FRMO Corporation (FRMO) Earnings Call Transcript

Good afternoon, everyone. This is Thérèse Byars speaking, and I'm the Corporate Secretary of FRMO Corp. Thank you for joining us today for the company's 2023 second quarter earnings conference 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 investments. For additional information, you may visit the FRMO Corp. website at 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 2023 second quarter earnings. A replay of this call will be available on the FRMO Corp. website until the summary transcript is posted. And now I'll turn the discussion over to Mr. Stahl.

Okay. Thanks, Thérèse, and thanks, everybody, for joining us today. Before I start talking about FRMO, I just wanted to acknowledge the ultimate founder of FRMO was an attorney called Lester Tanner. And he passed away a couple of days ago, and Sunday was his funeral. I just want to acknowledge him. He was just an incredible, unbelievably brilliant and warm human being. And we probably wouldn't even have an FRMO Corp. As a matter of fact, I shouldn't say probably, we definitely wouldn't have an FRMO Corporation, were it not for his leadership and insight. And if we had more time, I would tell you about his just amazing life, which -- he did amazing things even in retirement. So I just wanted to acknowledge him as human being, he'll be sorely missed. He was a great guy. He is one of a kind, and we're going to miss him dearly. Anyway, with that, we're never going to forget him, and we shouldn't, and I'll go into FRMO. So as you can see, quarter was pretty good, at least I think so. We have -- this is FRMO's [ itself shareholders' ] equity of $224 million, which I believe is a record we've got plenty of liquidity. We've got $36 million in cash. We have a de minimis or at least, I think it's a de minimus amount of debt. That debt incidentally relates to a building, which is the building that houses our investment in HashMaster, one of our various cryptocurrency investments, and more about that later. The thing I want to focus on for the quarter, is the development of our strategy in cryptocurrency. I'll first touch on Horizon, however. So Horizon itself has done pretty well. Horizon is for the year closing December 31, 2022, we collected a number of performance fees. We had a fair amount of net income. Therefore, that's going to spill over in the revenue in next quarter FRMO because you will recall, we have our revenue share. And there's also some investments in FRMO, and they're very [ compulsory ] investments in Horizon. So they're going to have very similar kinds of performance, so expect some good news over there. And you'll recall that everything is reported with regard to Horizon with a lag. So in the next quarter, which for us is the calendar ending February 28, the Horizon information is going to be included as of December 31. Just for your edification, and I know we've said this many times before, but just to bear that in mind. So there's always a lag. So right now, from a Horizon point of view, we're reporting things that are really September 30, as if they happened on December 31, because that was a bit of information we had at the time we did these financial statements, and their financial statements for us, let's not forget, as of November 30. Now our cryptocurrency strategy, you'll recall, we entered cryptocurrency, you might say, gingerly -- gingerly, and we were particular in maintaining that posture in the past year. In the past year, other than maybe the last week or so, cryptocurrency, led by Bitcoin, basically declined [ instantly ]. The cryptocurrency mining machinery declined even more, and there were cryptocurrencies that declined more than Bitcoin. . The reason for that is, and we will cover it later, there are 3 vectors that really govern the price of cryptocurrency, particularly Bitcoin. And you can bid cryptocurrency up, but you have to be very cognizant. That's a function of the [indiscernible] upcoming halving, the halving that we're going to have. Halving basically means that the block reward for mining Bitcoin is going to be cut in half. That's why they call it halving. And that's coming at about 470 days. In the case of Litecoin, I think it's 198 days, if I'm not mistaken. And you're always in the world of mining where you should always be preparing for that. And in the prior year, people not only didn't prepare for it, they didn't realize that as we approach the halving, the equipment to use for mining is just worth less money. So the idea of bidding up crypto mining equipment is a very bizarre idea, and we did very, very little in the world of investing in crypto. Now you could say more or less the market is properly discounting the halving. So we're much, much more [ favorably ] inclined to crypto. Now in our crypto currency exposure, apart from the crypto we own directly, indirectly in the funds, we have 4 cryptocurrency investments. I'm going to just mention them because we don't really highlight these things in the financial statements. One is called Consensus Mining, that is the merger and the [ capital ] raise of the original HK Cryptocurrency Mining partnerships. And we did an offering. That offering is going to be listed and tradable in the not too distant future I'm guessing, but I'm thinking 60 to 75 days from now, maybe sooner. So Consensus Mining, watch for trading, and we own some shares of that. And there is Winland, which we used to call Winland Electronics. Now it's called Winland Holdings because it's holding a variety of cryptocurrency investments. So I'll read all our cryptocurrency figures and other investment figures in a moment. We own a 7.1% interest in HashMaster. HashMaster is a number of things. HashMaster is a mining repair company -- mining equipment repair company. It's also a hosting company for mining. So it's our default mining site. So we don't want to or we cannot -- or we find it disadvantageous to be in certain other sites. We can always retreat the HashMaster. We've done that more than once when we couldn't get terms that we need and, of course, that company repairs our equipment. And also, there's some HashMaster mining for its own account that goes on there. And lastly, we own an investment in our Digital Currency Group, which is a long-term investment for us. And since we bought it, it's done fairly well. And then we have the following investments now, I'm going to mention TPL in a minute, but let's just go through the various cryptocurrency elements. So we have -- first, we'll read -- this is reading from a list, obviously. These are the holdings we have, so to speak, implied, mean our pro rata share via partnerships. We have 596,936 shares of the Bitcoin Investment Trust, GBTC. We have 4,287 Ethereum Classic Investment Trust; ETCG is the symbol of that. We own 27,186 shares of Bitcoin Cash Investment Trust. All these funds are on Grayscale, which is part of the Digital Currency Group; BCHG is symbol. We own 616 shares of Grayscale or Zcash Investment Trust; ZCSH is the symbol. And we own 6,502 shares of the Litecoin Investment Trust. We own 227 coins of Bitcoin Gold. We actually own that directly. That was a [ fork ] from the Bitcoin we own directly and -- which is on the funds, held directly. We have 139.6 actual Bitcoin, all of which we mined. We also own directly 7,647 shares of GBTC, the Bitcoin Investment Trust. We own 18 shares of the Ethereum Classic Investment Trust. We own 40 shares of Bitcoin Cash Investment Trust, all directly. 283 shares of Litecoin Investment Trust. We own 1,763.5 actual Litecoin that we mined. This is in FRMO itself. We own 35 Ethereum that we mined. You can't mine Ethereum anymore because it went to proof of stake for proof of work. We own 661.7 Ethereum Classic coins. We own 6.7 Bitcoin Cash coins that we mined. And we own 62 Zcash coins that we mined. Now we own 30.8% as of the last recording of Winland, now called Winland Holdings, formerly known as Winland Electronics. So what I'm going to do is, I'm going to read you what Winland owns, and you can multiply by [ 30.8% ] and get the right number. So this is what Winland owns because I think it's relevant. 63.3 Bitcoin, all of which it mined; 7.4 Bitcoin that we didn't mine, we actually bought it; 14.9 Litecoin that we bought were acquired in various ways; 53.5 Zcash that we acquired in various ways, including purchase; 1 Bitcoin Cash coin; 8.7 Bitcoin Gold got that out of the [ fork ] and 9.4% of Ethereum Classic that we actually purchased in the marketplace. And remember we own, this is FRMO, 30.8% of Winland. In terms of Texas Pacific Land Trust, which was our biggest investment at the moment, as you well know, we have direct holdings of 7,449 shares and indirect holdings, basically in various funds, everything from Polestar to HK Hard Assets, we have 52,230 -- excuse me, 52,224 shares, and you can add them and you can multiply by a price and you can see what it's worth. So that's our -- those are our investments. The point I want to make is, and maybe there will be some questions about crypto. So there are some similar events that happened or are in the process of happening crypto that I think are very, very positive. So I'll mention those things and make some comments about Horizon and maybe we can go to the questions and answers. So the CBOE, Chicago Board Options Exchange, you will observe now has a digital asset exchange. It's really important to the future of crypto [indiscernible] spot regulated market for crypto in order for crypto to be an accepted asset class. And that's in the process of happening. Obviously, it's going to start small because it's in test mode. But the regulated chain, CBOE already has a digital asset exchange. Before very many months elapse, I personally expect other exchanges to have digital asset exchanges as well. CME, of course, already has some Bitcoin features. The Bank for International Settlements some number of weeks ago announced that they are because they're a quasi-regulator of banks around the world is now possible to have 2% of a bank balance sheet to be crypto. Now there are some pretty big banks in the world. Can you imagine if 2% on the bigger banks were crypto, imagine 2% of a bank were Bitcoin, what that would mean for the price of Bitcoin? Well, that's in process of happening. Now digital assets mean a lot of different things to a lot of different people. There are already digital assets that need to trade that can trade. I'll give you some examples. Airline miles, a lot of people on this call probably have airline miles, might not even know they have them, have airline miles, maybe have no intention to use them. There's no reason that those can't trade on a regulated exchange. And there's no reason why they can't trade in the form of being paired with the appropriate cryptocurrency, whatever it happens to be. Loyalty points, coupons, CVS, Walgreen, just as examples, there are many, many retailers to have these things. You may wish to use them. You may not know you have them. But when on a blockchain, you'd be able to look it up if they were put on a blockchain. And they are in the process, all these assets I'm going to refer to or I've just referred to are in the process of being put on blockchains, and they will be paired with various cryptocurrencies, and they will be traded on the exchanges. So credits, maybe you subscribe to some service online that you never use, and they debit your credit card every month. Maybe somebody wants that service, maybe you can sell that service to somebody else. That's a digital asset. So there is no shortage of digital assets that have yet to be truly digitized in the cryptocurrency in sense of the word. All of that is in process of taking place. So look for -- or expect really similar developments in the world of crypto in the not-too-distant future. Now you might have observed that in Horizon, we have a little ETF that we started, called the Blockchain Development ETF. If you look very closely, you'll see a lot of that ETF is publicly-traded exchanges. And there's a reason for that. So we can't introduce cryptocurrency, especially in digital asset sense that I just referenced without having regulated exchanges. It's a recipe for disaster. The regulated exchanges have to be properly set up to do these things. And that takes a lot of doing. It's all in the process of happening. So I personally predict, it might sound like an outlandish statement, but the day will come when cryptocurrency is going to be the biggest traded assets. The way I would compare it as, think back half a century to Chicago Mercantile Exchange. At that time, it was a mere commodities exchange. And as a mere commodity exchange, it traded less commodities than it does right now. For example, Bitcoin is a commodity, and there was no record of that in the early '70s, 50 years ago. In any event, currency became a -- currency futures, I should say, became tradable. If you go back to the Wall Street Journal of 50 years ago and look up the day that currency futures started trading because you could always have gone to a bank and exchanged your currency. You could even have done a forward swap at a bank. So you didn't technically need a future, but we ended up having future. If you were to read the op-eds in the Wall Street Journal on the day, currency futures started trading in the CME and you were to cross out the word currency futures and write in the word cryptocurrency, you could publish that article today. Same things people said then, we're seeing now. How much bigger is currency futures than commodities? And how much bigger is bond futures and currencies? No one thought a bond futures, although they needed in 50 years ago. Now we have it, and look how big it is. I think I hope I'm right about this. I'm doing this from memory, so forgive me if I misstate it slightly. I don't think I'll be very far off. I believe that commodities account for about 7% of the revenue of Chicago Mercantile Exchange. So the growth in exchanges would not have been possible without out bigger asset classes and new asset classes, and we had them. They were unimaginable 50 years ago. Still it's hard to imagine cryptocurrency as an asset class being respected and your typical larger institution having a cryptocurrency allocation of the varying sizes. In my opinion, it's coming. So I think cryptocurrency has an extremely bright, bright future, and I invite your questions on that. I also mentioned one other thing, which is -- yes, please go ahead.

I would just like to interject a tiny bit of color. You can do it better yourself, but you decided to be efficient with your time, which I think you might need to compete with all the questions. But indeed, at the time, that CME was proposing currency futures. It was actually thought by many responsible people, including policymakers, that number one, it would be illegal. And if it wasn't, it should be because it could actually be dangerous for the entire financial system. It could undermine the sovereignty of nations. That was the kind of discussion or rhetoric that was going on at the time.

Yes, that was an argument. And just to give you a little bit more color, we have so many questions, I want to make sure I get to them and deal with all of them. But just to give you a little more color on that point. There are many reasons why they thought it would undermine nations. So I'll just give you 2. One is you're buying a future, it could be argued and it was argued at a time. You're betting on the future value of a currency relative to another. So if you're betting on the future value of a currency relative to another, which say we don't even think about that, that's standard and prudent hedging practice. 50 years ago, they said that was gambling. And of course, 50 years ago, gambling was illegal. So was gambling really illegal? Or was hedging, your currency exposure illegal? Today, I think we can state without equivocation that the authorities effectively, although their intent might have been related to gambling, their intent was different than what actually happened. They didn't want to make prudent hedging your currency exposure illegal. But that's what they did. It was impossible to hedge your currency exposure. For companies, like we had in the United States of America, they were branching out internationally. So you thought about in the forward-looking sense the companies are branching out internationally, there's going to be a need to hedge your currency exposure. Couldn't do it without getting yourself arrested. It's amazing, but that's what people said. And then, of course, the idea -- remember, this is the early '70s, the United States was not yet off the gold standard. So the idea was no currency should be allowed to float because the nation needs to control the price of its currency. Experience informed us during the '70s with the inflation, no nation was, a, was ever able to truly really control the value of its currency relative to the currencies, and they basically gave up. And [ understandably ], they gave up pricing their currencies in gold. So currency is no longer had the fixed reference of gold. And they basically give up on fixed currencies. So that change put yourself in the position of policymakers in that era to give up fixed currencies in that era, it's a much bigger change, a much bigger sea change and simply allowing cryptocurrencies today. So what we ask for in cryptocurrencies is de minimis relative to what actually happened. It was earth shattering at the time. So anyway, I was going to mention HK Hard Assets is last thing, and then I will take the questions. So HK Hard Assets, we're building it up. Remember, its purposes to be get other investments, not revealing what the investments are, and we are approaching the $4 million mark in money in HK Hard Assets. Who's in HK Hard Assets? FRMO, me, a company called Horizon Common, some other partners in Horizon. So we've just started ourselves, and we'll build it up the way we built HK Hard Assets to up, designed to benefit from inflation. And I think that's happening. I have to make one -- or yes, I forgot. One other thing, which I should have said at the beginning. So you might know that we and FRMO have an investment in the Mesabi Trust. And I didn't know this until a couple of days ago. This is an odd fact about the Mesabi Trust. So I'm not really talking about Mesabi Trust in its investment sense. In 1962, the Mesabi Trust was listed. It's Mesabi Trust is kind of investment we like, which is it just collects revenue, doesn't really have employees. In 1962, to list at New York Stock Exchange was considered to be extraordinarily controversial. And I'm reliably informed by people who know about this subject that the SEC had objections to listing such an enterprise on the New York Stock Exchange. And you could see it from their point of view, it's not really a business. Of course, it is a business and the way I look at it. And of course, it is listed with New York Stock Exchange and has been for more than half a century, and it's now no longer controversial. However, the attorney representing the Mesabi Trust to get it listed was none other than Lester Tanner, the founder of FRMO. So a little bit of irony there. It shows you something about the circle of life, how we touch each other in ways that we don't realize. I didn't know that until a couple of days ago. Anyway, I'll leave you with that thought. And unless you have something to add, Steve, could we go to questions?

By all means.

Okay. Thérèse, if you could facilitate that, read the question, and we'll endeavor to give the best answer we can to the subject.

It will be my pleasure. The first question, what are the revenues that FRMO receives from its ownership interest in HK LLC revenue stream that is valued on the balance sheet at $10.2 million? Is this figure a straight flow through to FRMO's bottom line? Or is it offset by any cost/taxes? Does this figure vary much? Do you want to answer? There's more, but...

Well, let's do that. So let's do it this way. We're getting it's -- I remember a number exactly, we're getting a little bit less than 5% of HK's revenue. So it varies with HK's revenue. HK's revenue varies in a couple of ways. One is sometimes you get performance fees and sometimes you don't get performance fees. So it varies that way. It varies with market value fluctuation of the assets we manage. And of course, it varies with the clientele. So there's no tax offset or anything else. So what you get is what you get. There's no -- we don't take anything out of it. It just is what it is. So you apply the pro rata figure to whatever the gross revenue is for that quarter. And the fourth quarter, as I said earlier, can be a big quarter with performance fees. This is the fourth quarter for Horizon or just past, and we have a respectable amount of performance fees. So we'll have an unusually large revenue to report than February 28, mostly coming from Horizon. Now it was a question about HK Hard Assets. I think they meant Horizon. So...

I think they meant Horizon.

Yes. The only thing we get from HK Hard Assets is the dividends. So the biggest investment in HK Hard Assets, there's no secret, is TPL. There's some other things in there, but there's no revenue that comes from HK Hard Assets. So I just took the liberty of interpreting that the question referred to Horizon itself, not Horizon, Hard Assets. So if there's more, I think, now is the time to get to it.

Okay. I'll just read the last set. Does this figure vary much each year based on performance fees or other factors? And I think you just answered that. If so, would it be possible to provide the revenues to FRMO for the past few years and/or what is expected in 2023, 2024? This is obviously a very valuable asset to FRMO, and I would be interested in how Murray and Steve think about its value as it is essentially a royalty stream.

Okay. Well, let's say, if you want the back numbers, it is easy to get because you look at our financial statements for the various years, and you would divide our revenue by the proration factor, which I think it's something like 0.0493 or something like that. Anyway, it's somewhere in the annual report, you'll see it. And divide -- so if we get $3 million divide by that number and that'll give you the Horizon revenue for that time period. So that's easy to do. So I probably should have memorized the number exactly, but I guess I'm too lazy. I've never memorized it, but it's somewhere in this document. And if you can't find it, I know it's in this document, if you can't find it, we'll get you the number. But it's something like 0.0493 or 0.0495 or something like that. So is there anything I haven't answered in that? Now you want me to do a future forecast. Obviously, I can't do a future forecast without getting myself in some legal trouble. So if you don't mind, I'd rather not get myself legal trouble. And truth said, I can't know exactly what it's going to be. If I can just tell you this, if cryptocurrency does well, you'll be very happy with the revenues produced by Horizon.

Next question. What is the difference between the above items that is the participation in the revenue stream and the investment in Horizon Kinetics LLP that sits on the balance sheet at $14.6 million? Is there income to FRMO that flows through from this investment separate and distinct from the interest in the revenue stream mentioned before? How should one think about the true value within a range of this [ ownership ] stake relative to the $14.6 million stated value on the balance sheet?

Yes. So basically, there's 2 components set. The first component is yes, we don't get revenue, we own a piece of the profits. So basically, we get distribution that's designed to offset, that gives enough capital to pay our taxes. Certain amount of Horizon's other than the tax distribution is reinvested. So that number on the balance sheet, the $14-odd million, that doesn't represent our assessment of the value. It basically represents the investments on Horizon's balance sheet. There's a little bit of goodwill there, not a lot of it. So you can decide if that goodwill is merit or not, but it's mostly cash and investments. So for the most part, it's a hard book. At some point, we're going to have to monetize Horizon, and then you'll get to see a real trading value, and you'll know for sure. But right now, I think the number is something like either 4.93 or 4.95. So if you take that, let's call it, $14.5 million to make it easy and divide by 0.0495, which is approximately right. So 14,563,000. I'll use a calculator and make a little precise divide it by 0.0495, and that's $294,202,000 that's the value. We don't have $242 million in cash and hard assets there. It's not that much, so there's some goodwill there. But we've got a lot. So I'm not disclosing the number we have right now yet, but as I said, there's not a lot of goodwill there, especially not for an investment management company. In the right market, there'll be some type of monetization event probably a listing at some point, and you'll get to see what the trading value is because it's going to have to happen at some point, just not happening today. So -- but it's a -- but to answer your question directly, it's separate and distinct from the revenue share.

Next question regarding Winland. My understanding was that one of the strategies was to grow the mining operations significantly. With the current level of distress in crypto mining, is there any reason why Winland has not acquired additional significant mining assets or made strategic investments, like the Argo Blockchain Senior Notes, which are currently paying and were available at $0.04 on the dollar or less than 4 months of accrued interest to quote Hillel the Elder, "If not now, when?"

Okay. Well, the answer is very simple. And you can see it quantitatively on what's called the Luxor ASIC, A-I -- A-S-I-C, price index. The prices machines are [ collapsing ]. So to go out and acquire machines, there's no reason to do that when the prices are collapsing. If the machine prices are not properly discounting, the mining reality and approaching halving, we don't want to buy any machines. And the mining business or mining equipment was tremendously overvalued. How overvalued is it? Can we give you something quantitative? That's a rhetorical question. I believe it's implied in the question I just got, so I'll answer it. You'll recall about 2.5 years ago, we -- this swap with Winland, FRMO bought some equipment, brand new equipment, which we, in turn, immediately sold to Winland in exchange for shares of Winland. So I think we got a pretty good deal relative to price Winland was trading at that time. that equipment -- if you look at this price index, that equipment rose in value a lot through December of -- or November of 2021. And then if you look at that Luxor ASIC prices and machines proceeded to collapse. When I say collapse, I may be 1% or 2% off, I would say, lost from the high point, 86%, 88%, maybe 89% of their value, something in that range, okay? If today you wanted to buy the machines that we had sold to Winland 2.5 years ago, which by the way, we depreciate over 3 years, and it's been over 2.5 years. So they're almost fully [ appreciated ] machines, you would pay a price today even, not radically different than what Winland paid or what we paid to buy them, FRMO, more than 2.5 years ago. So still hasn't discounted reality. So we just had to stay away. What we did in FRMO is, we were nibbling away when we thought it was appropriate at Winland shares. So we've been buying Winland shares. And we thought that was the best use of the capital, given what was going on. And based on the price of Winland today, we didn't buy a tremendous number of shares and Winland itself does not will have liquid. We didn't buy a tremendous number of shares, but the price we got Winland at, so far, we made a, I would say, a respectable profit at. So that's what we're doing in investment sense. During the collapse, it just didn't make sense to be very active in this area, other than what I just told you and we weren't very active. In the future, we're getting more constructive, and we're probably going to be interested in buying some equipment at some point. But we want to buy and it's another everything we do. We really weren't interested in buying used equipment that had been used for 3-plus years because it's nearing the end of its useful life. Yes, we could have repaired it and throw some money into it. But I don't know if we'd ultimately break even or not, so we didn't want to do that. So our next move, if we decide is the right move, we're probably going to buy some state-of-the-art equipment. And don't forget, we did very, very -- maybe a month or 2 ago, we did buy some equipment in Consensus Mining, brand-new state-of-the-art equipment, which is now functioning and earning a very high rate of return. Remember, when you buy equipment, you always have to be cognizant of the approaching halving. So at this stage, we're going to have to buy some new equipment, at least we think that's the best value. So I hope that's thorough enough.

Next question. What are management's thoughts on oil royalty businesses, making acquisitions right now at the expense of shareholder dilution, for example, as is the case for Sitio Royalties acquiring Brigham Minerals?

Okay. Well, let's just say that's a very elegantly phrased question. Thank you so much for phrasing it that way. And basically, we don't want to -- or let's put it this way, I don't agree that it makes sense to acquire royalty interest for equity, like we had done in the transaction that you described. So I'll explain why. The royalty, no matter how good the royalty is, the royalty is finite. Sooner or later -- so every oil royalty has a decline curve. Sooner or later, it will produce no oil, even if it's great and lasts long period of time. The equity is forever. So the equity is a perpetuity. So generally speaking, that's one of the reason, and this is generalizable to acquisitions in a lot of businesses. You buy a business, whatever it is, in this case, it's oil royalties, but it could be technology, it could be machinery, it could be even pharmaceuticals, could be anything. However, brilliant -- let's use the example pharmaceutical. However brilliant it is, however wonderful it is, the pace of human knowledge and human progress, it continues. And let's say, it was a pharmaceutical, 1 of 2 things are going to happen, either, a, it's going to go off patent and you'll get a lot less revenue for it; or b, which is more likely, in the fullness of time, some company will develop something, which is a superior treatment to what currently exists. So when you offer stock for someone else's business, the business you buy is going to have a finite life. The stock you're offering in exchange that has an infinite life. And that's the problem with using equity in acquisitions. Now books are written about in the '70s, this was very popular. And textbooks are written, case studies are written at major universities about using equity to buy a variety of businesses. The idea was it was very similar if you think about to what we now call modern portfolio theory, you would use equity to buy a variety of businesses. Every business has its own cyclicality. And if you very clever about it, you'd buy a bunch of businesses where the cyclicality of one will offset the cyclicality of other, and you will develop a stable earnings and revenue stream. But the problem is every business is like a human being, it has a finite life. And the equity has an infinite life. So ultimately, it's not a sensible strategy, and I don't think very highly of it. And it's one of the reasons why we don't use equity very much to buy things at FRMO. So that's how we feel about that.

Next, being on the Board of Directors and large shareholder of TPL, would management be able to speak on why Texas Pacific Land Corporation does not publish any kind of "proved, probable and possible reserve" analysis in their annual reports as other royalty businesses, like Brigham, Blackstone and Viper Energy do? The TPL 10-K does not exactly make clear why these figures are "unavailable." In March 2022, Bloomberg article noted that the "Permian Basin is uniquely positioned to become the world's most important growth engine for oil production." So it seems like making the data public on TPL's reserves should be beneficial for shareholder return, unless it wouldn't, in which case shareholders should know about this as well.

Well, all I can say in the answer to that question is, given my position on the Board, number one, given the current circumstances, which if you read the SEC filings, you know what the currency and circumstances are. I'm just not in a position to comment on that particular subject. So I just -- I normally like to answer every question, but I'm just not at liberty to answer that question in the manner that is phrased. So unfortunately, I'm going to have to decline to answer that.

Okay. The next question, could management give us an update on FRMO's MIAX investments now that Miami International Holdings was filed for an IPO. What is the outlook for MIAX's asset classes? Does management thinks it will gain market share? For example, [ spike futures ] appear to trade in a similar manner to VIX, but with the added friction of lower the liquidity. Why would traders want to switch to trading with this new instrument? Does MIAX have any pricing power versus other exchanges?

Well, let's put this way. The best way I judge MIAX is just go on the website and look at the volume. So all exchanges, the profitability is really a function of volume. So to do more volume, it raises the expenses a little bit, but doesn't raise the expenses a lot. So in a really bad market, the volume contracts. And in MIAX's case, it actually didn't contract, even last year was a pretty rotten market. The volume contracts, and there's very little you can do to cut expenses because it's so efficient, the margins are just so high. So what I can tell you is that in the world of exchanges, we're going to create just completely new and just amazing, and I think that's the best way to talk about sets of assets. I'm personally prejudiced, and MIAX, I think they have the best technology, but it's not objective, I'm just saying it because I happen to like MIAX, but I really believe it. In any event, so this is just an example. It's nothing that MIAX is going to do. I want to give you an example of how the exchanges in the future are going to be different and why I like exchanges so much and like MIAX in particular. Somebody -- an investment manager will say, I think the GDP is going to go up or down by a certain amount, and therefore, I will go longer short the S&P in a certain quantity. The trouble with that is, at S&P trade as logical as it is and even though the premise upon which it's based might be spot on accurate, is a very idiosyncratic trade. So the economy might go up or down as forecasted, but other things happen. So the values of currencies rise and fall, interest rates, wax and wane, company's profit margins expand and contract. So you can't simply generalize that the GDP of X will lead to an S&P return of some properly commensurate amount, either positive or negative. In the world in the future, what you will be able to do, you'll be able to do the following. You'll be able to say, I think the GDP of the United States is going to rise by 3%. And we have to buy a future that will pay you or some type of [ instrumentality ] it will pay you if the GDP doesn't, in fact, rise by 3%. And if the GDP does not rise by 3% and rise by less than 3% or it actually becomes negative, then you're going to pay someone else. And you will know before you do that trade, how much exactly, you will make or lose if the GDP performs in a certain manner. So that's going to be possible in a blockchain cryptocurrency environment. So you're going to be able to do things that today, you really can't do. So there are only a handful of big exchanges with licenses. I mentioned today only a tiny subset of the types of the products that are possible. They are more product conceivable at all the exchange -- than all the exchanges with all their technology put together can handle at the moment. It's going to be just an incredible experience. And as far as the IPO goes, it's no secret. The IPO market is just -- at least until a week or 2 ago, the IPO market was the worst IPO market in a very long period of time. I think in the year 2020, hardly any companies came public. I looked at the list, I don't remember how many were, weren't very many. So it's just a horrible environment to come public, and why come public in the horrible environment, much more logical to come public in a better environment, which we will have eventually in due course, we just have to be patient. I don't know when there's going to be an IPO, obviously, but it will happen in due course, and we'll see what the value is, and I'm very, very optimistic about the future of MIAX. I hope that addresses, which you wanted me to address.

Yes. So the next question, could you please talk about the prospects for FRMO's smaller investments, like Digital Currency Group, Winland Holdings, Miami International Holdings and HM Tech?

Okay. So MIAX, I'd do that one first. I think I addressed it. So I like exchanges in general, I like MIAX in particular. I think the future is bright. I think if you just look at the volume every day, and it's all publicly available. That's your best indicator. You'll know more or less what's happening by looking at the volume, and it's growing, and there are lots of things are possible. So very bright future. Winland is evolving into a mining company. It was not prudent in the last 12 months to buy any more mining equipment. So it's probably going to soon be prudent to buy some mining equipment. And you're going to see more investment along those lines. What exactly are we going to do and how we're exactly going to do it? I can't say. I don't actually know at the moment how we're going to go about it, but I think we're coming to a much better period for cryptocurrency. So look for more investment there. Winland -- anyway, Winland has prospered. One of the things that Winland is getting or is in the process of getting right now, Winland invested some number of years ago. And you might recall Mt. Gox, which went bankrupt. There were bankruptcy claims, trade claims for the crypto there. And the bankruptcy is now concluding, and we're going to monetize the trade claims. So we'll put that cash to good use, I hope. And that's one of the things that's happening and Winland continues to mine and continues to build cryptocurrency. One thing I should say about Winland is, if you think about, in a way, it's almost like a quasi-Bitcoin ETF. So when you buy a Bitcoin ETF, if they were a Bitcoin ETF, just remember, unlike a mutual fund or an ETF, Bitcoin has no dividend so you can pay the fees for. So what would happen is if there were a Bitcoin ETF, the operator, whoever it is, would have to -- each and every quarter or probably every month, would have to sell some Bitcoin to pay the fees. So let's just take the abstraction no one puts money in, no one puts -- takes money out to the ETF. There's a certain amount of coin there. And every year, the amount of coin is going to diminish. In Winland, as you can see and why we read these statements, every quarter, the amount of coin there increases because we mine it. So which would you rather have? Would you rather have cryptocurrency investments with a coin diminutions. Would you rather have investment where the coins increase. I believe one day, the day will come when there are Bitcoin ETFs and there are people going to understand the distinction between the 2 classes. And there are people who will go along the mining companies like Winland and go short the cryptocurrency ETFs and lock themselves in a certain return based on how fast we can grow to Bitcoin with mining. So that's Winland. HashMaster is actually doing very well. So the HashMaster is organized in such a way that the different businesses offset one another. So for example, hosting for a lot of businesses became problematic. So we ourselves had equipment and hosting companies that were having difficulties. So we actually had the ability to send our equipment to HashMaster, and we have a greater liberty of action, how we go about mining, how we go about buying electric power. So with another mining company, we have to buy electric power on their terms effectively through them because Winland we control, we can buy electric power in our terms. So that's a pretty good thing to have. The repair business was doing less well during the calamity of the equipment price crash. But on the other hand, the movement of our equipment HashMaster was a positive thing. So you could say in that sense, it's an equilibrium. And during the year, we actually expanded HashMaster, we bought a transformer. So what it did is, it gave us the ability to draw more power. Now you know the reason why we want to draw more power, and that kind of worked out rather well, I think during the months when the electric utility was installing a transformer, the crypto was having its carnage, so we weren't any of the worst for were, and now it's pretty good to have that capacity there. The building itself, which is owned by FRMO, I am told or, let's say, I'm reliably informed that we could sell the building that we're going to. We could sell the building for twice what we paid for it. It's nice to know that. So HashMaster is a nice little asset, doing very well. Digital Currency Group. As you've seen, they've had their challenges, obviously, but the core of business is fabulous. What's the core business? It's a big core investment trust. And the assets under management are? What the fees are and much of that goes right to the bottom line. So there are challenges and other aspects of business you can read in the journals, but we never got involved in lending out crypto or any of that stuff. We don't really believe much in it and in the future, I don't think you're going to see this sort of activity in general in the cryptocurrency world. It's really something that's best done in banking. So the core business of Digital Currency Group, I think it's great Bitcoin or the other cryptos rise in value, which I suspect they will, it's going to be even better. So the core remains, I think, fairly robust. So those are the 4 that I've covered. I think that's complete.

Yes. This is a follow-up on questioner 7 from the fiscal year 2021, 2nd quarter earnings call. "instead of reviewing it only verbally on the conference call, can you please -- 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 shares, et cetera, would be very helpful. If that is not possible for some reason, then my question is, what specifically prevents you from doing this choice, specific regulations?"

Okay. Well, nothing prevents me from doing it since they just read it, and I read it off a table. So I don't see any reason why we can't put the table somewhere. So could you do that through us? Could you arrange to have a table put either on the website or some place appropriate so everyone could see it, because I don't think there's a regulatory reason went into it. So could you -- could we rely upon you to do that?

Yes. I will do that. I will work with Jay on that...

You'll take care of it, so we'll take care of that. And hopefully, it will be up there in due course and everybody can see it.

Okay. Next, why are there no first quarter or third quarter transcripts for the year 2021 and no first quarter transcript for the fiscal year 2022, that actually was just put out. On the FRMO website, they appear to have been skipped over.

Okay. Is there any...

I should answer that.