425: Twenty One Capital to Go Public via SPAC, Aims to Maximize Bitcoin Ownership for Investors

Twenty One Capital, co-founded by Tether and Jack Mallers, is set to go public through a SPAC merger with Cantor Equity Partners, aiming to provide investors with a unique vehicle for Bitcoin exposure.

Summary

• Twenty One Capital, co-founded by Tether and Jack Mallers, is launching as a Bitcoin-native company.
• The company intends to maximize Bitcoin ownership for investors.
• Twenty One Capital is entering a SPAC agreement with Cantor Equity Partners.
• The goal is to provide a singular vehicle for Bitcoin exposure.
• The company is launching with over 42,000 Bitcoin.
• Twenty One Capital aims to grow its Bitcoin per share through launching products, partnerships, and using capital markets to accretively buy Bitcoin.
• Strike, another company founded by Jack Mallers, is immensely profitable with adjusted EBITDA margins well over 20% in 2024.
• Strike did over $6 billion of monetizable volume, representing 600% growth year-over-year.
• Strike expects 8 to 9 figures of net profit this year.
• The next step for Twenty One Capital is to get the transaction approved and list its stock on a stock exchange under the ticker XXI.
• The company views its public equity as its first product and its shareholders as its customers.

Sentiment

Score: 8

Explanation: The document presents a positive outlook for Twenty One Capital, highlighting its unique value proposition, strong backing, and the potential for growth in the Bitcoin market. The profitability of Strike, another venture by Jack Mallers, further boosts confidence. However, risks associated with Bitcoin volatility and regulatory uncertainty temper the overall sentiment.

Positives

• Twenty One Capital has a strong founding team with experience in building software and scaling businesses in the Bitcoin space.
• The company has credible backers, including Tether and SoftBank, providing access to capital, relationships, and experience.
• Twenty One Capital aims to provide a unique value proposition by being an operating business focused on growing Bitcoin per share, unlike static Bitcoin ETFs.
• Strike, another company founded by Jack Mallers, is highly profitable, demonstrating Mallers' ability to build successful Bitcoin-focused businesses.
• The company intends to build Bitcoin-native cash flow through products and high-margin opportunities, differentiating it from other Bitcoin holding companies.

Negatives

• The success of Twenty One Capital is highly correlated to the price of Bitcoin, which is known for its volatility.
• The company is subject to regulatory risks and uncertainties surrounding Bitcoin and crypto assets.
• The SPAC transaction is subject to approval, and there is a risk that it may not be completed in a timely manner or at all.
• The company faces increased competition in the Bitcoin and crypto industry.
• The company is dependent on Jack Mallers who is also running Strike.

Risks

• The Proposed Transactions may not be completed in a timely manner or at all.
• Failure to realize the anticipated benefits of the Proposed Transactions.
• The level of redemptions of the Company's public shareholders may reduce the public float.
• The failure of Pubco to obtain or maintain the listing of its securities on any securities exchange after closing of the Proposed Transactions.
• Changes in business, market, financial, political and regulatory conditions.
• Risks relating to Pubco's anticipated operations and business, including the highly volatile nature of the price of Bitcoin.
• Risks related to increased competition in the industries in which Pubco will operate.
• Risks relating to significant legal, commercial, regulatory and technical uncertainty regarding Bitcoin.
• The outcome of any potential legal proceedings that may be instituted against Pubco, the Company or others following announcement of the Proposed Transactions.

Future Outlook

Twenty One Capital aims to list its stock on a stock exchange under the ticker XXI, pending approval of the SPAC transaction, and plans to build technology and bring products to the market that the capital markets haven't seen.

Management Comments

• Jack Mallers: 'We want to bring a new type of company to the capital markets, one that's centered entirely around Bitcoin.'
• Jack Mallers: 'Our KPI, our core KPI is Bitcoin per share. How much Bitcoin on our balance sheet representative of a fully diluted share.'
• Jack Mallers: 'Judge us in Bitcoin terms.'
• Jack Mallers: 'Strike is immensely profitable.'
• Jack Mallers: 'We do view our public equity as our first product and our shareholders as if they are our customers, because we're selling unique access to Bitcoin in the public markets in our opinion.'

Industry Context

This announcement comes amid increasing institutional interest in Bitcoin and the growing popularity of Bitcoin ETFs. Twenty One Capital aims to differentiate itself by being an operating company focused on actively growing its Bitcoin holdings and building Bitcoin-native products, rather than simply providing static exposure to the asset.

Comparison to Industry Standards

• MicroStrategy is a large corporate Bitcoin holder, but Twenty One Capital aims to build technology beyond just owning Bitcoin.
• Bitcoin ETFs provide static exposure to Bitcoin, while Twenty One Capital aims to actively grow Bitcoin per share.
• Strike's profitability metrics, such as adjusted EBITDA margins over 20% and significant revenue per employee, are strong compared to other financial services companies.

Stakeholder Impact

• Shareholders: Potential for increased Bitcoin exposure and returns through the company's operating model.
• Employees: Opportunity to work in a growing, innovative company in the Bitcoin space.
• Customers: Access to new Bitcoin-native products and services.
• Investors: Access to a unique public equity offering focused on Bitcoin.

Next Steps

• Obtain approval for the SPAC transaction.
• List stock on a stock exchange under the ticker XXI.
• Build technology and bring products to the market.
• Continue educating the world on why Twenty One Capital exists.

Key Dates

Keywords

Bitcoin, Twenty One Capital, SPAC, Cantor Equity Partners, Jack Mallers, Tether, MicroStrategy, ETF, Strike, SoftBank, Capital Markets, Cryptocurrency, Investment, Financial Services