MARA CEO Thiel Remains Confident in Bitcoin Amid Downtown

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2:14Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. We talked about this at the top, Bitcoin not having a great year. It's headed for its fourth annual decline in its history. And the first one that didn't coincide with a major scandal or industry meltdown. So we're talking about cryptocurrencies, Bitcoin specifically, now nearly 7 % lower for the year. It's down around 30 % from its October 6th all-time high. Volumes low in investors, Tim Baling, and Bitcoin ETFs. You know about this. You do a weekly Bitcoin So you know. Yeah, I mean, the bear market means that Bitcoin has decoupled from stocks.

2:53The S &P 500 closing in at a record earlier this month, up 16 % for the year. Bitcoin struggled to find footing. The Bitcoin miner and accumulator, Mara Holdings, knows all too well about the drop. Its own stock down more than 36 % so far this year. Nearly 28 % of the float is shorted. With more, we head to Paris and to Fred Thiele, chairman and CEO of Mara. Fred, good to have you on the program. Sam, the decline in the asset price this year, certainly$126 ,000, that was a major high earlier this year. That was a big moment for the cryptocurrency. But down close to 30 or more than 30 % from that.

3:30How much lower does Bitcoin go?

3:33Fred Thiel:I think your Bitcoin at this level is finding support in the kind of 84 ,000 range, which is just about where the break even point is on most ETF purchases, Bitcoin ETF purchases. And that seems to be a level of support where essentially people, large investors who are trying to defend their positions, if you would want to keep it above that level, which if it falls below that, you'd see more sales most probably out of the ETFs back into liquidity. Bitcoin, it's very much driven by global liquidity. You had expectations of more from the Fed and more clarity around market structure. But I think what you really have to look at is there was a huge run up in the kind of August through September into October period.

4:32Fred Thiel:And a number of us felt the market was frothy in the beginning of Q3 and things were getting a little bit overheated. And now we've seen some of that come off. You've also seen a lot of money that rotated into AI now, rotating out of AI and starting to rotate into more Dow stocks. And so I think you're generally seeing a risk-off environment. Risk-off tends to drive people out of Bitcoin. But the liquidity that the federal government is going to inject in the marketplace now that quantitative tightening is over, we're starting to see easing again. We believe that will bode well. The dollar's down, which also bodes well for Bitcoin.

5:13Fred Thiel:And I think you're going to continue to see Bitcoin appreciate. But you've got to realize it's a very large asset class. It's a couple trillion dollars in size. And it takes a lot to move the price. And I think what we're seeing now is just some health retracement. Hey, if I may just jump in for a moment. You know, I am wondering, Fred, you say that it's a risk-off environment. And yet I'm looking at an S &P 500 that's still near its all-time high. You know, we've seen quite a bounce back when it comes to the S &P 500, also a very big market. So I'm just curious, you know, how do you square that if we're seeing investors still willing to move into the equity markets, but not crypto, that disconnect?

6:02Fred Thiel:I think you have to, in regards to crypto, you have to look at the derivatives market, which is much bigger than the actual spot Bitcoin market. and you have to see the sheer amount of leverage and positions that have come off since the peak. You've gone from the$90 billion-ish range down to the$30 billion range of open positions. And so that's a huge amount of leverage that comes off, which essentially sucks wind out of the marketplace. And people have been moving their money out of Bitcoin and into other things. I think you've also seen, look at the AI stocks. Most of the second tier AI stocks have all seen a pretty large come down since the peak.

6:46Fred Thiel:Even stocks such as Oracle, look at CoreWeave, look at these stocks and how they've performed. And I think what you're seeing is a rotation out of some of those and into other stocks. And Bitcoin is associated with technology. It's associated with the risk on assets and it's very associated with liquidity. So having said that, and you talked about the run-up that we saw earlier in terms of crypto, that where it got to maybe like frothy levels, we're now at what, 87 ,302 and change. So what do you think should be the level of crypto that makes more sense? I think you have to look at the long-term trend.

7:29But more importantly, go back a little over a year ago, go 14, 15 months ago, no U.S.

7:39Fred Thiel:money-centered bank would deal with crypto-related companies, nor would they take crypto deposits, nor would they let you trade crypto, nor would they let you wire money to crypto exchanges almost. And today, you have every bank, including JP Morgan, now moving ahead and doing all sorts of things with crypto. You're seeing tokenization of assets. DTCC has now gotten a no action letter from the SEC around tokenizing assets. You're seeing all sorts of activities around the traditional finance environment where they're embracing crypto. And I believe that part of the effect of that is you're now going to see all sorts of things wrapped around crypto, which will make the space much more relevant.

8:23Fred Thiel:But it takes time for those products to take effect, get launched. And I think, again, Bitcoin has had a great run over the past 15 years. It's been one of the best performing assets on record. And I think that we're going to continue to see great performance out of Bitcoin over the coming years. So, Fred, you're a Bitcoin miner. You're also a Bitcoin accumulator. We've spoken to Eric Trump of American Bitcoin. And I'm curious, he's also a miner, also an accumulator. What makes your company different than American Bitcoin? Well, any company that mines Bitcoin is performing the exact same service for the Bitcoin network, which is essentially assembling transactions into blocks and then competing to win the right to essentially add that block to the blockchain.

9:14Fred Thiel:What differentiates Mara from American Bitcoin, A, we own about 70 % of our hosting operations. We're fully vertically integrated. We own power generation. We generate energy off of wind farms, off of flare gas and oil fields. We operate on four continents. We also are fully vertically integrated from a technology perspective. We operate our own pool. We co-founded the only U.S. ASIC manufacturer for Bitcoin mining ASICs. The rest of the market is all dominated by Chinese companies. And we have been very proactive in helping drive a lot of the growth of crypto around partnerships with energy companies.

10:00Fred Thiel:And I think, you know, we're still considerably larger than American Bitcoin, not just in our mining operations, but also in the amount of Bitcoin that we hold on our balance sheet. On the identity part of this, trying to understand what the company looks like. You guys issued a statement this week saying you're not a digital asset treasury firm. You should not. So you should not be excluded from MSCI, whereas the company said it has been adopting a Bitcoin treasury strategy by holding its mined coins. What is the difference between being a treasury company versus a company that adopts the treasury strategy?

10:33Help us with the nuance there.

10:35Fred Thiel:Sure. So a Bitcoin treasury company, for example, like Strategy or MicroStrategy, as it's formerly known as, has acquired all of its Bitcoin by purchasing it. Mara has mined the majority of its Bitcoin. We've also purchased Bitcoin in the market, but most of our Bitcoin is the product of our mining operations. We have chosen to hold our liquid assets in Bitcoin because we believe, again, better to hold our cash in the best performing asset class over the past 15 years than to hold it in fiat, which is continually losing its value, or just to hold it in treasuries, which will only pay a dividend of low single digit percentage points.

11:18Fred Thiel:So Bitcoin has been an excellent place for us to hold our cash. And we'll continue to be so, we believe, over the long run. But we generate Bitcoin by mining Bitcoin. We're not out in the market buying Bitcoin on a regular basis like MicroStrategy. We have from time to time gone into the market and bought it when we think it's very opportune. Last year, there was an opportunity to buy Bitcoin when it was in the$60 ,000 range. And we bought Bitcoin because we had a feeling it was a belief rather that it was going to go up, which it did. And there are times where we're opportunistic like that. But we sell Bitcoin that we produce to fund our operating expenses.

11:58Fred Thiel:So, you know, we are not a company that holds our Bitcoin, every single Bitcoin that we have. We actually sell Bitcoin from production to fund our business. So we're an operating business. Bitcoin mining is our primary business. And Bitcoin just happens to be how we hold our funds. Fred, one thing I'm just curious, though, going back to what we've seen in terms of the fatigue in the price and Bitcoin coming down. You know, what's interesting is, and I'm just looking at some of our reporting and commentary, you know, you've got a White House that's very much favored or favoring the digital currency world.

12:32You have the president declaring crypto a national priority. U.S. Congress has passed a landmark stablecoin legislation and Bitcoin exchange traded funds were raking in billions of dollars. You know, we've seen acquisitions. We've seen so much movement. And again, I'm going back to the decline that we've seen in crypto. It's a pretty favorable environment. So, I mean, is all of the good expectations in terms of news already priced in and it can't get much better?

13:03Fred Thiel:No, I think like anything, any asset will revert to mean and Bitcoin has simply reverted to mean. It has most probably overcorrected. But you had in the past six months a huge amount of accumulation by the plethora of digital asset treasury companies that were formed. You go back not too long ago, it was basically MicroStrategy was the only real one. You had MetaPlanet to a lesser extent. Seminar Scientific was a smaller one. And we were a large holder of Bitcoin. That was kind of it. And then all of a sudden you had all sorts of companies come out of the woodwork. What did they do? They raised cash.

13:43Fred Thiel:They went and bought a bunch of Bitcoin, which drives the price up. Right. Price comes up. People start putting money into ETFs. You start getting bigger derivative positions. OK. And it's a flywheel effect. And if you just draw a trend line over the past number of years, you'll see Bitcoin has just reverted to you. Got to run. Fred, thank you so much. Fred Thiel, chairman and CEO of Mara. If you follow markets, you know the value of long-term thinking. You plan, you diversify, you prepare for volatility. But in life, even the best strategies can't prevent every bad day. A fire, a loss, a disruption that demands immediate attention.

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