FRMO Corporation (FRMO) Earnings Call Transcript & Summary

Good day, and welcome to the FRMO quarterly conference call. As a reminder, today's call is being recorded. At this time, I would like to turn the conference over to Ms. Thérèse Byars. Please go ahead, ma'am.

Thank you, Connor. Good afternoon, everyone. This is Thérèse Byars speaking, and I'm the Corporate Secretary of FRMO Corp. Thank you for joining us on this call. The statements made on this call apply only as of today. The information on this call should not be construed to be a recommendation to purchase or sell any particular security or investment fund. The opinions referenced on this call today are not intended to be a forecast of future events or a guarantee of future results. It should not be assumed that any of the security transactions referenced today have been or will prove to be profitable or that future investment decisions will be profitable or will equal or exceed the past performance of the investment. For additional information, you may visit the FRMO Corp. website at www.frmocorp.com. Today's discussion will be led by Murray Stahl, Chairman and Chief Executive Officer; and Steven Bregman, President and Chief Financial Officer. They will review key points related to the 2021 third quarter earnings. A summary transcript of this call will be posted on the FRMO website in the coming weeks. A replay of this call will be available for 1 month beginning at 7:15 this evening. To listen to the replay, the toll-free domestic member is (888) 203-1112. The international toll number is 1 (719) 457-0820. When prompted, key in the pass code 7275594. These dial-in numbers are noted in the FRMO press release dated April 14, 2021, which may be found on the FRMO website by clicking the link called Information Statements & Announcements. The press release can also be reviewed on the OTC market's website by typing in the ticker symbol FRMO and clicking on the news link. And now I'll turn the discussion over to Mr. Stahl.

Okay. Thanks so much, Thérèse. I just want to -- before I start, Steve, do you want to kick it off? Or should I kick it off?

No, please. You go ahead.

Okay. Great. Okay. So thanks, everybody, for joining us on FRMO call. And as you can probably see from our financial statements, we managed to get record shareholders' equity, record total assets. And I'd say we're doing okay. So let me just point some things out, some things that are obvious and some things that are not so obvious. As you can see from the financial statement, the cash level remains relatively robust. We intend to keep it at about that level. I don't expect any radical changes there. Some things that are not so obvious that are worthwhile talking about the balance sheet, then we'll actually go to some interesting things on the horizon. The shorts, which we always talk about, but we don't -- and we don't really talk about this part, which we'll talk about in the future. The shorts at the moment are about 99% hedged. That doesn't mean if something really bad happened, we couldn't take a mark-to-market loss on it. But the hedge is on virtually everything. It actually might be greater than 99%. But whether it's 99.2% or 99%, it's hedged. We always had some hedges on. But at the moment, we're as -- for all intents and purposes, we're fully hedged on everything. Reason for that is the valuation in the market is very high, and there is some market exposure there. And we don't want to have too much market exposure, so we undertook some hedges there. The next thing that's not so obvious in the balance sheet, as you can see in the line under total assets. Look at investment in Horizon Kinetics, $12.9-odd million. The Horizon Kinetics itself has over $160 million of cash and marketable securities on the balance sheet. So when that might be a conservative statement for the reason that just like Horizon itself carries its investment Digital Currency Group at cost, FRMO carries its investment in Digital Currency Group at cost, Horizon Kinetics carries its investment Digital Currency Group at cost. So when I quote that number of our cash and marketable securities, I'm quoting the number at cost. The cost basis in Horizon Kinetics is virtually identical, maybe a couple of dollars off. So basically, with the difference in rounding error, we may have a share difference or something. We have basically the same investment in Horizon Kinetics' Digital Currency Group as we have in FRMO. So if we owned, in round numbers, 5% -- we actually own a little less than 5%, but we own 5% of Horizon Kinetics and 5% of, let's say, $160 million probably conservatively stated, is $8 million. And you subtract $8 million from $12 million, we -- that would say 5% of Horizon Kinetics is worth $4-plus million. I mean, well, 5% of it is worth $4-plus million, which means the entirety might be worth $50 million. And I don't think that's appropriate valuation for Horizon Kinetics. So you could say that the aspect of our financial statement might be understated. Another thing which goes to Horizon Kinetics but impacts FRMO is a fair amount, who knows if we're going to get it, of uncrystallized performance fees. That, if everything holds up, we might collect, and Horizon Kinetics that would significantly impact positively, I should say, FRMO's cash flow. And that you might wish to think about the revenue stream and what that valuation is worth. Of course, we don't know what the revenue is going to be year by year because performance fees are, of course, variable. That's why they're performance fees. And then last but not least, a thing that's not so obvious. On January 12, 2021, we launched an ETF called the Horizon Kinetics Inflation Beneficiaries ETF. And that's done remarkably well, not just in performance, but in collecting assets. And as of last night's close, we had $268 million in assets under management, just in that alone. So last couple of years, we have had positive cash flow. In terms of AUM, we had negative cash flow. That's reversed itself in 2021. And we have, I would say, not inconsiderable cash flow. So that's the -- that's how the financials are doing. As I said, Digital Currency Group, we carry at cost. Now you might want to know what were the values of the key assets which we -- I'll give you just verbally, and there'll be a table somewhere on the website. We're going to put this in tabular form so you can refer to it soon, to remember it. But in any event, our implied exposure to the Bitcoin Investment Trust, GBTC. And I should tell you that Bitcoin Investment Trust actually trades at a discount to net asset value. The reason that's important is that if it becomes ETF, which it might, it's going to trade at net asset value. In any event, the implied share count is 560,564 and the implied FRMO share of that market value as of the date of the financial statement is $28,050,000, round numbers. So we have that. We also -- even though we -- this rounded position, but it's small enough that we never really broke it out, but has relevance to the investment trust position. We own, also via the funds, 5,776 shares of something called the Bitcoin XBT or Bitcoin tracker. It's actually a Swedish security. And as of last reckoning, it was worth about $1.6 million, as that. And then lesser things that we own in the funds. We own, let's see. We own, a little bit directly -- well, I should say, indirectly, we own a little bit of Bitcoin SV, which is one of the forks. It's only worth, at the end of the time period, $19,000. But it's worthwhile talking about that. We own, indirectly through the various funds, 1,565 shares of the Ethereum Classic Trust. This is a Grayscale Digital Currency Group product. It's only worth about $18,000 on the financial statement, but it's there. We also own a piece of the Bitcoin Investment Trust, another Grayscale product. We have 23,620 shares rounded near a share. And that's worth about $114,000. We own another thing, a large-cap trust. And that was 1,374 shares worth less than around $25,000. And we own piece of the [ literal ] Grayscale products, like Litecoin Investment Trust, 5,375 shares worth about $96,000; a 549 shares of the Zcash Investment Trust. Again, this is all sort of funds worth, at the data financial statement, $7,700. I'm rounding, obviously. And we own some, indirectly through the funds, Bitcoin Gold. This is actually Bitcoin Gold. Might talk about Bitcoin Gold a little bit later. So when the forks 210 actual coins worth about $8,000. Now coins that we have owned directly, and we own in FRMO itself. We have any 88.5 shares of Bitcoin, shares that we mined. We own directly 7,644 shares of Bitcoin Investment Trust, GBTC, we actually own that. We own 714 coins of Litecoin. We own 35 coins of Ethereum. We own 661.7 coins Ethereum Classic coins. And we own 55.6 Zcash coins. That's not the entirety. Just one more asset needs to be considered. We own 28.43% of Winland Holdings, formerly known as Winland Electronics. And there's money going on there. And we own, in Winland itself, this is not FRMO share, but we own, in Winland itself, 18.9282 coins and then our ownership multiply by that quantity gives us implied quantity of 5.3813 coins. And that's -- those are the major holdings. And if there's some questions, I believe, on the nature of holdings, which we'll get to in the Q&A, so I won't cover it. Basically, I think I said this about a year ago. A year ago, you can't forget that we were in the throes of the first stages of the coronavirus problem. And I think I made the statement, I don't remember for sure, but I think I made the statement to someone that one way or another, that there -- we don't really have a lot of people involved in the horizon, we don't really have a lot of overhead. I mean, in heads. So we're not going to be negatively affected that way. A lot of our assets are more or less immune from the coronavirus problem. And if anything, if it results in inflation, it will probably be a positive thing, not a negative thing. So -- and so far, at least, it's happened. In terms of Horizon, a lot of what we do remains to be special situations. We've got some ideas on other products, new things that might happen in the world of ETFs, they're fund ideas. One of the things that are interesting in terms of fund ideas is, we did a private placement for -- a year ago for the Canadian Securities Exchange. That's done reasonably well. That's actually a private investment. And we did a private placement for something called Diamond Standard that you might see in our financial statements, we actually own a little bit of Diamond Standard. Diamond Standard, which we haven't talked about before. Diamond Standard is a private company that's involved in an effort to create coins, actually, not like crypto, except the coins will actually hold diamonds. The idea is take a physical sample and put it in the coin and make every physical sample statistically identical so they have the same value in terms of gross clarity, carat weight, color and so on and so forth. And actually create ultimately with that an ETF or maybe more than one ETF. Actually holding diamonds, never made diamonds a homogeneous asset class as opposed to a heterogeneous asset class like it is now, and actually create new asset class, making diamonds a real investment for people. So we started a fund to just invest in Diamond Standard, we either [indiscernible] from FRMO bought a little Diamond Standard ourselves. And Horizon Kinetics has a little Diamond Standard, so we'll keep you updated and we'll see how that goes. And so I think we've been fairly busy. And we're working on another deal, which I'm not going to talk about right now, but we're working on something. We're in the process of doing another raise for some other interesting investment, which when we complete it, I'll certainly disclose it to everyone. And those are the main points. Steve, do you want to add anything, things I missed or ever?

No, no. I'm listening avidly.

Okay. So in that case, I don't want to take up too much time because I know there's a lot of questions. I don't know what they are, but I know there's a lot of questions. So Thérèse, if you please, you can read them in any order, and I'll try to answer every question. If I don't answer them or if I go over, we'll do an overflow call like we did last time, and we want to get every question answered.

Sure. Be happy to. Okay. The first group all have to do with cryptocurrency and mining. And the first one is about Digital Currency Group, and it says that's a little bit -- it's got 4 parts to it. What is FRMO's investment in Digital Currency Group? What is that investment on a look-through basis to Coinbase net of any fees or promotion to Digital Currency Group? And the last part is if, or when, Coinbase goes public, do you expect Digital Currency Group to distribute the shares? And then will those be held on FRMO's balance sheet as public securities?

Okay. So let's go backwards. Coinbase is obviously public right now. I -- as far as I know, and it might change, but as far as I know, it's the intention of Digital Currency Group to hang on to Coinbase shares. Any ownership we have [ are also based on ] Digital Currency Group, I mean of Coinbase, is via Digital Currency Group. So at the moment, there's no reason to believe that we're going to end up winning any shares of Coinbase. So that's that. So let's go backwards. So what was the part right before that? Just to make sure I have it exactly right.

Sure. What is that investment that is FRMO -- well, I guess, those 2 go together. So what is FRMO's investment in DCG? And what is that investment on a look-through basis to Coinbase net of any fees or promotion to Digital Currency Group?

Okay. Well, that's a hard question to answer. So let me do the easy part first, then we'll go to the hard part. So we own, I may be a share off, but we own, as best as I remember, 353 shares of Digital Currency Group and I may be a share off. And the number of shares outstanding are about 700,000. You can figure out the -- our ownership interest. Horizon Kinetics itself owns, give or take, the same number of shares, maybe 1 share more or 1 share or less. I don't remember. Anyway, so that being the case, there's a lot going on in Digital Currency Group, not least of which is there's tens of billions of dollars in assets under management to Grayscale, the biggest of which is the Bitcoin Investment Trust. But there are other trust as well. So it's a very valuable entity. The general rule of thumb in the world of investment management is to say an asset management company is worth 3% of assets under management. I'd think you would -- in the case of Grayscale, you'd apply a higher standard, but one can debate that. In any event, let's just use a number. You can look up the actual number on their website. So I'm just giving you a number that's rounded deliberately and rounded down, so we can just work with it over the phone, and you can get the exact number and apply the same calculations and get something a little more precise. But in any event, let's say, there's $30 billion of assets that are managed in Grayscale. So 3% of $30 billion is $900 million right there. I personally would say it's a bigger number. That by itself is bigger than the investment in Coinbase, even at its elevated market value. There's a lot of private placements in Coinbase. There's also cryptocurrency they own directly. So not that it's not important, but there's a tremendous amount of value in Digital Currency Group from what I know. So I don't think the investment will stand or fall by what happens in Coinbase. Of course, we're very gratified. It was a big success in Coinbase. So that's about as far as I can go without disclosing anything that's proprietary to Digital Currency Group. But I hope that's enough information.

Okay. So the next question. Does FRMO own any crypto exchanges? And if so, which and how are they valued?

Okay. So to begin with, we don't own any crypto exchanges. That's a little deliberate. And the reason is because what is called the crypto exchange is not an exchange. In SEC parlance, Securities and Exchange Commission parlance, exchange has a precise definition. So an exchange, among other things, is an SRO, that's S, Sam; R, Robert; O, Oscar. SRO stands for self-regulatory organization. So the exchange is responsible -- I'm using terminology at this point a little more loosely just to illustrate the point. An exchange actually has a regulatory aspect. It actually applies rules and enforces those rules with regard to people who trade in that exchange. And it does it in conformity with the existing securities laws of the United States of America. If it's a commodity exchange, then there will be the securities laws and regulations that are promulgated by the Commodity Futures Trading Commission. In any event, in the world of crypto exchanges, there's no regulation. What they really are is they're brokers. They don't have a self-regulatory government function in that sense of the word. So it's too early to be involved in what people call cryptocurrency exchanges. All I can tell you about the exchanges are, there's been, in the last year or so, an enormous consolidation in some of these so-called exchanges. And again, I call them brokerage firms. They are just matching buyers and sellers, unlike an exchange, which regulates the players and has rules it enforces. So it's not clear how many people have the scale to survive. It's in -- you'll see a lot of these so-called exchanges, they'll do something an exchange would never do, which means they maintain a securities inventory for the purposes of facilitating transactions, just like a market maker would. Well, a market maker, you could say that they facilitate exchange, but they're taking market risk. One of the characteristics in the exchanges, an exchange doesn't hold securities, an exchange doesn't take market risk. Why doesn't exchange take market risk? Well, one, I personally wouldn't like it, although no one needs to listen to me because now you're part of the market. But how can you possibly be a self-regulatory organization and administer the rules and regulations with the type of -- with the level of objectivity, which is required, if you, yourself have positions, either long or short? So there'd be inherent conflict of interest. So one of the characteristics to be an exchange would be, you got to have no securities inventory and you have to have no short positions. You have to be neutral. None of the cryptocurrency exchanges, that I've seen anyway, are that. They are not neutral. They actually -- they can benefit or not benefit from certain trends within the cryptocurrency markets. So I haven't invested in it for that reason. And at the moment, we don't have any plans to do so. We had an opportunity some time ago to invest in one of the cryptocurrency exchanges and I say, so-called cryptocurrency exchanges, but we declined for reasons that I just enumerated, and I think we're pretty glad we did. So I think that's a thorough answer to the question. What's next?

Okay. And the next one, I believe you covered in the previous question. Does FRMO own any Coinbase directly or indirectly?

Yes. As we -- clearly, we do. And I disclosed the amount, it's like -- give or take a share, 353 shares.

No, that's of Coinbase. This question was about ...

Oh, Coinbase, I said -- Coinbase, we don't have any Coinbase. No shares whatsoever. not one share.

Okay. Next question. Also I believe you covered previously. What impact has the IPO of Coinbase had on the valuation of FRMO's investment in the Digital Currency Group?

Well, I would say, nice that it appreciated a lot in value, but there are so many wonderful things happening in Digital Currency Group. It's not the major driving force, I would say. The major driving is the expansion of the business of management, and there's a very, very extensive investment portfolio in Digital Currency Group. So there's a lot of good things that could happen. And there are some good things that have already happened with that portfolio. So I wouldn’t rate the failure or success of Digital Currency Group on what happens in Coinbase. So although with Coinbase, it's really a big success, and it's great that it happened, but there's a lot more going on in Digital Currency Group.

Okay. Since Mr. Stahl is an expert on and a holder of Bitcoin, would he share with the listeners how many years before one Bitcoin Satoshi is worth $0.01, well, it says one $0.01, of USD? What are the greatest risks to not reaching a valuation whereby 1 Bitcoin Satoshi is worth $0.01? Would Mr. Bregman respond to this question with his thoughts as well?

Okay. Do you want to go first, Steve? Or do you want me to do it?

I will just say as I said yesterday, for now and 3/4 talking about our large investments in Texas Pacific Land Trust and Bitcoin. As -- and I hope this doesn't scare people. I believe in fuzzy thinking, meaning I'd rather be correct as to direction in order of magnitude, than with precision necessarily. So you can be pretty precise. You're driving at 35 miles an hour or 37 miles an hour, but you're going up in the wrong direction on a highway on-ramp. So I don't -- I've never even considered thinking about like exactly when the price of Bitcoin relative to U.S. dollars will be at a certain level or not. What I'm concerned about is that conditions and circumstances continue to change in a way that lessens the risk of holding Bitcoin and increases the success of it. And that, to my understanding, is really governed by the major risk of Bitcoin, which is whether it's accepted or not by people because that's what makes some money. And all evidence is that day-by-day, there are more people and more institutions and importantly, institutions that now have vested interest in its success, that keeps building and proliferating. And beyond that, there are certain kind of calculations that, to me, seem not the best use of my time. As long as it's going in the right direction, I'm satisfied, but then that might be a little vague. You might have better idea of that specificity, Murray.

Okay. Well, see, the -- I'll give you my view. We don't know how Bitcoin is going to be successful. We're pretty confident we're going to be successful. So how can you say you become -- you're confident it's going to be successful? We now know how it's going to be successful. That's because I wrote something a while ago in one of the compendia and it dealt with, there were 40 cryptocurrencies that have essentially the same monetary policy as Bitcoin. Some of them are actually forks of Bitcoin, like Bitcoin Cash and Bitcoin Gold. So you have 2 possible outcomes. First possible outcome is in the other cryptocurrencies, you just don't get network effect. If you don't get network effect, they may have some value, but they won't have a lot of value. You may make money on those, but the bulk of the value is going to reside in Bitcoin. And if that happens, you'll have some truly remarkable value in Bitcoin. I personally don't believe that's the way it's going to happen for Bitcoin. I believe that many of the cryptocurrencies, of that 40, that essentially the same monetary policy are going to be adopted. They may not have as big a network effect as Bitcoin does. But essentially, they have the same monetary policy. And as such, they're not going to have radically different valuations than Bitcoin, even if Bitcoin has the same market capitalization. So what's going to happen is, ultimately, when they create ETFs for crypto, a much more logical ETF for crypto would be to create an ETF for all of the coins that have the same monetary policy, meaning those 40. No one's done that yet. And I don't want to intimate any product ideas. That's the way it should be done. So let me give you an example of why that's so important. Again, let me just repeat the premise. So you have 2 coins to have the same monetary policy. They really shouldn't have radically different valuations by the law of no arbitrage or they might have differences in valuation. Let's compare Bitcoin and Bitcoin Gold. Bitcoin Gold is a tiny fraction of market capitalization of Bitcoin. Now Bitcoin Gold, of course, was a fork of Bitcoin. Now a fork, in very, very general terms, you might assert as kind of like a spin off, and it is. But it has some important differences. Unlike a spin off, you have to collect the spin-off. In other words, if security A, which is a DTC, does a spin-off, you may like the spinoff, you may not like the spin-off, you may retain it, you may sell it. But everything happens automatically, other than your buy or retain or sell recommendation. In the world of crypto, you got to go out and get it. So when Bitcoin Gold fork occurred, a lot of people didn't want it. A lot of the -- what people call exchanges, and I call brokers, refused to support it. A lot of people didn't know how to get it. So there are as many Bitcoin Gold coins on the Bitcoin Gold blockchain, give or take a few, as there are on the Bitcoin blockchain, roughly 18.6 million But it's been over 3 years since that event and a lot of people who didn't collect the Bitcoin Gold are probably never can get their Bitcoin Gold. So let's say, and I don't know the number. I'm just making up a number. Let's say, ultimately, 4.5 million of the 18-odd million was collected. That's 25%. So if Bitcoin Gold ultimately is going to have a comparable market capitalization to Bitcoin, well, as a practical matter, you can only get 1/4 of the coins, not the entirety of coins. So each coin, to get comparable market capitalization, each coin would have to be worth 4x that. Now given the fact that Bitcoin Gold market capitalization is an insignificant fraction of Bitcoin. Let's just say, it was, again, making up a number, but I don't think it's far from reality, but I just want to make it easy to explain on the phone. Let's say it was 1% of the Bitcoin market capitalization, although I think it's actually less than 1% of Bitcoin market capitalization. Let's just say we're 1%. Okay. So it has to appreciate 100 times just to get to the Bitcoin current market capitalization. And you've got to multiply it by 4 because we're going to learn that only 1/4 of the coins actually got collected. That's 400x appreciation just to get to Bitcoin level. Let's say, Bitcoin appreciates 100x, that's 400 x 100, that's 40,000x. So theoretically, somebody could put $1,000 into Bitcoin Gold. If my theory is right, that $1,000 can appreciate 40,000x. Ultimately, that's how I believe it's going to happen. Now you have to make the same calculation for the other 38 cryptos whose monetary policy was, one way or another, derived from Bitcoin. And everyone has a slightly different number. In the case of Zcash, let's say, it wasn't a fork, so more people got the coins, you have to do an adjustment for that. On the other hand, the market value is a different percent of Bitcoin market capitalization than Ethereum. And then Bitcoin Gold is, you have to make those calculations as well. And it's also not this further far advanced in the issuance policy because -- or the issuance practice because Zcash was put out in the market after some years after Bitcoin was put out in the market. So all those things being said, I think ultimately, a whole bunch of coins are going to have comparable market capitalizations. So you can make a lot of money on the Bitcoin, you may make much, much more money on the others. So that's the way I would choose to answer that question. It's going to happen. You might see -- you might rephrase -- I'll take the liberty of rephrasing the question. When do you think it's going to get much more broad reception? I would say, within 12 months of the major countries releasing digital currencies. China plans to do it. United Kingdom plans to do it. I don't think the other major countries are far behind. Once the central banks of the major industrial powers release digital currencies and people are comfortable using and transacting in digital currencies, I think there'll be a huge move to acceptance of the cryptocurrencies, at least the limited issuance ones. And that's how I think it's going to evolve. So I hope that's a clear answer to your question.

Yes. Next question. I've read a lot about Bitcoin mining operations being attracted to Texas for various reasons that seem quite natural for the state. I wonder if Murray and the team have ever discussed or thought about how TPL's assets may or may not have opportunity to leverage this development? It seems like a possible and maybe even unintentional collision course with the realm of FRMO's varying businesses. Any opportunity to obtain a comment about this from Murray or the team?

Well, obviously, given my position as a Board member of TPL, I can't really say anything about it. All I can say is this. There's a lot of gas in Texas that's being flared. If you have a royalty, and your gas is being flared, if you get nothing for it anyway. You have the right to ask for your gas in kind. You can actually ask your gas to be delivered at some point. And if it's delivered, you can do whatever you want with it. So that's about as far as I can go in that without -- well, that's about as far as I can go. That's intriguing a lot of people with the state of Texas and with the natural gas market. So to obviously a lot of people are taking advantage.

Okay. Next question. Similar to the gold rush period where selling the picks and shovels was a good way to profit from investor appetite for mining, what are some ways that investors can profit from the current interest in crypto assets?

Okay. So the short answer is, at the moment, it's not really easy. So I mean it sounds great. You're going to sell the picks and shovels, and you're not going to take the risk of actually owning the crypto. Well, the trouble with it is the primary way people are doing this right now is there's some publicly traded companies that are really in the financing part of it, meaning trading or collecting deposits or lending crypto. There's really no barrier to entry. The only barrier at the moment is the reluctance of major institutions because I'm not sure if it's going to be successful. Within a year or 2, I think there's going to be a plethora of institutions involved in it and might radically change in a negative way, the profit dynamics of people who want to do the picks and shovels theory in that way. There's mining. The mining is a necessary part of crypto. It's not the only way you can validate transactions, but it's an important way you can validate transactions and pay people for the transactional validation. So we're involved in the mining part of it. Anybody can be involved in mining. So anybody can buy what they refer to as rig. It's really a server, but they call it rig. Anybody can buy a rig. You don't need to have a whole paraphernalia of mining. You can just put your rig in a hosting facility and your rent, so to speak, is primarily, not entirely, but primarily your electricity cost, you get billed for it. And you can even have arranged that during the mining process, if they'll sell enough coins, this is the hosting company on your behalf to pay your so-called rent, then the rest of it is free, so to speak. So just to give you an idea, in Winland, because it has state-of-the-art equipment, and it's in a pretty good mining location. Winland actually sells the first 5 days production, roughly 5 days production, of the crypto that it actually mines. That pays for electricity. And the rest of the month, everything is free, just add to the crypto balances. So that's how it works there. Now different kinds of machines, different durations might be a little bit different. But that's one way to do it. So if you're looking to enter, I would say the best way is through mining. You're only going to have 1 rig. We're not bringing many rigs, you probably want to join a pool, make sure you're paid every day. But that's, I think, the way it is right now. There aren't a lot of -- there are a lot of companies developing software. Those are going to be the picks and shovels. Not clear at all which software is going to be needed and who's going to get paid for it, what's going to become industry standard. We're a long way from that. And one of the big risks in doing that is a really great software, including the Bitcoin operating protocol itself, is open source code. You may develop some brilliant product, and you may be paid nothing for it, although they may thank you as being the benefactor of civilization. That's where it stands, I think, the industry.

Okay. Now the next about 10 questions are all pretty much about the same thing, but I'll read each one of them one at a time. They're pretty much about disclosure, and they have to do with the FRMO financials. Under Note 4, there is now listed investment A and investment B. In the past, there has only been 1 investment that has been greater than 10% of total equity. Can you tell us the name of the new investment? Or if not, some background on what commercial space it operates within?

I can give a little the background. So it's no great secret. So just to refresh your recollection, investment A is good old TPL. And investment B is good old -- the Bitcoin Investment Trust. Those are our 2. Those are -- that's investment A, that's investment B. So I think that's pretty complete. I probably should say you probably -- I bet with the ad. We probably should say, investment A is TPL, investment B is Bitcoin. But in accounting parlance, they just don't do it that way. They say investment A, they say investment B, so I don't have any problem telling you what they are. And that's what they are.

Okay. Next one is pretty much the same. From my reading of the third quarter financial statement, there appears to have been a large investment whose name was not disclosed. The most recent statement references and investment A, which was present on the prior statements. Now there's a large investment B. Since investment B is a such a large percent of equity and thus very material to future returns, will Mr. Stahl disclose the name of investment B and discuss a bit about why this particular investment was made?

Okay. So to begin with, I obviously disclosed it, what it is. It's not a new investment. It's just that it appreciated to the level that under the accounting rules, it would have required some type of disclosure. And I said the way the world of accounting works, you're not required to talk about the name. The reason you're not required to talk about the name is because let's just say investment B was something else. I was in the process of buying some more. So you obviously don't want to -- if you're in the middle of buying it, you don't want to tell the world if you're in the middle of buying something. That wouldn't be very bright. So the accounting rules provide for that type of terminology. But we bought pretty much what we're going to buy, at least for the time being. And as far as Bitcoin goes, we're creating more and through mining. And we're trying to figure out how to get more involved in mining in a variety of ways. So it might increase in a different sort of way. Or if we end up mining a lot of coins, at some point, we'll have to footnote it and we'll say, the Bitcoin coins are worth x and it's -- may even combine it in some way to make it clear, like we just did in the more prepared remarks where we disclosed this XBT, the Bitcoin tracker. It's not the same thing as GBTC, but it's basically the same thing. So XBT is not part of Security B, but it's essentially economically the same thing. So anyway, the accounting terminology would refer to investment B as GBTC. But that's why we decided that if we're going to do that, we'll break out the XBT. And it's worth about $1.6 million, as I said. And analytically, when you think about it, I personally would combine both together.

Okay. The next one is the same question. What is the second large equity investment FRMO has invested in? Would you disclose this very scale Bitcoin Investment Trust? Then the next question, can the precise amounts of each cryptocurrency vehicle that is owned be broken out in future earnings statements?

Yes. Well, we broke it out in holdings. So the thing is, as far as earnings go, what this appears is this would appear in comprehensive earnings, meaning it just appreciates. So I think we all know how much -- you can look and see how much Bitcoin appreciates in a month, in a quarter, in a year. So I mean, I could certainly tell you that, but I think it's self-evident that [ the planet ] -- what happened positive, really negatively. And that's why we don't say investment B appreciated X percent because I think it's fairly self-evident. But we can do that if people really need.

Okay. No doubt this will be covered in Mr. Stahl's opening remarks. But just in case, could we get a breakdown of the crypto positions and where they are distributed through the balance sheet of the limited partnership lines?

Yes. Well, the cryptocurrency stuff is in the cryptocurrency category. It's not entirely accurate, however, to say that because just to show you how accounting makes things. Sometimes, they make things very clear. Some things they made -- sometimes they make things a little bit more complex than we would like. So for example, if you would kindly go to Note 4, let's just take cryptocurrency mining stuff, for example. We have Cryptocurrency Mining LLC. And that's a cryptocurrency investment, even though it's a little bit different than owning GBTC and that's a little bit different than owning cryptocurrency itself like Bitcoin. Similarly, we have Cryptocurrency Mining LLC II (sic) [ Cryptocurrency Mining II, LLC ], which is again a little bit different. And there's a little footnote about that. You see, let's take HK Cryptocurrency Mining LLC. You'll see May 31, 2020, $38,000 roughly value and February 28, 2021, $31,000 value. The assets -- or the assets really are the machines. We depreciate the machines. The LLC is more profitable than it's ever been. The most recent quarter we had, which ended March 31, most profitable quarter we ever had by far in that LLC. And that's continuing so far through April. But machines run down. We have machines that we bought more than 3 years ago. They're fully depreciated. We have no value in them whatsoever. But if we assign them the value of $0.01, the return on assets would be -- it would be just be astronomical. You just can't use 0 as the nominator. So anyway, the answer to your question, I think we gave all the cryptocurrency amounts in detail, and it's not really -- at the moment, the mine currencies are not that much money. If they get big enough, we're going to create a category. We'll just say mine currencies, it will be on the balance sheet somewhere, and it'll be clear to everybody. Right now, it's just not the biggest value. Well, let's just say -- let's just put it this way. If you take all the mine currencies together, it's worth something like $5.4 million. So I think that breaks it out. Maybe if it gets bigger, we'll just have a category, mined cryptos, be somewhere in the asset side. I think that's the number. It's roughly $5.4 million if you add up the values.

Okay. The next question asks if you can provide an inventory of cryptocurrency and shares of securities owned by FRMO and entities?

I think we pretty much did that. We have some small holdings of different securities. It's not like it's a great secret. Most of our security holdings are through funds. And the funds are making great secrets of their holdings. The securities you're likely to see, there might be the odd exception here or there, but the securities that you will see in Horizon Kinetics Inflation Beneficiaries ETF. We just own them directly. Why do we own them directly? Because we bought them before there was a Horizon Kinetics Inflation Beneficiaries ETF. So we couldn't buy the ETF. It didn't exist. Lately, we've been buying shares of Horizon Kinetics Inflation Beneficiaries ETF. It's not a big number. If it's big, I'll certainly break it out and disclose it right now, which is not a big deal. So we leave it the way it is, but we've been buying shares of it. And you shouldn't forget, we also own shares of the RENN fund. That's another security that -- we don't break it out because the actual share amounts daily or disclosed on the SEC Form 4 filings. But we can do that if people require it.

Okay. Let's see, in the last conference call, Murray Stahl said that FRMO would provide a table of its holdings, including crypto, Horizon Kinetics, hard assets, Texas Pacific Land Trust, et cetera. That would be nice as we could follow quarter-by-quarter the evolution of these holdings and have a clearer idea of the weight of each holding on FRMO net asset value. Are you planning to publish such a table?

Yes. I actually have this table that was prepared for me. When I read numbers, I was reading off that table. So what we're going to do either tomorrow, or whatever day the folks get around doing it, somewhere on the website, they're going to put that table so people can see it. So it's going to be there.

Okay. Next, yes. This is very similar to the last question. On the last call, I had sent in a question. Instead of only reviewing it verbally on the conference call, can you also please begin to list exactly what the exposures are of the major assets that everyone wants to know about? A small table that shows the number of look through shares of TPL, Bitcoin, mining equipment, Winland Holding shares, et cetera, would be very helpful. If that is not possible for some reason, my question is, what specifically prevents you from doing this? Choice? Specific regulation? And also Murray mentioned that he was amenable to something like that and that they would look into it. Obviously, I opened this quarterly report hoping to see something like that, and it's not there. Is there any update on that?

Well, and the update is, it's somewhere on the website, I'm not going to figure out where on the website they're going to put it, but there are other people who put it somewhere in the website. It will be obvious to everybody it's there. It will be properly marked, and you'll be able to click on it and see the table. You'll be able to see the same table that I'm looking at.

Great. Okay. Next question. We see a new section to Note 4 under investment concentration that identifies an investment B as a concentrated investment for FRMO. It is appreciated. You may not want to or be able to divulge exact details at this point if it's a new investment. But any insight on investment B would be appreciated.

Okay. So as you see, we're reading the -- want to make sure we're answering every question, even though some are very similar to others. I guess, lawyers would say asked and answered, but we're here to give you information. So I think we gave you the information, we'll give you the table. And if anything is unclear in the future, we'll make additions to that. But I -- we've certainly revealed what investment B is, and I can't state enough, it's been around for a while. It just -- it's appreciated to a level where the accounting standard required some type of mention of it. And that's the way they do it. Now you know the way we do it.

Okay. And the fair values of some of the limited partners has exploded, presumably due to TPL featuring heavily in those portfolios. Would it be possible to indicate what other investments and relative concentration of those portfolios are comprised of?

Well, the concentrations are pretty similar in percentage terms. The concentrations you see in FRMO, they're not radically different. There are 2 securities, at least as far as the post to our fund goes, and we're in the process of buying. They're, right now, not big positions. But one day, there'll be big positions, and we can explain more in detail what they are. I don't think it's so -- a brilliant idea to tell people what it is. I'll just say that one way or another, they're in character of what we've been doing thus far. They're not radically different than what we've been doing. So little-by-little, we're adding those positions. In the fullness of time, we'll disclose it. It's just not our policy that when we're in the process of adding to something, we don't usually talk about it much. But you won't be shocked when you find out what we're up to.

Okay. Moving on to the RENN fund. I've noticed Horizon Kinetics filed a Form 4 almost daily for the RENN fund. The form lists FRMO, Fromex and HK Commons. Who is the beneficial owner and how many shares does FRMO own?

Okay. The number of shares that FRMO owns is on that Form 4. So what you need to do is you need to add the shares held by Fromex to the shares held by FRMO, and they give you that amount. It's on the Form 4. FRMO in total, I'm going to be off by 1,000 shares because I don't remember every number exactly. FRMO must own a 70-ish thousand shares. Horizon Common, what is that? Horizon Common is not owned by FRMO. Horizon Common is a separate company. Horizon Common is owned by the regional partners of Horizon Asset Management in the original weights when we established the company. If you want to know what the -- what those weights are, if you're interested in the names of the people, if you look at the original Form ADV, Horizon Kinetics, you could see the numbers. Basically, we own the beach about 16.6%. That's not the exact number. I may be off by a few basis points. But my personal holding, it was something like 16.6%, something like that. And that's the way it is right now. You also observed that Horizon Common is a partner in, a big partner in HK hard assets. But that's as far as relationship between Horizon Common FRMO goes, and also, I should say, the Horizon Common own some shares of FRMO. I mean [ shares as own ]. I don't remember, but I can get you that number if it's necessary. Anyway, that's it. So roughly, let's say, of the total shares that we own, we meaning Horizon Common and FRMO and its subsidiary, Fromex, let's say, altogether, we own, let's say, 130,000, something like that. Just crudely speaking, let's say, roughly 60% is owned by FRMO and its subsidiaries and the balance is owned by Horizon Common, that would be about right.

Okay. Next question is about Diamond Standard. What does the Diamond Standard asset represent for the RENN fund? Regarding diamonds, how our FRMO and RENN fund going to invest in this asset class? And what does the Cayman entities in the RENN fund invest in? Any general updates on the RENN fund?

Yes. Yes, sure. Okay. So the Diamond Standard first. So the RENN fund, which is a closed-end fund, that's one of the reasons we established it. Ideal to invest in a private company because we don't need daily liquidity. So the RENN fund, if Diamond Standard, were as successful as I personally believe it will be, let's just say, and I could be wrong. Let's just say it can successfully create the diamond asset class. Incidentally, not that many weeks ago, Diamond Standard did its first coin offering. So it actually offered a diamond coin. And I believe, again, I'll begin to be off by a few bucks. But I believe they sold $23 million, $23.5 million worth of coins. The idea is to create coins first. And you have to put enough coins in the marketplace that it's actually an investable asset class, so ETFs could actually buy, trade, retain the coins. So the first step is a -- it's a pretty good success, actually. I would say better than I thought was possible. And there's always the growing pains, the technical details. It's a brand-new asset class, first of all. So I won't bore you with the technicalities of custody and transfer. It's brand new. There are always the little issues that you could never have anticipated unless you actually do it. And all those -- and they're really little issues. They're all being worked out. And look forward to the next offering. So if it works, the RENN fund, being a very small fund, has exposure to an asset class nobody else has. And it could -- if it works, it's going to be more than meaningful to the RENN fund. It's going to be a very, very big deal. The cost base of the investment to the RENN fund is not big. I'm going to be off again, I don't remember the number exactly, there's too many numbers to keep them all in my head. But I think the number was about $80,000. I may be off by a few thousand dollars, but something like that.

And then part of the question said what is the Cayman Entity in the RENN fund investment?

Yes. So the Cayman entity basically -- well, it has one primary investment. And I'll tell you why we have -- so it owns shares in the Mesabi Trust. Horizon itself, FRMO has owned some shares in the Mesabi Trust, it's not that big an investment. So Mesabi Trust is a trust, in some ways, kind of like what TPL was when it was a trust. The difference is the Mesabi Trust, whatever its income is, just pays it out. That's one thing. Second difference is it's not oil and gas, it's iron ore. And ends up being the investment because iron ore prices are just about at their record high. So basically, Cleveland-Cliffs mining operates their property. And whatever they take out of the ground, they pay Mesabi Trust their pro rata share. And it doesn't require a lot of operating personnel, doesn't require a lot of work, our kind of business. So why did they -- why can't it be in the RENN fund? It actually is the RENN fund. There's a problem in doing this in a mutual fund. And it's what's known as -- and if you think, this term is ridiculous. This is actually a term. It's what's known as bad income. The dividend, which is actually very good because the dividend is actually not taxed as dividend rate. The dividend is taxed as a capital gains rate. In the dividend, you also get a depletion allowance. So it has a really good tax structure. And -- but the mutual fund, it's considered to be bad income. And the mutual fund regulations say you can only have a certain amount of bad income. And it wouldn't have been a problem were it not for the fact that because iron ore prices went up a lot, the dividend, and you can look on their website, you can see how much the dividend just went up. It went up a lot and might go up more. It rises to a level that is beyond what is permitted by the mutual fund rules. Don't forget the rules are written in 1940, it's Investment Company Act of 1940. So that would be a problem because it will be taxed at a much higher rate. We don't want it to be taxed at a much higher rate. So what is the remedy? The remedy is that if you buy the shares or you can choose to transfer shares into a corporation in the Cayman Islands. And then you take the dividend, and you either send it out to the corporation itself or you just leave it in there. It's considered to be good income because now it's the income of a Cayman Islands Corporation. So the Cayman Islands Corporation was created so that we wouldn't have the bad income problem. So we didn't create something to be hidden. It's just that we created it to avoid this tax problem. And now we don't have a tax problem with Mesabi Trust. So I think that's pretty much the back pattern.

Thank you. All right. Next one, how many Bitcoins has Winland mined as of today? And what is Winland's cost of mining as of today? And more about Winland -- I'll let you answer that.

Well, I think I revealed -- it's not the number of coins as of today, it's the number of coins as of a few weeks ago, but I'll just repeat it. So we had that number. As of few weeks ago, it was 18.9282 coins. So it's obviously more right now. So in terms of what is the cost, let's look at it this way. Say in the average month, there's 30 days in a month. And by the fifth day of the month, we paid all the electricity. So basically 5 days -- and remember, it's not exactly 5 days. It might be 5.31 days or maybe 4.92 days. It depends on the price of Bitcoin on those days because we'll sell roughly the first 5 days to pay electric charges. But if you'll permit me to round for the purposes discussion, let's say, it takes about 5 days. So it takes about 5 days, and it's -- and there are 30 days in the average month. It therefore follows that we pay all the expenses out of 5 days or 20% of the month, the cost of mining is 20% of the price of a Bitcoin. That's how good it is. It's pretty good, actually. I think.

Okay. All right. What are the mining economics as of today for FRMO and Winland? Any updates on the Mt. Gox litigation?

Okay. So FRMO and Winland, the mining is -- and I think you just heard the answer to the Winland question. It's as good as it's ever been. Now depending on you go company-by-company and tranche-by-tranche, depending on the type of equipment, it might be a little bit better or a little bit worse. So for example, we still have, in some of the crypto entities, machines that we bought over 3 years ago. Technically speaking, they're obsolete, they're nowhere near as profitable as the Winland machines I just gave you. But it's fully depreciated, so it has no value. In terms of return on capital, the return is astronomical anyway. So it just can't -- it's hard to imagine that it could get any better in the mining of crypto. But that's as good as it's going to get. Now before you get too excited about it, just bear in mind in the world of Bitcoin, in about 1,118 days or so, we're going to enter the period known as having. So what's going to happen, assuming the Bitcoin price doesn't change, which is probably a bad assumption. But assuming everything remains constant, what's going to end up happening is the revenue is getting cut in half, and the expenses will be more or less the same, and it won't be so great unless the price goes up a lot, which it might actually happen. And in that circumstance, it would be just as great as it is now. So that's basically what's going on in mining. In terms of the cost of the equipment, because things are so great at the moment, the equipment is expensive. I'm reluctant to buy a lot of equipment. And I'm reluctant to buy a lot of equipment because we're approaching having. And unless things change, the economics of equipment is going to be less. That said, not like we're not going to buy any equipment. So we might buy some parts, build our own machines like we did previously, might do it that way. We might find a deal on unused equipment. Because we have a repair facility hash master, we're able to repair our own equipment. Might do it that way. There might be new generations of equipment. We might buy that just to try it out, a lot of possibilities. Anyway, I hope that's pretty comprehensive.

Yes. All right. The next question is One Chicago is still listed as a security exchange investment. My understanding is that the exchange is no longer in business. Why is it still listed?

Okay. Because as of the 28th of February, maybe it's the 29th of February, we didn't get our liquidating distribution, and we didn't know what it was. So basically, we've got liquidating distribution or we've been total liquidation distribution is, I don't know if we got it. We're not taking a loss on it. And that's why we kept it on there. We didn't know what the amount was. At the end of the day, relative to the total of the assets, it's pretty insignificant. So rather than estimate it; we just left it and wait till we find the -- to which we get the actual numbers. So basically, I think the liquidation that we got in the amount is -- it's a small percentage of what we paid for it. I don't remember what it is. I would have -- there wasn't a lot of cash in the balance sheet. So basically, what happens is, they just stop operating the company. And whatever you can get out of it, which is mostly liquid assets, you get out of it. The real value was the license, and they're not using license. So we ended up not doing as well as we want. But the problem is the big holders, interactive brokers. So we're partners basically with 3 big companies: Interactive Brokers, Chicago Mercantile Exchange and CBOE. We're a little tiny rounding error in that investment. So we don't have any power to change the outcome. I guess, to us, it was very interesting. To the 3 large companies, it was a rounding error for them. They didn't want to continue and not heck of a lot we can do about it. So that's basically what happened. I thought it was a worthwhile project to continue, but that's just my opinion.

Okay. Thanks. Next question. Any update on the uplisting of FRMO?

No, we haven't -- I mean, so many things to focus on, we just didn't focus on that. It's not because it's not an important project. There's only so many hours in a day, and we just didn't have the -- we just didn't have the bandwidth to focus on it. So between cryptomining and all the debt and payables and running the business, Horizon and new product, which is Inflation Beneficiaries ETF and doing the research, the writing, just -- and some other stuff, Diamond Standard being one example, just didn't have the bandwidth to pay a lot of attention to it. This is the truth.

If I could add a little something. We also did, a couple of years ago, a pretty extensive cost analysis of it, and it was more than twice as expensive. In terms of listing fees and the accounting and regulatory filings, it was more than twice as expensive as being on the OTC market.

Okay. Well, thank you, Thérèse. Anyway, I didn't devote a lot of bandwidth to it during the quarter in all honesty.

Okay. Next question. Status update on ETF offerings after the success of the Inflation Beneficiaries, INFL?

Well, I'll tell you this much. Obviously, I'm not going to announce I had this wonderful idea, and I'm going to do something because somebody will do it first. I think I have one very good idea what to do. I think I've got one idea that's good. I don't know if it's very good. And then there are some other things that they're not far enough along yet to know if they are good or not. So we're working on a variety of things. See, the basic problem [ in this type ] of opportunity is, our business with the mutual funds. The mutual funds have a lot of disadvantages just as a structure relative to an ETF. The problem in making use for us of the ETF structure is that the ETF structure was designed for indexes, and we didn't want to be indexes. We wanted to be actively managed. So the Horizon Kinetics Inflation Beneficiaries ETF has a very low turnover is actually actively managed. We can discuss more about this [ in the questions tab ]. But we weren't going to do anything in ETFs unless we knew we could do it in the active management realm. And it took a while before the laws were clarified sufficiently that we were able to safely undertake an active management venture. Yes, so we became, within the last 12 months, apparent that we could do it. Before then, very, very few people attempted it. And the few people that attempted it failed. All kinds of reasons for that, and it's not all entirely because of the laws, although part of it was the laws were very unclear. And when we felt the time was right, we decided we were going to move. So they actually, once we -- so there's obviously a period of analysis that has to go into it. And then once we said the word go, from that point forward, it took roughly 4 months, from the word go, to the creation of an ETF. So there's some fair amount of operational work that has to be done. Anyways, as I said, we have a number of ideas. And I look forward to the next opportunity of doing one. The -- when that happens, of course, [indiscernible] be full disclosure as we are with everything else. But at the moment, it's an idea. We haven't filed anything yet.

Okay. The next question returns to the -- every once in a while, someone asks about changing the name from FRMO to something else. So this shareholder said for what is worth, my humble suggestion for a new name per Murray's idea request on the call would be [ Kinetics Chain ]. It speaks to both the legacy HK assets as well as to the marketable blockchain assets, together conveying the timeless message that the whole is greater than the sum of the parts. And then there's a quote, "A kinetic chain is the notion that these joint and segments have an effect on one or another during movement. When one is in motion, it creates a chain of events that affects the movement of neighboring joints and segments."

Okay. Well, look, I mean I -- it's the first time I'm hearing it, so I need to reflect on it, but I certainly will give it some consideration. By the way, I should mention that there were people who e-mailed in suggestions, and they actually were pretty good. And we would have used one of them. The only problem was when we actually had our attorneys research names, each and every name that was suggested to us, and we actually liked names very much, somebody was using them, and we just couldn't use them. So we would have changed -- we would have used one of those ideas, but no-go because somebody was using it nor is it legally permissible. I don't know if anyone is using this. So the first step we do is before we devote too much time to it, we look and see if anybody is using it. And you'd be surprised the names that people claim proprietary interest in. But we actually had an experience in FRMO many years ago that there was a name we were using. And we thought it was -- I wouldn't even say the name because I don't want to start this controversy again, but it was name we were using for something. Someone claimed that it was a proprietary name. We said it's named that it's part of popular parlance. It's -- it can't be proprietary. And it took a few months to resolve that. You never know. You just got to be careful. Anyway, we'll certainly give it due consideration. It sounds pretty good. But now you know what the first step is.

Okay. And the last question is, would you discuss your views at length about how the increase in money supply will lead to more dollars chasing the available goods and services to consume. For the available goods and services for consumption with those dollars, what metrics do you consider worthwhile? Specifically curious if there is any readily available metrics besides GDP that you would like to -- that you'd like to use to make that comparison?

Okay. Well, that's a very -- that's a deep question, so I'll give a deep answer. So let's begin with this. It all starts with the budget, United States budget. And it's the same problem in other countries. So I'll just use the United States as the example, but it's the same everywhere. Basically, the -- there's a huge deficit. And it's funding that deficit that basically leads to a lot of the growth in money supply. So the Federal Reserve has to buy the securities issued by the government because no one else is going to buy them almost 0 interest. And then cause the government wouldn't be appropriately funded. So what's the problem in correcting that? So understand how difficult it is to correct. But it doesn't matter who is in the government. You could be for Party A or Party B, it doesn't really matter. Here is what the problem is, and I'll use this illustration. Let's just say, this would never happen. This is just taking an extreme suggestion just for purposes of discussion. It's a preposterous idea. But to show you how difficult it is control the budget. Let's just say the United States government decided that we're going to take social security, make it 0. Everybody's check, whatever it is, you're just not getting it. It's now 0. So theoretically, that saves over $1.2 trillion. And secondarily, we're going to take the United States defense budget, and we're going to cut that to 0 immediately. So if you work for the Department of Defense, whether you're a civilian employee or military employee, you're fired, and we're just going to do nothing with military anymore. You can save another $700-plus billion. Now interest on debt, which is a little bit less than $400 billion, let's just call it $400 billion for this exercise. Let's just say that we passed a law, said, you know what? I know that the bond has a coupon on it, we just passed a new law. It's now 0. Add all that up, and you say, well, we'll save $2.2 trillion. If you did that, you still have a $1 trillion deficit. Now you understand the magnitude of your problem. Now let's say you actually promulgated those laws. Would you [ in point effect ], save $2.2 trillion. Now those are the cuts. You wouldn't save anything close to it. You might not save anything. Why? Because the people get social security. For a lot of it, it's taxable. So you can't cut out $1.2 trillion and save $1.2 trillion because some of that goes right back to the treasury. As a matter of fact, there are people who work through social security administration, and they're computer programmers or administrators or whatever they are doing. But their income is now going to go to 0. They pay taxes. You lose those tax revenues. And then if you really want to take it a step further, there are companies, they're not part of the government budget, not government employees, but they're consultants, they sell equipment. There are all sorts of things that go on, and their income is going to go to 0 because their client is Social Security Trust Administration. The same angle is true in the United States Department of Defense. So the people who work, be it civilian or military, their incomes are going to 0. You can lose a lot of tax revenue, then all the enterprises that sell things to the United States government, General Dynamics, Lockheed, many other companies, that's going to 0. So you won't save anything like that. You might not save anything. And then if you look through the third order effect, well, there are companies that do business with General Dynamics, and their income is going to go to 0 or nearly so. You can't solve it that way. Same thing holds true, by the way, with interest expense. We're not going to get rid of $400 -- $400 billion of interest expense because people pay taxes on that interest. As a matter of fact, think about all the banks and all treasuries, and their income on that is going to go to 0. And that will be a disaster. So you can't do it. Much as you might say, you'd like to do it. And then the most important thing, which should be obvious, but I'll say it anyway. Those expenditures, which the Federal Reserve has to buy the securities to finance that, that's a big part of GDP. So take the 3 areas of government, not branches like legislative, judicial and executive, but areas: federal, state, local. Add it all up, those areas are spending over $10 trillion a year. The GDP is about $21 trillion. So cut the expenditures, cut the GDP, in addition to cutting the tax revenue. That's what makes it so difficult. In math, I have a term for that. They call it trapdoor mathematics. So what do we mean by that? It's a door that works one way, but not the other way. So normally, arithmetic in multiplication and addition is cumulative. So 2x3 is 3x2. It works in both directions. In this, it doesn't work. But you can increase the expenditures, you can increase the GDP. But if you reduce it, their expenditures, by that amount, you might collapse the GDP. And therefore, you make even a worse deficit. You can't get out of it. So the bigger the economy is, the more serious the problem is because the more money you have to spend to keep it growing at the 2% or 3% or whatever the rate is. So it's pernicious. There's no solution, but past a point of any solution that's reasonable. Yes, you could take $2 billion off program A and $3 billion off program B, but in the context numbers I cited, it's just irrelevant. It doesn't mean anything. So it's a fairly good bet. The currency is going to lose its purchasing power. And important fact, it is losing its purchasing power because all you have to do is look at the CRB index, which is the Commodity Research Board Index. And you can see it's up, if memory serves, year-to-date, it's only -- but not even the halfway mark. Matter of fact, we're not even to 1/3 mark yet for the year. It's up by 15% year-to-date. And if you go to the submarket, if you pay attention to prices, you'll see. The prices are up on a lot of different things. And if you look at the CRB index, you'll see why you're up. So beef is up something year-to-date, up something like 15%. Poultry is up something like 7%. Lumber, I don't remember a number, it's up some enormous number. And then one other thing that's important, what's called strategic materials, meaning things that we normally didn't think about and didn't use a lot in the past. So we always had adequate supplies. Now they're coming into everyday usage, an example being lithium. Lithium is used in the batteries of your iPhones and your iPads. It's also used in electric vehicles. So I wouldn't even quote -- I wouldn't even dare to quote the price change in lithium year-to-date. It's so big that every person in this call will think I'm just making up a number. I won't even quote it, but it's an outlandish number, and it's not even 4 months old. That's how much it's up. And there are materials you haven't even heard of like neodymium, those are things that go into electric motors. You got to have it. They create magnetic fields. It's up almost as much as that. It's outlandish kind of numbers. So you just can't move society in the ways -- maybe it should be moved in that direction. But the supplies just don't exist, do those sorts of things. So we're getting inflation. That's all there is to it. And by the theory, which is well documented history. Sir Thomas Gresham, Gresham's law. Bad money drives out good. Why would you spend? Let's say, it was designed to talk about England in the 16th and 17th centuries. So if you had a recently minted coin of the realm, I had an old coin that was worn and clipped, meaning in the old days, people would shave off a little silver of the coin and keep it for themselves. You'd always sell the clipped coin before you sold the regular coin. And if it goes on long enough, that the bad money drives the good, everybody wants to use the debased money. And the good coin has gone out of circulation and hence it being a problem. Ultimately, that gets overwhelmed by Thiers' law. So Thiers' law is actually inverse of Gresham's law. It's hard to imagine it. Both things can happen simultaneously and it does. Thiers' law says, good money drives out bad. How is it possible? Well, at some point, people won't even take the bad money. And you can see -- you can see it in the world of cryptocurrency. It's already happening because people think about Bitcoin and their remark always is how much did it go up? And it's the wrong metric. Measurement shouldn't be how much it went up. What's really happening is you need to take that chart and turn it upside down. What's actually going on is the dollar is collapsing relative to Bitcoin. So someone says, what is Bitcoin? It's just a bit. It doesn't represent anything. Well, it could be so argued. But the dollar is collapsing relative to that. So the more negative the things one says about Bitcoin, I would say, by logical implication, the more negative those same things are for the dollar and it also applies to the euro and the yen or every other fiat currency that matter. They are -- those currencies are collapsing relative to these bits and it's a very serious problem. At some point, people won't take the fiat currencies. And that's what's going to -- that's basically what's happening. Now the only alternative to the fiat currencies -- I mean the only alternative to our currencies are A, the cryptos, at least the ones with a reasonable monetary policy; and B, hard, you could say, tangible, we say hard, hard assets. What's a hard asset? Oil, gas, gold, silver, iron, stuff like that. Now reality, there's really one asset, and that asset is oil or I should say, energy. So why is it one? Why do I say, well, what about gold? What about silver? What about platinum, what about tin, what about zinc, what about copper? Well, each and every one of them has a common feature. The biggest cost of money is energy, you got to smelt it. You don't find iron in a mine. You find ferrite, which is iron oxide, you've got to get the oxide out. Matter of fact, they don't find silicon to make solar panels. You find quartz, what is quartz? Silicon dioxide. How do you get the pure silicon out of there? Well, you got to smelt it, you got to heat it just like you would gold or silver or iron or anything else. So when the price of oil rises, the price of everything else is going to rise as well. So basically, that's where we are. And unless somebody can do something about the money creation, if the money is rising, the money supply is rising faster than supply of goods and services, and it's just a question of law of supply and demand. The purchasing power of that currency is going to decline. Now just specifically about the dollar, what metric, it changed the metric. They being the monetary authorities, the Federal Reserve. They used to, until a couple of months ago, give us M2 statistic. Now they have something called M2SL. It's not radically different than M2. But they only release the number once a month, they used to release it once every week. So if you go on the St. Louis Federal Reserve website and look at M2SL, you will find the following shocking observation. What is shocking about it? Roughly 25% of all the money created, all the dollars, because this is a dollar-based currency, all the dollars created in the history of United States of America was created in roughly the last year. So since the supply of goods and services is not rising by 25% annually and supply of money, at least at the moment, is rising by 25% annually, if you believe in laws of supply and demand, then the currency must lose its purchasing power. It's that simple. And it's negligible. And there's not a lot that anybody can do about it. And that's why the situation is so horrific in my humble opinion. And that's why FRMO and Horizon itself, Horizon Kinetics, is positioned in an investment sense the way we are. For a number of years, we've been positioned that way. As people probably realize for a number of years, the world was not of that mind, so it didn't do wonders for our performance until last few months. But that's the way the world was looking at it, and we looked at it in a completely different way. And that's the way it is. Not a happy state of affairs in my view. Anyway, I hope that gives you an idea of where we stand on the great inflation question and what metric you want to look at. So I would say the CRB -- to summarize the CRB Index, you want to pay close attention to that. You want to pay close attention to M2SL. And keep your eyes open when you're at the supermarket. And the rest is in the process of happening, as they say. But I hope that's thorough enough. Is that it, Thérèse? Do we have more questions in?

No, that was the last question. Great answers. We appreciate it.

Okay, well -- okay. Steve, do you want to add anything to anything I said?

No, no, I don't. I will. Well, we're in out of time that is -- got so many fundamental inflection points. And usually people have enough trouble just dealing with one and changes are afoot. And when changes are afoot, what used to work stops working. And it's very difficult to speak to people who don't have this kind of background to even understand it. And there are going to be a shift of wealth, shift of performance, shift of fortunes, shift of fortunes amongst business, businesses and shift of fortunes amongst investment managers and companies. It's the kind of difficulty we foresee over the next 5 and 10 years, the death of change, I think, it will be. And FRMO, I think, I hope, is a -- seems to me, it is -- is on the right ages of some of these changes.

Okay. Well, thanks, Steve. And I guess it reminds me to thank everyone for your attention and your support and all the great questions. And of course, we'll reprieve this in about 3 months, and look forward to answering your questions at that time. So thanks again for joining us this afternoon. I guess we'll sign off now.

This concludes today's call. Thank you for your participation. You may now disconnect.