Coin Alpha: March 2021 Outlook

“Capital isn’t scarce; vision is.” - Sam Walton


Our subscriber base is expanding, thank you for reading our content! This month’s newsletter will focus on institutional Bitcoin, particularly on Aker’s newly founded Seetee subsidiary.


Institutional adoption of Bitcoin has been one of the prevalent topics during the current market cycle. While numerous institutions have signaled interest in Bitcoin, it was Michael Saylor and his company MicroStrategy (MSTR) who brought institutional Bitcoin thesis to wider audiences. Back in July 2020 Saylor announced MicroStrategy to explore purchasing bitcoin, gold, and other alternative assets instead of holding cash (USD).

Saylor’s public statements mark a turning point in the way institutions perceive Bitcoin and digital assets, leading to wider acceptance towards the asset class. MicroStrategy’s move was relatively soon followed by even bigger announcement as Elon Musk of Tesla (TSLA) bought $1,5 billion worth of bitcoin in last month. MicroStrategy currently holds 91 326 bitcoins in its treasury and Tesla 48 000 BTC.

Last week, on March 8th, MicroStrategy and Tesla were followed by a Norwegian Aker ASA (AKER), announcing an allocation of 500 million Norwegian krones (NOK) into bitcoin and blockchain-derived technologies. The 180-year-old Aker will gain exposure via a dedicated company called Seetee, that will keep its liquid investable asset purely in bitcoin. In addition to buying bitcoin, Seetee plans to join the Bitcoin and broader blockchain community and establishing partnerships with leading players. Furthermore Seetee is launching bitcoin verification operations and plans to build and invest in innovation projects and companies in the Bitcoin and blockchain ecosystems. Seetee currently holds 1170 bitcoins.

Aker’s move is particularly interesting to Finnish and Nordic investors as it represents the first clear example of growing institutional demand. Aker additionally published an excellent shareholder letter, that encapsulates the underlying fundamentals behind why Seetee was founded. Without further ado, let’s explore the shareholder letter in detail.

Bitcoin as Risk-Management Instrument

An escalating amount of corporate leaders have expressed their concerns over growing inflation. The world seems to be shifting towards more unsustainable monetary policies and Nordea’s Andreas Steno Larsen has estimated that up to 20 percent of all U.S. dollars in circulation were issued during 2020. Aker’s Kjell Inge Røkke states inflation being one of the key reasons why Aker decided to hedge cash-related risk with bitcoin.

Inflation and Central Banks

Kjell Inge Røkke continues with central bank related criticism, stating that two percent inflation will actually consume third of your liquid portfolio every twenty years. If central banks would target 3% inflation, almost 50% of your assets would be consumed in the same timeframe.

The First Mover Advantage

Despite of an abundant amount of Bitcoin alternatives, altcoins, and tokens, Bitcoin permanently holds the first mover advantage. Seetee shareholder letter also slightly hints towards Bitcoin’s upside potential, painting potential 10x or even 50x valuations. Bitcoin’s recent high-water mark was $61 604, multiplying that by 10 would equal to $616K. Multiplying the HWM by 50 would equal to $3,08 million.

Bitcoin Infrastructure

Seetee aims to invest heavily in Bitcoin and blockchain infrastructure, including mining operations. Røkke describes Bitcoin as a load-balancing economic battery, particularly useful for transferring stranded or intermittent energy.

On march 9th Blockstream announced a partnership with Seetee in order to build solutions for harnessing stranded energy sources and boosting power grid efficiency with Bitcoin mining. Seetee and Blockstream also plan to launch financial products for industrial applications with Blockstream’s Liquid sidechain.

Scarcity = Value

Bitcoin is the most scarce asset available, only 21 million bitcoin units will ever exist. 21 million is only a nominal number as a significant amount of bitcoins has been lost forever, causing the actual final circulating amount to belower. Kjell Inge Røkke benchmarks bitcoin against scarce items like fine art, which actually follows similar Proof-of-Work (PoW) structure as bitcoin. Bitcoin is basically fine art, more fungible but harder to forge.

Possibly the best way to represent Bitcoin’s scarcity is to compare it with precious metals with stock-to-flow (S2F) model. Platinum currently has a 0,4 S2F, which is relatively low. Silver however has 22 S2F, which is closer to bitcoin’s current S2F of 58,9. Gold’s current stock-to-flow is 62. The estimated S2F for bitcoin after 2025 halving will be 121,4, making Bitcoin extremely scarce.

Closing Words

It’s incredibly interesting to see over 100 year old companies starting to think seriously and embrace new alternative asset classes like Bitcoin. Aker has truly done its homework and due diligence before the recent allocation, I’m truly looking forward to future bitcoin-related content by Seetee. As Aker ASA is the first Nordic company to truly explore Bitcoin’s institutional potential, I’ve personally decided to add Aker to my stock portfolio.

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Editor: Timo Oinonen. LinkedInTwitter.

Disclosure: The information provided is for informational purposes only and is subject to change without notice. The information presented in Coin Alpha should not be construed as investment advice.