NYDIG Explores Bitcoin Lending Floating Finance

NYDIG, a subsidiary of Stone Ridge that specializes in providing Bitcoin-backed loans, is preparing to expand its services through float financing, according to the company's 2024 investor letter. The letter refutes common objections to the utility of Bitcoin, suggesting that it can generate cash flow through sales and be used as collateral for fiat currency loans. Float is an important concept in insurance and asset management, representing invested capital from insurance premiums or reserves. Stone Ridge has extensive experience in using collateralized loans against other assets, although it has not yet issued any loans secured by Bitcoin. Integrating float into Bitcoin-backed loans is seen as having the potential to transform the market, providing liquidity for BTC holders. Sam Callahan from Marathon Digital considers this move significant, as it opens up major investment capital for the Bitcoin ecosystem, reducing costs and preventing the need to sell BTC for liquidity, thereby increasing its value and driving adoption. Stone Ridge refers to its Bitcoin-backed loans as "HODL loans," competing with traditional stock-backed margin loans in terms of risk and cost-effectiveness.