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Cypherpunk Holdings: In Short

  • Canadian listed company (CSE: HODL, OTC:KHRIF) with portfolio of assets in the digital and privacy marketplace
  • Large holder of Bitcoin as treasury reserve
  • Stakes in companies on the cutting edge of digital currencies and infrastructure
  • Further acquisitions include large pool of increasingly scarce IP addresses
  • Experienced management team with established records in the blockchain and cryptocurrency markets

Digital currencies and personal privacy – two major trends that will be defining the financial landscape in the future. And here’s Cypherpunk Holdings (CSE:HODL, OTC:KHRIF), a listed company which combines a portfolio of the best of both worlds.

Cypherpunk Holdings is not a fund, it is a company with a diverse portfolio of investments in both companies and cryptocurrencies, as well as other digital assets. As such it represents less of a risk than taking a single position in a single coin. It is also run by a team with expertise in the sector.

Cypherpunk remains one of the largest publicly listed holders of Bitcoin. As of 14 April it holds an aggregate of 360 BTC. As part of its capital allocation and treasury management strategy, Cypherpunk will maintain cash assets sufficient to meet day to day needs, while the majority of unallocated reserves will remain in Bitcoin.

Cypherpunk is also the owner of a number of equity stakes in companies that are active across the blockchain space. Companies must be in a position to enhance the overall privacy of the Internet or enable the further decentralisation of blockchain networks. Ideally they should represent early stage opportunities and have management with proven track records.

For example, at time of writing, the company owns 4.5% in Wasabi Wallet, a market leading desktop privacy wallet for Bitcoin. It also owns 1.4% of Samourai Wallet, which is regarded as one of the most secure and private of the mobile cryptocurrency wallets.

Outside of the wallet space, Cypherpunk Holdings also owns stakes in the likes of Chia (a developer of programming language for blockchain), Hydro66 (a Swedish data centre which provides cloud computing and crypto mining services) and most interestingly NGRAVE, which has Zero, aka the Coldest Wallet, a fully offline hardware wallet with top grade security certification.

Cypherpunk gets exposure to companies like this through a variety of means. Sometimes it is a lead investor, sometimes it uses convertible loan notes or warrants. Not all these companies are listed either.

Just as an example of the sort of company that attracts Cypherpunk’s attention, Chia, one of its holdings, has just launched a green cryptocurrency. It is based on proof of space and time, rather than the proof of work concept that underpins Bitcoin. Users have to seed unused space on their hard drives. Instead of Bitcoin miners, we now have Chia farmers. This means ordinary owners of home computers can get a piece of the action, rather than those who control massive server farms.

The future of cryptocurrencies is of course going to be underpinned by the development of very low to zero impact energy solutions like this one. It has to be.

But Cypherpunk is not just about cryptocurrency. One of the early rationales behind cryptocurrency in the first place was privacy and privacy is going to be at something of a premium in coming decades.

Cypherpunk’s strategy is partly about tapping into that future demand for privacy, the urge to drop off the grid. It is getting harder.

In March Cypherpunk said it was engaging with Heficed to acquire over 16000 IPv4 addresses. These will form part of a long term asset for the company and will allow Cypherpunk to book operating income. Cypherpunk has now secured a leasing arrangement for these addresses which will yield almost 15% on its investment every year.

The prices of IP addresses have been increasing steadily over the past year (over 35%). A single IP address is now costing between $20 and $25 at the moment but demand is starting to outstrip supply due to demand from e-commerce platforms that are buying up thousands of these.

Cypherpunk reckons demand for these addresses is only going to increase as we migrate towards more use of the Internet of Things.  When the Internet was first launched, there was a widely held assumption that only 4bn IP addresses would be required. A small number of technology companies and ISPs have now largely cornered the market in these digital assets. While a new form of IP, IP6, has been created, adoption of this has been slow.

This is a great example of the sort of digital market that is not a cryptocurrency, that Cypherpunk is able to get involved in.

Who is running Cypherpunk Holdings?

Cypherpunk’s CEO is Antanas “Tony” Guoga, a former member of the European Parliament who also started the Blockchain Centre in Lithuania. He served in the European Parliament from 2014-2019 but is also a major supporter of the development of Lithuania as a high-tech hub, especially in the area of blockchain. He has been working with the Lithuanian government to leverage the country’s skilled work force in the development of technology projects, pursuing a vision that encompasses the transparency benefits blockchain can bring to society.

The team’s chief investment officer is Moe Adham, a Bitcoin miner and graduate in nanotechnology from Switzerland’s Federal Institute of Technology. He is an international speaker on the topic of blockchain technology.

Cypherpunk’s chief economist is Jon Matonis, a founding director of the Bitcoin Foundation who has also worked in influential roles at companies like Visa, Verisign and Sumitomo Bank. He is also an independent director on the boards of companies in areas like mobile payments and gaming.

Additional investor relations support comes from Veronika Oswald, who is a partner in fintech and venture capital firms in the UK and leverages a considerable and valuable network of contacts in the financial world.

Why we like Cypherpunk

Ultimately, we like Cypherpunk because the company represents a slice of the future. It is not a pure cryptocurrency play, nor is it focused on blockchain infrastructure. It is more diverse than this. Cypherpunk provides exposure to underlying companies that sit close to the centre of the coming financial revolution, emphasising innovation that helps to build a digital world with more integrity and privacy.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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