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SIMON BROWN: I’m chatting now with Stafford Masie, Executive Chair at African Bitcoin Corporation. Stafford, appreciate the early morning. Let’s chat. You had a recent announcement coming through. Your Africa Bitcoin Corporation Bitcoin Yield Generator. If I understand this, essentially I suppose [if I] lodge my bitcoin with you guys I can earn a contracted yield of up to 5% payable over a three-, perhaps even five-year term.
STAFFORD MASIE: That’s correct. Thanks for having me, Simon. Africa Booking Corporation [BTC] is the first Bitcoin treasury company listed, governed on the Johannesburg Stock Exchange. And what we’re offering right now is the opportunity for long-term holders of Bitcoin to accumulate yield, to generate more yield off their BTC. So essentially you send us your BTC and we will invest the portion of that BTC in fiat terms into our private credit engine.
So remember who we are. We are a business that has a private credit engine, and we deploy money from fixed-income capital into SMMEs in South Africa. That’s our core business and that’s been a very successful business, very profitable business, and we’ve been running that as a regulated company on the JSE for the last three years.
We’ve then morphed our strategy, augmented our strategy with Bitcoin. So now we have Bitcoin on our balance sheet. So example we’ve got three Bitcoin right now. If I do an LTV [loan-to-value] and I can access capital in the world globally at rates that I can’t do just merely in my private capital business, my weighted average cost of capital in my private credit business right now is between 12% and 15%. That means I’m lending out to SMMEs in South Africa, Africa at 20% to 22%.
So you can understand how my private credit business makes money. It’s that arch between what I’m lending and where I’m borrowing it from. Now, what we can do with Bitcoin is collateralise the Bitcoin, and I can gain access to fiat at rates below 5%. So this really increments my margin at a very low loan-to-value.
So when you give me your bitcoin I’m going to do an LTV at a max of 30% on that bitcoin. I’m going to take that fiat and I’m going to deploy it into my SMME private credit business impacting Africa-based SMMEs. That business is highly securitised loans. It’s double-securitised. Our loan book right now sits at a 0.08% default rate. So it is a governed, audited, publicly traded company saying. ‘Give me your bitcoin, I’ll hold on to that bitcoin, I’m going to generate a yield between 3% and 5% over three to five years. So you don’t just have to keep it sitting idly somewhere, because there are a lot of bitcoin holders that hold bitcoin and they hold it for the long term.
Now what we’re saying is not only can you hold it, I’ll generate you a yield between 3% and 5%, but in a very transparent way. So today you can’t stake your Bitcoin but you don’t know what’s happening in the risks associated with it. We saying you can take your bitcoin and we can have a human impact, we can have a human yield.
It’s done very transparently. So it’s an audited company, it’s a publicly traded company. We’re doing it very transparently. And people typically will say, ‘Well, you know, is this risky? What if bitcoin goes up or down? The price of bitcoin doesn’t impact us because when we’ve taken the fiat – that 30% LTV – and we’ve put it into our private credit engine, it is over-collateralised.
So, if you think about it this way, our mandate on the private credit side for the money we raise is we raise 20% equity, and then our funders provide the 80%.
So if I take three bitcoin and I do an LTV of 30%, so I take your three bitcoin, what I’m going to do with it as I hold it, I’m going to hold it securely. Transparently. You’ll be able to look into it at all times. You’ll be able to see how I generate the yield. So I’m going to take the one bitcoin, which equals about R2 million, and I’m going to buy R2 million worth of equity in ACOF, which is our Altvest Credit Opportunities Fund. That’s our private credit engine. That results in R2 million becoming R8 million to R10 million that I can deploy into an SMME.
That’s highly impactful and that’s a beautiful story. So you’re generating yield off your bitcoin, but you are also incrementing jobs. You’re having an impact on the economy – which is really, really positive. So we’re very excited about this.
It’s the first time in the world that a Bitcoin treasury company has ever done anything like this. And it’s meaningful to us.
SIMON BROWN: Absolutely. There’s a bunch I want to talk about. Some of it is, as you said, long term. It’s the HODLers [long-term holders]. This is not someone who’s trading it. I’ve got Bitcoin in it. I’ve got it in a wallet and it sits and does nothing. This is saying, hang on. It can actually generate some yield for me, which is what it hasn’t done in the, six or seven or eight years I’ve held it.
The question folks are going to ask is, is it at risk? To your point, you’re managing that by … LTV, by low default rates, et cetera. That’s how you manage that part of the process, so that at the end of the term I get my bitcoins back.
STAFFORD MASIE: Yes, tou get your bitcoins back and I’m going to pay you 3% to 5% over the three to five years monthly. So you’re going to see a yield monthly. So if you give me a hundred bitcoins I’m going to pay you 3% to 5% per annum, but I’m going to pay you monthly. That’s incredibly powerful for high-net-worth individuals, family offices, long-term bitcoin holders.
The beauty of this is it’s not speculation, it’s asset-based lending. Look at it that way. And the asset and the collateral that I’m utilising is Bitcoin. And if you take a look at Bitcoin’s performance over the last 16 or 17 years, if you hold it for three to five years, it outperforms any asset on the planet.
No asset in the world has ever performed as well as Bitcoin over a 36- to 48-month period.
SIMON BROWN: Gotcha. And custody, because that’s the other point. Obviously you’re leveraging some of it. Where is the ABC, the Africa Bitcoin Corporation, where is your wallet? Who are you sitting it with or is it sitting in a drawer somewhere?
STAFFORD MASIE: [Chuckles] Look, we are the clear rules from a JSE perspective. So one of the things is we are a JSE company, we’re not a startup, number one.
Number two is, our custody is … storage – we hold our Bitcoin in institutional-grade securitised environments. I’m not going to disclose exactly how we do it, but rest assured that our auditors, Forvis Mazars, are skilled in crypto auditing. We changed our auditors not too long ago and the reason we did that was we had to do it because we wanted auditors that had the capability to really do this …
There’s a gentleman over at Forvis Mazars called Wiehann [Olivier]. He has a PhD in crypto. So they know what they’re doing. Essentially they oversee the entire custody and storage of our Bitcoin.
And we do it so transparently. If you go to our website africabitcoincorporation.com and you click on ‘Aanalytics’, you will see real-time analytics about Bitcoin holdings. You will see the value of it, you’ll see the mNAV (Market to Bitcoin Net Asset Value), the value of it. You will see the share price correlated to it. You’ll see what’s in our wallet, exactly. And that’s institutional grade, audited in real time cold storage.
SIMON BROWN: Yeah. And we know Wiehann Olivier. He’s been in the show a couple of times. Cold storage is the key point. I always say to folks, you’ve got to have your bitcoin in cold storage. That’s how it works really.
We’ll leave it there. Stafford Masie, executive chair, of Africa Bitcoin Corporation, I appreciate the early morning.
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