I believe Digital Credit has the potential to become one of the most important developments in the history of Bitcoin. Not simply because of the opportunities it creates for companies such as Smarter Web, but because of the role I believe it could play in bringing an entirely new audience of investors into the Bitcoin ecosystem.
I see Bitcoin as the foundation of a new financial system. Bitcoin is Digital Capital, SWC is our Digital Equity and MORE is our Digital Credit. Each serves a different purpose, appeals to different investors and has different characteristics. However, I think it is the development of Digital Credit that could become one of the biggest catalysts for significantly increasing the amount of capital flowing into Bitcoin over the coming years.
There are enormous amounts of capital around the world seeking reliable income. Many of those investors have little interest in owning Bitcoin directly or experiencing the volatility associated with Digital Equity. What they want is an attractive yield, regular income and an investment structure they can understand and evaluate.
I believe Digital Credit has the potential to meet some of those objectives by using the financial strength of Bitcoin-backed companies to support income-generating investments, whilst seeking to reduce the volatility experienced by investors. The possibility of generating double-digit yields through financial instruments supported by Bitcoin is something I find incredibly exciting, although achieving those yields and managing the associated risks are two very different challenges.
For Smarter Web, this opportunity is fundamental to our long-term strategy. MORE gives us access to a different pool of capital from SWC, but I believe its potential extends well beyond providing another way for us to finance the business. We have an opportunity to help establish an entirely new investment category within the UK public markets, and that is something I am determined to pursue as investors deserve MORE and better options than they have today.
One of the most important parts of developing that market is ensuring investors have the information they need to understand what they are investing in. And that is why, we launched our new MORE Digital Credit dashboard, bringing together a range of financial metrics designed to help investors better understand our Preferred Shares, the strength of our balance sheet and the risks associated with the investment.
If we want this market to grow, we need to make these investments easier to understand, compare and assess. Transparency is an important part of building confidence, and I believe providing clear, regularly updated information will become increasingly important as the market develops.
The dashboard includes several measures that I think are particularly useful.
Our BTC Rating is currently 6.28x. This measures the Bitcoin asset coverage supporting our financial obligations and provides an indication of the value of our Bitcoin treasury relative to the claims against it. I think this is one of the most important measures for anyone considering an investment in Bitcoin-backed Digital Credit, as it helps explain the underlying asset backing supporting the structure.
Alongside this, our Dividend Cash Cover is 2 years, reflecting the cash available to support our Preferred Share dividend obligations at the current rate. Our Combined Cash Runway is 1.45 years, which also takes account of our borrowing interest costs.
These are important distinctions. Having substantial Bitcoin asset backing is one thing, but having the liquidity available to meet ongoing financial commitments is important. We want to build a capital structure that can withstand difficult market conditions, and I believe investors should be able to evaluate both the underlying asset backing and our ability to meet those commitments without necessarily having to sell Bitcoin.
Another important measure is our Amplification Ratio, currently approximately 16%. This measures our net financing claims, including debt and Preferred Shares after deducting relevant cash balances, as a percentage of the value of our Bitcoin treasury. This metric is relevant to both MORE and SWC investors, although for different reasons.
For MORE investors, it helps demonstrate the scale of the financial claims relative to the Bitcoin backing. For SWC investors, it provides an indication of how our capital structure can amplify movements in the Bitcoin price when considering the residual value attributable to Ordinary Shareholders.
That amplification works in both directions. If Bitcoin appreciates, the potential increase in the underlying value attributable to Ordinary Shareholders can be amplified. Equally, if Bitcoin falls, the downside exposure can also be amplified. This is one of the reasons why I have consistently emphasised the importance of disciplined capital allocation and maintaining a resilient balance sheet.
Weeks like this, when Bitcoin experiences a difficult period, are a useful reminder of why our approach to amplification matters. I remain as convinced as ever about Bitcoin’s long-term future, but conviction in where Bitcoin is heading does not mean we should build a public company on the assumption that its price will continually rise.
We have to recognise that Bitcoin can experience significant periods of volatility, and that difficult market conditions can last much longer than any of us might expect or hope. As a public company, we have a responsibility to build a balance sheet that can withstand those periods, rather than one that relies on Bitcoin appreciating to meet our financial commitments.
Our current maximum amplification target is 35%, although this is something the Board can review and change as circumstances evolve. That target reflects our approach to balancing the opportunities amplification can create for shareholders with the importance of maintaining financial resilience.
I believe this is an important distinction in how we are building Smarter Web. We want to benefit enormously from Bitcoin’s long-term appreciation, but we also want to be able to navigate the difficult periods along the way. For me, responsible capital management is not about having less conviction in Bitcoin. It is about ensuring we are building a company capable of benefiting from that conviction over the long term.
The dashboard also includes some more sophisticated measures, including our BTC Risk, currently 3.17%, and our BTC Floor, currently $10,940 per Bitcoin.
BTC Risk represents a modelled probability of a Bitcoin coverage shortfall, whilst BTC Floor represents the modelled Bitcoin price at which asset coverage reaches its defined floor. Both are based on assumptions and should not be interpreted as guarantees or predictions. However, I think they provide additional context for investors seeking to understand how our capital structure might perform under different market conditions.
We also show an Effective Yield of 14.12% at the MORE share price used by the dashboard, compared with the current annual Preferred Dividend Rate of 12% based on the £100 reference amount.
The difference reflects the market price of MORE. As the share price changes, so does the effective yield, and the yield would also be affected by any change to the Preferred Dividend Rate. I think it is important that investors understand this distinction, particularly when comparing MORE with other income-generating investments.
There are additional measures and explanations available on the dashboard, which you can find on our website under the Bitcoin Treasury dropdown. I would encourage anyone interested in either SWC or MORE to spend some time exploring it.
Not every metric is immediately straightforward, but I believe they will become increasingly relevant as Digital Credit develops into a more established investment category.
What excites me about Digital Credit is the potential size of the audience it could eventually reach. There are many investors who want to generate a meaningful level of regular income from their capital but have no desire to experience the volatility associated with Bitcoin or Digital Equity. They may be accustomed to investing in property, bonds, income funds or other financial instruments, and I believe Digital Credit could eventually become another option for them to consider.
Of course, a high dividend rate does not make an investment risk-free. MORE has its own risks, including changes to the variable Preferred Dividend Rate, movements in its market price, liquidity and the underlying exposure of our balance sheet to Bitcoin. Our objective is to manage those risks responsibly and provide investors with the information needed to make their own informed decisions.
We have introduced a new type of investment to the UK public markets. It is unrealistic to expect every potential investor to immediately understand its characteristics, appreciate the structure or recognise the opportunity we believe it offers.
We need to explain what we have created, demonstrate how it works and reach investors who may never previously have considered investing in a Bitcoin treasury company. That means continuing to improve our communication, making the financial information more accessible and demonstrating through consistent execution that we can manage the structure responsibly.
I believe education and awareness will be just as important as the financial characteristics of MORE in determining how successfully the market develops. This is a major priority for me over the coming months, and I expect to spend a considerable amount of time helping to broaden the audience for Digital Credit and Smarter Web.
We have already achieved a significant milestone by bringing MORE to the London Stock Exchange. The challenge now is to develop it into a successful, widely understood and increasingly established investment. I believe the potential is considerable, but we will need to earn investor confidence over time.
Turning to the week itself, we made just one regulatory announcement. On Tuesday, we announced the latest weekly dividend for MORE.
The dividend for the week ending Friday 13 November is £0.2301 per Preferred Share, reflecting the current annual Preferred Dividend Rate of 12% based on the £100 reference amount. The ex-dividend date was Thursday 12 November, the record date Friday 13 November and the scheduled payment date is Monday 30 November.
Establishing this regular pattern of communication is important. Investors need to know what to expect, particularly when it comes to an income-focused investment with weekly dividend payments. Consistency, transparency and reliability in our communication are all part of developing confidence in MORE over time.
On Thursday, we also found out that Smarter Web will be included in the MSCI Micro Cap Index, effective from the close of 30 November.
Whilst this is unlikely to generate significant passive investment flows immediately, it represents another important step in increasing our visibility and accessibility to institutional investors. It is also a positive milestone as we continue to develop Smarter Web, with the potential for inclusion in larger indices over time.
Beyond the formal announcements, work continues across Smarter Web on a number of different initiatives.
Next week is looking particularly busy, with a wide range of meetings and discussions scheduled. There are several things we are working on that I am looking forward to being able to share more about when the time is right.
As I have said many times, not everything we are working on can be discussed publicly whilst it is progressing, and not every opportunity will necessarily come to fruition. However, I remain incredibly excited about the possibilities ahead of us and the work taking place to develop Smarter Web.
I am also looking forward to our shareholder meal next Saturday, 21 November. It is always a pleasure to spend time with shareholders, and I particularly enjoy the opportunity to have conversations in person with people who have followed and supported our journey. I am sure there will be plenty to talk about.
Looking ahead, I believe we have an extraordinary opportunity. But I also believe we are still at a very early stage, not just in the development of Smarter Web, but in the development of the wider Bitcoin financial ecosystem.
If Digital Credit becomes the significant investment category I believe it can, the implications could extend far beyond any individual company. It could introduce an entirely new audience to financial instruments supported by Bitcoin, increase the amount of capital participating in the ecosystem and ultimately contribute to Bitcoin becoming a much more important part of the global financial system.
That is an opportunity I find incredibly exciting, and one I want Smarter Web to play a meaningful role in developing.
Thank you, as always, to our shareholders and everyone who continues to support Smarter Web. There is a great deal MORE to do.
CEO of The Smarter Web Company, the largest UK Bitcoin treasury company. With 25 years of profitable Internet experience. A developer with creative passion and marketing skills that work.
LSE: #SWC #MORE | OTC: $TSWCF $MORPF | FRA: $3M8
