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spk02: point directly, not least to which actually most important remark, that despite all of that, the investing, and you can see how much money we spent, we increased our cash balance, not decreased our cash balance relative to fiscal year end. So, and our own shareholder equity, not the consolidated shareholder equity, where we consolidate our non-controlling interest in the HK hard assets, but our own equity interest now exceeds $206 million. So there's a substantial investment here with substantial liquidity and we expand in crypto little by little every quarter. So maybe the first thing I should tell you is why do we expand little by little every quarter when no one else seems to do that. And I know it might be excruciating to watch, but it's necessary to do it that way. The reason it's necessary to do it that way is because of two factors in the world of mining. One is that no matter what point in the cycle you are, this is a cycle of course relative to the halving in Bitcoin, you're always, every passing day, you're approaching yet another halving. So I would look at the halving or I would encourage you to look at the halving the following way. The block reward is cut in half. So another way of saying if you want to get the same block reward for your mining activity, essentially you have to have twice as many machines. Now in practice, you have to have many more than twice as many machines. Why do you need many more than twice as many machines? If the block reward is cut in half because the aggregate hash rate, meaning the number of machines you're competing with, in the entire Bitcoin system is ever growing. So if you want, even if it wasn't halving, you have to grow your equipment. That's the first problem. So you have to have twice as many machines to get the same number of coins. It's another way of saying it's mathematically the same as if the cost of mining just went up. And that's, by the way, one of the reasons that Bitcoin goes up over time. So halving plays a very important role. And it would be ever cognizant of that. So with the having, if everything else was stable, which it never is, but if it was, it would be a predictable, very high return security. Probably no security is as predictable or as high return as you're ever going to encounter. So the second factor is because you can think of it as if You need twice as many machines to get the same amount of Bitcoin. Therefore, your costs are rising. You have to be very, very cognizant of your usage of electric power. So you have to have machines that will be ever more economical in electric power usage. So no one seems to believe me when I say this, but I'll repeat yes again and yet again in the last seven or eight years. The electric power usage per transaction is down 96%. Doesn't mean the electric power usage of the entire system is down at all. Electric power usage of the system is up. Electric power usage per transaction is down 96%. And it has to continue, and it probably will continue. And the reason that's relevant for going slow in terms of buying equipment is when that happens, your equipment could be obsoleted. So what you'd like to do is you'd like to constantly be growing the amount of crypto you have, which I think we've done, if you look at all the quarterly statements, and you'd like to be doing it in such a way that you're always in a position to buy the most up-to-date equipment and you bought small enough equipment so that you've managed to use it completely and thoroughly during the cycle. So we've been very careful buying equipment One of the things you'll see in our cryptocurrency mining operations, we're now operating fully depreciated equipment. How long we'll be operating that is a question that I don't know the answer to, but the goal was to get to the point where we can operate properly fully depreciated equipment. Our policy is to depreciate new equipment over a two-year cycle and used equipment over a year or sometimes a year and a half. So we're very conservative of our depreciation. In consensus mining, I believe in round numbers, we're up to 266 roughly. I'll look this up for you in a second because I wrote it down. I beg your pardon. We're up to 265 bitcoins in consensus mining. We also, in consensus mining, as the most recent reckoning, this is data as of several days ago, but I think it'll be relevant. We have 6,618 Litecoin. Litecoin, you might be aware, is basically the same monetary policy as Bitcoin. It just started later. So at the moment, it has a wonderfully higher inflation rate, but it'll end up at the same point as Bitcoin. It's actually a lot more profitable. to mine Litecoin than mine Bitcoin. And you can make an argument for Litecoin. If Litecoin ever were to have the kind of use cases that Bitcoin is going to have, or at least some of it, the Litecoin aggregate hash rate would grow in relation to Bitcoin aggregate hash rate. And you'd make a lot of money out of that. And also, we own, as of several days ago, with other words, most recent reckoning, we own... 265, no, excuse me, 38.9, I beg your pardon, 38.9 Bitcoin cash. Now, Bitcoin cash is an interesting sort of animal because Bitcoin cash has the exact same monetary policy as Bitcoin itself. It's just that the Bitcoin hash rate, Bitcoin cash hash rate, is maybe a half of 1% the size of the Bitcoin hash rate. Therefore, the market capitalization Bitcoin Cash is something like one half of 1% of the Bitcoin hash rate and the Bitcoin mark capitalization. And as I said, if there was ever a use case for a bigger block size that one day there might be, you can make a lot of money in Bitcoin Cash. So it's kind of interesting. One of the reasons going back to Litecoin, that Litecoin is more profitable than Bitcoin is Litecoin engages in merge mining. It's both good and bad. So in other words, with the same mining rig, you can mine two coins. You can mine Litecoin, and you can buy Dogecoin. Dogecoin has a very profligate monetary policy, so I personally don't find it all that interesting. So we get paid entirely in Litecoin. We take our block reward entirely in Litecoin. Now, the more expensive Dogecoin is, the more of your electric bills you can pay with Dogecoin, and therefore... the less money it costs to mine Litecoin. Therefore, the less valuable Litecoin is. So theoretically, since I would assert Dogecoin has a profligate monetary policy, Dogecoin is going to underperform Litecoin. Dogecoin might even go down in value if it gets diluted enough. And to the degree Dogecoin underperforms Litecoin, Litecoin is worth more money. And just for that reason, you might make money off it. Anyway, We are in the process of buying some L7 miners, which is what mines Litecoin for Winland. So Winland, before very many weeks are out, will be mining Litecoin as well as Bitcoin. I think we're the first of the publicly traded miners to mine material amounts of Litecoin. I don't think any of the publicly traded miners do that. Now, Winland is public. Consensus is going to be public, hopefully not too distant future, so you'll be able to see their financial statements. And I hope you'll be impressed with the degree of liquidity we maintain. And I hope you'll be impressed with the degree to which we consistently increase the crypto holdings, which is very different than what other companies do. And we intend to increase our exposure. in this field. So, um, the crypto business is alive, it's healthy and it's growing. And, um, we didn't know seven or eight years ago when we started this venture, if crypto was a viable business or not, we just thought we knew enough about it to be able to make some reasonable assertions about it and, um, make some money at it. So that's what we ended up doing. And, um, So far, it's working out well. So a couple of other things I'll point you to in the balance sheet that I personally find intriguing. You can see why we're a long-term investor if you look at our balance sheet, November 30th, and you look at deferred tax liability of $25 million. The longer we hang on to what we have, the more money we're making off this, which is essentially an interest-free loan. So you really want to be long-term investors. That's not a small amount of money, even to our now expanded shareholder's equity. I'll also point you in the direction of the liability side of balance sheet. And securities sold short. These are largely the dysfunctional ETFs, the path-dependent ones. We keep selling short. And you'll observe, as of the most recent reckoning, $10,683,000 in short sale proceeds and a market value of $1,291,000. So it's a not insignificant part of our cash generation. And we continue to do it and we're likely to expand it when opportunities present themselves. One other thing I'll point you to, investments in securities exchanges. Our biggest holding in security exchanges, the Miami Options Holdings, which is colloquially known as MYEX, has come public yet, but it might come public one day. And I would pay attention to that valuation. That's a current valuation as a private company. You could look at their website. You can see how well the company is doing here. And I expect that to continue. So we're very, very excited and pleased what's going on at MyEx. So in summary, we have our crypto businesses. We have our exchanges businesses. We have our own investments. And last but not least, we have Horizon Canix. So Horizon Canix is in the process of doing a reverse merger into a company known as Scott's Liquid Gold, and it's publicly traded. So there's going to be, when this deal closes, I guess theoretically there's one now, a publicly traded valuation on Horizon Chemex. So we won't need to guess or estimate what the value of our investment in Horizon Chemex is. We'll be able to see it realized So I would pay attention to that. I'm expecting, but don't hold me to it, this deal to close sometime around the end of April. So let's say with good fortune, April 30th. And we maintain our proportionate interest in Horizon Mechanics. So that's a lot of activity, a lot of public trade securities, so consensus coming public, Horizon. Kennex is coming public. A lot of interesting things going on. I could probably continue, but I've given you a little tour of what's happening. We've been very busy. So I think the best thing to do is maybe invite whatever questions you have to fill in the gaps of what I didn't mention. And maybe you could kick it off, Therese, and just tell me what the questions are, and I'll be more than delighted to address them.
spk00: I'll be happy to, Murray. The first question is, My impression is that most of the total FRMO assets on the balance sheet are valued using market prices. How much and what assets are not valued in that way? What is the best way for an investor to value FRMO? More specifically, given its assets, especially the increased attention to cryptocurrency, why should it be priced slash traded for more than that asset value?
spk02: Okay, there's a lot of questions there. So let's say everything we can take in market, we take in market. So what's easier to talk about what's not in market? What's not in market is our investment in MyEx. Our holding is it's a little bit above cost. The reason it's a little bit, not greatly above cost, the reason it's a little bit above cost is because MyEx did some deals, equity deals subsequent to our transaction, which is using that value. It's not a market price, negotiated price. There's that. We also have on the books at cost holdings of digital currency group, which are people on Grayscale, which among other things are the people who operate the Bitcoin Investment Trust that's now in the process of becoming an ETF. And that's at cost. And then, last but certainly not least, is Horizon, which you see on the balance sheet. It's not at cost. It's cost plus whatever accumulated earnings have been retained in the business. Horizon Kinetics has a pretty big dividend payout ratio. FOMO doesn't pay a dividend. Horizon Kinetics pays, I think, pretty robust dividend. We received that dividend. So whatever is left over after the dividend gets put back and retained earnings. So you're not seeing a market net. However, you will see a market net if you figure out what, um, what our proportion interest is in, um, Scott's liquid gold. So to answer partially the question, I'll come back to it in a second. Why shouldn't it trade at, um, its market value, well, we don't really know what the appropriate valuation should be of MyEx. We don't know what the appropriate valuation should be of Digital Currency Group. We will know, but we do not know at the moment what is the appropriate valuation of Scott Sugar Gold, which is really going to be Horizon Kennex. The market will tell us that. Right under the Horizon Kennex notation on the balance sheet, you will see this revenue share. So we have a revenue share. In other words, we get a little bit less than 5% revenues of Horizon Mechanics. So the question is, what is that worth? And I guess it depends on what the revenue of Horizon Mechanics is. I guess it depends on how much it can grow or fail to grow. Weasel mines may differ about what it's worth. So we have it on, we created a number years ago, which I don't know how relevant it is. It's never been changed. With a public valuation, people have more insight into it. That might change as well. So I guess the trading price of Horizon Canada, trading price of FOMO, if you like, reflects what some people believe is might be the valuation of all the entities I talk about. And I left out one, which I'm going to add in right now, consensus mining. It's not a big deal, but we still own it. It's not public yet. It will be public, and that'll have to have a valuation put on it. And then you'll observe the real estate owned. That's on the books at cost. And the question is, what's that worth? And it might be worth, some would argue it's worth more than what it's on the balance sheet for. So differential between those publicly, the most publicly traded entities that we can value and the ones we don't are what people assume should be the value. Whether that's right or wrong, we're gonna find out in the not too distant future. So we'll have to see what happens. So I hope I addressed everything, hope I did. I think I covered all the main points in that. Anyway, Scott's Liquid Gold, if you're interested, is SLGD. And you know what we're going to do on Verizon Kennex. You could look at the mark capitalization of Scott's Liquid Gold, and you can figure out what its mark capitalization is going to be when the deal closes, and you can draw some conclusions, I think. but you'll have to draw those conclusions on your own. So I think that's a thorough answer. I hope it's a thorough answer. So maybe we can proceed to the next question, Therese.
spk00: Okay, the next question I think has to do with the balance sheet as well. Some of the commentary on the issue of non-controlling interest confuses me and seems a bit contradictory. Perhaps Murray could comment on his thoughts as to how best to value the company's particularly with respect to the NAV of about $4 per share without non-controlling and about $8 including non-controlling?
spk02: Well, I'm not 100% sure I understand the question. So we take the shareholder's equity and divide by number of shares. That's your book value. And the way I would look at it, I mentioned in the prior question a number of things that are not valued at market. So the real question is, are they worth more than the stated balance sheet value? So are the buildings real estate worth more than their value? I think they are. But is MYACS worth more than its cost basis i think it is is horizon worth more than it stayed here i think it is is revenue share more worth more than it stayed here i think it is and so on so forth consensus mining we're going to figure out what happens um so all i can tell you is um that's the differential and i can't tell you what exactly the value should be because everybody has to make up their own mind on that um All I can tell you is judging from the market price relative to the book value, obviously people think it's worth more, not less, than the carrying values.
spk01: And that's not an unreasonable position to take.
spk00: I wonder if part of the question about the non-controlling and the book value attributable to the company might be, Why is there such a large non-controlling interest? That wasn't in the question, but it might be implied.
spk02: Okay, why don't you explain what you mean by that, because I'm not sure what the question is.
spk00: Okay, so I think on the balance sheet, we have stockholders' equity attributable to the company and then non-controlling interest. So that may be confusing, and I may be interpreting this wrong, but just what the difference is.
spk02: Okay, what difference is, okay. What is a non-controlling interest? Okay, that's a good question. We control two LLCs. They're known as HK Hard Assets 1, HK Hard Assets 2. You can see in the footnotes how much we control of each. So the differential, which I think in the case of HK Hard Assets 1, is something like 78%. It doesn't belong to FRMO. It other people, of which, apart from FRMO, the largest holder, let's say of HK Hard Assets One, is yours truly. So I own a lot of it personally. So that's the difference. So FRMO doesn't own it. We obviously, we're just partners in that. So you might say it's a fund. The market value of that fund is probably 160 something million dollars. It's growing usually every month. Why is it growing every month? Because the various partners, myself included, are contributing more securities to it constantly, and hopefully the market value is going to grow as well. So basically, that's what the non-controlling interest happens to be. It's basically these two funds. The market value of HK Hard Assets 1 is a lot bigger than the market value of HK Hard Assets 2 for the simple reason that HK Heart Assets 1, we've been at it for about seven or eight years, something like that. HK Heart Assets 2, we've been at it at, I don't know, a year and a half. Does that sound right? Something like that. So it's going to take a while to build up HK Heart Assets 2 the way we built up HK Heart Assets 1. That's non-controlling interest. Now, maybe the question is, well, what if you merge non-controlling interest into FMO? Would it make a difference? That wouldn't make a difference at all because it's still up in the same book value. We take those assets and presumably we take shares in it to be more shares outstanding. FMO has bigger market capitalization. But HK100 Assets 1 owns the same things that FMO owns. Maybe the weightings are in a rounding error slightly different. I don't know. But maybe in a rounding error they're slightly different. But they're not materially different. So we just own more of the same stuff. So I don't think that affects the valuation whatsoever.
spk01: But as I said, reasonable minds may differ.
spk00: The next question, I am a retail shareholder of FRMO Corp. In regard to the latest financial report, can you tell in which bucket under quote assets and quote in the balance sheet are the crypto digital currency assets reported?
spk03: Yes.
spk00: I think it's crypto-slash-digital currencies report. I did not find them directly mentioned, hence the question. And then there's a second part to the question, but I'll let you answer the first.
spk02: Yeah, well... Oh, wait, no, it's related.
spk00: I'm sorry, Maury. And in regard to the holdings of Winland and Consensus Mining, are they under investment in limited partnerships and other equity investments at fair value?
spk02: Yes. So all that stuff... Is it investments, limited partnerships, and other equity investments? They all lump it in there. It's all in there. Public, private, it's all in there. For the most part, it's all there. And digital mining assets are the digital mining assets. They're the machines and the real estate. The reason the real estate is under digital mining assets, because it's just real estate, because the property is used for mining.
spk01: And that's why it counts as digital mining asset.
spk00: In the next, in the first quarter 2024 conference call, Murray Saul stated Bitcoin Cash was the most undervalued asset with the most upside on the balance sheet. With regard to FRMO accumulation of Bitcoin Cash, is it more cost effective to purchase the coins versus mine them? In addition, what is the ideal amount of Bitcoin Cash on the balance sheet in relation to Bitcoin?
spk02: Okay, my second part, I don't know what the ideal amount is. I've never really thought about it that way, so I don't know if I can answer it. I still stand behind the idea that it's really undervalued because it's got the same monetary policy, it just doesn't have a use case. And by the way, Bitcoin itself doesn't really have a use case. It has ETFs in it, but it doesn't really have a use case. So one of the issues between Bitcoin and Bitcoin Cash, it really hasn't been an issue yet, but it might be one day an issue. The only material difference between Bitcoin and Bitcoin Cash is Bitcoin Cash has a bigger block size. Ordinarily, that wouldn't be an issue. Nobody who mined Bitcoin really cared that much about the block size. And a lot of people were against making a bigger block size. That's why at the time when Bitcoin Cash, this is about 70 years ago, Bitcoin Cash fork, and got existence, most people, including ourselves, were not really enamored of Bitcoin Cash. And the reason was we didn't want a bigger block size. We didn't want a bigger block size. The theory was that if you made the block size too big, some big multinational company would come in and do one transaction after another, high-speed transactions, and we'd be right back to centralization. The block size in Bitcoin is by design. Everyone likes it that way. It's small. You really can't fit a lot of stuff in. Now, enter ETFs. Of course, years ago, people talked about ETFs. We just couldn't visualize. One day, we have an ETF. Now, we got an ETF. So, why is that relevant? Well, if you're creating units of an ETF, a unit is... usually 25,000 shares. Some ETFs, it'll be 50,000 shares. So the difference between ETF and a mutual fund is you can only add money to an ETF in certain increments of shares. So in other words, you can't add $2,500 to an ETF. If you want to add money, you can buy 2,500 shares, you can buy $2,500 worth in the open market, but you can't deposit $2,500 into it. You have to deposit it in set share amounts, which are known as units. The standard unit is 25,000 shares. However, there are other ETFs that have 50,000 shares. I forget what the unit amounts are and all the ETFs the SEC approved the other day. You could look it up. So anyway, if you're creating units and you have to instantiate your ETF and one must instantaneously buy Bitcoin, one would think that you want to post that transaction to the block and have it on the blockchain just for accounting purposes. So now if the block isn't big enough to accommodate that because there are many smaller transactions that precede it, there's a solution within the context of Bitcoin and that solution is to pay a transaction fee. So Bitcoin mining when it happens gets a little more profitable than otherwise would be because people want priority for their particular transaction, whoever it may be, in terms of posting to the blockchain, voluntarily pay a transaction fee. You don't have to pay a transaction fee if you don't want to. Voluntarily pay a transaction fee, and that transaction fee gives you priority in posting. So one would think that miners, to the degree they wish to earn the transaction fees over and above the block fees, might then find a use case for a bigger block size, which is the Bitcoin cash currency as opposed to Bitcoin currency. The same thing. Or put it another way, what if for whatever reason, there's no plan to do this, by the way, what if for whatever reason someone decided to make a Bitcoin cash ETF? Would that attract more mining activity? If it attracted more mining activity, the hash rate would be bigger and the market value would be bigger by virtue of what we know as network effect or Metcalfe's Law. So there's a lot of upside there. So the same equipment that you mine Bitcoin with, you can mine Bitcoin Cash. So to change your equipment from mining Bitcoin and Bitcoin Cash, it's a switch. It takes time. at most 30 seconds, if it even takes 30 seconds to switch one way, and another 30 seconds to switch the other way. Generally speaking, the profitability measured in the fiat realm is basically identical. So what we've done over time in our mining and consensus mining, even our mining to the extent we do mining in FOMO, we've devoted some machines to mining Bitcoin Cash. Now, because there are many, many fewer people that are mining Bitcoin Cash. Many, many fewer people. Now, the price of Bitcoin Cash is much lower than the price of Bitcoin. But there are many fewer people mining it. So the number of coins that you're getting per block if you're a miner is much greater. So if we had a handful of the machines set to mine Bitcoin Cash, relative to the machines that we have set to mine Bitcoin, we're going to accumulate Bitcoin Cash faster than we accumulate Bitcoins. So come a point in time when we will have, let's say, consensus mining as many, if not more, Bitcoin cash coins as we have Bitcoins. And then it gets kind of interesting because if the theory is valid, and by the way, I should tell you, I'm the only person who even believes it. So I'm more or less minority of one. If you ask anybody else in the crypto realm, um, they are not a believer in best investment thesis. So I'm basically by myself. But I think it's going to have a use case one day. And it may be a very different use case than Bitcoin. Matter of fact, I believe that a lot of different cryptocurrencies are going to have use cases. It's just hard to imagine what they might be right now. But it's going to happen. We could speculate, but I'm not going to do it because of just speculation. But I can dream up lots of use cases. I've written about some over the years, but They're only ideas. There could be a lot of possible use cases. So I think it's important to maintain Bitcoin cash. It doesn't involve a lot of expense. Matter of fact, we already paid for the machines. We can always switch back. So we're going to continue doing that. Litecoin, same thing. I know you didn't ask, but Litecoin, the same thing. And maybe in the fullest time, we'll... We'll actually do some other coins as well. Over the years, we have mined some Ethereum. Ethereum is not mined anymore. Now it's a proof-of-stake system. We mined some Ethereum Classic over the years. We still have it. So there's a lot of interesting things to be done.
spk01: So I guess I hope that's enough on that question.
spk00: I suspect he will comment on the 11 new U.S. Bitcoin spot ETFs. Given the expense differential, will he transition out of GBTC, and if so, into which of them?
spk01: Well, I wish I could.
spk02: Let's put it this way. I'd be very careful to have me answer the question because I can't give you the kind of information that you're seeking. All I can say is I am well aware of what the differential is, and there are a lot of options to doing things. Only restraining factor is there's taxes. So we'd like, if possible, not to pay them. So in preparation, if we were to do something, which I'm not verifying we're doing or not doing, but if we were to do something, we would very much like to do it on a tax-free basis. And even though we have verbal opinions, we're not going to do anything unless we get a written opinion of an order. We don't have a written opinion yet, although we have a verbal opinion. So we'll have to evaluate once we get a written opinion that we can do something on a tax-free basis.
spk01: I will be able to give you a much more lengthy and detailed answer to your question.
spk00: What or how many coins were mined in the recent quarter? What number were sold? By coins?
spk02: I don't have that at my fingertips. I will just tell you that we hold many more coins than we sell. So basically, in consensus mining, we basically haven't been selling any coins. So why haven't we been selling coins? As a generalization, because we raise a lot of capital in our private offerings. and we never spent the money and interest rates are now 5%. So the interest income is such, we're not even using the income, we basically use the interest income to pay the electric bill. So I don't think we sell very many coins at all. In Winland, we don't have such big cash balances, so we do sell coins, but we, I don't have the figures in front of me, but basically, Net, we grow our coins every quarter. We're not selling more coins than we mine. The goal is to mine more coins than we sell. And every quarter, we want to grow our number of coins. It's really, really important to grow our number of coins every quarter. And I don't think we've ever gone down sequentially in quarter in terms of number of coins in contradistinction with a lot of other companies do. I think we're always growing our coins, and I pay very close attention to that. I wish I had the figures in front of me, but those are other publicly traded corporations, and they'll have to speak for themselves. But it's very important that we keep increasing the number of coins we have.
spk01: And if I may do it, we're going to keep increasing the number of coins.
spk00: We do list the crypto holdings on the FRMO website under quarterly conference calls.
spk02: Yeah, and people can see that we've grown the coins. If you look at that, you can see we've grown the coins. We're not selling coins. So you can compare linearly, sequentially, quarter by quarter. You can see what's happening. So I'm going to look it up now just for the heck of it. And we held directly, I'm going to round, 152 Bitcoin. This is November 30th. And we held indirectly another 24. I'm rounding down, not up. Then let's see if I can get something.
spk01: Let's see if I can. Information savings, comments, calls.
spk02: I'll do the quarter before. Let's see if I can give you a number. Yeah. So held directly, we had, I'm rounding down, 24. I mean, excuse me, not 24, 149. So we increased and held indirectly 24. I ran down this. I think it went up anyway when you round. So if I can look it up. No, it's the same, 24.17. So indirectly, we got the same. Directly, we've increased by 152, 249. Call it three coins to quarter. Okay. It doesn't look accurate to me for the simple reason that I know consensus increased the number of coins. It should have went up, so it doesn't look accurate to me. But anyway, maybe you can check that.
spk00: It's as of November 30th, so since then.
spk02: Well, I know, but August 31st to November 30th, that consensus increased the number of Bitcoin. So it's definitely bigger. So you might want to. Oh, actually, a bigger pardon. We did increase. It's very small, but we have a small holding. So as of November 30th, the number is, this is indirectly, it's consensus in Winland, 24.26 and held indirectly on August 31st, 24.17. So it did increase. As I said, we don't own a lot of consensus yet. And we lend a lot of it, but it's a very small company. It only has 65 coins. So we didn't mine that many coins for the quarter.
spk01: So we didn't grow by that much. But it's growing. Very important to us. Okay.
spk00: Without revealing anything that might reduce Horizon Kinetics or FRMO's competitiveness, would management give a bit more information about FRMO's and associated subsidiaries mining rig procurement process. I'm mainly asking this because the fact that FRMO is apparently being required to pay in Bitcoin for this equipment by manufacturers, as told in the previous shareholder meeting, it is a bit surprising to me. For example, Bitmain, one of the largest Bitcoin mining rig manufacturers, those payment options on their website including USD wire transfer and their payment terms on their support page do not refer to any such policy of only accepting Bitcoin.
spk02: Okay. Well, to begin with, last couple of purchases, we did not pay in Bitcoin. We paid in USD. And we didn't buy it from Bitmain. We didn't buy the equipment from Bitmain. We bought the equipment from wholesalers. So why did we buy the equipment from wholesalers? So a lot of the miners, the publicly traded ones, bought equipment from And unfortunately, they can't pay for it. So it's sitting in a warehouse. So the tariff was already paid on it. So some wholesaler somewhere or some number of wholesalers own this equipment. The intended recipient cannot pay or does not intend to pay or does not wish to pay or whatever. So we've done that. We've done that in USD. USD. So sometimes we'll put an order in with a wholesaler, and we combine our order with that of other companies to make a really big order. And that order really does go to Bitmain. But the idea is to make it a really big order so that all the participants in the agglomeration of the order can get the discount for volume. But then we're buying, we're paying the wholesaler. We're not paying Bitmain. So wholesaler responsible for delivering the equipment to us. Some of the confusion might be, one of the things that I want to say, one day we'll have a graph to show this. What I'd like to do, I wish we had a graph for this. Maybe next time we can have a graph to show this. So what I'd like to do is show how much money it costs in Bitcoin to buy the state-of-the-art machine. So put it this way, when we started mining, let's say seven or eight years ago, if we wanted to buy the then state-of-the-art machine, which was the S9, if memory serves, we had to, even if we paid in dollars, but if we translate those then dollars into Bitcoin, we had to spend roughly nine Bitcoins. even though we might have paid in dollars. We had to spend roughly 99 Bitcoin to buy the then state-of-the-art, the S9. I think it was something like a 10 or 11 terahash machine. Today, what we want to buy is the S21 coin, the S21 machine, which is 200 terahash machine. So it's got processing power probably 20 times what the S9 had. And one Bitcoin... can buy 10.75 of those machines. On the right day, maybe 11 machines. So what's happening is the number of machines that you can buy priced in Bitcoin is ever rising. So it's probably my fault. I probably wanted to say that at some meeting, and I didn't express myself with the precision that I'm doing right now. And maybe it's totally my fault. People took it as we're spending Bitcoin to buy machines. But in the past, we've done that. We've actually, it has happened. We've used Bitcoin to buy machines. But recently, we're using dollars. But what I want to say is, whether we're using dollars or using Bitcoin, I really was trying to, in a very inarticulate way, to express the increased purchasing power of coins in relation to machines. That's a really important concept because one day we have a lot of coins. We'll be able to grow our processing power if we had to by just using Bitcoin from the treasury. If we needed to, I don't expect that to ever happen, but we would have the option of that happening. So I guess what I was trying to do is express the idea that sometimes I say to people, you're not in the fiat world, you're in the Bitcoin world. Which is true. So maybe I was trying to express it as if we're going to do the account. We can't do the accounting of Bitcoin because it's not proper. But mentally, we really should. So because what's actually happening, when people look at a quarter of Bitcoin and they'll say Bitcoin is up or down, whatever it was for a day. But they really shouldn't say that. What they really should say is the U.S. dollar was down in relation to Bitcoin. That's actually what's happening. Bitcoin's not changing in price. The U.S. dollar is changing in price. The US dollar is losing its purchasing power relative to Bitcoin. And you can see it if you had a graph of the machines expressed in Bitcoin. And if everybody thought of it that way, people would say, well, my dollar is losing value. I don't want to have any dollars. I want to have Bitcoin. People look at it that way. But they look at Bitcoin as if it were a stock. It is not a stock. It may be quoted as if it were a stock, but it's not a stock. It's just an alternative store of value. And it's gaining purchasing power in relation to the same thing as saying dollar is losing tremendous purchasing power relative to Bitcoin. And that's why we're involved in it. It's a sociological revolution from that point of view.
spk01: So I hope I've expressed myself more carefully this time so I've made my meaning more clear.
spk00: Moving on to questions about the horizon kinetics and Scott's Liquid Gold merger. As far as you or anyone knows, does Scott's Liquid Gold, via Scott's Liquid Gold announcement, have any impact on FRMO?
spk02: Yes, it does, because what will happen when this deal closes, I believe, don't quote me on this, this is my personal belief, so I'm not the world's expert on generally accepted accounting principles, but I believe that Under generally accepted accounting principles, we're going to have to use the market value of Horizon because we're going to change the name of Scott Sickle Gold to Horizon Chemex. We have to use the market value, whatever that happens to be. And if the market value is higher than the $15 million we have it on the books for, we're going to have to use the value. I believe we're going to be required to do that. Time will tell if we really are or not be required. So, you're going to see it. It's going to have an impact and maybe not small on shareholders' equity.
spk01: So, I would pay attention to that.
spk00: I think you answered these next two questions, which were also about merger. This shareholder says, I own 11,000 shares of FRMO. And my questions for management are, what relative details can you share with FRMO shareholders about the decision to bring Horizon Kinetics public through a reverse merger? Why and why not? Should FRMO shareholders anticipate any material changes impacting the value of FRMO shares in connection with or subsequent to the merger? If yes, please elaborate. I believe you just did, but if there's anything you want to add.
spk02: Yes. I'll just reiterate that if you calculate what the value is today, there's a way to do it. If you were to calculate it, my personal view is I think we'd have to change the balance sheet value of Horizon Kinetics considerably. And maybe, I don't know for a fact, but maybe that might provoke a discussion of the value of the revenue share. And we might have to change that as well. So there's that part of it. Why did we decide to do it? Well, there's two kinds of shareholders, Horizon CACs. They're the ones that are active in the business, which you're talking to one of them right now. So I'm not going anywhere. I'm not selling any shares. You know, as far as I know, I'm in good health. I like what I'm doing. I'm going to keep doing it. So everything is fine. I'm not looking for any liquidity. I don't need any liquidity, thank goodness. But there are people who own shares that are not activated. They were just investors from the beginning. And they got to a certain age, and they may have some need of liquidity. So it's not fair to keep them locked up. So there are two options. Option number one is we could have bought their shares, in which case we had negotiated price. And from their point of view, it's really not fair. We're the insiders. We're giving them a price, which from their point of view may or may not be fair. You can see that might be problematic. It might even be a conflict of interest if we even were to quote a price. So the other possibility is create a market. The market will determine the price. If they want to sell, they want to sell. If they don't want to sell, they don't want to sell. Maybe they even want to buy more, whatever it is. And we're going to see what happens. I will tell you, I'll reiterate it. There is a dividend policy in Horizon Kennex, and we're not going to change that dividend policy. So the Escozzo Gold shares to become Horizon Kennex shares, you're getting a dividend, whatever it's going to be. So that's a big difference from FRMO as a publicly traded vehicle. And people can decide whether they like it, whether they don't like it, etc., etc., etc., So it was liquidity needs of people who were not active in the business. That's probably the best way of saying it.
spk01: They get to a certain age and, you know, I think it's only reasonable to provide liquidity options.
spk00: The next part of the next question is a housekeeping question, which was asking about the annual meeting transcript. It has been posted since January 5th. this year. And if you don't see it, please refresh your web page, the screen, refresh it, and then you should be able to see it. Now, the rest of that question. Also, FRMO is clearly an amalgamation of various investment funds, investment funds, fee streams. And I was wondering if you have ever considered providing some more detail that would allow investors to view the company as a Some of the parts lens, particularly given Horizon, will have a value mark in the public market in the not-too-distant future. I've seen several public alternatives managers go through this exercise, and the shareholder refers to the Brookfield 2023 Investor Day deck. So that's the question, basically.
spk02: Okay, well, it's going to happen. So when they're These are our financial-slash-accounting-slash-legal staff. They're probably busily drawing up documents as we speak, and, you know, we're going to file an S-1 registration. There's going to be a lot of information, that thing, and quarterly we're going to give detail on the revenue streams and all that.
spk01: So it's all coming. There's not a lot to hide, frankly.
spk00: Yeah. Next question. In the interim consolidated financial statement, on page seven, it lists a different number of shares owned in Winland compared to page eight. What is the reason?
spk02: I think, don't quote me on this, but you probably should ask the auditors. I think the reason is the convention is that on one page, they state the number of shares that they owned at a date and time. The one that we own, that Ephraim owned in Dayton time. And the other, they state the way the average number of shares they were owned during the quarter. I believe that's the accounting convention. So in round numbers, like right now as of this second, I don't know the exact number, but I would say we own in round numbers something like $1.6 million. That's about as close as I can get without sitting down and adding it up. We have a 10B5 program open for Winland, and we're in the market every day buying shares.
spk00: Another part of that question is it was announced on December 26, 2023, that Horizon Kinetics is merging with Scottsdale Food Gold. Was there any consideration given to merging with FRMO, and what was the reason for selecting Scottsdale? liquid gold as the public trading vehicle.
spk02: Okay. Was there any consideration given to merging with FRMO? Not really. So the next question would be why? Well, look at it from the point of view of the non-active shareholders. So FRMO, even though it has interests in the horizon mechanics, it's got all kinds of other things, a lot of its securities. And, um, in the interests of other shareholders, there might have been dilution. And matter of fact, there would have been dilution. And it might not have been so great because people could argue it's just a security. It's an ongoing business. So an ongoing business trades at a multiple. The security is just worth its net asset value. So it might have been from the point of view of somebody looking for liquidity, um it might not have been from somebody's point of view the best possible outcome so we really didn't look at that way another reason is um fmo is going in a not radically different direction but uh somewhat different direction so fmo is if you look quarter by quarter of how much we own the windland windland's an operating company it's mining um crypto and it keeps increasing and we're increasing the size of windland so fmo kind if we kept doing what we're doing, we'll be an operating company, not an investment management company. So then somebody could say, if you're taking an operating company, managing crypto, not managing crypto, mining crypto, and you're, and you're integrating that with an investment management company, is that going to help the multiple? Is that going to hurt the multiple? And reasonable minds may differ in that. So rather than just make an experiment, we, left it alone. We didn't go in that direction. We're going to continue expanding the crypto mining business in a gradual but deliberate manner, which is, I think you'll see, is different than what Horizon Connects is doing with the asset management business.
spk01: Did I answer that?
spk00: Yes. I think you did. What are the ballpark odds that all of the related companies, such as FRMO, Win-Win Consensus, Scott Liquid Gold, and HM Tech, et cetera, will be combined someday into one New York Stock Exchange and NASDAQ traded stock?
spk02: Okay, so just to list the entities, if somebody were to urge us to do it and if we said yes, the entities would be FRMO, Horizon Canix, Horizon Common, HM Technology, otherwise known as Hashmasher, Consensus Mining, Winland, um, seems like I'm missing something. I don't know what it is. It seems like I'm missing something, but you get the idea. Um, it would have a very big market capitalization just on an asset value basis, but, um,
spk01: Is that the highest and best use of everything?
spk02: Because there's going to be a lot of cash and marketable securities. Would it be valued like a holding company is valued? Would we get an operating multiple on it? And that's the critical question. Is it better to have the different parts growing their unique businesses and getting a multiple in earnings? Is that the best use or the best ultimate value realization for shareholders? Or is it just throwing it in one pot and having all this cash and marketable securities there and maybe taking a chance where we can get the holding company discount? In any event, whatever the answer to that question is, it's going to be harder to grow the cryptocurrency business in the context of something that's enormous like that. So we'd have to make a much more radical effort to give it prominence and we don't want to make a radical effort for the reasons I mentioned earlier because you have to go in a steady and deliberate pace because there's always the danger every quarter that your equipment is going to be obsoleted. So you can't commit a lot of money to equipment any given quarter because you really don't know what's happening. Put another way, that's not been the philosophy All the other companies have done the same thing, so I leave it to you to see how that policy has worked out. And I don't think it's worked out in the interest of shareholders. Just my personal opinion, not trying to cast any aspersions on anyone. It's just that the pace of technological change is very rapid. We have to be very mindful of it. So we don't want to be in a position where we're going to force things in ways we ought not or would not otherwise do.
spk01: So I hope that explains the logic there.
spk00: The next question has a rather long follow-on kind of explanation for why he's asking. Could management give a bit more detail on what would entice them to make dividend distributions to FRMO shareholders? On the point regarding Mr. Bregman's comments on stock dividends for investors to create a homemade custom dividend yield opposed to cash dividends from the company, and also relating to the gentleman's question on FRMO's valuation near the end of the previous meeting. I'd like to say that, one, I would like to retain as much relative percent interest as possible in the business of that FRMO itself for as long as possible. And, two, I would like any gains received from any ownership of the business to be based on the economics of the underlying business rather than the vagaries of Mr. Market and whatever the market price and liquidity happens to be on offer in the market at any given time. As the gentleman in the previous meeting notes, the valuation of FRMO by Mr. Market does not always make perfect sense. I'd like to repeat the Warren Buffett quote, that quote, I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years, end quote. From this perspective, I completely understand management's continued apparent deprioritization, deprioritizing of uplisting FRMO. It has nothing to do with the fundamental operation of the business, but the cash dividend, the economics of the business, or underlying owned businesses of FRMO can speak for themselves and could, in a way, reduce or eliminate the need for any kind of uplisting, re-rating, or other form of greater recognition from marginal buyers in order to reward existing shareholders. In this case, rewarding existing shareholders for inching toward becoming ex-shareholders. This would also allow existing shareholders who are not directors to continue opportunistically accumulating shares without having to compete with any newer section of Mr. Market that any roadshow may gain the attention of. So the question was at the beginning. Could you give a bit more detail on what would entice management to make dividend distributions to FRMO shareholders?
spk02: Okay. So the moment, I agree with all, by the way, I agree with all the sentiments in the question. So I'm completely in agreement with all that stuff. So we don't have any plans in FRMO to pay a dividend. I don't know. Uplisting, as far as that goes, we've just been so busy, we just really haven't had time. We've been doing a lot of stuff. Frankly, we haven't had a lot of time to even think about it. What we're mainly doing in FOMO is we're building the cryptocurrency business. So towards that end, to the extent we can generate cash, a lot of that is going to be deployed in growing the crypto business. So... I think we get a lot more value for shareholders in reinvesting in the crypto business in a gradual sort of way than we'd get if we paid a dividend. So we're just going to continue what we're doing at more or less the same pace, and we're going to see what happens. So far, the crypto we have is getting to be pretty considerable, and we keep buying crypto-related assets. So eventually it's all going to coalesce and something you're going to see regular operating earnings from it. When the cryptocurrency business is something that's really much better understood by the public. Right now, I don't think it's very well understood by the public. Eventually people will get it. Meantime, we're just going to keep growing it. So I hope that answers the question. We're not going to do things on the fringes.
spk01: We're just going to more or less maintain our policy.
spk00: Yes. Horizon Kinetics recently posted third quarter commentary with a large section of the publication dedicated to the merits of cruciate exchanges and their exposure to the derivatives market. How does management reconcile this with their thesis that the whole past 40 years of market dynamics has been an aberration based in large part on rates falling to zero? In the commentary's own graphics, derivatives growth only seems to start growing after the historically low rates that came after the 2000 dot-com bubble. What might a higher for longer risk-free rate do to various trading costs, behaviors, and capital allocation decisions that could negatively affect exchanges?
spk02: Okay, so let me just take it in parts. I'll say the last 40 years, more or less, the aberration, let me explain what the aberration was historically. So in the 80s, we started with some inflation and we started with high interest rates and then the miracles happened. First miracle was the Soviet Union began to collapse towards the end of the decade.
spk01: It collapsed. The significance of that was the Soviet Union
spk02: Didn't have a lot in the way of technology, but it's a literal treasure chest. Every conceivable natural resource you can imagine. And just about everything came on the global market. Just about every commodity you can possibly think of. So we had a miracle disinflation, which had not collapsed, wouldn't have happened. Miracle number one. Miracle number two. The People's Republic of China. Now, the People's Republic of China didn't have much in the way of natural resources, so they couldn't rival the Soviet Union. What they did have is, and they do have, 1.4 billion would-it-be people. They didn't have a lot of commodities to put on the global market, but they put 1.4 billion people on the global market, and that is global labor arbitrage. See, of all sorts of companies, maybe almost every company in the S&P 500 that moved production to China not just move production in China as big, I don't want to understate that at all, not just move production in China and thereby got higher property margins, margins that were unimaginable not that many years previously, but also don't forget the next miracle, which involves people from China, but also involves other people. The previously denied areas to American business, so the Iron Curtain, Poland, Romania, Soviet Union, China, Mongolia, etc., they were denied areas. All of a sudden, they were opened. So all the third miracle, all these geographies that were previously closed were now opened. And there were a lot of other countries, while they weren't really, properly speaking, iron country nations, they were quasi-socialist nations, like many in South America. It also opened up their markets.
spk01: So I'm going to put that under the third miracle. Three huge miracles. for 40 years, more or less. That's the story of the markets for 40 years.
spk02: Now we'll come to the croupiers in a minute. But those are the three miracles. So those three miracles together, once a millennia, aberration. Now let's add a fourth, I wouldn't call it a miracle, but I would call it an aberration. So sometime around late 90s, there were a handful of people on the internet, globally, and by 2023, There were 5.4, maybe 5.5 billion people in it. So you went from a handful to 5.5 billion. And that created business opportunities for the likes of Apple and Amazon and Facebook and Google and Microsoft. And I can keep going, but you get the idea. So now we're four miracles. So now you can't take almost nobody on the internet and a quarter century later, Take 5.5 billion people in the internet and say that's going to continue because there's only 8 billion people in the world. It can't continue. It has to be an aberration. There's only one Soviet Union. It collapsed, dumped their commodities in the marketplace. Now they're not going to do it anymore. China offered 1.4 billion people. By the way, it's not just China. It's India. It's Malaysia. It's Thailand. It's Vietnam. It's the Philippines. I don't think it's an exaggeration to say that 3 billion people actually entered the global labor market. But it's a once-in-a-millennium event. Those are aberrations. Now, China, to take one country, its companies are rising to challenge the American companies.
spk01: So forget about interest rates.
spk02: The movie is starting to run in reverse. So China, I don't know if it'll be a success or not. China has something called the Kirin 9000 chip. And they have Huawei, one of their private companies, makes a phone that looks to me, and I'm not an expert, looks to me, it's very competitive with Apple. And a week or two ago, they created a phone known as the P70, the upgrade of the Mate 60. It looks like it's even more competitive with Apple. And a third of Apple's business is in China. Now, the Chinese company Huawei has an allocation. What does that mean? They can't even satisfy the demand. They keep cutting the prices. They keep adding features to it. Apple's got to respond. So you can't expect China to be, which it was for some number of decades, low-cost manufacturing hub, low-margin hub of the planet forever. You have to anticipate... that they're going to move into higher margin businesses, and the higher margin businesses are going to be in direct competition with all the major companies in B500. Now, how do you find the quantitative expression of that? Well, all you need to do is look at the MSCI ACWI index. These are round numbers, but I think they'll do. You can look them up and get the exact numbers. In that index, I think the weighting of American stocks is something like 63%, something like that. The weighting of Chinese stocks is something like 2.7%. There's not that much distance between the Chinese economy and the American economy. On a purchasing parity basis, which some would argue is the correct way to measure economies, the Chinese economy is bigger than the American economy.
spk01: So now the aberrations run all the other way. That's going to correct the In my mind, there's no doubt about that whatsoever.
spk02: So if people keep behaving as if the last 40 years were not an aberration, which is essentially what everybody is saying is the case, what does that mean? That means that all these great technology companies are going to keep growing, even though they more or less wired the world for the internet. Does that mean that the Russians are going to keep dumping commodities in the marketplace? They're not going to keep dumping commodities in the marketplace. Those commodities are going to go to China. And whatever the problem was in sustaining Chinese growth, they're not going to get the kind of values they need to really grow. China is moving into higher margin businesses. There's no question about it whatsoever. None. So as one example, just one, the Chinese company BYD makes electric cars, is now making more electric cars than Tesla. So China Aviation, they only made one plane, but they made a plane, an airliner. From the look of it, it looks competitive with Boeing and Airbus. And why would we not expect China to do that? So now as the Chinese companies, if the Chinese companies, as I assert they will, if they move into the high-end margin businesses or low-end margin businesses, which they occupied themselves for the last 30 or 40 years, then everyone's going to say the last 30, 40 years was an aberration, and it's going to wreak havoc in the marketplace. That's the danger. So now enter cryptocurrency. The answer from the Western countries is not to have more engineers, invest more money in technology, et cetera, et cetera. The answer, unfortunately, is spend more money and maintain a senior living, and that means borrowing. That's just unsustainable. So money is being debased. Cryptocurrency is the answer to debasement. It's the answer to centralization. And it has the prospect of becoming the biggest asset class the world ever was, the world ever saw. Why? Because stocks themselves are an aberration. For most of history, the big markets were gold stocks. and money claims, like letters of credit. Stock is a relatively new thing. If you were to look at the, you get a Wall Street Journal, just go to the library and get a Wall Street Journal from 1923. I'm not saying get a paper from Ancient Times. I'm saying get a newspaper from 1923 and see in the New York Stock Exchange how many stocks were preferred stocks and how many stocks were common stocks. You will see People are not interested in common stocks. They're into preferred stocks because they're interested in income-bearing securities. And that's what's going to happen in cryptocurrency. So cryptocurrency, the next evolution in cryptocurrency, it's going to become interest-bearing. So how is it going to become interest-bearing? Because I think there are roughly 689 different exchanges. They're really brokers, but exchanges in cryptocurrency. And there are massive differentials in how they trade. So a market is developing for what's called a flash loan. What's a flash loan? You borrow, let's say, Bitcoin for 10 minutes, literally 10 minutes. The idea is to sell that Bitcoin in the market that Bitcoin is most expensive of the 689 exchanges and buy it back in the least expensive market, thereby reaping a benefit and paying it back before the Bitcoin block actually gets written to a blockchain. Now, you only get a handful of basis points, maybe 10%. nine basis points for a loan. But you can see if you got nine basis points every 10 minutes, how many 10 minute intervals are there in a day? You can see how lucrative that is. And what that means is that the market rate of Bitcoin in the flash loan market is likely to be much greater than the market rate of fiat that's set by a central bank. And then things really get interesting And that explains why so many people want to make a crypto ETF, to collect crypto to be able to lend it out in the flash loan market. That's really the name of the game.
spk01: It's not to raise $10 billion and get 21 basis points.
spk02: So we're living in aberrational times, and you might regard crypto as an aberration, but that's not the aberration. What happened over 40 years, that's the aberration. Crypto is the return to normalcy. From a book of history, there wasn't a central bank that told people what rate to lend money at. We only think it's normalcy because with our lifetimes, that's the way the world worked. For thousands of years of recorded history in most cultures all around the world, people figured out what the value of money was. They didn't need a central bank to tell them. So what's really happening is we're going back to normalcy. In a world of normalcy, hard assets, not financial assets, true measure of wealth.
spk01: We're going back to that. So I hope that's enough of a lecture. I don't want to go on.
spk02: I could go on a lot longer, but I just gave you a mini lecture on the subject.
spk01: I guess we'll call it, you know, comments on apparitions.
spk00: Okay. What is management? This is a question about succession. What is management doing to make themselves more dispensable to the company in as minimal a value disturbing way possible? With the death of the great Charlie Munger, the Horizon Kinetics reverse merger, and the recent court decision on TPL, I think many FRMO shareholders are looking to the future and wondering how management's excellent leadership and direction will persist in some form beyond the lives of current management and even the lives of existing shareholders who may plan to pass on their FRMO shares to their children in a similar way that Mr. Stahl has mentioned as being his own intent in the past.
spk02: Well, I guess what we're in the process of doing is we're looking at people who are obviously younger than ourselves might take over the reins when unfortunately we're either not around or we are around or not able to exercise our functions. That's what we're doing. We don't have anything announced to you right now, but, um, when we do, we'll certainly let you know. And I get nobody is forever. Yeah. I said to the degree, it makes you feel better. Um, I feel great. Um, I don't have anything wrong with me, at least not that I know of. And, um, I'm not going anywhere, but you're right. We're going to have to plan for succession. We're in the process of doing that. And when you have something tangible announced, we will certainly announce it. And when you have public trade securities, it's easier to attract some people than it is to attracting people to a private company.
spk01: So that's what we're thinking about doing.
spk00: Around 80% of the U.S. national debt is owned by the U.S. public. Is it conceivable that the Fed could raise interest rates to nearly Volcker-like levels if they wanted to and effectively nullify or greatly reduce the payments it would have to make to the U.S. public portion of its debt by simply raising taxes on U.S. companies and individuals to compensate for their own interest payments to a large degree?
spk02: I don't believe it's conceivable. I think that the interest rate problem is considerable and I think it's coming to a head. The interest expense in 36 months or probably less is going to be the biggest debt item. A lot of the Bonds are owned by tax exempt institutions. That doesn't help. If you want to tax people more, they always have the option of voting with their feet and not owning the bonds. So I don't think that's going to get you anywhere. I think the interest problem is one of the great problems that is faced by nations periodically when they borrow too much money. Usually the solution is inflation. It's not a very good solution, but usually that's where the direction it goes in. I think it's going to go with that way as well. But today we have the complexification of cryptocurrency. So I personally think cryptocurrency is going to be a tremendous asset class and people who wouldn't dream of owning cryptocurrency who today are very safe and secure in the treasury security in the not too distant future when they see the interest they can earn on crypto.
spk01: are going to be investing in crypto. My personal belief, we'll see if I'm right or wrong.
spk00: Is there any effort being made to grow Winland's electronics and monitoring business? Growth in that segment appears largely unchanged since 2013 and limits the ability of Winland to accumulate Bitcoin and mining assets. I recall that Winland was initially bought by FRMO for its excess cash flow and high return on equity. Since the financials do not break out the electronics business assets from the mining assets for the purposes of funding Linlin's continued Bitcoin accumulation, I wonder how the return on assets on the electronics segment compares to, say, a high-yield savings account that could similarly fund the Bitcoin operations by liquidating the electronics business at this point. given the segment's stagnant growth over all these years. Is this not dissimilar from how ConsenSys Mining and Seniorage Corporation currently operate? Without growing the electronics side of the... Just one more part. Without growing the electronics side of the business, what really differentiates Winland from ConsenSys right now beyond the former being publicly traded?
spk02: Okay, well... It's true the business of electronics isn't growing, but then again, to make it grow, you have to inject a lot of capital in it, and the return on capital in electronic business is not going to be as good as return on capital in crypto. So we're not dismantling the electronics business. It's fine. It's profitable. Just leave it alone, and it'll do whatever it's going to do. In terms of the crypto business... EPROMO has participated in many equity offerings in Winland, and we have more than enough capital in EPROMO to provide for all of Winland's needs. It's a big difference between EPROMO and Winland and consensuses. In Winland, we raise money in really small stages as we need it, and that money has largely come from EPROMO. In consensus, we actually did a private offering and raised a lot of money. We probably raised more money than we really needed at the time. So at the moment, we have maybe, you could argue, we have excess capital. I don't think we have excess capital in Winland. I think we have adequate capital, what we want to do, but we want to grow it. And I think you get a pretty high return on capital, as you can see. So what you have to do is look at what happened to Winland stock. over the years since FMO started investing in it. And now it's a meaningful position. We're going to be, hope to be able, can't guarantee, we hope to be able to grow it even more. And we'll see what happens. But you're right. I mean, they're basically both crypto mining businesses. And at the end of the day, they're following the same gradual policy of measured purchases
spk01: of the state-of-the-art equipment. That's what we've been doing lately.
spk00: What are management's thoughts on GBTCs and other Bitcoin ETFs' lack of in-kind redemption options and allowing only the SEC's cash-only creation slash redemption policies?
spk01: Well, I mean, I can't speak for them. I could see why they don't want in-kind redemptions.
spk02: But at the end of the day, when you're an ETF, people don't have to leave money in the fund. So there's a lot of ways to, let's just say there are a lot of ways to do the equivalent of in-kind redemption if you really want to do it. And I'll just leave it at that rather than state what the possibilities are. There are a lot of possibilities that are open.
spk01: And the time will tell what people are going to do. So I'm sure you'll see some interesting things in the next couple of months.
spk00: Last question. Without revealing anything that may reduce Horizon or FRMO's competitiveness, what is the process by which ideas are generated at Horizon Kinetics and FRMO? For example, how does an idea come to the attention of Mr. Stahl or Mr. And how is it determined which, if any, Verizon product to incorporate that idea into? For example, determining to use FOMO versus the Paradigm Fund versus the Rent Fund or some other vehicle to invest in an idea.
spk02: Okay. Well, anybody can generate ideas. And rare though it may be, even I have an idea from time to time. And the portfolio manager in question says, Is it liberty to incorporate an idea, assuming it falls within the scope of the charter of the fund that the person is managing? So some of the funds are more general, and you have a greater liberty of action to those funds. And then there's the corporations. And it's basically in the corporations like Winland or FRMO or Horizon Kinetics, it's the corporate capital, it's Steve and myself, they're the allocators.
spk01: We make the decisions.
spk00: Okay, Murray, Steve, that was our last question. So do you have any closing remarks?
spk02: Only to say I enjoyed getting the questions. I enjoyed answering the questions. If there's anything that – We didn't cover or answer any question if I was a little opaque and maybe I shouldn't have been opaque or we just didn't get to cover something that you're interested in. Please don't hesitate to contact us and we'll get you an answer. And of course, we're going to reprise this in about 90 days. And thanks so much for your support and for lively discussion. And we're going to see you again real soon. So thanks so much. And I guess I'll sign off now.
spk00: Okay, this ends our conference call. You may now disconnect. Thank you for joining us.
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