#785 Is Borrowing Against Your Bitcoin A Smart Investment? w/ Jason Williams

Jason Williams is an investor and entrepreneur.. He has built and sold numerous companies, including an approximately $500 million exit in the healthcare space. Jason and Pomp have also worked together to invest more than $100 million in the bitcoin and crypto industry. In this conversation, we discuss leveraging your Bitcoin and Real Estate for liquidity, the risks involved when borrowing against your Bitcoin, and the 5 things that Jason is excited for in Crypto this next year. ======================= Choice is a new self-directed IRA product that I'm really excited about. If you are listening to this, you are likely part of the 7.1 million bitcoin owners who have retirement accounts with dollars in them, but not bitcoin. I was in that situation too. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it too. Absolute game changer. https://www.retirewithchoice.com/pomp ======================= Circle is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.com.

• 0:02Speaker 00

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Jason Williams is an accomplished entrepreneur and investor. He's built companies that have exited for nine figures. He's invested nine figures of capital and he also happens to be a great friend of mine. In this conversation, we talk about everything from Bitcoin to real estate and all kinds of personal finance topics that lots of people who listen to this podcast are probably interested in. I really enjoyed this conversation with Jason, as I always do. But before we get into this episode, I want to quickly talk about our sponsors. First up is BlockFi. BlockFi provides financial products for crypto investors. Those products include a high-yield interest account, a US dollar loan product against your crypto

• 0:47Speaker 00

  collateral, and a no-fee cryptocurrency trading product. BlockFi also just released a brand-new Bitcoin Rewards credit card. It's a normal credit card that when you swipe it, you get Bitcoin back, rather than cash back or airline miles. I'm an investor in the business and I'm a very happy user. The BlockFi Bitcoin Rewards credit card is absolutely amazing. To start earning today, go visit blockfi.com/pomp. Again, blockfi.com/pomp. I've got the credit card, I love it, I think you will too. Blockfi.com/pomp. Next up is Choice. It's time to stop paying capital gains taxes on your Bitcoin, and Choice is here to help. Choice is rebuilding the way Bitcoiners approach retirement by making it possible to invest in Bitcoin and 19 other digital assets inside your IRA.

• 1:30Speaker 00

  Right now, every time you make a trade, you have to pay capital gains taxes that can be as high as 37%. Choice enables you to trade real Bitcoin, other cryptos, and stocks without having to pay a dime in capital gains. The best part? They just released an iOS app, so you can open an account in less than 10 minutes and take control of your future from the palm of your hand. Join me and the 20,000 other Bitcoiners who have started their tax-efficient stack and open your Choice account today. Search "stack sats" in the App Store or visit choiceapp.io/pomp. Again, search "stack sats" in the App Store or visit choiceapp.io/pomp. And one more thing, if you want to hold your private keys, Choice lets you do that too. Start stacking tax-efficient satoshis today and visit choiceapp.io/pomp.

• 2:16Speaker 00

  I/O slash POM. Last but not least are my friends over at Circle. If you manage corporate or institutional funds, you're probably looking for ways to access opportunities in crypto. You see the growth and momentum and you want exposure. But a lot of institutions don't know how or aren't comfortable with the risks of Bitcoin or DeFi. Now there's a new investment that's built specifically to help institutions get into digital assets. It's called Circle Yield. It's a blockchain-based investment built with USDC, the leading dollar digital currency. Circle Yield is over collateralized and fully secured with Bitcoin collateral to protect your funds. This also makes it a great fit for crypto institutions who want to diversify their treasuries and reduce risks while staying all on chain. You get your choice of terms from

• 3:01Speaker 00

  one to 12 months in a fixed rate that's higher than what you'll get at a bank or in many fixed income markets. Visit circle.com/pomp to book a meeting with one of their experts. Again, circle.com/pomp and book a meeting with one of their experts. Big fan of Circle and I think you will be as well. All right, let's get into this episode. I hope you guys enjoy this one.

• 3:21Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 3:44Speaker 00

  Jason, you there? Yeah, what's going on, guys? All right, I got a whole bunch of questions for you. First, let's start with this idea of real estate and Bitcoin. I think there's a lot of people who see high inflation happening and they're asking themselves, what should I do from an investment standpoint? Obviously, this isn't financial advice, but some of the assets that have done very well, real estate's up, stocks are up, Bitcoin's up, etc. How do you think about your personal portfolio and Bitcoin, cryptocurrencies, real estate is like the opportunities that you have to deploy capital into? I had a really great discussion with Grant Cardone. You know who that is? I do know who that is. Yeah, so I was on Clubhouse and he jumped on stage and I was like, Grant, look, you're

• 4:26Speaker 00

  Like a leverage master, you understand how to buy uh high quality real estate, whether it's commercial, residential, mixed commercial, residential, whatever. Um, and apparently he's got like about two billion uh and he levers about 50%. So he's got four billion of of assets in real estate with 50% leverage on it and he's he's crushing it. And I was thinking like, man, I haven't done much with Bitcoin. I I've been a buyer and holder of Bitcoin. Um, I've rehypothecated some of it and gotten paid in in stable coins or Bitcoin. But I I feel like right now with Bitcoin kind of being boring, I don't look at the price, by the way.

• 5:10Speaker 00

  Uh, that was one of my New Year's resolutions. So uh this year, it's like the 14th. I haven't looked at the price, even though Bitcoin's at 43,000 and change. I don't look at the price. And it feels really kind of boring right now. And and I I'm playing these scenarios like, is this the right time to borrow against Bitcoin? Like, can I can I put like a 25% LTV loan against my stack? And do something different with it. Maybe buy high quality, income-producing real estate, or buy some more Bitcoin with that money and rehypothecate it to try to drive some more yield. Now, have you guys thought about that strategy at all? And I'm I'm going both ways here.

• 5:53Speaker 00

  I'm saying borrow against my Bitcoin stack, leverage it, and potentially rehypothecate it and drive some yield, or borrow against property I own right now. You know, you can get pretty favorable terms and either buy more real estate or buy Bitcoin with that. Have you guys talked about that at all? One of the things that I find really interesting, so we haven't talked explicitly about certain strategies, but uh one of the things that a number of people I know kind of privately are doing is, let's say they bought a piece of real estate before the pandemic and they were kind of paying off the mortgage on it, whether they were paying it or they had people, you know, renting it. And the value went up. And so what they did was they refied it, right? And when they refied it, they basically had some delta that they cashed out.

• 6:38Speaker 00

  And when they did the cash out refi, all of a sudden, that's the money they went and used to actually go buy Bitcoin or, you know, participate in other types of investments. So that's like a kind of a straight down the fairway, I think of like how people were getting it. I think what you're talking about is a little bit more of a sophisticated thing where you're saying, hey, look, if you own a piece of real estate, you just borrow right against it. And if you're borrowing, I don't know, what are the rates that you're seeing in terms of either residential or commercial right now that people could borrow at? Somewhere between two and three percent for like a 10 year balloon, which is, it's not bad. And then on Bitcoin, it's crazy. I'm seeing like a 24 month loan at 1% APY at 25% LTV.

• 7:19Speaker 00

  I mean, that is incredible, guys. If you do the math on it, that means you can borrow five million bucks, 25% LTV, you gotta put up 450 Bitcoin or so. It's going to cost you 4100 and change a month or $100,000 for 24 months. That's, that's your cost. That's your debt service on that. That sounds pretty good to me. Now, you have to factor in, can you get margin called? Like, is Bitcoin going to drop and can you cover if that happens? I mean, that doesn't feel great to me, but with Bitcoin, again, I don't look at the price at 43,039, something like that. I don't look at the price anymore. It feels like you may be able to borrow against it.

• 8:04Speaker 00

  Yeah. Well, how do you think about the difference between borrowing? It's like real estate, it's a good example, right? Most people are borrowing money to buy real estate. When they do that, they basically are getting a couple of advantages. So you obviously get the hard asset itself that should appreciate against the dollar over long periods of time. They get the tax benefits between depreciation, segregation studies, et cetera. They get cash flow from somebody renting it if it's an investment property. And then on top of that, they also are getting usually some sort of additional revenue that they can drive from it, right? Whether it's short term, long Long term, whatever. When you think about those things, Bitcoin, if you borrow money to buy Bitcoin,

• 8:45Speaker 00

  you in most cases are just buying it and holding it. Yes, you can put it in an interest-bearing account and drive a little bit of interest. But one thing is like, where do you borrow against? So you can borrow against your real, so you can borrow against your Bitcoin. How do you think about after you've borrowed money, where to put it? Whether you put it into real estate or you put it into Bitcoin, like kind of on the allocation side? Yeah, I mean, this, this is, this is why I'm trying to get all the galaxy brains together, all the guys in the dark shirts with the hoodies, you know, that are, that have that energy that you guys have and ask the same question. It seems pretty straightforward to me that borrowing against property, you know, high-quality property, whether it's not producing revenue or it is revenue-producing property, seems like a pretty simple play.

• 9:28Speaker 00

  Whether you lever that to buy more property or Bitcoin, Bitcoin being property. Again, that seems like pretty clear to me. I think there's a very, well, it happened in 08, right? Where banks, banks restructured your holdings. But I think there's a low probability of you getting margin called on a piece of property that you, you hold the paper on. So I really like that strategy. The other side doesn't seem very mature at this point yet, you know? If you, if you borrow against Bitcoin, you're kind of using, it's untested waters right now. There's a bunch of, of different options, whether it's BlockFi, Unchained, Celsius, like, you know? I don't know. I don't, I don't have a dog in the fight there.

• 10:13Speaker 00

  But the rates look good. It's, it's not as clear to me on the other side of that pump. If I do borrow against my Bitcoin, I want to own more Bitcoin. I think that's, that's where I am. If I borrow against the real estate, I want to buy more Bitcoin as well. So like that $5 million scenario I just talked to you about. At 25% LTV, you're gonna have to put up, you know, north of 450 Bitcoin, but you can buy about 116 Bitcoin. Again, I don't look at the price, but Bitcoin 43,167, you're picking up about 116 Bitcoin. All right. If you had to say, what are the five things you're most excited about around Bitcoin and cryptocurrencies in 2022? What are the five things that you're like, bam, this, I'm super excited to see this stuff happen?

• 10:57Speaker 00

  Well, Bitcoin, crypto funks, bored apes, buying planets in the metaverse, and regulatory clarity. I think I think I'm excited about that kind of stuff. All right, let's go to reverse. Look, look, look, look, look. I'm a Bitcoin money maximalist. What does that mean? It just means I think Bitcoin is is good money. It's it's like it's an insurance wealth policy. And I'm totally in 100% in, but I don't think Bitcoin solves everything. So I am looking around at at different projects. I've always been interested in tinkering. So, you know, my Bitcoin maximalist friends, those toxic guys,

• 11:41Speaker 00

  you know, they just think I've gone brain dead, full galaxy brain when I talk about this other stuff. But I'm interested in it. So, you know, I'm a holder of of crypto punks and crypto funks and and bored apes. And, you know, I think that there's something there. I think there's a cultural, a cultural shift. There's a group of people that don't care about the programmatic monetary policy of Bitcoin. They don't care about good money. You know, they're they're in it for a lifestyle and and they identify with with these cultural movements and they like they like video games and stuff. So, look, I'm older now, but I'm still interested in in this space. And, you know, when I say I'm older now, I think I'm an older Bitcoiner.

• 12:23Speaker 00

  You know, I'm I'm a guy who has assets and house, a house with chairs. A lot of Bitcoiners talk about like sell your chairs for Bitcoin, for Bitcoin, excuse me. Like, I don't want to do that. I want to have a car and a house and I want to go on. vacations and I also want to have Bitcoin. So when you think about Bitcoin as one of the five things, that's kind of a self explanatory. Regulatory clarity, I think, is another one that's self explanatory. But you mentioned three things there in the middle. You said crypto punks, crypto funks, and what did you say, bored apes, I think, right? Explain more about those three things. Why are those three of the five things that you're excited about in 2022? Yeah, so crypto punks are kind of like OG Ethereum based JPEGs or PNGs.

• 13:06Speaker 00

  And they kind of rug pulled the the holders of those. So I'm an owner of of crypto punks. They're worth a lot. I think the floor is like 70 Ethereum or something like that. So what is that 230,000 bucks or something along along that way? They sold the IP to a third party and I found it to be really weird. So they they almost like took the value away from the people who owned this asset. And it caused a lot of people to think. One of the the groups that I think did something interesting was a group called that invented or or produced something called crypto funks. They took crypto punks and they flipped them the other way. So they're just facing the other way.

• 13:49Speaker 00

  They're exactly identical to to crypto punks, but not identical in any form or fashion because they're flipped the other way. And they're kind of challenging a lot of of DMCA and claims around copyright and what are your rights to these these images? And I've enjoyed the exploration of that pomp. And then finally bored apes, you know, they they they lay claim to giving you the IP and the right to actually go out and commercialize your ape. So you could you could launch a clothing line with that image and sell it as long as you hold it, you apparently have some rights and privileges associated with that. I think that's really interesting.

• 14:35Speaker 00

  Again, this is anyone can right click these images and then anybody can sue anything, anybody for anything, obviously. So that remains to be seen how defensible these positions are in court. But it's really interesting to me to dive down this copyright licensing trademark kind of situation as Holder of some of these JPGs. What you two got questions about? Jason, I saw someone was buying land next to Snoop Dogg in the metaverse. Are you buying land in the metaverse? I buy planets. No, I'm buying planets. Pom's right. Like, I was talking to this guy. He was talking to me about land and this and that in a very expansive metaverse game. And I was like, man,

• 15:19Speaker 00

  look, I'm gonna put some money in your project, but I want a planet or the sun. Because I was thinking, if I can own the sun in this galaxy, if I'm the life-giving force to everything else out there, I can monetize that somehow. Maybe put a little meter in the middle of the sun and you buy the protons and the life force that comes out of the Jason Williams parabolic sun. I like the way this sounds. I'm working on it. And yeah, if you live in my universe, you're gonna pay me for that light, baby. Jason, what are you doing with your NFTs? You just have them sitting there? Are you using them for anything? Well, this is the thing. So this year, I'm opening up a surf shop, coffee shop with my daughters,

• 16:02Speaker 00

  and we bought a board ape and we want to use it as like, you know, as our mascot almost. Like, we want to put him on surfboards or have him drinking coffee, you know, just doing stuff. And it's just one little moment of this kind of cultural connection we're going for. My kids love JPGs and they love board apes and stuff like that. So I thought it'd be neat to to actually try to commercialize it and push it as far as we can. I engaged the lawyers, though, and they started to puke on it a little bit. So I think we have work that work to do to fully be protected by using this IP, trademark, and image.

• 16:43Speaker 00

  But yeah, man, like, that's one of the things I'm trying to do with with board apes. I've seen some really, really cool displays, guys, of digital art and also people making physical representations of their digital art projects. And no, it's a lot of fun. And look, Pom and I have been in this game a long time when it comes to digital art. And, you know, it's fun to see it mature. What's the craziest NFT that you bought? Crypto dick butts.

• 17:18Speaker 00

  What? What is that? I think it's dick, chicken dick butts or crypto dick butts. Yeah, I think it's, uh, yeah, it's, it's really, it's like a chicken, uh, with a butt and a dick, I think. How much something like that go for? Take money, baby. We'll talk about that offline. That's cool. Yeah, I'm down for that. All right, what's the, what's the second craziest one that you've bought? Um, well, I, I think Gary V's project to me was, was really wild. I mean, we dropped millions of dollars on V friends and it's really just Gary V scribbling on a piece of paper. You know, he's not an artist at all. He's a moderately older

• 17:58Speaker 00

  looking gentleman who, uh, you know, who, who got some ink pens and drew some really, you know, I, I don't know.

• 18:07Speaker 00

  Like patient penguin and stuff, right? Yeah, like really basic stuff, guys. Like if you had an image of one of these V friends to put up, it's pretty basic stuff. I dropped millions of dollars on it. So Gary V, if you're out there, bro, you're gonna make me hold on to this bag forever or are these things gonna pump? I'm ready. Let's go. No, but the whole point, but here's the last thing we'll talk about and then we gotta go because we got other things we gotta do. Is, uh, his whole thing isn't so much you're buying just a piece of art, right? It's an access thing. So, so there's an element of you get to go to a conference, you get, depending on which one you own, you get to FaceTime with them, whatever. And it's fascinating to me and just like, uh, if this becomes the way that people actually, uh, kind of engage

• 18:48Speaker 00

  with their community, it's a very interesting way to do it, right? And so, uh, from everything I can tell, like it's been very successful for them. Uh, and if they continue to do this in a, in a material way, uh, I don't see why, uh, they won't set kind of the, the standard, the default, right? Like people always give Gary a hard time, uh, online sometimes, but the thing I always say is like, the dude's been ahead of a lot of trends, man. You know what I mean? Like it's just, there's something about when you live on the internet, when you're molded by the internet, if you will, you just understand and have intuition for, oh, this is gonna be a big thing. This isn't like, the guy was talking about audio being big in like 2012. Right? And people are like, what do you mean audio? That sounds crazy. And then like podcasts become a massive thing. And now people are getting bought for hundreds of millions of dollars.

• 19:32Speaker 00

  Right? And so I think the same thing here is like, we may look back in five or 10 years, be like, damn, remember when he did that? And like, we'll see, right? Maybe he's wrong, too. Like, I don't think that he's right every time. I think he'd be say that. But it is interesting that he's, he's doing things to test it out and try to figure it out. Yeah, look, I'm a fan of Gary Vee. He's, he's certainly an opportunist and he's made, you know, tens, if not hundreds of millions of dollars off of V friends. So, you know, the proof is in the pudding. Like, I'm, I'm, I'm in, you know, when he, when he called his friends to participate, you know, we got the call, you know, I'm supporting him. But let's, let's see how it goes. The one other thing real quick about Gary is I don't know if you guys saw the latest

• 20:10Speaker 00

  Full Send podcast, but they got, they got Bob, is there Bob Menery? And yeah, and Bob is asking them. They got John Shaheed on too, who usually doesn't host the podcast, but he was there. And, and the clip that I saw, Bob's like, all right, man, it's like, how rich are you? And they cut away and John Shaheed is like, oh, my God.

• 20:34Speaker 00

  And to Gary's credit, he was like, very.

• 20:38Speaker 00

  Which, which is great because you get Bob Menery just asking wild questions. Bob Menery, by the way, Jason, I don't know if you know who Bob Menery is. He's the only person in the world who could go from literally interviewing Antonio Brown to Gary Vaynerchuk and everyone in between. Like, the guy, his range is unparalleled. And, you know, he just sits there and he just asks the questions that he need, that he needs the answers to. Like, yeah, how much cash you got? They got Chad Ocho Cinco, they got him to pull up his bank account and like, literally hand them his phone and show him how much cash was in his bank? It's crazy, man. Which pop brother takes his clothes off during the middle of one of your broadcasts and walks off the show? What? That, that hasn't happened yet. Yeah, but I'm saying like, which one of you would be the one? John, John, for sure, John. John would do it. He'd just say, I've had enough.

• 21:23Speaker 00

  Make it an NFT. I'll do it right now. Strips off the shirt and just says, peace out. I'm out, Pom, Liana. That's it. Exactly. All right. Where can we send people to find you on the internet? Well, I'll be teaching at Wharton Business School on the 26th. So you can check that out. You can follow me at GoingParabolic on Twitter. And then I'm doing a mining convention in Texas on, I think, the 8th. I'll be on stage talking about ESG, mining, whatever else random comes in my head. And yeah, it's an Austin Scott's crypto mining. I think Sailor will be there as well. It'll be fun. All right. I love that. All right. Everyone go follow Jason on Twitter if you don't.

• 22:05Speaker 00

  I don't know where you've been. At GoingParabolic, the number one Twitter username in the world. Facts. All right, man. Appreciate it. See you at Wharton. See you, guys.