press release<\/a>.\u00a0 We believe this is a better metric than a basic adjusted SOL per share as it adjusts for items that can heavily skew such a calculation such as investment timing and leverage.\u00a0 For example, a company can raise $100m, buy $1m of SOL one month, and buy $99m of SOL the following month to claim their basic SOL per share increased by 99x over that time, but this was more due to the small initial purchase than due to value creation.\u00a0 The company could then borrow $100m and buy SOL with it in a subsequent month to claim their SOL per share then doubled, though this was due to leverage rather than the main value accrual mechanisms.\u00a0 Our adjusted SOL per share metric adjusts for items like these to measure the value creation from accretive issuances, staking, and discounted locked SOL purchases.<\/p>\nThe 0.197 adjusted SOL per share tells investors how much in adjusted SOL is underlying each share of Upexi common equity.\u00a0 The investor can see how this develops over time to measure the efficacy of Upexi\u2019s treasury management operations, and can convert the adjusted SOL per share by multiplying by the price of SOL to see how much of a premium our stock is trading at relative to the value of our cryptocurrency (on an adjusted basis).<\/p>\n
CN: Over 53% of your SOL holdings are locked tokens that were purchased at a mid-teens discount to spot prices. Can you explain what these locked tokens are and why Upexi chose to buy locked tokens at a discount? What benefits and risks do locked tokens bring in terms of built-in gains for shareholders, and how long before those tokens become liquid?<\/strong><\/p>\nAM: Solana Foundation sold tokens to investors, typically cryptocurrency venture capital firms, early on to raise money for things like protocol development and for developer grants.\u00a0 However, as it was still early on in Solana\u2019s development, these tokens were locked. Hence, investors are not able to use them freely in DeFi and they do not trade on an exchange (only OTC).\u00a0 Upexi is able to buy locked tokens at a mid-teens discount, that vest and become liquid on a monthly basis, generally through January 2028.\u00a0 As we do not plan to sell Solana, there is no reason for us not to buy locked tokens to take advantage of the discount for investors.\u00a0 Moreover, locked tokens still early the ~8% staking yield, and when the mid-teens discount is put into yield-equivalent terms, we are nearly doubling the staking yield.\u00a0 So buying locked Solana at a discount is a great way for us to great built-in gains for shareholders and increase the staking yield in a risk-prudent manner.<\/p>\n
CN: It goes without saying that holding any single-asset crypto treasury comes with volatility. How do you approach risk management for your SOL holdings? Do you hedge for downside protection, or are you all in with full confidence that downturns will reverse? In more practical terms, how do you reassure investors that the company won\u2019t overexpose itself if Solana faces a major correction?<\/strong><\/p>\nAM: We have a buy and hold strategy, and given our view that Solana will generally increase over the medium-term, we buy when we have the funds to do so and we do not hedge.\u00a0 We seek to maximize value for shareholders in a risk-prudent fashion, so we will not take on too much leverage, we will not do crazy degen trading onchain, and we only use qualified custodians while diversifying amongst them.\u00a0 We believe this not only positions us well for any market environment, but is also a strategy that resonates with both crypto and traditional investors alike.<\/p>\n
CN: Does Upexi have any plans to move beyond simply holding SOL? For example, are there advantages to investing in projects or builders within the Solana ecosystem to complement your SOL holdings? Or do you see concentration in Solana as core to your strategy?<\/strong><\/p>\nAM: We do not have any plans to move beyond holding and staking spot and locked Solana and engaging in accretive capital issuances. We believe the three value accrual mechanisms of accretive raises, staking, and discounted locked Solana purchases are so powerful that it doesn\u2019t make sense to deviate from that at all.<\/p>\n
CN: Upexi\u2019s stock trades at around 0.7 times its basic NAV of the SOL treasury. Why do you think the market is valuing Upexi at a discount to its crypto holdings? What steps can be taken to close that valuation gap so that the stock price better reflects the underlying holdings? I saw that SharpLink announced a share buyback program as an acknowledgment that its stock is below its NAV. Would you consider a similar move?<\/strong><\/p>\nAM: There are a number of items that make a basic mNAV calculation misleading, and as such, we do not believe that it represents the true underlying valuation that the market is ascribing to the company.\u00a0 Here, we have published a \u201cFully-Loaded mNAV\u201d metric that adjusts for items like leverage, cash on hand, pre-funded warrants, etc., and we believe is the most accurate valuation measure for Upexi.\u00a0 Here, we are currently trading at 1.4x.<\/p>\n
CN: I noticed that management has been active at investor conferences, including presentations at Needham, Canaccord, and H.C. Wainwright. Can you discuss how traditional finance audiences and investors are reacting to your crypto treasury strategy? What are the most common questions or concerns you hear from institutional investors and analysts?<\/strong><\/p>\nAM: The knowledge level of traditional investors varies quite considerably, with many of them looking into cryptocurrencies and crypto-related stocks for the first time.\u00a0 As such, the most common question we receive is \u2018what is the difference between Solana and Bitcoin?\u201d.\u00a0 Another common question we get is \u201cwhy Solana?\u201d.\u00a0 All that said, traditional investors do appreciate how powerful the model is and that cryptocurrencies may have more positive than negative catalysts, such as incoming US market structure legislation, all coming together to offer what is likely a very asymmetric risk-reward in our stock.<\/p>\n
CN: Upexi joins a fast-growing list of public companies embracing a crypto treasury strategy. What do you think is driving this wave of corporate crypto treasury strategies? How does Upexi\u2019s approach compare to the OG in this strategy, which was the first to hoard Bitcoin?<\/strong><\/p>\nAM: Upexi did the first large-scale equity private placement for an altcoin treasury, and since there have been over 150 to follow.\u00a0 The popularity of the model is likely coming from the success of companies like Upexi, which is making more companies want to adopt similar strategies and investors looking to make outsized returns.\u00a0<\/p>\n
Upexi employs MicroStrategy\u2019s main value accrual mechanism in accretive capital issuances, but also adds others such as staking to earn an 8% yield making the treasury a productive asset and buying locked Solana at a discount for built-in gains for shareholders.\u00a0 We are also underpinned by an asset that we believe will similarly be an end-game winner, but at just 5% the size, so our view is that there is much more\u00a0 potential upside in our treasury asset than for MicroStrategy.<\/p>\n
CN: And last, as a follow-up to the prior question, are you concerned that that company\u2019s exclusion from the S&P 500 index invalidates the investment thesis that resonated well with traditional stock investors?<\/strong><\/p>\nAM: No, we are not concerned.\u00a0 The S&P Index Committee has discretion on which companies it adds to the index, and MSTR may still be added in the future.\u00a0 It has added other firms that own Bitcoin in the past like COIN and SQ. We do not think the fact that it wasn\u2019t added during the recent quarterly rebalancing means much.<\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"
Upexi is the largest public company holding Solana tokens and uses a SOL strategy to build its holdings and generate additional revenue through staking. In an interview with crypto.news, Upexi…<\/p>\n","protected":false},"author":1,"featured_media":11237,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-11236","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency"],"_links":{"self":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/11236","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/comments?post=11236"}],"version-history":[{"count":1,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/11236\/revisions"}],"predecessor-version":[{"id":11238,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/11236\/revisions\/11238"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media\/11237"}],"wp:attachment":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media?parent=11236"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/categories?post=11236"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/tags?post=11236"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}