Bitcoin Magazine

A Bitcoin Berkshire Model: Orange Juice

The corporate Bitcoin landscape is currently dominated by a single, aggressive playbook. Companies following this model rely almost exclusively on capital markets and financial engineering—issuing debt, preferred stock, and common equity at premiums—to turn their corporate balance sheets into amplified, high-beta proxies for Bitcoin.

Now, Orange Juice, a firm launched by partners at ego death capital, is introducing a brand-new corporate strategy to the mix. Rather than acting as a financial engineering vehicle reliant on capital markets, Orange Juice plans to acquire profitable American businesses, hold them indefinitely, improve their operations, and direct part of their excess cash flow into a Bitcoin treasury. While the dominant model turns investor demand for credit securities into Bitcoin, Orange Juice wants to turn sustainable operating earnings into Bitcoin.

To understand the value of this new approach, you have to understand its primary departure from the prevailing meta: Orange Juice is deliberately not “max long” Bitcoin. By anchoring its balance sheet to traditional operating earnings, the company trades away explosive bull market leverage in exchange for a decorrelated return stream that acts as a vital ballast during bear market winters.

Bear market ballasts and countercyclical purchasing power 

The core argument for the Orange Juice model becomes clearest during a Bitcoin bear market. Bitcoin companies that are driven by capital markets flows work best when investors are eager to finance them. Strong Bitcoin prices support higher equity valuations, which makes share issuance highly accretive, while healthy credit markets lower the cost of borrowing. However, during market downturns, this dynamic reverses. Equity premiums compress, credit becomes expensive, and capital markets become far less receptive. As a result, pure-play Bitcoin balance sheets lose their purchasing power precisely when Bitcoin is trading at its cheapest valuations.

Orange Juice, in theory, would be able to use its non-Bitcoin enterprise value as a buffer against these “very awful months”. A durable operating business like a pest control firm, a managed IT provider, or an industrial maintenance contractor can all continue to collect customer payments and generate free cash flow even during a 50% Bitcoin drawdown. This steady operational cash provides the company with unencumbered, countercyclical purchasing power when external capital markets are closed. At its core, the non-Bitcoin business serves as a diversification venue, providing a decorrelated return stream that smooths out enterprise volatility and protects the firm from a fearful capital market. It is also applicable to leveraged financing, because free cash flow can be used to pay preferred dividends or debt coupons, which can eliminate the need to issue equity at bear market lows. 

The trade-off: cost of capital and the Bitcoin hurdle rate

Because Orange Juice isn’t purely a Bitcoin balance sheet company, its downside protection comes with a clear structural trade-off.

Every acquisition Orange Juice makes introduces a cost of capital and an implicit hurdle rate: Bitcoin itself. If Orange Juice has $20 million in capital, it must decide whether to deploy that $20 million directly into Bitcoin on day one or use it to acquire a business generating (as an illustration) $3 million in annual cash flow. Even if the business yields an attractive 15% initial cash return, Orange Juice still has to answer whether that business will ultimately create more Bitcoin-denominated value than simply holding the underlying asset.

In a sustained bull market, this model obviously creates an inherent drag. A business returning 12 – 15% annually can prove to be a poor capital allocation decision if spot Bitcoin compounds much faster, and Orange Juice’s equity will naturally lag the explosive returns of amplified pure-play amplified “digital equity.” Orange Juice is effectively betting that the ability to aggressively buy the dip during bear markets (or at least service liabilities without selling Bitcoin or issuing equity) using operational cash will ultimately compensate for the opportunity cost of not putting every dollar directly into Bitcoin.

Execution risk and acquisition quality

For this countercyclical engine to work, the model depends heavily on acquisition quality and operational execution.

Unlike strategies that focus primarily on marketing to the capital markets and on financial engineering, Orange Juice’s success would depend on management’s ability to execute M&A and manage operating businesses. The ideal subsidiary must generate recurring revenue, require minimal maintenance capital expenditures, carry modest leverage, and remain resilient through broader economic recessions.

Weak or highly cyclical businesses damage the core thesis by losing its cash flow at the exact moment Bitcoin and the capital markets come under pressure. If an acquired subsidiary fails during a downturn, it could turn into an operational drain. Therefore, management must excel at both acquiring businesses at attractive free-cash-flow multiples and running them efficiently enough to maintain a predictable stream of excess cash for Bitcoin accumulation.

The bottom line 

Corporate Bitcoin strategy no longer has to be a game dominated by “digital securities.” While pure-play Bitcoin companies operate as high-beta vehicles designed to maximize upside during favorable market regimes, the Orange Juice model offers an alternative framework designed for resiliency through decorrelation.

By accepting lower beta and sacrificing maximum leverage in a bull market, Orange Juice, in theory, creates an operational foundation for unconditional purchasing power through every stage of the market cycle. 

Disclaimer: This content was prepared on behalf of Bitcoin For Corporations for informational purposes only. It reflects the author’s own analysis and opinion and should not be relied upon as investment advice. Nothing in this article constitutes an offer, invitation, or solicitation to purchase, sell, or subscribe for any security or financial product.

This post A Bitcoin Berkshire Model: Orange Juice first appeared on Bitcoin Magazine and is written by Allard Peng.

Bitcoin Magazine

Should Bitcoin Companies Build USD Reserves? Understanding The Truth

Strategy’s U.S. dollar reserve has reached $4.65 billion, up from $3.75 billion two weeks earlier. It has also sold almost 7,000 BTC since late June 2026. 

Many are wondering why a company built around accumulating Bitcoin would choose to hold billions of dollars in fiat. More importantly, should other Bitcoin businesses do the same? 

Strategy holds cash because it’s in a very unique position 

Strategy increasingly operates as an issuer of Digital Credit: preferred securities backed economically by an enormous Bitcoin balance sheet. These instruments create fixed dollar dividends obligations.

Bitcoin produces no cash flow. Strategy’s software business produces far too little cash to cover its capital structure. 

Traditional credit analysis compounds the problem. S&P assigned Strategy a B- rating in October 2025, citing its Bitcoin concentration, weak dollar liquidity, and very weak risk-adjusted capital. Under S&P’s methodology, Bitcoin is effectively excluded from the capital base used for this analysis because of its market risk. 

In our coverage of the S&P rating, we specifically mentioned that a cash reserve, amongst other things, was worth exploring to improve credit ratings. 

Strategy therefore holds dollars to support its credit issuance. That is literally the whole reason. 

More dollar liquidity can improve the perceived safety of its preferred securities, broaden investor demand, and potentially lower its cost of capital—in the eyes of credit ratings agencies. 

The cash still carries an economic cost. Excess capital should produce a return. A conventional company can reinvest it, repurchase shares, or distribute it. A Bitcoin company can buy more Bitcoin. Every dollar held in cash replaces potential positive returns with guaranteed negative real returns.

Strategy accepts that cost because its business model depends on issuing more credit. Three unusual conditions exist at once: Bitcoin dominates its balance sheet, rating agencies heavily penalize that Bitcoin exposure, and management intends to keep issuing Digital Credit.

All three conditions are pretty unique individually and it is exactly the combination of all three that creates the situation where they need to hold cash. For instance, if Strategy did not want to issue credit, then it wouldn’t need the cash. 

The economic consequence of cash reserves 

The math creates some glaring problems with cash reserves.

Suppose Strategy issues $100 of preferred stock carrying a 10% annual dividend and holds three years of dividend coverage in cash. It must reserve $30 and can deploy only $70 into Bitcoin.

The preferred still costs $10 per year. The $70 invested into Bitcoin must therefore generate:

$10 ÷ $70 = 14.29%

A stated 10% cost of capital becomes a 14.29% hurdle rate on the capital actually deployed. The reserve raises the required return by 42.9%. Interest earned on the cash reduces the hurdle somewhat, but the structural drag remains. 

The true hurdle is actually higher, however, because BTC’s volatility means it will heavily underperform the hurdle rate in some years, and these years still require the dividends to be paid (here I am assuming that dividends are not skipped). So aside from the cash drag, there is also a volatility drag imposed by attempting to amplify a volatile asset. This risk must be compensated for by adjusting the hurdle rate higher. 

The larger the required reserve, the less of every new dollar reaches Bitcoin. If Bitcoin appreciation fails to exceed this higher hurdle over time, common shareholders bear the cost.

However, cash is far from useless. Cash creates useful optionality. It can cover dividends and interest during Bitcoin drawdowns, reducing the risk of forced Bitcoin sales. It can also support opportunistic repurchases of securities when they trade below their stated value.

Strategy recently did exactly that. In late July, it paid $25 million for $28.89 million of STRC stated value, a 13.47% discount. It later used $108.6 million from Bitcoin sales to retire another 1.15 million STRC shares. Buying preferred stock below par removes more senior claims and future dividend obligations than the cash spent. It is also accretive to Net Bitcoin Per Share.  

Should Bitcoin companies accumulate cash or bitcoin? 

For most Bitcoin companies, cash needs should be tied to the operating business rather than to an arbitrary reserve target—consider that Strategy literally does not know how much reserves it needs to get a better rating or for more credit investors to become interested in STRC. 

A cash-flowing company usually has a good understanding of its cash outlay. It should hold enough dollars to cover payroll, taxes, debt service, vendor payments, near-term capital expenditures, and a reasonable buffer for volatility in operating cash flow.

The right reserve depends on the stability of those cash flows. A profitable business with recurring revenue, low fixed costs, and predictable expenses can operate with a smaller buffer. A cyclical or capital-intensive business needs more. The reserve should rise because the business requires liquidity, not because management simply wants a large cash balance.

Once operating needs and a prudent liquidity buffer is covered, additional cash needs a specific economic purpose. Otherwise it dilutes returns by generating a large opportunity cost. For any company, excess capital should compete directly against the company’s hurdle rates, repurchasing undervalued shares, reducing expensive liabilities, or investing in projects that can earn a higher return. 

In conclusion, Strategy is a very, very rare case. Its cash reserve exists only because it is building a large credit issuance business on top of a Bitcoin balance sheet while credit ratings agencies impose significant institutional inertia which treats legitimate, liquid assets as zero value. Companies without that liability structure—which is basically all other companies—have far less reason to accumulate dollars beyond their working capital buffer.

Disclaimer: This content was prepared on behalf of Bitcoin For Corporations for informational purposes only. It reflects the author’s own analysis and opinion and should not be relied upon as investment advice. Nothing in this article constitutes an offer, invitation, or solicitation to purchase, sell, or subscribe for any security or financial product.

This post Should Bitcoin Companies Build USD Reserves? Understanding The Truth first appeared on Bitcoin Magazine and is written by Allard Peng.

Bitcoin Magazine

Corporation’s Approach to the BIP-110 Soft Fork

BIP-110 is approaching its first consequential activation boundary. The proposal enters mandatory signaling at block 961,632, currently projected around August 9, 2026. It locks in no later than block 963,648, roughly in late August, and activates its new transaction rules at block 965,664, currently projected for early September. BIP-110 uses a 55% signaling threshold and would enforce its restrictions for 52,416 blocks, approximately one year.

Bitcoin resolves consensus changes through coordination among miners, users, and nodes (note that anyone can be any combination of these three things). Miners choose which valid chain to extend. Users decide which chain’s coins, deposits, and payments they recognize. Nodes independently choose which rules they enforce. Durable consensus emerges whenever these groups converge on the same chain.

BIP-110 restricts large data pushes, oversized output scripts, undefined witness versions, Taproot annexes, deep Taproot control blocks, OP_SUCCESS opcodes, and certain Tapscript conditionals. It grandfathers UTXOs created before activation, while standard monetary uses remain compatible with its rules.

Most corporations don’t have to do anything 

For most corporations, BIP-110 requires no action. Today, the typical corporate Bitcoin utility is as a store of value, as a long-duration treasury reserve asset. This use case is basically unaffected by the transaction features targeted by BIP-110.

Corporations using Bitcoin for payments also face limited direct impact. Standard on-chain payments remain compatible (see below for specifics), while ordinary Lightning payments occur off-chain. A chain split can still affect Lightning channel monitoring, force-close behavior, and the chain source that a Lightning node treats as authoritative. However, even corporations using Bitcoin for payments normally use a third party provider like Square, so all of this abstracted away to be a non-issue. 

A corporation that runs its own full node has a direct choice. Every user retains the right to run the Bitcoin implementation that matches its needs. A corporation that supports BIP-110 should therefore switch over to running BIP-110. All other node-running corporations can simply do nothing. 

A BIP-110 node enforces tighter rules. During mandatory signaling, it rejects blocks that fail to signal bit 4. After activation, it also rejects blocks containing transactions that violate BIP-110. A non-BIP-110 node accepts BIP-110-compliant blocks as well as blocks that remain valid under the existing rules. Among all chains valid under its own rules, a node follows the branch with the greatest accumulated proof of work.

So the key factor to be aware of is a chain split. When miners build a chain that is not compliant to the BIP, BIP-110 nodes can separate from the broader network. Non-BIP-110 nodes may continue following the higher-work branch, while BIP-110 nodes could remain on a compliant branch with less accumulated work. 

Corporations dealing with chain splits 

Mining companies face the highest immediate economic exposure. Electricity and machine time are sunk costs. A miner should select the branch it expects other miners, nodes, and users to recognize and mine on it. A miner may also stop mining and wait for the chain split to resolve. If BIP-110 and non-BIP-110 chains develop independently, miners must track chainwork, signaling, validity under both rule sets, and their own mining pool’s stance, and the market value assigned to each branch.

Corporations operating exchanges and institutional custody should prepare for settlement uncertainty. During an extended split, the ordinary six-confirmation standard loses much of its value because each branch can show six confirmations independently. Operators should monitor both branches, raise confirmation requirements, pause large deposits or withdrawals when risk rises, and delay final settlement until one branch has decisively accumulated more work or the transaction has sufficient depth on all viable branches. Different validation rules can produce chain splits, false confirmations, and double-spend risk.

Let’s consider a chain split occurring at block height S. 

Suppose a deposit appears on Chain A at S+4 and on Chain B at S+6. Once both chains reach S+12, the deposit has substantial depth on each branch (assuming we are still using six-confirmations). Now, this number of six confirmations should change depending on the work on each branch. And it might be the case that the number of confirmations one would like to see would be different for each branch. The main point is that the operator must wait until both branches reach the requisite confirmations. The operator can at that point be confident that the transaction remains, not matter which branch becomes canonical.

If the transaction appears on only one branch, the operator should wait for that branch to win or apply chain-specific accounting. That would be the only way to ensure no double spending happens. In practice, monetary transactions should always eventually appear on both branches, since the BIP-110 chain does not prohibit monetary transactions.

Conclusion 

The main thing to be aware of is a chain split. If there is no split, then there is nothing that needs to be done differently. Even with a chain split, BIP-110 will not create insurmountable disruptions. 

For corporations that may be impacted by a chain split, the main action to take is to lengthen confirmation times and monitor both branches. For node-running corporations that support the BIP, the main action is to start running it on their nodes, if they haven’t already. 

Miners, as usual, should direct their hashrate based on their view of which branch will end up with the most accumulated proof of work. Exchanges and custodians should lengthen settlement procedures and maintain visibility into both chains, should a chain split occur. For the daily operations of most corporate Bitcoin users, BIP-110 changes very little, if it changes anything at all. 

Disclaimer: This content was prepared on behalf of Bitcoin For Corporations for informational purposes only. It reflects the author’s own analysis and opinion and should not be relied upon as investment advice. Nothing in this article constitutes an offer, invitation, or solicitation to purchase, sell, or subscribe for any security or financial product.

This post Corporation’s Approach to the BIP-110 Soft Fork first appeared on Bitcoin Magazine and is written by Allard Peng.