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Phrases like “Bitcoin is the hurdle rate” and “Bitcoin is the new hurdle rate” frequently re-occur in the Bitcoin communities, often without a context. In short, this motto means that Bitcoin is the best benchmark for investment: avoid investing in anything that yields lower returns than Bitcoin. Let’s delve deeper into the meaning of this phrase and explore what this credo challenges and why some find it controversial. What is the hurdle rate? The hurdle rate indicates the minimum return that makes an investment or a project viable. The hurdle rate is used while deciding whether to start a business project or make an investment. If it is too high, the project or an investment may be rejected.  To determine a hurdle rate, one considers costs, inflation, interest rates, and potential risks. Some companies use their weighted average cost of capital (WACC) as a reference for the hurdle rate. However, some add the risk premium to WACC to get a safer hurdle rate. It’s understood that the return on investment rate should be above the hurdle rate so that the investment would be viable. The current yield on 10-year U.S. Treasury bills is often used as a benchmark when calculating the hurdle rate, as it serves as the risk-free rate, since other investments are typically riskier. Some models use 3-month treasury bills instead. And that’s what Bitcoin maxis are challenging when they say Bitcoin is the hurdle rate. How is Bitcoin the hurdle rate? There are at least two messages attached to the “Bitcoin is the hurdle rate” motto. First off, bitcoiners point out the poor performance of the U.S. Treasury bills if compared to Bitcoin’s performance.  The second meaning of Bitcoin as the hurdle rate is that sometimes you should just buy Bitcoin instead of trying to find a…

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Filed under: News - @ June 29, 2025 11:26 am