Speaker 1: The information provided in this program is of a general
Speaker 1: nature and is not intended to be personalized financial advice.
Speaker 1: We encourage you to seek appropriate advice from a qualified
Speaker 1: professional to suit your individual circumstances. Micro Strategy is the
Speaker 1: world's largest corporate holder of bitcoin. We're in Washington, DC
Speaker 1: to interview its executive chairman, Michael Sailor about how his
Speaker 1: company has catapulted to be one of the most highly
Speaker 1: valued in America.
Speaker 2: Really, micro Strategies pioneering a new market. We're issuing securities
Speaker 2: backed by digital capital, backed by bitcoin.
Speaker 1: This whole conversion financial engineering type strategy is often referred
Speaker 1: to online as the infinite money glitch.
Speaker 2: See the misnomer there is. It's not a money glitch.
Speaker 2: It is a digital transformation of the capital markets.
Speaker 1: Meet Michael Sailor, the technology entrepreneur who started micro Strategy
Speaker 1: in nineteen eighty nine and took it public on the
Speaker 1: Nasdaq in ninety eight. What is an enterprise software company
Speaker 1: is now better known as the world's first and largest
Speaker 1: corporate holder of bitcoin. In August twenty twenty, Sailor converted
Speaker 1: two hundred and fifty million US dollars of the company's
Speaker 1: cash to bitcoin. Since then, he's spent almost ten billion
Speaker 1: US dollars acquiring more. Its total worth is now more
Speaker 1: than fifteen billion dollars, making micro Strategy officially a whale.
Speaker 1: It owns more than one percent of all bitcoin available.
Speaker 3: The strategy has transformed.
Speaker 1: Its once languishing share price to a market capitalization of
Speaker 1: more than forty billion US dollars at the time this
Speaker 1: video was made. Its valuation represents a premium to its
Speaker 1: bitcoin holdings of about two and a half times.
Speaker 3: While believers think it could shoot higher.
Speaker 1: Some short sellers believe it's only worth however much bitcoin
Speaker 1: it actually holds. Michael Saylor is obviously more bullish. He
Speaker 1: sees his company is at the center of the modern
Speaker 1: capital flow to digital assets. To understand how he thinks
Speaker 1: about the company's future, we flew seventeen hours from New
Speaker 1: Zealand to the United States to interview him at.
Speaker 3: His apartment in Washington, DC.
Speaker 1: A reminder that this show never offers financial advice, but
Speaker 1: what this interview does offer is an insight into the
Speaker 1: mind of Michael Saylor. mIRC Sailer, thank you so much
Speaker 1: for having us in your incredible apartment.
Speaker 3: It's so good to be here.
Speaker 2: Yeah, thanks Rah, thanks for coming.
Speaker 3: I guess you are most welcome.
Speaker 1: I heard in another interview that you did that you
Speaker 1: resented people who worked from home. So I felt like
Speaker 1: we had to come and.
Speaker 3: I was ready to do this ran in person.
Speaker 1: Now you were just telling me before, but I'd love
Speaker 1: my audience to hear this. You spent some time in
Speaker 1: New Zealand growing up.
Speaker 2: Tell me about that. I did. My father was in
Speaker 2: the United States Air Force and there was a station
Speaker 2: down on the South Island in Blenham And so when
Speaker 2: I was a child. I guess I arrived around age
Speaker 2: three and I stayed there till age six. I remember
Speaker 2: walking to school through a wheat field, and every day
Speaker 2: at school, the highlight of the day was when they
Speaker 2: delivered our lunch, and it was it was either fish
Speaker 2: and chips wrapped in a newspaper or it was a
Speaker 2: meat pie and you could alternate between one or the other.
Speaker 3: Sounds about right.
Speaker 2: It was like the culinary highlight of my childhood. When
Speaker 2: it came back to the US, the food went downhill
Speaker 2: from there.
Speaker 3: That's amazing.
Speaker 1: So you actually started school in New Zealand. So I'm
Speaker 1: going to claim you as a Kiwi for the rest
Speaker 1: of this conversation.
Speaker 3: If you're right with that?
Speaker 1: Okay, Now, like I want to get the figures right,
Speaker 1: micro Strategies bitcoin holdings. Two hundred and fifty two, two
Speaker 1: hundred and twenty is the number of bitcoin you hold?
Speaker 1: Is that still correct? And if we put that at
Speaker 1: the current price around sixty six thousand US dollars, that
Speaker 1: is the total value of about sixteen billion dollars.
Speaker 2: Maybe closer to seventeen billion right now, but yeah, sixteen
Speaker 2: after seventeen billion dollars.
Speaker 1: Now, do you mind if I personally ask how much
Speaker 1: how many bitcoin you hold? Personally in its total value?
Speaker 2: I have more than seventeen thousand, seven hundred and thirty two.
Speaker 2: That was the amount I announced about four years ago.
Speaker 2: Haven't sold any That's amazing. Okay.
Speaker 1: We're going to come back to that and talk more
Speaker 1: about the bitcoin revolution in the latest stage of this interview,
Speaker 1: But first I want to talk about micro Strategy, the
Speaker 1: company that you yourself started decades ago. Now, how should investors
Speaker 1: think about the underlying software company because you still operate it. Right,
Speaker 1: You often talk about micro Strategy as a bitcoin development company,
Speaker 1: but I can imagine the actual software company is quite
Speaker 1: critical because its success provides the means to accumulate one bitcoin.
Speaker 2: Well, the way to think about micro strategy is three components.
Speaker 2: We've got a balance sheet, which is the bitcoin balance sheet.
Speaker 2: We've got a software business, a technology business, and that
Speaker 2: was the springboard for us to get into bitcoin. And
Speaker 2: now we've got an emerging bitcoin securitization business where we're
Speaker 2: a bitcoin development company and we leverage our bitcoin balance
Speaker 2: sheet to issue security to the public market that no
Speaker 2: one else could so easily create as us. So if
Speaker 2: we look at the software business, well, that's a five
Speaker 2: hundred million dollar a year revenue business and it generates
Speaker 2: consistent cash flows, and that got us to twenty twenty
Speaker 2: and that's still a very healthy business. It's a multinational
Speaker 2: and we do business with thousands of companies all around
Speaker 2: the world, including customers in Australia and New Zealand and
Speaker 2: Korea and Japan and you know, you name it. But
Speaker 2: the best way to think about micro strategy of your
Speaker 2: investor is we have we're the largest operating company that
Speaker 2: holds bitcoin. So if you have seventeen billion dollars of
Speaker 2: capital a bitcoin that's permanent, so there's no redemption rights
Speaker 2: to that there's ETFs like black Rock or Fidelity that
Speaker 2: are comparable to us in size, but those are over
Speaker 2: night deposits. So if you said, hey, I've got seventeen
Speaker 2: billion dollars in deposits, people can take the money out
Speaker 2: of the bank tomorrow, Well, they just basically a trustee
Speaker 2: holding the money. They and they return it when they're
Speaker 2: asked to return it. You can't leverage it, and you
Speaker 2: can't build businesses on top of it. Micro Strategy has
Speaker 2: permanent capital, so for example, we can do things like
Speaker 2: we can issue convertible bonds on top of that capital.
Speaker 2: So if you have you know, we have sixteen to
Speaker 2: seventeen billion in bitcoin exposure, we have four point two
Speaker 2: billion and convertible bonds. The bonds we can issue fairly
Speaker 2: cheaply because we have a stock. The stock reflects the
Speaker 2: permanent capital the bitcoin, but that's not redeemable either. That
Speaker 2: means that it can generate a premium to the bitcoin.
Speaker 2: So as people trade the stock and they trade the
Speaker 2: options on the stock, the stock trades that are premium
Speaker 2: to the acid value, and when the stock trades at
Speaker 2: a premium to the asset value, the company issues either
Speaker 2: equity or convertible bonds at a premium to the underlying assets.
Speaker 2: When we do that, we don't just put the money
Speaker 2: in the bank or in t bills. We actually invest
Speaker 2: the money in bitcoin. So you can imagine when the
Speaker 2: company issues, if we were to sell a billion dollars
Speaker 2: of equity in the market and it's back by five
Speaker 2: hundred million a bitcoin at one hundred percent premium, then
Speaker 2: we buy the bitcoin in three days later, we've generated
Speaker 2: a five hundred million dollar gain for our shareholders in bitcoin.
Speaker 2: So that's very interesting. That generates what we call a
Speaker 2: BTC yield. Now, if we do the same thing with
Speaker 2: a bond, a billion dollar convertible bond, we don't do
Speaker 2: it a one hundred percent premium. It might be a
Speaker 2: two hundred percent premium because the bond comes at a
Speaker 2: premium to the stock. So when you go up forty
Speaker 2: percent over a stock which is one hundred percent, now
Speaker 2: you're looking at something looks like more than one hundred
Speaker 2: and eighty percent. So now a billion dollar bond sold
Speaker 2: into the markets backed by three hundred and fifty million
Speaker 2: dollars a bitcoin we buy backed the billion of bitcoin,
Speaker 2: we capture the six hundred fifty million dollar gain another
Speaker 2: BTC yield. So the real operating business of the company
Speaker 2: isn't the software business anymore. I mean that's that's still there.
Speaker 2: It generates seventy five million in cash flow, but one
Speaker 2: of those bonds would generate ten years worth of earnings
Speaker 2: in five days. And so really micro strategies pioneering a
Speaker 2: new market. We're issuing securities backed by digital capital, got
Speaker 2: backed by bitcoin, and then we're buying the bitcoin back.
Speaker 2: So what that means is I could issue the bond
Speaker 2: in one week, buy the bitcoin, capture the three four
Speaker 2: five hundred million dollar gain, announce it to the market.
Speaker 2: The stock would trade up. I could do another bond
Speaker 2: the next week. So instead of a tradition model where
Speaker 2: I raise a billion dollars, I go find real estate
Speaker 2: in Auckland. I invest in the real estate, I leverage
Speaker 2: it up, and in five years you determine whether I
Speaker 2: was smart or stupid.
Speaker 1: History of our property market, you'd be pretty smart.
Speaker 2: It's a five year investment cycle. And if I was smart,
Speaker 2: after five years, I come back to the capital market
Speaker 2: and I say I'd like to raise another billion. Now
Speaker 2: I have to find another set of real estate in Auckland,
Speaker 2: or Blenham or Sydney or Melbourne, and it takes another
Speaker 2: five years to figure out whether it worked. So what
Speaker 2: you have there is heterogeneous credit, and you have a
Speaker 2: slow investment cycle. Micro strategy has homogeneous credit. We're going
Speaker 2: to raise a billion by bitcoin. Show you that we
Speaker 2: bought bitcoin to ac created bitcoin per share. The investors
Speaker 2: look at it. It's an immediate gain. We just lived
Speaker 2: through five years in five days. And then once we've
Speaker 2: done that fast rapid investment cycle, what's your next idea.
Speaker 2: I'm going to do the same thing again. I'm going
Speaker 2: to buy another billion of bitcoin. And so if you
Speaker 2: look at that against the backdrop of this year. In
Speaker 2: the first quarter, we did an eight hundred million dollar
Speaker 2: convertible bond, We bought bitcoin. The market liked it. The
Speaker 2: very next week, we went back to the market, did
Speaker 2: a six hundred million dollar convertible bond, bought more bitcoin.
Speaker 2: It was a creative the market liked it. So what
Speaker 2: we do. We went back to the next quarter. We
Speaker 2: did another eight hundred million dollar bond, We bought bitcoin,
Speaker 2: the market liked it. In the middle we sold hundreds
Speaker 2: of millions of dollars of equity and the next quarter,
Speaker 2: we sold more equity. We sold one point one billion
Speaker 2: of equity in Q three. We basically did that at
Speaker 2: a massive premium, so we captured a large BTC yield.
Speaker 2: We announced that the market liked it, and then very
Speaker 2: next week we did a convertible bond and that became
Speaker 2: a billion dollar convertible bond. And so what you see
Speaker 2: is we're running a very rapid investment cycle. We're developing
Speaker 2: a city in cyber we call that city Bitcoin. It's
Speaker 2: like if we were the first public company to show
Speaker 2: up in Manhattan and we started selling debt or public
Speaker 2: equity instruments in order to raise money to develop Manhattan,
Speaker 2: and everybody else was using cash or going at a
Speaker 2: slow rate. And if we found that the two innovations
Speaker 2: are one, we issue public securities to develop Manhattan, and
Speaker 2: the second is we can build a building in five days. Right.
Speaker 2: So you can't do that in real space. It takes
Speaker 2: five years to build a building, right, and you can't
Speaker 2: hit the public markets for capital. But in cyberspace, I
Speaker 2: can raise the capital every month. I can build the
Speaker 2: building in five days. Our investors are bitcoiners, right, So
Speaker 2: if you're a bitcoiner, what do you think you think
Speaker 2: bitcoin's going to go up forever with some volatility. So
Speaker 2: what do you want? You want more bitcoin per share.
Speaker 2: So how do you know whether the company is succeeding
Speaker 2: that's giving you bitcoin per share. Well, we do the deal,
Speaker 2: we announce BTCLD. This is how your bitcoin per share
Speaker 2: are creeded. How long does it take? Takes a few days.
Speaker 2: So the real micro strategy business is to be the
Speaker 2: leading public issuer of securities in order to acquire bitcoin.
Speaker 2: And as we acquire the bitcoin, we're driving up the
Speaker 2: scarcity of the bitcoin. We've now bought more than one
Speaker 2: percent of the bitcoin. Now there's only four hund and
Speaker 2: fifty bitcoin available for sale from every day by natural sellers,
Speaker 2: the miners, you know. So four hundred and fifty times
Speaker 2: sixty seven thousand a bitcoin, it works out the twenty
Speaker 2: twenty million in change. So you can see what happens
Speaker 2: is if we're raising capital via tapping into the public
Speaker 2: equity markets and the public fixed income markets, and we're
Speaker 2: bringing that capital back and we're structuring our balance sheet
Speaker 2: and we're buying the bitcoin, then that's good for bitcoin,
Speaker 2: and of course that lefsverage that we get via issuing
Speaker 2: the debt that's four point two billion dollars of debt
Speaker 2: at eighty basis points. So we pay, you know, we
Speaker 2: pay less than one percent interest for the four point
Speaker 2: two billion, which creates the leverage on the equity. And
Speaker 2: because there's leverage on the equity, that creates more performance.
Speaker 2: It also creates more volatility. Now, who wants volatility? The
Speaker 2: option traders want volatility. So in the options market, we've
Speaker 2: gone from a three million dollar open interest in micro
Speaker 2: strategy options to some day's forty billion, right, So the
Speaker 2: options traders are trading high volatility. You can think of
Speaker 2: them as the options traders want ten x leverage on Bitcoin,
Speaker 2: ten to twenty x leverage, and maybe they want it long,
Speaker 2: they want calls, or maybe they want to short it
Speaker 2: ten x. They just you know, the haters want to
Speaker 2: short it. The numbers what a log it, right, But
Speaker 2: then micro strategy is like one point five x bitcoin.
Speaker 2: And then if you build a derivative on micro strategy
Speaker 2: like MSTU or mst X, they're like two x micro strategy.
Speaker 2: So that's like three x bitcoin. And so how well
Speaker 2: have they done in like two weeks? They raise like
Speaker 2: seven hundred million dollars in two weeks no marketing. So
Speaker 2: on top of this stack, if you're looking at spot
Speaker 2: bitcoin et spot bitcoin, you either buy bitcoin or you
Speaker 2: buy ibit or FBTC. They're offering you standard bitcoin returns
Speaker 2: fifty ar R with fifty fifty volatility and fifty R
Speaker 2: and one hundred percent upside one hundred percent downside. That
Speaker 2: is the digital commodity micro strategy. The stock is one
Speaker 2: point five x, and the way we get to one
Speaker 2: point five x is we issue these bonds which give
Speaker 2: you half the upside of bitcoin little downside. What if
Speaker 2: I want half the upside five percent of the downside, right, Well,
Speaker 2: that's you buy a convertible bond, a senior in the
Speaker 2: capital structure of a company that's four x over collateralized. Right.
Speaker 2: So people that are risk averse they can actually buy
Speaker 2: the bond. They get half the benefit. People that are
Speaker 2: bitcoin maximalists can buy the equity and get one point
Speaker 2: five percent benefit. The degenerates, the traders, they can get
Speaker 2: three to ten x, and then the haters can short
Speaker 2: the common stock or short or short with puts. And
Speaker 2: we have sometimes fifteen billion dollars or twenty billion dollars
Speaker 2: of open put interest. You know, when I was a
Speaker 2: younger man, when we first came public, you know, I
Speaker 2: was in my early thirties, and if people shortened my stock,
Speaker 2: I'd be like, they're short of my stock. I don't
Speaker 2: like them.
Speaker 3: But you still called them to generates today.
Speaker 2: You know, that's that's a term where am I I
Speaker 2: would reserve to people that are traded with so much leverage.
Speaker 2: They might get wiped out on the weekend, but they
Speaker 2: do it for the thrills in lieu of going to Vegas. No,
Speaker 2: but when I was a younger man, you know, I
Speaker 2: would have been concerned about people short in my stock.
Speaker 2: But now I'm not because micro strategy is really just
Speaker 2: providing a set of institutional instruments. Then institutional investors can
Speaker 2: use to tailor a portfolio that's long short hedged. They
Speaker 2: can sell the volatility, they can arbitrage the volatility, they
Speaker 2: can arbitrage any instrument against any other instrument. They can
Speaker 2: generate yield, they can buy insurance. Some of those people
Speaker 2: that are short, they'll short a billion dollars of micro
Speaker 2: strategy and they'll buy a billion dollars a bitcoin. And
Speaker 2: so if we didn't exist, then billions and billions of
Speaker 2: dollars of capital from the traditional finance markets wouldn't be
Speaker 2: invested in bitcoin because they can't buy or hold the
Speaker 2: underlying crypto asset. They can only buy securities or bonds
Speaker 2: or options or other instruments. So we become an institutional
Speaker 2: gateway for crypto exposure by all types of investors. And
Speaker 2: you know, my real aspiration now is if you really
Speaker 2: hate bitcoin, I want you to love us like we're
Speaker 2: the perfect instrument to short right of you, because I
Speaker 2: promise you I won't sell it right. We're going to
Speaker 2: be levered long bitcoin. And if you're if you don't
Speaker 2: like it, or if you just want to hedge it,
Speaker 2: you get to sell our stock or sell or sell
Speaker 2: puts or byputs right and uh. And the worst thing
Speaker 2: I could do is to take your side of the
Speaker 2: trade or to interfere with what you're doing. So so
Speaker 2: I think part of micro strategies rise to prominence in
Speaker 2: the space is we have been laser focused. We're very consistent,
Speaker 2: we're very transparent. We're going to buy bitcoin, never sell bitcoin.
Speaker 2: We're going to borrow money intelligently. If you like Manhattan
Speaker 2: and if a company said I'm going to borrow five
Speaker 2: billion dollars at one percent interest, and I'm going to
Speaker 2: develop real estate in Manhattan. You might think that that's
Speaker 2: kind of company you would like to invest in. But
Speaker 2: if you hate Manhattan and we're one hundred and fifty
Speaker 2: percent exposed in Manhattan, you get this investment teach you're like,
Speaker 2: that's the company I want to short. And the most
Speaker 2: important point in the marketplace is you just have to
Speaker 2: be very pure, true to your focus, have integrity and
Speaker 2: consistency and transparency because it's it's not my job to
Speaker 2: trade hedge arbitrage or construct that portfolio. There are guys
Speaker 2: with hundreds of millions or billions of dollars in a
Speaker 2: Bloomberg and that's what they do every day. So my
Speaker 2: contract with them is we're going to do what you
Speaker 2: can't do. We're going to buy bitcoin, whole bitcoin, and
Speaker 2: we're going to issue equity and we're going to issue
Speaker 2: debt instruments and you can't do that. We're a public
Speaker 2: company and on the you know the Nasdaq Stock Exchange
Speaker 2: in America with the nearly thirty year track record, and
Speaker 2: we have sixteen billion of permanent capital that's bitcoin, right,
Speaker 2: So I can create an equity with eighty or ninety vol.
Speaker 2: I can have permanent capital. We can stand massive swings
Speaker 2: because of our capital structure. That's what we can do.
Speaker 2: What you can do is decide if you want to
Speaker 2: buy it, sell it, hedge it, or short it. Short it.
Speaker 3: So let's talk about micro strategies.
Speaker 1: Rise there. In the past few days, it hit forty
Speaker 1: three billion dollars, a fifty two week high. All of
Speaker 1: those functions that you've spoken about, the reasons why you
Speaker 1: think that your stock can currently command a dreemium to
Speaker 1: its net asset value forty three billion at it's high
Speaker 1: versus that sixteen billion, and it's near asset value being
Speaker 1: the bitcoin holdings. Give me the rationale beyond what you've
Speaker 1: mentioned about those functions for you think that you think
Speaker 1: it may be able to continue to expand to perhaps
Speaker 1: one trillion.
Speaker 2: Yes, because I mean, if you wanted to make it.
Speaker 2: Put it simply, we're the only company that can issue
Speaker 2: bitcoin back bonds. So anybody can buy bitcoin and have
Speaker 2: all the downside and all the upside and all the volatility.
Speaker 2: But what if I want half the upside but no downside. Well,
Speaker 2: there's a lot of people if you look at the
Speaker 2: at the fixed income market, Look at the corporate debt market,
Speaker 2: look at the preferred stock market, look at the convertible
Speaker 2: bond market. People in the convertible bond market, they have
Speaker 2: to buy a convertible bond I can buy. I can
Speaker 2: sell a billion dollars of bonds in one day to
Speaker 2: people that have to buy the bar. They can't buy bitcoin,
Speaker 2: they can't buy the equity. So who in the market
Speaker 2: is the leading issue of convertible bonds. Well, we are
Speaker 2: micro Strategy. We've issued like five billion dollars worth of
Speaker 2: convertible bonds, and so we've got that credibility. And what's
Speaker 2: going to back the bonds Bitcoin? Well, what if I
Speaker 2: had fifty billion dollars of cash and treasuries and I
Speaker 2: wanted to issue bitcoin bonds. It wouldn't work. Why because
Speaker 2: the volatility of a T bill is five, the volatility
Speaker 2: of bitcoin is fifty. The volatility of micro Strategy equity
Speaker 2: is eighty. If you want to buy a convertible bond,
Speaker 2: you want to buy a bond from an issuer that
Speaker 2: has volatility more than forty five. You want high volatility,
Speaker 2: you want high liquidity, and of course you also would
Speaker 2: like the bitcoin upside. If bitcoin if it doubles, the
Speaker 2: convertible bond will provide you a bitcoin return only if
Speaker 2: it's sold to you by a company that's all all bitcoin.
Speaker 2: So micro Strategies this bitcoin securities company. And if if
Speaker 2: I want highvoll high performance bitcoin equity, well you have
Speaker 2: to have a company is one hundred and fifty percent bitcoin.
Speaker 2: If you want high volatility, high performing bitcoin converts, you
Speaker 2: need a company that's backed by bitcoin. If you want
Speaker 2: to buy, you know, a bond that pays one hundred
Speaker 2: two hundred basis points more than conventional things, you need
Speaker 2: a company that can sell you that bond that has
Speaker 2: a way to generate better than that. So there's an
Speaker 2: entire swap market out there where a lot of people
Speaker 2: would love to get paid seven percent interest. Fixed income
Speaker 2: retirees let people literally have one hundred billion dollar funds
Speaker 2: and they have to buy bonds that generate fixed income.
Speaker 2: That's the name of the fund, fixed income. They can't
Speaker 2: buy bitcoin, they can't buy the equity, They might not
Speaker 2: even buy the convertible bond. So MicroStrategy can we can
Speaker 2: generate that bond. And of course bitcoin's been going up
Speaker 2: fifty percent a year, so we have crude capital digital capital.
Speaker 2: On one side, this is fifty percent with massive volatility.
Speaker 2: There's a lot of people that would love ten percent
Speaker 2: fixed income with ten volatility. So how do you turn
Speaker 2: you know, high voltage capital into low voltage fixed income.
Speaker 2: You need a transformer, Okay, So what's the perfect transformer?
Speaker 2: A company with ten twenty thirty billion dollars of bitcoin
Speaker 2: and then I sell a billion dollar bond here that
Speaker 2: gives you this percentage and this low volatility, and I
Speaker 2: invest the money into this which is high performance, high volatility.
Speaker 2: And so what Microstate does is we're scraping or stepping
Speaker 2: down the volatility, and we're stepping down the performance. Now
Speaker 2: you would think, why would you want ten percent instead
Speaker 2: of fifty percent? I mean, like, why would you want that? Well,
Speaker 2: micro Strategy has gotten fifty percent every year for the
Speaker 2: past four years, but we took fifty percent vole. Right.
Speaker 2: The world's full of people that would rather have five
Speaker 2: percent and five vol or ten percent and ten vol
Speaker 2: or fifteen percent and fifteen vol. So, in essence, micro
Speaker 2: strategies opportunity is to be that leading public company in
Speaker 2: securitizing this asset class and then providing the derivatives, you know,
Speaker 2: fixed income, high yield, convertible, high performance equity, And you
Speaker 2: can't really do that if you don't have a public
Speaker 2: company with permanent capital. You can't do it with that
Speaker 2: sec forty and ETA for a trust. See they've got
Speaker 2: overnight deposits. They can't generate five years duration leverage on
Speaker 2: some kind of preferred or bond like instrument. So I
Speaker 2: guess the last metaphor I give you is, you know,
Speaker 2: standard oil created the oil business. So I give you
Speaker 2: a petrochemical refinery and think about what goes in one side.
Speaker 2: It's crude oil. What comes out the other side? Gasoline?
Speaker 2: Why do you put gasoline in the car, because that's
Speaker 2: the only thing that works. Kerosene? What do you put
Speaker 2: that in jets? That's jet fuel? Right? Propylene?
Speaker 1: You know, the two men goes in paint.
Speaker 2: All of those petrochemical products come out this side. The
Speaker 2: refinery does a lot of work and incomes crude oil.
Speaker 2: So think of micro strategy as we take in crude capital.
Speaker 2: There's no doubt it's the best performing acid fifty years.
Speaker 2: It's theoretically the best digital. Best form of capital is
Speaker 2: digital capital. It's just scary to a lot of people.
Speaker 2: It's too volatile, it's too difficult to manage. So they
Speaker 2: want someone that can, you know, domesticate it, step it down,
Speaker 2: package it in safe components, and then connect it into
Speaker 2: the fixed income market, the high yield market, the you know,
Speaker 2: the convert market, and the public equity markets and micro strategy.
Speaker 2: You know, we inadvertently, we just inadvertently backed into that
Speaker 2: because to do what you do what we did, you
Speaker 2: have to start with a very small company, a billion
Speaker 2: dollar company, and then we become a forty billion dollar
Speaker 2: company and now we're one hundred and fifty percent bitcoin.
Speaker 2: So if you take another billion dollar company and do
Speaker 2: what we're doing, you can't catch us, because at this
Speaker 2: point we can we can grow five ten billion dollars
Speaker 2: a year in capital or faster. Can't catch us if
Speaker 2: you start with the same thing. But if you take
Speaker 2: a big company like Google or Meta or Microsoft or Apple,
Speaker 2: and they took fifty billion and they bought fifty billion
Speaker 2: a bitcoin, well that would be good for Bitcoin, and
Speaker 2: that would be good for their shareholders. And if Apple
Speaker 2: did it a lot, they might add a trillion dollar
Speaker 2: to their market cap, but it would be a trillion
Speaker 2: on top of three trillion, So at the end of
Speaker 2: the day, Apple would be an enterprise twenty five percent bitcoin,
Speaker 2: seventy five percent Apple micro strategy is an enterprise one
Speaker 2: hundred and fifty percent Bitcoin. So how do you create
Speaker 2: a company which is one hundred and fifty percent bitcoin
Speaker 2: that can sell billions of dollars of fixed income instruments
Speaker 2: or billions of equity into the market with a permanent
Speaker 2: capital base that's going to oscillate, It's going to vibrate
Speaker 2: with the frequency of bitcoin, right that that is I'd
Speaker 2: love to say we had the idea four years ago
Speaker 2: and that's what we were trying to do. No, we
Speaker 2: just kind of stumbled onto just a really great business.
Speaker 1: I do want to get to Apple and how you
Speaker 1: perhaps plan to convince companies like that to follow your
Speaker 1: Bitcoin adoption strategy playbook.
Speaker 3: But this whole conversion.
Speaker 1: Financial engineering type strategy is often referred to online as
Speaker 1: the infinite money glitch. But I wonder if it is
Speaker 1: infinite or not. And if it's not, do you perhaps
Speaker 1: see it running into more of a supply issue first
Speaker 1: or a demand issue first, demand being perhaps there might
Speaker 1: not be potential buyers of all of those other options
Speaker 1: like bonds or supply that if you create too many
Speaker 1: shoes and can make too many conversions from your stock,
Speaker 1: that investors existing investors will be diluted too much that
Speaker 1: you'd then run into a sort of cap with that.
Speaker 3: Or can this just keep going forever?
Speaker 2: Michael, see the misnomer there is. It's not a money glitch.
Speaker 2: It is a digital transformation of the capital markets. When
Speaker 2: you have a system that moves from a higher energy state,
Speaker 2: a more disordered state, to a lower energy state, lots
Speaker 2: of energy gets given off. Think of steam becoming water, like,
Speaker 2: is it a money glitch? It's just steam becoming water
Speaker 2: and it condenses what heps when water becomes ice, it's
Speaker 2: not a heat glitch. But heat what you and what
Speaker 2: happens when you add heat, the ice becomes water, the
Speaker 2: water becomes steam. So if you look at the capital markets,
Speaker 2: you've got eight hundred nine hundred trillion dollars of wealth
Speaker 2: in the capital market, and you've got this wealth, You've
Speaker 2: got people invested in all these heterogeneous assets. Why to
Speaker 2: ninety eight percent of the companies in the S and
Speaker 2: P five hundred not perform? Right? How come one percent
Speaker 2: of all the returns come from like seven companies. Right,
Speaker 2: what I talked about with if you study the convertible
Speaker 2: bond market, someone issues a convertible bond, it takes them
Speaker 2: five years for the investors to figure out whether it worked,
Speaker 2: and then when they come up with a new convertible bond.
Speaker 2: Is a different credit proposition. It's very inefficient, right, if
Speaker 2: you think about preferred stocks very inefficient, junk bonds very inefficient,
Speaker 2: private credit very inefficient. You know, fixed income people get
Speaker 2: very low yields. What if I you know, I'm getting
Speaker 2: this yield and I'm taking all this credit risk and
Speaker 2: counterparty risk. So of the nine hundred trillion in capital
Speaker 2: in the global capital markets, half of it is just
Speaker 2: long term, well store of value, long term capital. You know,
Speaker 2: that is pure capital. People with money just want to
Speaker 2: keep their money rich, just want to stay rich. I
Speaker 2: give you an organization of billion dollars in the endowment,
Speaker 2: you just want to not lose the billion dollars. Precisely right,
Speaker 2: So that four hundred and fifty trillion is invested in
Speaker 2: buildings that are rusting, it's invested in cars, it's invested
Speaker 2: in fleets, it's invested in things that suffer from twentieth
Speaker 2: century risk factors, credit, default, war, tariff, tornado, text tech.
Speaker 2: You know, like you had a good business at Kodak
Speaker 2: and your family had all their money in Kodak, and
Speaker 2: then what happened. Or you owned Xerox and what happened.
Speaker 2: Then you own the best business in Ukraine, and then
Speaker 2: as a war that happened. Right, I could give you
Speaker 2: ten thousand examples of risk factors that destroy wealth. So
Speaker 2: you've got that four hundred and fifty trillion on one side,
Speaker 2: and then you've got one trillion digital capital. It's like,
Speaker 2: well I had a building. I get rid of all
Speaker 2: the things that make the building a problem, and I
Speaker 2: make it an invisible, immortal, indestructible, teleportable, digital building. That'd
Speaker 2: it be cool? Okay? Well that's what bitcoin is. So
Speaker 2: this thing that people think of as a gwitch, it's
Speaker 2: not that. It's it's energy flowing from a from a
Speaker 2: steam state, from highly disordered, inefficient bouncing into each other
Speaker 2: into a more ordered state. Right, it's moving from a
Speaker 2: year in Africa, I give you a billion dollars, I
Speaker 2: say go invest in any real estate in Africa and
Speaker 2: anything you want, any country, hold it for thirty years.
Speaker 2: There's not a single thing you know that you would
Speaker 2: want to invest in. And I say, well, you know,
Speaker 2: would you rather own a billion dollars of real estate
Speaker 2: in Africa or a billion dollars of real estate in
Speaker 2: New York City. Well, you can see you'd rather swap
Speaker 2: the New York City risk for the for the Nigerian risk.
Speaker 2: And then I say, well, would you rather own a
Speaker 2: billion dollars of real estate in New York City or
Speaker 2: a billion dollars of bitcoin? Or billion dollars in cyber Manhattan.
Speaker 2: There's no mayor in cyber Manhattan. There's no property tax
Speaker 2: in cyber Manhattan. There's no storms, there's no weather in
Speaker 2: cyber Manhattan. Everybody lives forever in cyber Manhattan. You can
Speaker 2: you know, you can teleport cyber Manhattan sixty times a second.
Speaker 2: You can program it as an AI. It's like, so
Speaker 2: what you see is it's not it's not a glitch.
Speaker 2: It's simply capital flowing from a disordered economy. In Argentina
Speaker 2: and Nigeria, they have hyperinflation. Okay, So if I happen
Speaker 2: to be there and I'm selling pesos and buying dollars,
Speaker 2: and you know, the peso used to be one peso
Speaker 2: to the dollar, and today it's like fourteen hundred or
Speaker 2: twelve hundred pasos to the dollar. Was that a glitch?
Speaker 2: Like was?
Speaker 3: Or was that?
Speaker 2: That's basically the free market. It's it's capital flows to
Speaker 2: where it's treated the best. And so if I have capital,
Speaker 2: you know in Argentina, I would put it in the US.
Speaker 2: And if I have capital and the dollar, let's take
Speaker 2: the dollar. One hundred years ago in Miami Beach, an
Speaker 2: acre of land in the waterfront cost ten thousand dollars,
Speaker 2: today ten million dollars. The dollar lost ninety nine point
Speaker 2: nine percent of its value against real estate waterfront property
Speaker 2: in Florida. Okay? Is that a glitch? Right in? The
Speaker 2: peso lost ninety nine point nine percent of its value
Speaker 2: against the dollar in twenty years. Is that a glitch?
Speaker 2: That's really just capital flowing from a weak asset to
Speaker 2: a middling asset to a stronger asset. And Bitcoin's advance
Speaker 2: is capital flowing from twentieth century analog assets, financial and
Speaker 2: physical assets to the twenty first century digital economy. And
Speaker 2: it's going to go fast. Early on, it went really fast.
Speaker 2: The first decade has been going fifty percent a year
Speaker 2: ar for the past four years. But as the one
Speaker 2: trillion equalizes with the four hundred trillion, and this becomes
Speaker 2: two hundred. When this becomes four, probably this four hundred
Speaker 2: and fifty trillion will become seven hundred trillion, But this
Speaker 2: one trillion will become one hundred trillion, And so as
Speaker 2: this becomes a fraction of the twentieth century economy. The
Speaker 2: difference between the cost of capital on the bitcoin universe,
Speaker 2: which is fifty percent right now, and the cost of
Speaker 2: capital in the dollar universe, which is about twelve to
Speaker 2: fourteen percent. Look at basically, that's the return of the
Speaker 2: S and P. So the S and P sets the
Speaker 2: cost of capital for traditional conventional assets, and bitcoin is
Speaker 2: the opposite. And so bitcoin is like three and a
Speaker 2: half times the S and P. And it's also three
Speaker 2: and a half times of volatility. Look at dvol Bitcoin
Speaker 2: volatility fifty five versus the VIX. And so if you
Speaker 2: look at the two it's not a complicated thing. It's
Speaker 2: a thermodynamic idea that any physicists will tell you. This
Speaker 2: is a hot fluid, this is a cold fluid. I
Speaker 2: pull up the gate and I mix the fluids. And
Speaker 2: how hot is the bathtub it's somewhere in between, right,
Speaker 2: the temperature is it's going to be in between scalding
Speaker 2: hot and freezing cold and in the middle. If there
Speaker 2: are some ice cubes in this one and I have
Speaker 2: at least scalding hot water, ear some of the ice
Speaker 2: cubes are gonna melt, but you're gonna end up with
Speaker 2: a warm bath. With the exception that there's always going
Speaker 2: to be you know, if you look out, if you
Speaker 2: look out ten years instead of fifty versus fifty voll
Speaker 2: versus fifteen ball, maybe it'll be forty five to forty
Speaker 2: to thirty eight to thirty six to thirty two to
Speaker 2: twenty eight. This volatile is coming in. This arr is
Speaker 2: coming in. Now. This comes up because what happens when
Speaker 2: when like when Apple and Google and Microsoft and Facebook
Speaker 2: or whatever, when they buy bitcoin. What happens when you
Speaker 2: could take the bottom ninety eight percent of the S
Speaker 2: and P five hundred if they bought bitcoin, their performance
Speaker 2: would start to approach the big tech and so the
Speaker 2: performance of the S and P index will move toward
Speaker 2: bitcoin as they put bitcoin on the balance sheet, Bitcoin
Speaker 2: performance will move toward the S and P. As we
Speaker 2: move move from you know, a one hundred to one
Speaker 2: ratio to a ten to one ratio to a five
Speaker 2: to one ratio, and these things equalized. But you know,
Speaker 2: if you understand it is thermodynamics and collapsing into a
Speaker 2: more efficient energy state. Like, how is it not more
Speaker 2: efficient to be able to teleport a building sixty times
Speaker 2: a second between New York and London? Like that's efficient
Speaker 2: versus your family made an investment in London thirty forty
Speaker 2: years ago and they changed the law last month, and
Speaker 2: now you're going to lose all your wealth. That's inefficient, right.
Speaker 2: So bitcoin is the digital transformation to capital. MicroStrategy is
Speaker 2: just a business taking advantage of the digital transformation. But
Speaker 2: if I was talking to Apple, I would say, don't
Speaker 2: buy back one hundred billion of your stock. Buy one
Speaker 2: hundred billion of bitcoin. It will go to five hundred billion.
Speaker 2: You'll have a five hundred million dollar business growing twenty
Speaker 2: percent a year. You'll make one hundred billion investment games
Speaker 2: a year. Your investors will look at it and they'll
Speaker 2: add a trillion or two trillion dollars to your market cap.
Speaker 2: And now the company will be valued sixty percent based
Speaker 2: upon the operating business, forty percent based on the balance
Speaker 2: sheet right, and the risk will shift. Because the risk
Speaker 2: in a conventional company is the balance sheet's worthless and
Speaker 2: the company's value based upon the P and L. And
Speaker 2: so if you make a billion dollars a quarter, I
Speaker 2: basically value it at twenty.
Speaker 3: P to E.
Speaker 2: So I take the quarterly result, I'm multiply by eighty,
Speaker 2: and I say, oh, you're worth eighty billion dollars because
Speaker 2: I took one billion. I'm multiplyed by eighty, and the
Speaker 2: balance sheet's worthless. But the next quarter, I say, well,
Speaker 2: my billion went to zero. Well that's eighty times a
Speaker 2: billion dollar change. You've got a massive whip saw. That's
Speaker 2: why these companies stocks crash. If the company had forty
Speaker 2: billion dollars of tangible assets on the balance sheet and
Speaker 2: it was that puts a floor right on the equity.
Speaker 2: And really what you want is you want a well
Speaker 2: balanced company where it's like Harvard University or Yale. They're
Speaker 2: not valued based upon the earnings of this semester of
Speaker 2: freshmen entering Harvard. They're valued because they have eighteen billion
Speaker 2: in the endowment. You know, and if they close, the
Speaker 2: university is still rich. They have eighteen billion in the endowment.
Speaker 2: So micro strategies just pioneering. It's kind of common sense.
Speaker 2: Your family wouldn't give away all your money and just
Speaker 2: say we're going to work harder, And a university wouldn't
Speaker 2: give away all its money and say we're going to
Speaker 2: raise tuition, cram the classes, cut the teacher's salary, and
Speaker 2: work harder. But conventional wisdom and finance is your company
Speaker 2: ought to diving it out its capital, It ought to
Speaker 2: buy back its stock. It shouldn't actually hold any capital
Speaker 2: in the balance sheet, and it should just raise its
Speaker 2: prices and tell its employees to work harder and cut
Speaker 2: its cost. And that, in a nutshell, is why ninety
Speaker 2: nine percent of the companies in the world underperform the
Speaker 2: Magnificent seven and why they all could benefit by just
Speaker 2: adopting bitcoin. Is there a Treasury reserve standard?
Speaker 1: That was an interesting point you made about analyzing and
Speaker 1: coming to the valuation in terms of analyzing the performance
Speaker 1: of a company. Right, investors historically, as you mentioned, just
Speaker 1: look at a price to earnings forward looking ratio or
Speaker 1: look at the profit and loss. How should investors analyze
Speaker 1: micro strategy Because if you mentioned that, to give you
Speaker 1: a metaphor, micro strategy is the tap to that capital flow.
Speaker 1: As you mentioned, there's nothing else like that, like are
Speaker 1: you a bitcoin bank? Do we value you similar to
Speaker 1: do we analyze you similar to a bank or do
Speaker 1: I've seen a simplification perhaps as analyzing micro strategy like
Speaker 1: a ret like a real estate investment trust, But that
Speaker 1: feels too simple. I mean, is there anything we can
Speaker 1: compare it to micro?
Speaker 2: I think I think you got to look at the
Speaker 2: balance sheet and say, okay, that's one component. They've got
Speaker 2: this much bitcoin, and then you got to look at
Speaker 2: the P and L and say, well, how much investment
Speaker 2: income can they generate? So if the company gets to
Speaker 2: fifty billion dollars a bitcoin, and if bitcoin goes up
Speaker 2: twenty percent a year, the company generates ten billion dollars
Speaker 2: a year of investment income and that compounds twenty percent
Speaker 2: a year. So if I said to you, hey, here's
Speaker 2: a big tech company that makes ten billion a year
Speaker 2: and they're growing that twenty percent a year, how would
Speaker 2: you value that?
Speaker 1: I mean, through the roughot it there you go.
Speaker 2: So it's not very complicated. The thing that's helped people
Speaker 2: back is we've used in definite and tangible accounting for
Speaker 2: the last four years, and it's not until twenty twenty
Speaker 2: five that you actually start to do fair value accounting.
Speaker 2: And when you start to do fair value accounting, you
Speaker 2: can actually see investment income and you can see the
Speaker 2: income potential. And so it's not complicated to figure out
Speaker 2: what the balance sheet is. Everybody knows, you know, two
Speaker 2: hundred and fifty two thousand bitcoin. The complicated thing is
Speaker 2: to grasp the idea of a company that's securitized that
Speaker 2: issues securities back by bitcoin, and the real franchise the
Speaker 2: micro strategy has is we're the leading issuer of bitcoin
Speaker 2: back securities. So the question is how much capital can
Speaker 2: we raise, how much permanent capital we have? And the
Speaker 2: second question is how much leverage will we use and
Speaker 2: how intelligent will it be? And the third question is
Speaker 2: what's your forecast for bitcoin? Right? I mean? And so
Speaker 2: there's three variables there. If we barrow ten billion dollars
Speaker 2: at seven percent, and we invest in bitcoin and bitcoin
Speaker 2: returns twenty one percent, then we scrap fourteen percent arbitrage
Speaker 2: on ten billion, We make one point four billion a
Speaker 2: year in the swap, We roll that into the business,
Speaker 2: and then ten years out you've got fifty billion dollar
Speaker 2: business fifty billion in capital, and you're generating ten billion
Speaker 2: dollars your investment income just off of that one piece. Right,
Speaker 2: But it all comes down to, you know, what's the
Speaker 2: nature of the capital, how much can we get and
Speaker 2: raise and then how will we invest it and will
Speaker 2: be responsible? You know? And you know the haters, right,
Speaker 2: the haters think, well, Bitcoin's just going to go up
Speaker 2: zero percent a year, right, So of course from their
Speaker 2: point of view, the balance sheet's going nowhere. And if
Speaker 2: bitcoin goes zero percent a year, you can't raise any capital, right,
Speaker 2: So if that's your forecast, you're not that interested. You know.
Speaker 2: My view is Bitcoin's going to appreciate twenty nine percent
Speaker 2: a year arr for the next twenty one years, right,
Speaker 2: that's what it takes it too.
Speaker 3: Well, was the dollar cigirl on that.
Speaker 2: Thirteen million pi bitcoin? Yeah? Okay, And so what do
Speaker 2: you think my shareholders think? Well, my shareholders are pretty
Speaker 2: bullish on bitcoin, right. There's no one buying Micro's strategy
Speaker 2: that hates bitcoin. No, they're shooting in Yeah. So at
Speaker 2: the end of the day, I mean, the methodology would
Speaker 2: be figure out what's your forecast for bitcoin? By the way,
Speaker 2: you can go to Google type Bitcoin twenty four and
Speaker 2: you'll find the Bitcoin twenty four open source model. It's
Speaker 2: a twenty one year model. You can download it. It's
Speaker 2: a spreadsheet you can put in your forecast for innovation rate,
Speaker 2: inflation rates, all the asset class, monetizations, demonetizations, bitcoin assumptions, supply. Well, yeah,
Speaker 2: you can put that all in and you can run
Speaker 2: your model and you can get your own answer. Right,
Speaker 2: So do that, and then you just got to consider, well,
Speaker 2: how much capital do you think the micro strategy will
Speaker 2: raise via securities offerings? And after you do that, you
Speaker 2: decide are we responsible custodians? And then you create a
Speaker 2: five or ten year model for our investment income and
Speaker 2: you figure out how much income can we generate and
Speaker 2: how fast can we grow? And of course all those
Speaker 2: things are very integrated. And you know, if the more
Speaker 2: you know about the capital markets, the more enthusiastic you get,
Speaker 2: because we look and we say the convertible markets are
Speaker 2: in a efficient, the preferred stock markets inefficient, the high
Speaker 2: yield markets inefficient, the corporate debt markets inefficient. You know,
Speaker 2: the real estate market is and efficient. So you know,
Speaker 2: we our view is we kind of want to be
Speaker 2: the Amazon of fixed income. We want to we want
Speaker 2: to build a better product direct to a new distribution channel.
Speaker 2: And uh, you know, I don't blame people for not
Speaker 2: necessarily understanding that, because sometimes you have to see it.
Speaker 2: And in the in the absence of you know, fair
Speaker 2: value accounting and the like and three or forecasts and
Speaker 2: those you know don't exist. It's it's a lot for
Speaker 2: people to grasp right now.
Speaker 1: Well, you've even had to come up at micro strategy
Speaker 1: with your own measurement to measure the success of the strategy.
Speaker 1: You already mentioned it earlier on in this chat. The
Speaker 1: BTC yield Currently you're to date, that's around twelve point
Speaker 1: two percent that yield.
Speaker 3: But over the next three.
Speaker 1: Years, according to your most recent quarterly report, you're targeting
Speaker 1: something betwe I think four to eight percent. Does that
Speaker 1: correct that? So that then implies a diminish, a diminishing
Speaker 1: in that yield. So once it decreases or compresses that yield,
Speaker 1: what happens then? Do you need to come up with
Speaker 1: another means to well in the capital.
Speaker 2: Let's just focus on BTCo for a second. What is it?
Speaker 2: It's the rate of increase in bitcoin per share. So
Speaker 2: if I think we're getting close to almost an eighteen percent,
Speaker 2: like seventeen percent BTC yield for the year so far,
Speaker 2: And that means that between January first and today you've
Speaker 2: you've gotten more than seventeen percent more BTC per share.
Speaker 2: If I if I gave you a company and I
Speaker 2: said it's going to dive in and yield to seventeen percent,
Speaker 2: and I give you another company, say it's got to
Speaker 2: be a dividend yield of zero, you know, it's like, well,
Speaker 2: you would value the second one based upon the underlying asset,
Speaker 2: but you're not going to any more. But the first
Speaker 2: one you would actually take the underlying asset it and
Speaker 2: then you would take the yield. And then the question
Speaker 2: is how long will they generate that yield? Right, And
Speaker 2: what's the average yield over the lifetime of my holding period.
Speaker 2: So in that case, I mean you could say, if
Speaker 2: I expect four to eight percent yield, you could put
Speaker 2: a ten, twenty, or thirty pde on that. Sometimes people
Speaker 2: will know it's basically your earnings per share in a way,
Speaker 2: but you know, we can't really call it that because
Speaker 2: it's it's a non gap measure, and it's a it's
Speaker 2: a bitcoin per share type measure for that's valuable to
Speaker 2: people that love bitcoin. But when you think about it
Speaker 2: that way, right, this simple model there is the company
Speaker 2: should have a premium equal to the multiple of the yield. Right.
Speaker 2: If you think the multiple should be twenty, and if
Speaker 2: you think the yield will be eight percent, then you
Speaker 2: could say the companies are traded one hundred and sixty
Speaker 2: percent premium to the underlying asset. Right, So so the
Speaker 2: ability to generate that yield will justify that premium. And
Speaker 2: it's a simple model, but it's not the whole model.
Speaker 2: The real issue is how you generate the yield, and
Speaker 2: the way you're generating the yield is through issuing securities
Speaker 2: to the public market. You know that come to generate
Speaker 2: that yield. And one way to do it is by
Speaker 2: issuing equity at a premium. That's a simple way, the
Speaker 2: most simple way imaginable. Right. Another way to do it
Speaker 2: is to issue convertible bonds at a premium to the equity,
Speaker 2: which may or may not be at a premium to
Speaker 2: the asset. That's a slightly less simple but still kind
Speaker 2: of straightforward way to do it. A third way to
Speaker 2: do it is I just issue a fixed income instrument
Speaker 2: that pays seven percent, and I buy bitcoin with it
Speaker 2: that yields more than seven percent, which is what you're
Speaker 2: done right Well, well, technically that's not exactly what I'm
Speaker 2: doing right now. What we're doing right now is you've
Speaker 2: issued equity at a premium, and we've issued convertible bonds
Speaker 2: at a premium. You know, if the company and the
Speaker 2: future were to issue preferred stock that had to fix thing,
Speaker 2: or issue bonds corporate debt or or something that had
Speaker 2: a fixed coupon, then you would be swapping the fixed
Speaker 2: for the you know, for the bitcoin return. And of
Speaker 2: course in that case, look, if you're if your forecast
Speaker 2: or bitcoin is to go up seven percent a year
Speaker 2: and your and the company's paying seven percent for their capital,
Speaker 2: there's no yield, you see, right. If your forecast is
Speaker 2: to go up twenty one percent a year and the
Speaker 2: company pay seven percent, there's a big yield, right, And
Speaker 2: so so if you use BTC yield, then you just
Speaker 2: think about what's the company going to do to get
Speaker 2: to it. And we've just got lots of different tools
Speaker 2: to get to it. We can there's other things. There's
Speaker 2: a thousand things you could do, right, I just I'll
Speaker 2: keep it for the sake of our interview to just
Speaker 2: those few because they're simple to discuss. And you know
Speaker 2: our guidance. You know, our target is four to eight percent.
Speaker 2: We've done more than double eight percent this year.
Speaker 3: So it feels pretty conservative.
Speaker 2: Then I think we try to be conservative in our
Speaker 2: guidance because we don't want to disappoint our shareholders. But
Speaker 2: clearly you know we will. We will pursue our objective,
Speaker 2: you know, as rapidly as we can in a prudent fashion.
Speaker 1: Should we talk about the bitcoin revolution, Yeah.
Speaker 2: You are.
Speaker 1: It's all bitcoin and part two of this interview with
Speaker 1: Michael Sailer, he explains what could be Bitcoin's next big moment.
Speaker 2: Banking is just the next logical step and is.
Speaker 1: That not exactly what bitcoin is? Don't want to happen.
Speaker 2: Right, Like, at the end of the day, you have
Speaker 2: an og crypto community is very hardcore about it. But
Speaker 2: if you look at where all the money is, ninety
Speaker 2: nine point nine percent of the money is actually in
Speaker 2: the traditional economy and in the war for the future
Speaker 2: of money. The war's going to be won with money.