A couple notes - first, while the bitcoin yield metric is undoubtedly insane, it's not the conversion assumption that makes it so - in fact assuming all the equity converts is actually the conservative assumption. You say convertible debt isn't free money - that's what they're accounting for by assuming conversion.
A couple notes - first, while the bitcoin yield metric is undoubtedly insane, it's not the conversion assumption that makes it so - in fact assuming all the equity converts is actually the conservative assumption. You say convertible debt isn't free money - that's what they're accounting for by assuming conversion.
I also think that yes, while selling equity to buy bitcoin at ATH is pretty wild capital allocation, it's also perfectly rational if the market is valuing you above NAV as a bitcoin proxy. And selling 0% convertible debt, which if bitcoin doesn't moon is essentially free money and where if bitcoin does moon, they'll make more on the BTC than they'll "lose" on the conversion, is also pretty rational.
From what I've heard, certain institutions like the convertible bonds because they get exposure to BTC without a downside except the opportunity cost of 0% interest. What I don't understand is what they expect to happen if bitcoin goes down - what money they expect to be paid back with. Maybe I'm missing something.
A couple notes - first, while the bitcoin yield metric is undoubtedly insane, it's not the conversion assumption that makes it so - in fact assuming all the equity converts is actually the conservative assumption. You say convertible debt isn't free money - that's what they're accounting for by assuming conversion.
I also think that yes, while selling equity to buy bitcoin at ATH is pretty wild capital allocation, it's also perfectly rational if the market is valuing you above NAV as a bitcoin proxy. And selling 0% convertible debt, which if bitcoin doesn't moon is essentially free money and where if bitcoin does moon, they'll make more on the BTC than they'll "lose" on the conversion, is also pretty rational.
From what I've heard, certain institutions like the convertible bonds because they get exposure to BTC without a downside except the opportunity cost of 0% interest. What I don't understand is what they expect to happen if bitcoin goes down - what money they expect to be paid back with. Maybe I'm missing something.