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Joe Burnett, MSBA (🔑)³ Profile picture
@IIICapital
Feb 20, 2021 • 6 tweets • 1 min read • Read on X
1/ How to Live Off Your Bitcoin 101

1. Post BTC as collateral for USD loan from @unchainedcap
2. Buy Bitcoin and short futures on @binance
3. Collect spread (currently 43% annualized)
4. Pay interest 11%
5. Earn 32%.
2/ Note these spreads can change quickly.

If Bitcoin does drop rapidly you will need to collateralize your loan. But as Bitcoin is dropping the futures spread is also likely dropping. Meaning you can close out your carry trade early and make $ profit.
3/ Since Bitcoin dropped from where you originally took your loan, you probably ended up with more Bitcoin than you started with, and you can use that to collateralize your loan.

Still a win.
4/ If Bitcoin rises then you simply collect the spread, pay the interest, earn extra $, and retain all of your Bitcoin.
5/ Anyone see any flaws with this?
Risks are very small imo but here they are:
- custody (exchange) risk
- price of bitcoin falls and for some weird reason the contango spread gets larger. Not sure if this has ever happened or why it would.

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More from @IIICapital

Joe Burnett, MSBA (🔑)³ Profile picture
Sep 15, 2023
1/ Nearly 5 years ago, I posted a thread at $3,500 BTC explaining how #Bitcoin’s extreme volatility is a feature of its monetization process.

Outsiders are perplexed by 10x returns and 80% drawdowns, but Bitcoiners recognize this is hyperbitcoinization.

x.com/IIICapital/sta…
2/ @JoeSquawk has noticed this.

Andrew mentioned BTC has been "going nowhere" ($26,000) despite a potential impending ETF approval, yet Joe notes “it was $4,000 when we started saying it wasn’t going anywhere."

That's a 6.5x increase, a 550% return.

x.com/WalkerAmerica/…
3/ Where does this extreme volatility come from? And why does it occur?

It’s due to immutable absolute scarcity being distributed through proof of work (in an exponentially decreasing distribution schedule) combined with fear and greed emotions of humans.
Read 11 tweets
Joe Burnett, MSBA (🔑)³ Profile picture
Apr 26, 2023
1/5 The Lightning Network’s interest income opportunity is a revolution in finance for two reasons:

1. Lightning offers interest income without default risk.

2. Income without default risk means we now have an internationally credible risk free rate of return. Image
2/5 How?

Just like oil provides the energy to drive the oil tanker, sats provide the digital energy to route sats to the recipient of a lightning payment.

Node operators get paid to provide the digital energy to route sats but you remain in custody of the sats at all times.
3/5 In 2022 Lightning generated about ~ $2M in fees for node operators.

This will continue to grow as block space remains fixed, Bitcoin adoption continues to expand, and volume explodes as Lightning becomes a globally trusted payment network. Image
Read 6 tweets
Joe Burnett, MSBA (🔑)³ Profile picture
Jan 27, 2023
1/ Bitcoin mining rigs (ASICs) are a segment of computer hardware that can be priced as a derivative of BTC and time.

This thread will outline a new valuation model for #Bitcoin ASICs. Image
2/ Due to the commoditization of ASICs, the Bitcoin mining industry has experienced a tectonic shift when attempting to determine the market value of this hardware.

ASICs are no longer run for 6-12 months until they end up as e-waste. Image
3/ These machines now retain their value for significant periods of time and a large (yet fragmented) secondary market has developed for their nearly inevitable resale to a miner with a lower energy cost. Image
Read 14 tweets
Joe Burnett, MSBA (🔑)³ Profile picture
Dec 22, 2022
1/ 2022 was a treacherous year for Bitcoin miners, but I'm hyper-bullish on the industry over the next ~ 10 years.

There are two key reasons why the Bitcoin mining industry is positioned to flourish. Image
2/

1. The world is in the early stages of actively monetizing BTC.

2. Energy production will become more efficient and cheaper.
3/ A higher BTC price and less expensive energy is the perfect storm for the Bitcoin mining industry to explode.

Revenue will soar and costs will drop.
Read 8 tweets
Joe Burnett, MSBA (🔑)³ Profile picture
Dec 5, 2022
1/ Many ETH talking heads have recently started attacking BTC’s “long term security model” as ETH has underperformed BTC since its “upgrade” to ultra-sound money ~ 4 months ago.

Ironically, it is ETH that has both a long term security and a long term value accrual problem.
2/ Bitcoin’s long term security is fine, as indicated by two of the top Bitcoin Mining companies in the world.

3/ Now let me explain ETH’s fundamental long term problem.
Read 11 tweets
Joe Burnett, MSBA (🔑)³ Profile picture
Jul 15, 2022
1/ Introducing Bitcoin Energy Gravity - a metric that models the relationship between the price of Bitcoin and its cost of production.

This can be used to identify when the price of Bitcoin is too overheated or when the price of Bitcoin is bottoming.
2/ All Bitcoins are acquired at one of two market prices: $ / BTC or watts / BTC. Both prices are increasing over time, but not necessarily at the same rate.
3/ The prices of Bitcoin grow due to increasing scarcity (time, halvings, and mining difficulty) and more users joining the monetary network due to Bitcoin being the most superior monetary technology.
Read 15 tweets

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