💡 Bitcoin Battery Finance

Issue 143

✌️ Welcome to the latest issue of The Informationist, the newsletter that makes you smarter in just a few minutes each week.

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Today’s Bullets:

• Who is New Market Capital?

• What is Battery Finance?

• Pension Solutions

• Conclusions & Implications

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Inspirational Tweet:

Newmarket Capital took CNBC somewhat by storm this week, announcing a new type of real estate financing called Battery Finance.

A novel lending solution that “fuses Bitcoin with credit and traditionally financeable assets.”

If you watched the video above, it may leave you scratching your head—especially after the incessant interruptions by Andrew Sorkin, a notorious mainstream media Bitcoin skeptic.

This made it challenging for Hohns to explain the new product/strategy and likely has you wondering how it all works.

And how does it help pension funds? What?

If you are confused, have no fear. Because we are going to unpack Battery Finance and a bunch more, nice and easy as always, here today.

So, grab your favorite cup of coffee and settle into a comfortable seat for a stroll through innovative lending today with The Informationist.

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🧐 Who is New Market Capital?

First off, who on earth is Newmarket Capital?

Newmarket Capital is an alternative asset management firm (think hedge fund/private equity) headquartered in Philadelphia and founded by Andrew Hohns in 2020.

Newmarket specializes in structured finance, like innovative credit products, that merge traditional lending with ‘novel’ approaches.

The firm’s name Newmarket was inspired by the historic New Market in Philadelphia. Built in the mid-18th century, the New Market became a main hub for commerce. Its design focused on adaptability in order to serve the evolving needs of a rapidly growing community. Newmarket Capital seeks to do the same as a hub for financial innovation, creating modern solutions for borrowers and institutional investors.

As for Dr. Hohns, before founding Newmarket, he led the Infrastructure and Impact Financing Credit strategy at Mariner Investment Group, overseeing $25+ billion.

Hohns is not new to Bitcoin, as he is Director of FTAC Emerald Acquisitions Corp, a SPAC (special purpose acquisition company) that’s buying Fold, a Bitcoin company.

For those who don’t know, Fold is a platform where users earn Bitcoin rewards on everyday purchases through a mobile app and debit card. In essence, users receive Bitcoin cashback when shopping.

Now Hohns is involved in using Bitcoin as part of a new lending strategy call Battery Finance.

Let’s have a look at that next.

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🤔 What is Battery Finance?

Battery Finance is a new investment strategy fusing real world assets and bitcoin.

Huh?

First, Battery Financing is a hybrid strategy that uses both the underlying real estate asset and Bitcoin as collateral for an otherwise traditional loan.

This dual-collateral approach—securing loans with both tangible assets like real estate and digital assets such as Bitcoin—is a completely new concept in finance.

See, loans have long been secured by various forms of collateral, including real estate, vehicles, equipment, and financial instruments like stocks and bonds.

Now, integrating Bitcoin into the loan leverages Bitcoin's potential for long-term appreciation while maintaining the stability of traditional collateral.

Up until now, the Bitcoin-backed loan framework was this:

Borrowers pledge their Bitcoin holdings as security to access liquidity without selling the Bitcoin.

They deposit the Bitcoin with the lender who provides a loan based on a percentage of the Bitcoin value. This is typically a low amount, such as 40 to 50%. LTV (loan to value).

I.e., the borrower must provide $25K worth of Bitcoin to secure a $10K to $12.5K loan.

In contrast, Battery Finance combines the real estate asset with the Bitcoin collateral.

Right now, and for the example Hohns used on CNBC, Newmarket is making these loans for commercial properties, such as multi-family apartment units.

Okay, how?