ByCoinGape
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Bitcoin treasury firm, Twenty One Capital CEO Raphael Zagury has laid out an ambitious plan to take the company beyond its Bitcoin treasury, just weeks after taking over from former CEO Jack Mallers.
In a shareholder letter published on August 11, Zagury said the company needs to build businesses around its large Bitcoin holdings rather than operate simply as a Bitcoin treasury company.
“Twenty One owns one of the largest Bitcoin balance sheets in the public markets,” Zagury said. “But if Twenty One is going to be worth owning, it must become more than a Bitcoin treasury.”
Zagury took over as CEO on July 20, succeeding Mallers, who stepped down to focus on Strike. The leadership change came as Jack Mallers cited board differences on the firm’s business strategy.
The new CEO has identified five areas that will shape Twenty One’s strategy over the coming year.
The first is to strengthen the company’s corporate structure, including governance, controls, key hires and reporting. The company has already added two independent directors, Paul Lalljie and Karl Olsoni, to its board.
The second is building and acquiring operating businesses. Zagury said he sees Berkshire Hathaway as a useful model, with a strong balance sheet at the centre and independently run businesses around it.
The company also wants to develop its capital-markets business. Zagury said Bitcoin can be used not only as an asset to hold, but also as collateral and as a base for financial products.
M&A will be another major focus. According to Zagury, the current reset across the crypto industry is creating opportunities to acquire assets, teams and infrastructure.
The fifth priority is lending and credit. Twenty One plans to build toward a Bitcoin-backed credit business, with Zagury arguing that Bitcoin’s liquidity and round-the-clock trading could make it useful as collateral. He stressed that the company intends to keep leverage low and take a conservative approach.
The strategy comes as Twenty One Capital reported a $413.5 million net loss for the second quarter as per its latest filing. The company held 43,514 BTC as of June 30, with its Bitcoin holdings accounting for most of the quarterly loss after the value of its digital assets fell. The company also ended the quarter with $106.1 million in cash and about $484.5 million in convertible notes outstanding.
Zagury has acknowledged that the company’s stock has been trading at a material discount to the value of the Bitcoin it holds. He said the company shares shareholders’ concerns over that gap and believes the business needs to create more value beyond simply holding BTC.
The change in strategy also comes as Twenty One builds out its corporate presence. The company now maintains an official website and a LinkedIn presence as it develops its identity as a Bitcoin-focused operating company.
The shift comes as Bitcoin treasury companies face growing pressure to demonstrate value beyond simply accumulating BTC. Metaplanet, for instance, recently transferred 3,881 BTC amid nearly $1.6 billion in unrealized losses on its Bitcoin holdings.
Twenty one capital new CEO Zagury brings experience from both traditional finance and the Bitcoin industry. He founded and leads Elektron Energy, a Bitcoin mining and infrastructure company, and previously held senior roles at Deutsche Bank, Merrill Lynch and Goldman Sachs. He also previously served on Twenty One’s board.
For Zagury, the goal is not to compete with Bitcoin itself, but to build businesses around it.
“Twenty One is not a substitute for Bitcoin,” he wrote. “Twenty One must earn the right to be something different: a way to own the build around Bitcoin.”
The company expects to provide a fuller update on its strategy later this year.
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