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Money Stuff: Twenty Percent of a Picture of a Dog

by
Matt Levine
Money Stuff
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20% of a picture of a dog

  • Just 3 months after the NFT representing the image of the original doge meme sold for $4 million, it is now valued at more than $225 million and sold 20% of its ownership for over 11,000 ether ($45 million).
    • The DOG coin, representing a fraction of this NFT, doubled in value in less than 24 hours of trading, making it the most valuable NFT.
  • What makes sense here is that people are willing to pay $4 million for an NFT of the most popular meme on the internet.
  • What doesn't make sense is the fact that when you cut the NFT into millions of slices, each one will also sell for $4 million.

ESG Accounting: Embedded Derivatives

  • Background:
    • Companies like their borrowings to be accounted for as borrowings on the balance sheet, but some sorts of debt have "embedded derivatives."
    • For embedded derivatives, the balance sheet reflects the fair value of the liability and the income statement reflects the change in that fair value.
    • If your interest rate changes on these embedded derivatives depending on if you hit your ESG targets, it would increase your earnings if you hit your targets and decrease your earnings if you don't.
  • In practice, this impact on earnings is hard to measure: An ISDA paper from this week says that many ESG loans have embedded derivatives, which are difficult to value due to the lack of observable information that determines the timing and magnitude of the impact on cash flows.

ESG: Names

  • Fund companies are hoping to grab a position of cash pouring into sustainable products, but in some cases, rebranding has been in name only.

ESG: Short Selling

  • If you want to be an ESG investor, you shouldn't just be buying companies with good ESG performance, but actively short companies with bad ESG performance.
  • Short selling creates new shares of a company, which could compete with the share issued by the company.
  • If enough people embrace the idea of shorting bad ESG stocks (e.g., oil companies), it could crowd out these companies and make it impossible to finance their operations because the money you put into the stock will go to short sellers.

Suffolk County Bitcoin Mining

  • A Long Island man was charged with using his position as an IT supervisor to mine crypto, costing the county thousands of dollars in electricity.
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