus mechanism, you’re merely handing over control to others, and those who control staking truly hold the power.

Furthermore, who decides which transactions ultimately get recorded on the blockchain? That’s the area we’re involved in. For instance, block builders like Titan and Beaver—statistics show that if you include Beaver Build, over 90% of blocks are constructed by these two participants. This is the core issue we focus on. Currently, our market share in this space is roughly 3%.

Demand for Technical Expertise

Paul: Won’t they move into node operations? That seems like a natural progression for these reserve companies.

Charles: Since node operations require a high degree of technical expertise, these companies usually outsource the task to professional teams rather than operating them themselves. We began entering this field in 2021 and took some time to prepare before fully diving in. As for block building, we’ve been deeply involved in this area for nearly two years.

It’s not that complicated. If someone says, “I want to transform a NASDAQ-listed company with a market cap of less than $10 million into a $250 million project and want to do it within a month,” it sounds simple. You just need a great management team, a reliable wallet service provider, and a stable infrastructure provider to get operations started. Of course, these services come with costs. But we choose to operate ourselves, avoiding outsourcing fees.

Polymarket Dominates Politics

Paul: Currently, many significant changes are happening in the Ethereum ecosystem, but I think many people still don’t realize the profound impact of these changes. I’d like to play a video about Polymarket and how it’s influencing political structures.

Video Content: “We’re all trying to figure out where things are headed. You know, we’ve all seen him involved, but it’s only in the past 72 hours that this has really gained widespread attention.”

“Notably, (in Polymarket’s New York City mayoral election predictions), Andrew was ahead in the polls. At the time, I told my team that Zohran would win this race. Strategically, we chose not to participate in the crowded Democratic primary but decided to run as an independent candidate. Initially, everyone thought this was laughable and asked me, ‘What are you doing?’ Now, who’s laughing? I told Andrew, ‘Are you really that arrogant? I’m the mayor of New York City. Do you think I’ll stand idly by when you just lost to Zohran by 12 points? That’s extreme arrogance.’”

Gaming Industry Surpassing National Economies & Michael Saylor Buying ETH?

Paul: Now we have Polymarket, which can be described as Ethereum’s guiding force in politics. You can look at Ferguson’s tweet on the Immutable platform. He mentioned what the scenario would be like if Grand Theft Auto (GTA) launched a game token. We’re starting to see some major Bitcoin advocates, like Michael Saylor and Microstrategy, seemingly moving in this direction. How long do you think it will take for them to enter the Ethereum ecosystem? Will they choose to join?

Charles: Extreme Bitcoin advocates might never choose to join the Ethereum ecosystem, primarily because Bitcoin’s total supply is fixed at 21 million coins—that’s its cap. Ethereum, on the other hand, has a more flexible issuance mechanism and can even implement a deflationary model. So if Michael Saylor shifts to Ethereum, I’d be very surprised, as his attitude towards Ethereum doesn’t seem positive. I’d typically classify him as an extreme Bitcoin advocate, and many of these individuals may never change their stance.

However, for those who are more pragmatic, they’ll notice Ethereum’s practicality and recognize its potential, saying, “Wow, this technology is amazing! It can revolutionize the way global assets flow.” This transformation could include tokenized securities, concert tickets, and even the issuance of stablecoins—all great examples.

I believe these technologies will become the new standard for global asset flows, but extreme Bitcoin advocates may still not join.

Paul: That’s indeed interesting. I think as cryptocurrency evolves, especially with Bitcoin and Ethereum asserting their leadership positions in the market, they’re beginning to enter Wall Street. I feel that all current trends point in this direction, and Ethereum remains highly competitive within the entire ecosystem.