Twenty One's new chief executive, Raphael Zagury, is steering the company away from its pure Bitcoin-treasury model, saying it will build a conservatively leveraged Bitcoin-backed lending and credit business and back Bitcoin developers. The shift comes after the company posted a $413.5 million net loss in Q2, driven almost entirely by a non-cash change in the fair value of its Bitcoin holdings.
A new playbook
Zagury, who took the helm in July, replacing Jack Mallers, said the company will become "more than a Bitcoin treasury." He wants to build a lending business and support developers. In July, Twenty One said it would try to model itself after Berkshire Hathaway, building and acquiring high-quality operating businesses. Searches for key operating roles are underway.
The loss and the balance sheet
The Q2 loss stems from Bitcoin's price slide. Bitcoin has shed about 50% since its all-time high of $126,080 in October. Twenty One holds 43,514 coins, worth $2.7 billion at a current price of $63,464. That makes it the second-largest public Bitcoin treasury, according to Bitcointreasuries.net.
Investor patience
Investors have been worried about the stock trading at a discount to the Bitcoin it holds, and that the build isn't happening fast enough. The stock (NYSE: XXI) was down more than 1% over the past day and is down more than 50% year-to-date. Bitcoin treasuries exploded last year, and companies like Strategy have seen their stock suffer.
Zagury's plan is still taking shape. The company is searching for key operating roles, but hasn't given a timeline for the lending business. SoftBank, which was part of the original project, is no longer involved. Twenty One debuted last year through a SPAC merger with Cantor Equity Partners. The company hasn't said when the lending product will launch, but the search for operating roles suggests the build is moving from idea to execution.
