1
00:00:02,520 --> 00:00:07,080
Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

2
00:00:07,320 --> 00:00:09,760
Speaker 2: Another success story in terms of the stock that just

3
00:00:09,800 --> 00:00:13,000
Speaker 2: climbs and climbs and climes is Strategy. The company bought

4
00:00:13,560 --> 00:00:18,200
Speaker 2: recently one thousand and forty five more bitcoin, bringing its

5
00:00:18,239 --> 00:00:21,440
Speaker 2: total supply to five hundred and eighty two thousand, worth

6
00:00:21,440 --> 00:00:24,880
Speaker 2: more than sixty billion dollars. Bloomberg News took a look

7
00:00:24,920 --> 00:00:29,840
Speaker 2: at Strategy and it's seventy separate Bitcoin purchases since Michael

8
00:00:29,880 --> 00:00:32,800
Speaker 2: Sailor began to invest cash from the company's balance sheet

9
00:00:32,800 --> 00:00:35,760
Speaker 2: into the token in the middle of twenty twenty, and

10
00:00:36,159 --> 00:00:40,479
Speaker 2: every purchase over the last four years plus is now

11
00:00:40,600 --> 00:00:42,279
Speaker 2: a profitable purchase well.

12
00:00:42,240 --> 00:00:44,920
Speaker 1: And pleased to say that joining us now is Strategy

13
00:00:45,000 --> 00:00:48,960
Speaker 1: Executive Chairman Michael Sailor himself. Michael, it's great to have

14
00:00:49,080 --> 00:00:50,880
Speaker 1: you with us. We have a lot to talk about,

15
00:00:50,960 --> 00:00:53,360
Speaker 1: and one of those things is a recent call from

16
00:00:53,440 --> 00:00:56,600
Speaker 1: Jim Chenos. Of course, he's a legendary short seller. He

17
00:00:56,760 --> 00:01:02,960
Speaker 1: came out recently and said basically, buy bitcoin short Strategy shares,

18
00:01:03,120 --> 00:01:05,480
Speaker 1: and just to set the scene here, I'm curious what

19
00:01:05,560 --> 00:01:06,160
Speaker 1: you make of that.

20
00:01:08,080 --> 00:01:10,360
Speaker 3: You know, I don't think he understands what our business

21
00:01:10,440 --> 00:01:14,600
Speaker 3: model is we're actually the largest issuer of bitcoin back

22
00:01:14,720 --> 00:01:18,399
Speaker 3: credit instruments in the world. So last week we just

23
00:01:18,560 --> 00:01:22,880
Speaker 3: raised a billion dollars by selling a preferred stock non

24
00:01:22,959 --> 00:01:27,520
Speaker 3: cumulative called Stride. That means we basically borrowed money that

25
00:01:27,560 --> 00:01:30,000
Speaker 3: we never have to pay back, that we pay a

26
00:01:30,080 --> 00:01:32,760
Speaker 3: dividend on, but we could suspend the dividend if we

27
00:01:32,840 --> 00:01:36,840
Speaker 3: needed to. So Jim has been thinking that we somehow

28
00:01:36,880 --> 00:01:39,760
Speaker 3: needed to sell the equity. We now are in a

29
00:01:39,840 --> 00:01:44,080
Speaker 3: situation where we have Strike, Stride and Strife, three publicly

30
00:01:44,160 --> 00:01:48,480
Speaker 3: floating preferred stocks that are not deluded to the equity.

31
00:01:48,600 --> 00:01:52,240
Speaker 3: They all meet a different market requirement. Right that one

32
00:01:52,320 --> 00:01:54,680
Speaker 3: hundred and ten million dollars a bitcoin we bought last

33
00:01:54,720 --> 00:01:58,560
Speaker 3: week that was acquired without issuing any common stock. So

34
00:01:58,680 --> 00:02:03,640
Speaker 3: what's going on here is that we're using our sixty

35
00:02:03,680 --> 00:02:08,280
Speaker 3: billion dollars a bitcoin collateral to issue credit instruments. They

36
00:02:08,320 --> 00:02:12,000
Speaker 3: never come due. There's no liquidation risk, there's not even

37
00:02:12,040 --> 00:02:15,200
Speaker 3: an interest rate risk. Right, It's a noncumulative preferred and

38
00:02:15,240 --> 00:02:17,639
Speaker 3: we could suspend the dividends. So at the end of

39
00:02:17,680 --> 00:02:19,919
Speaker 3: the day, if he's lucky enough to short the stock

40
00:02:19,960 --> 00:02:23,080
Speaker 3: below one time's nab we're going to issue the preferreds,

41
00:02:23,120 --> 00:02:26,680
Speaker 3: buy back the stock and make money for our shareholders.

42
00:02:27,160 --> 00:02:30,360
Speaker 3: If the stock trades at a week premium, we're just

43
00:02:30,400 --> 00:02:34,680
Speaker 3: going to sell the preferreds, and if the stock rallies up,

44
00:02:34,760 --> 00:02:37,639
Speaker 3: he's going to get liquidated and wiped out.

45
00:02:38,040 --> 00:02:40,799
Speaker 1: Well, let's talk about that premium, because that is the

46
00:02:40,840 --> 00:02:44,240
Speaker 1: heart of his short call on Strategy, as you point

47
00:02:44,280 --> 00:02:47,560
Speaker 1: out here. So he said recently on a podcast that

48
00:02:47,760 --> 00:02:51,440
Speaker 1: shareholders are paying around two hundred and twenty thousand dollars

49
00:02:51,440 --> 00:02:53,840
Speaker 1: for bitcoin that trades at one hundred and ten thousand dollars.

50
00:02:53,880 --> 00:02:56,519
Speaker 1: But the company is doing everything it can to close

51
00:02:56,560 --> 00:02:59,359
Speaker 1: that spread, which is great, there's a catalyst. So he's

52
00:02:59,400 --> 00:03:01,519
Speaker 1: referring to the fact that you are selling your own

53
00:03:01,520 --> 00:03:04,120
Speaker 1: shares and buying bitcoin. But when it comes to the

54
00:03:04,120 --> 00:03:09,000
Speaker 1: premium that Strategy shares enjoy over the price of bitcoin itself,

55
00:03:09,040 --> 00:03:12,400
Speaker 1: do you think that that's sustainable? The fact that he

56
00:03:12,600 --> 00:03:16,840
Speaker 1: points out that basically you're the value of your company

57
00:03:16,880 --> 00:03:19,359
Speaker 1: is treating at twice that of bitcoin itself.

58
00:03:20,720 --> 00:03:23,440
Speaker 3: What he still doesn't understand is we're not a holding

59
00:03:23,520 --> 00:03:27,040
Speaker 3: company or a closed and trust. We're an operating company.

60
00:03:27,520 --> 00:03:31,520
Speaker 3: So when we issue trust, can't leverage the bitcoin. They

61
00:03:31,560 --> 00:03:35,920
Speaker 3: can't issue preferred shares, they can't issue permanent shares of

62
00:03:35,960 --> 00:03:40,040
Speaker 3: equity out of premium. We can. Our companies generated a

63
00:03:40,080 --> 00:03:44,720
Speaker 3: BTC dollar gain equal to about eight point four billion

64
00:03:44,920 --> 00:03:48,640
Speaker 3: dollars in the first two quarters of this year. That's

65
00:03:48,680 --> 00:03:52,440
Speaker 3: the equivalent of earnings for a bitcoin treasury company. Our

66
00:03:52,920 --> 00:03:56,720
Speaker 3: target for the year is fifteen billion dollars. And so

67
00:03:56,960 --> 00:04:00,920
Speaker 3: he's valuing the business that's generating eight point four billion

68
00:04:00,960 --> 00:04:05,120
Speaker 3: dollars of shareholder of value at zero, and he's hoping

69
00:04:05,400 --> 00:04:09,160
Speaker 3: that somehow the equity will trade to NAB. But what

70
00:04:09,200 --> 00:04:12,480
Speaker 3: he's what he's not paying attention to, is if we

71
00:04:12,600 --> 00:04:16,640
Speaker 3: can issue preferred shares that yield ten percent and invested

72
00:04:16,680 --> 00:04:19,640
Speaker 3: in bitcoin, which has been going up fifty fifty seven

73
00:04:19,720 --> 00:04:22,480
Speaker 3: percent for the past four and a half years, we're

74
00:04:22,600 --> 00:04:28,520
Speaker 3: capturing the forty seven percent arbitrage effectively risk free for

75
00:04:28,680 --> 00:04:31,640
Speaker 3: our common stock shareholders. And if you want to value

76
00:04:31,640 --> 00:04:34,960
Speaker 3: the company, you have to value the company's ability to

77
00:04:35,040 --> 00:04:40,120
Speaker 3: generate bitcoin yield or bitcoin games over and above the

78
00:04:40,160 --> 00:04:42,679
Speaker 3: actual holdings of the bitcoin the company has.

79
00:04:43,000 --> 00:04:46,160
Speaker 2: So, as you said, you have about sixty billion, sixty

80
00:04:46,440 --> 00:04:49,760
Speaker 2: three sixty four billion dollars orth the bitcoin your company

81
00:04:49,800 --> 00:04:51,840
Speaker 2: is worth about twice that at one hundred and six

82
00:04:52,000 --> 00:04:56,880
Speaker 2: hundred and seven billion dollars in market cap, and you

83
00:04:57,000 --> 00:05:02,039
Speaker 2: also have obviously in enterprise analytics software business. How do

84
00:05:02,120 --> 00:05:04,360
Speaker 2: you break down the value of the rest of your

85
00:05:04,360 --> 00:05:06,560
Speaker 2: company x bitcoin holdings.

86
00:05:09,720 --> 00:05:13,640
Speaker 3: If the company generates ten billion dollars of bitcoin gains

87
00:05:13,760 --> 00:05:15,760
Speaker 3: this year, you've got to put a ten or twenty

88
00:05:16,040 --> 00:05:22,000
Speaker 3: multiple on it. Right, So the bitcoin treasury company operation

89
00:05:23,200 --> 00:05:26,520
Speaker 3: is worth a multiple of ten, twenty, thirty or forty

90
00:05:26,800 --> 00:05:31,200
Speaker 3: times the BTC yield we're generating. That's the number one

91
00:05:31,320 --> 00:05:34,800
Speaker 3: source of value for the operating business. And then the

92
00:05:35,120 --> 00:05:38,760
Speaker 3: company also has sixty billion dollars plus worth of bitcoin,

93
00:05:39,240 --> 00:05:42,200
Speaker 3: and I would I would say to investors look at

94
00:05:42,200 --> 00:05:45,800
Speaker 3: it that way. A BTC dollar gain is like our

95
00:05:45,839 --> 00:05:51,280
Speaker 3: earnings equivalent, and then the bitcoin nav is the assets

96
00:05:51,320 --> 00:05:53,719
Speaker 3: on the balance sheet, and you should just look at

97
00:05:53,760 --> 00:05:55,880
Speaker 3: the earnings equivalent and put the multiple do you think

98
00:05:56,000 --> 00:05:59,240
Speaker 3: is appropriate on it. To come to an opinion about

99
00:05:59,279 --> 00:06:01,600
Speaker 3: the value of entire enterprise.

100
00:06:02,040 --> 00:06:04,640
Speaker 2: Michael Nobody has to explain the rapid rise and bitcoin

101
00:06:04,680 --> 00:06:08,280
Speaker 2: to me. I started buying bitcoins at eight hundred dollars.

102
00:06:08,360 --> 00:06:10,080
Speaker 2: I bought one as low as six hundred, but I

103
00:06:10,120 --> 00:06:17,640
Speaker 2: spent them. Unfortunately, How how do you expect the asset

104
00:06:17,720 --> 00:06:22,279
Speaker 2: to continue a price increase at these levels that we've seen,

105
00:06:22,360 --> 00:06:24,520
Speaker 2: I mean, can it keep that up over the next

106
00:06:24,560 --> 00:06:28,279
Speaker 2: five years, over the next ten years? And at what

107
00:06:28,440 --> 00:06:31,239
Speaker 2: point do we see, you know, winter coming again? Because

108
00:06:31,279 --> 00:06:38,200
Speaker 2: that's been a permanent fixture of this asset class. Right,

109
00:06:38,240 --> 00:06:42,400
Speaker 2: It's gone from zero or ony to twenty and then

110
00:06:42,520 --> 00:06:45,600
Speaker 2: back down to three or four, and then up to fifty,

111
00:06:45,640 --> 00:06:47,560
Speaker 2: and then back down to fifteen and now up to

112
00:06:47,600 --> 00:06:49,640
Speaker 2: one ten, Like, when does it drop again?

113
00:06:51,279 --> 00:06:55,000
Speaker 3: Winter is not coming back. We're past that. We're past

114
00:06:55,080 --> 00:06:57,800
Speaker 3: that phase. If bitcoin's not going to zero, it's going

115
00:06:57,839 --> 00:07:00,920
Speaker 3: to a million dollars, and you have all the evidence

116
00:07:00,960 --> 00:07:03,160
Speaker 3: you need to determine that. Right. The President of the

117
00:07:03,240 --> 00:07:07,839
Speaker 3: United States is determined he supports bitcoin, The Cabinet supports bitcoin.

118
00:07:08,120 --> 00:07:12,600
Speaker 3: Scott Peasant supports bitcoin. Paul Atkins has shown himself to

119
00:07:12,640 --> 00:07:17,080
Speaker 3: be an enthusiastic believer of bitcoin and digital assets. Ken

120
00:07:17,120 --> 00:07:21,760
Speaker 3: Tez a CFTC feels the same ray the banks are

121
00:07:21,760 --> 00:07:27,679
Speaker 3: going to custody bitcoin. Bitcoin has gotten through its riskiest period,

122
00:07:28,040 --> 00:07:31,560
Speaker 3: the accounting has been corrected. There's now only four or

123
00:07:31,640 --> 00:07:34,880
Speaker 3: fifty bitcoin a day available for sale by natural sellers,

124
00:07:34,880 --> 00:07:37,960
Speaker 3: that's the miners. At this level, that works out to

125
00:07:38,000 --> 00:07:41,680
Speaker 3: about fifty million dollars a bitcoin available for sale every day.

126
00:07:41,960 --> 00:07:45,080
Speaker 3: If that fifty million dollars is spot, then the price

127
00:07:45,120 --> 00:07:47,880
Speaker 3: has got to move up to find any natural any

128
00:07:48,320 --> 00:07:51,600
Speaker 3: seller that's priced sensitive. Now, if you do the math,

129
00:07:51,800 --> 00:07:55,320
Speaker 3: you'll actually see the Bitcoin Treasury companies by themselves or

130
00:07:55,400 --> 00:07:59,640
Speaker 3: buying the entire natural supply. Black Rock and the ETFs

131
00:07:59,640 --> 00:08:04,520
Speaker 3: are buying another measure of that. And we've got nation

132
00:08:04,640 --> 00:08:09,200
Speaker 3: state actors coming into the space. So I think when

133
00:08:09,240 --> 00:08:12,560
Speaker 3: bitcoin rallies, if it surges to five hundred thousand or

134
00:08:12,560 --> 00:08:15,480
Speaker 3: a million dollars, then maybe we could talk about it

135
00:08:15,560 --> 00:08:18,920
Speaker 3: crashing down by two hundred thousand dollars a coin. But

136
00:08:19,120 --> 00:08:22,320
Speaker 3: at the current price levels, it only takes fifty million

137
00:08:22,360 --> 00:08:25,440
Speaker 3: dollars to turn the entire drive shaft of the crypto

138
00:08:25,520 --> 00:08:29,280
Speaker 3: economy one turn, and you've got the Trump Media Organization

139
00:08:29,600 --> 00:08:32,480
Speaker 3: announcing two and a half billion, you've got Game Stop

140
00:08:32,520 --> 00:08:36,200
Speaker 3: announcing five hundred million, You've got my company that's raising

141
00:08:36,400 --> 00:08:39,160
Speaker 3: billions and billions of dollars. So the writing is on

142
00:08:39,200 --> 00:08:41,440
Speaker 3: the wall. Bitcoin's moving higher.

143
00:08:41,320 --> 00:08:43,440
Speaker 1: Okay, so there's a few things to dig into there.

144
00:08:44,040 --> 00:08:47,520
Speaker 1: One that, in your words, Bitcoin Winter is not coming back.

145
00:08:47,840 --> 00:08:50,559
Speaker 1: I'm rereading Game of Thrones right now, so that statement

146
00:08:50,600 --> 00:08:52,480
Speaker 1: gives me the shivers. But I did want to go

147
00:08:52,520 --> 00:08:55,520
Speaker 1: to the competitive landscape if you can freeze it that way,

148
00:08:55,520 --> 00:08:58,400
Speaker 1: and you went there, naturally, you think about the ets

149
00:08:58,520 --> 00:09:02,559
Speaker 1: suites out there. Bit for example, already up to seventy

150
00:09:02,600 --> 00:09:05,920
Speaker 1: two billion dollars in assets. There's a lot of bitcoin

151
00:09:06,040 --> 00:09:09,200
Speaker 1: treasury companies that have come to the scene, as you mentioned.

152
00:09:09,600 --> 00:09:12,320
Speaker 1: Twenty one Capital comes to mind, started by Jack Mallers,

153
00:09:12,600 --> 00:09:16,400
Speaker 1: and they all have the intention of just accumulating bitcoin.

154
00:09:16,679 --> 00:09:19,480
Speaker 1: That would be good for the price. Michael, as you say,

155
00:09:19,520 --> 00:09:23,160
Speaker 1: but do you worry about the competition out there to

156
00:09:23,240 --> 00:09:25,920
Speaker 1: buy bitcoin? It's going to become more and more expensive,

157
00:09:26,240 --> 00:09:32,080
Speaker 1: and everyone's competing for a shrinking pie, if you will.

158
00:09:32,120 --> 00:09:35,120
Speaker 3: I think we're in a digital gold rush, and you've

159
00:09:35,160 --> 00:09:38,120
Speaker 3: got ten years to acquire all your bitcoin before there's

160
00:09:38,120 --> 00:09:42,640
Speaker 3: no bitcoin left for you. The competition is a virtuous competition.

161
00:09:43,200 --> 00:09:46,480
Speaker 3: Metaplanet's the hottest company in Japan right now. They went

162
00:09:46,600 --> 00:09:49,480
Speaker 3: from ten million to a billion dollar market cap to

163
00:09:49,559 --> 00:09:52,920
Speaker 3: a five billion dollar market cap. They're going to raise

164
00:09:52,960 --> 00:09:56,960
Speaker 3: billions of dollars. They're going they're going to pull the

165
00:09:57,120 --> 00:09:59,920
Speaker 3: liquidity out of the Japanese market, so they'll be right

166
00:10:00,120 --> 00:10:03,920
Speaker 3: in capital and Tokyo and the Tokyo Stock Exchange. Obviously,

167
00:10:03,960 --> 00:10:06,280
Speaker 3: none of the rest of us are trading or selling

168
00:10:06,320 --> 00:10:09,319
Speaker 3: equity in the Tokyo Stock Exchange, so it's not competitive,

169
00:10:09,360 --> 00:10:14,720
Speaker 3: it's cooperative. There are companies coming public in Brazil right now,

170
00:10:14,920 --> 00:10:20,480
Speaker 3: like Orange BTC that'll come public in some timeframe and Meluse.

171
00:10:21,320 --> 00:10:26,960
Speaker 3: They're actually supporting equity capital markets in Brazil. You know,

172
00:10:27,040 --> 00:10:29,679
Speaker 3: the game stops. They already had six billion dollars a

173
00:10:29,760 --> 00:10:32,600
Speaker 3: capital and so for them to start to take some

174
00:10:32,720 --> 00:10:35,200
Speaker 3: of that capital and funnel into bitcoin, it's good for

175
00:10:35,280 --> 00:10:39,280
Speaker 3: all of us. Knakamoto in twenty one, they'll bring their

176
00:10:39,320 --> 00:10:44,560
Speaker 3: own particular twist. Our company is a very particular business model.

177
00:10:44,640 --> 00:10:48,760
Speaker 3: It's to issue bitcoin back credit instruments like bitcoin back

178
00:10:48,840 --> 00:10:52,800
Speaker 3: bonds and especially bitcoin back preferred stocks. We're the only

179
00:10:52,840 --> 00:10:55,120
Speaker 3: company in the world that's ever been able to issue

180
00:10:55,120 --> 00:10:58,120
Speaker 3: a preferred stock back by bitcoin. We've done three of

181
00:10:58,160 --> 00:11:02,960
Speaker 3: them in the past five months. We're not competing against

182
00:11:02,960 --> 00:11:09,040
Speaker 3: the bitcoin treasury companies. We're competing against ETFs like PFF

183
00:11:09,640 --> 00:11:15,199
Speaker 3: that have portfolios of preferred stocks or corporate bond portfolios

184
00:11:15,280 --> 00:11:18,960
Speaker 3: that are trading as ETFs in the public market, and

185
00:11:19,000 --> 00:11:21,760
Speaker 3: the way we compete is we offer foreigner basis points

186
00:11:21,800 --> 00:11:24,920
Speaker 3: more yield on an instrument that is much more heavily

187
00:11:24,960 --> 00:11:29,240
Speaker 3: collateralized and more transparent. And that's we're not going to

188
00:11:29,280 --> 00:11:33,319
Speaker 3: saturate that market anytime soon. That's one hundred trillion dollars

189
00:11:33,440 --> 00:11:35,680
Speaker 3: or more of capital in those markets.

190
00:11:35,800 --> 00:11:38,600
Speaker 2: It sounds like, you know, when you talk about what

191
00:11:38,640 --> 00:11:42,120
Speaker 2: you're doing in terms of financial engineering in terms of

192
00:11:42,120 --> 00:11:45,800
Speaker 2: financial markets with bitcoin, clearly it's I mean, you're doing

193
00:11:45,840 --> 00:11:48,320
Speaker 2: a lot more than just holding the bitcoin. So it's

194
00:11:48,440 --> 00:11:50,720
Speaker 2: I think unfair to compare you to an ETF, But

195
00:11:51,160 --> 00:11:53,439
Speaker 2: it sounds like you may be inviting competition from a

196
00:11:53,520 --> 00:11:57,200
Speaker 2: JP Morgan for example, which then makes me wonder, when

197
00:11:57,800 --> 00:12:02,560
Speaker 2: does this asset start to convince the naysayers? You know,

198
00:12:02,679 --> 00:12:07,080
Speaker 2: Jamie Diamond has famously said it's worthless, Warren Buffett has

199
00:12:07,360 --> 00:12:10,440
Speaker 2: called it probably rat poison squared. When when does it

200
00:12:10,480 --> 00:12:11,480
Speaker 2: win those people over?

201
00:12:12,800 --> 00:12:16,920
Speaker 3: People called the electricity worthless and aircraft worthless too when

202
00:12:16,920 --> 00:12:20,360
Speaker 3: they didn't understand them. So I welcome the competition from

203
00:12:20,480 --> 00:12:24,680
Speaker 3: JP Morgan, I hope to enter the space. Our advantage

204
00:12:24,880 --> 00:12:29,200
Speaker 3: is that we're one hundred percent bitcoin, so whenever we

205
00:12:29,280 --> 00:12:33,040
Speaker 3: create a preferred stock, it has the Bitcoin performance, and

206
00:12:33,400 --> 00:12:36,640
Speaker 3: it has a measure of Bitcoin performance and a fraction

207
00:12:37,080 --> 00:12:41,720
Speaker 3: of Bitcoin volatility. That allows us to issue the most

208
00:12:41,760 --> 00:12:45,720
Speaker 3: liquid preferred stocks in the world. The highest performance Strike

209
00:12:45,840 --> 00:12:47,760
Speaker 3: was up twenty nine percent when the rest of the

210
00:12:47,800 --> 00:12:51,040
Speaker 3: market of preferregs was down six percent. Strife was up

211
00:12:51,080 --> 00:12:53,000
Speaker 3: twenty two percent when the rest of the market was

212
00:12:53,040 --> 00:12:57,920
Speaker 3: down four point six percent. It's impossible to issue bitcoin

213
00:12:58,120 --> 00:13:03,400
Speaker 3: backed convertible preferreds and bitcoin backed fixed preferreds unless you're

214
00:13:03,440 --> 00:13:07,280
Speaker 3: willing to make one hundred percent of your balance sheet bitcoin.

215
00:13:07,679 --> 00:13:11,160
Speaker 3: So I'm not really worried about competition from JP Morgan

216
00:13:11,440 --> 00:13:15,280
Speaker 3: or Berkshire Hathway. I would love for them to enter

217
00:13:15,320 --> 00:13:18,120
Speaker 3: the bitcoin space buy up a bunch of bitcoin. When

218
00:13:18,120 --> 00:13:20,880
Speaker 3: they do it, they'll be paying a million dollars a bitcoin.

219
00:13:20,960 --> 00:13:23,240
Speaker 3: The price will go to the moon. That will be

220
00:13:23,240 --> 00:13:28,280
Speaker 3: good for the entire crypto economy and beneficial to everyone

221
00:13:28,400 --> 00:13:33,040
Speaker 3: that holds any BTC backed equity or credit based instrument.

222
00:13:33,640 --> 00:13:36,080
Speaker 1: Well, I'm still thinking about you saying that you view

223
00:13:36,120 --> 00:13:39,360
Speaker 1: yourself in competition, not with the bitcoin treasury companies, but

224
00:13:39,440 --> 00:13:42,600
Speaker 1: with some of the ETFs that hold preferred shares, that

225
00:13:42,600 --> 00:13:45,640
Speaker 1: that is the strategy that they're tracking. And when it

226
00:13:45,640 --> 00:13:48,080
Speaker 1: comes to your own financing and the fact that you

227
00:13:48,240 --> 00:13:51,640
Speaker 1: have been pivoting to issue more preferred stocks to fund

228
00:13:51,640 --> 00:13:55,800
Speaker 1: your purchases, why is that? Why go towards preferreds rather

229
00:13:55,880 --> 00:13:58,760
Speaker 1: than convertible bonds? Is it just a question of demand

230
00:13:58,840 --> 00:14:00,559
Speaker 1: or is there something to it?

231
00:14:02,280 --> 00:14:06,760
Speaker 3: The convertible bond market normally is a short duration investor.

232
00:14:07,000 --> 00:14:09,360
Speaker 3: They want to hold the bond three or four years,

233
00:14:09,640 --> 00:14:12,160
Speaker 3: and the calls that are embedded in the bonds are

234
00:14:12,200 --> 00:14:14,680
Speaker 3: capped calls capped at one hundred and thirty percent of

235
00:14:14,720 --> 00:14:19,440
Speaker 3: the strike and sorry of the conversion price. And so

236
00:14:20,280 --> 00:14:24,600
Speaker 3: that's a short duration call investor and a short duration

237
00:14:24,840 --> 00:14:30,640
Speaker 3: credit investor. What we sold with Strike SDRK was a

238
00:14:30,680 --> 00:14:34,400
Speaker 3: perpetual call option good for one hundred years or forever.

239
00:14:34,840 --> 00:14:37,520
Speaker 3: And then we sold a perpetual dividend you could hold

240
00:14:37,520 --> 00:14:40,240
Speaker 3: for one hundred years and give to your grandkids. So

241
00:14:40,480 --> 00:14:46,480
Speaker 3: long duration credit, long duration call, and that preferred never

242
00:14:46,560 --> 00:14:50,240
Speaker 3: comes due for us, so we don't have liquidation risk.

243
00:14:50,360 --> 00:14:53,440
Speaker 3: We don't have credit risk, So it's a much better

244
00:14:53,560 --> 00:14:56,800
Speaker 3: instrument if you intend to invest in a volatile asset

245
00:14:56,920 --> 00:15:00,280
Speaker 3: like bitcoin and hold the investment forever. Now, the other

246
00:15:00,360 --> 00:15:04,160
Speaker 3: point I'll make, Katie, is if you think about what

247
00:15:04,200 --> 00:15:08,760
Speaker 3: we're competing against. There's like eighty billion dollars worth of

248
00:15:08,840 --> 00:15:14,640
Speaker 3: corporate credit and preferred equity based ETFs that we identified.

249
00:15:15,200 --> 00:15:17,600
Speaker 3: Most of them charge a fee of fifty to eighty

250
00:15:17,640 --> 00:15:21,600
Speaker 3: basis points a year, most of them generate a yield

251
00:15:21,640 --> 00:15:25,080
Speaker 3: of six or seven percent, and most of them have

252
00:15:25,280 --> 00:15:30,160
Speaker 3: very heterogeneous o PAI credit, low volatility, and very low liquidity.

253
00:15:30,840 --> 00:15:35,400
Speaker 3: We're offering preferred instruments that have eight to ten percent

254
00:15:35,920 --> 00:15:42,080
Speaker 3: dividend yields at par ten to one hundred x higher liquidity.

255
00:15:42,160 --> 00:15:47,880
Speaker 3: They trade really really hard, very very liquid, and their

256
00:15:47,920 --> 00:15:53,320
Speaker 3: homogeneous credit and they're six x over collateralized. So it's

257
00:15:53,320 --> 00:15:57,680
Speaker 3: a very compelling instrument if you believe in bitcoin as

258
00:15:57,720 --> 00:16:00,240
Speaker 3: a digital assets.

259
00:16:00,240 --> 00:16:02,680
Speaker 1: To finish the thought here, and I'm looking at invescos

260
00:16:02,720 --> 00:16:06,440
Speaker 1: preferred ETF. The ticker there is pg X that charges

261
00:16:06,520 --> 00:16:09,520
Speaker 1: in expense ratio of fifty one basis points. It has

262
00:16:09,560 --> 00:16:12,360
Speaker 1: about four billion dollars in assets. When you say that

263
00:16:12,360 --> 00:16:14,880
Speaker 1: you're in competition with funds such as this one. Are

264
00:16:14,920 --> 00:16:18,800
Speaker 1: you referring to the fact that you're competing for investor

265
00:16:18,880 --> 00:16:21,520
Speaker 1: attention with these ETFs? I just want to make sure

266
00:16:21,560 --> 00:16:22,800
Speaker 1: I'm understanding your point.

267
00:16:22,920 --> 00:16:25,120
Speaker 3: Yeah. What I'm saying is you go buy that, maybe

268
00:16:25,160 --> 00:16:28,280
Speaker 3: you get seven percent yield effectively, and you pay the

269
00:16:28,320 --> 00:16:32,239
Speaker 3: fifty basis points, and some of that is QDI eligible,

270
00:16:32,280 --> 00:16:35,520
Speaker 3: and some of that is taxable. When you buy one

271
00:16:35,560 --> 00:16:39,480
Speaker 3: of our preferreds, like Stride is yielding like eleven percent

272
00:16:39,600 --> 00:16:42,760
Speaker 3: pluss right now, and Strife is yielding nine nine and

273
00:16:42,760 --> 00:16:46,680
Speaker 3: a half percent, you buy that, it's all QDI eligible.

274
00:16:47,000 --> 00:16:52,560
Speaker 3: It's it's trading ten to fifty times more liquid on

275
00:16:52,640 --> 00:16:57,040
Speaker 3: a dollar for dollar basis. It's very homogeneous credit and

276
00:16:57,080 --> 00:17:01,280
Speaker 3: you get an extra foreigner basis points of yield, better

277
00:17:01,360 --> 00:17:05,800
Speaker 3: tax treatment, et cetera. So we're actually competing against that.

278
00:17:05,880 --> 00:17:12,720
Speaker 3: We're offering tax efficient, zero fee fixed income yield to

279
00:17:12,840 --> 00:17:15,119
Speaker 3: someone that wants to hold that in their portfolio.

280
00:17:16,119 --> 00:17:19,560
Speaker 2: Michael, I would at least in the top five most

281
00:17:19,600 --> 00:17:22,840
Speaker 2: important characteristics of bitcoin is its security, right, I mean,

282
00:17:22,880 --> 00:17:26,199
Speaker 2: scarcity has to be one near the top. And the

283
00:17:26,280 --> 00:17:30,480
Speaker 2: Ledger obviously was a genius move by Satoshi, but it

284
00:17:30,520 --> 00:17:33,840
Speaker 2: seems to be uncrackable, and I'm wondering if that will

285
00:17:33,840 --> 00:17:37,480
Speaker 2: hold true far into the future with the development of

286
00:17:37,520 --> 00:17:39,600
Speaker 2: quantum computing. Do you worry about that?

287
00:17:41,560 --> 00:17:44,320
Speaker 3: I don't worry about it, And I make the point.

288
00:17:45,000 --> 00:17:48,679
Speaker 3: You know, Microsoft and Google market their quantum projects, but

289
00:17:48,760 --> 00:17:51,960
Speaker 3: they would never sell a quantum computer that cracked cryptography

290
00:17:51,960 --> 00:17:55,760
Speaker 3: because it would destroy their own companies. And there isn't

291
00:17:55,800 --> 00:17:59,640
Speaker 3: a practical use case for those quantum projects they've been marketing.

292
00:18:00,280 --> 00:18:03,360
Speaker 3: I think at some point a decade out, maybe ten

293
00:18:03,440 --> 00:18:07,399
Speaker 3: twenty years, maybe whenever, there'll be a powerful computer it

294
00:18:07,480 --> 00:18:11,120
Speaker 3: may start to threaten modern cryptography. When it does it,

295
00:18:11,119 --> 00:18:14,320
Speaker 3: it'll be a threat to Microsoft, Google, JP Morgan, the

296
00:18:14,440 --> 00:18:18,160
Speaker 3: US government. It may be a threat to bitcoin. When

297
00:18:18,200 --> 00:18:21,199
Speaker 3: it is a threat, all of these organizations are going

298
00:18:21,280 --> 00:18:26,520
Speaker 3: to upgrade their crypto protocols to be quantum resistant. You'll

299
00:18:26,560 --> 00:18:30,480
Speaker 3: see it coming a mile away. And every other digital

300
00:18:30,640 --> 00:18:34,280
Speaker 3: entity in the world is more vulnerable to that idea

301
00:18:34,480 --> 00:18:37,080
Speaker 3: or that threat than Bitcoin, and so they're all going

302
00:18:37,119 --> 00:18:39,440
Speaker 3: to upgrade, and we'll be talking about it while you're

303
00:18:39,440 --> 00:18:43,560
Speaker 3: reviewing Microsoft stock or Apple stock exposure.

304
00:18:44,280 --> 00:18:47,200
Speaker 2: I only I don't want to go too deep into this, Michael,

305
00:18:47,200 --> 00:18:50,639
Speaker 2: because it's only a half hour program. But I feel

306
00:18:50,680 --> 00:18:53,960
Speaker 2: like AI could You know, everyone's worried that AI may

307
00:18:54,000 --> 00:18:55,720
Speaker 2: turn on us, and this could be a way in

308
00:18:55,760 --> 00:19:00,280
Speaker 2: which AI has real power. Is that not the thing

309
00:19:00,280 --> 00:19:01,840
Speaker 2: that keeps you up at night.

310
00:19:03,160 --> 00:19:05,800
Speaker 3: I'll make a point here. The typical person might do

311
00:19:05,880 --> 00:19:09,680
Speaker 3: ten thousand transactions in their lifetime, maybe one hundred thousand

312
00:19:09,720 --> 00:19:12,480
Speaker 3: if they're very busy. The AIS are going to do

313
00:19:12,560 --> 00:19:17,080
Speaker 3: one hundred thousand transactions of minutes. They're not going to

314
00:19:17,640 --> 00:19:21,680
Speaker 3: suffer the existing credit systems, in the existing banking systems

315
00:19:21,680 --> 00:19:24,480
Speaker 3: of the twentieth century. They're going to want to move

316
00:19:24,520 --> 00:19:27,640
Speaker 3: digital money at high frequency, at the speed of light.

317
00:19:28,440 --> 00:19:32,080
Speaker 3: That means digital assets like bitcoin over the Lightning network

318
00:19:32,640 --> 00:19:38,280
Speaker 3: or via Layer three protocols. The demand for digital capital

319
00:19:38,840 --> 00:19:42,840
Speaker 3: which is what bitcoin is, and digital networks like Lightning,

320
00:19:42,960 --> 00:19:45,320
Speaker 3: and like all of the crypto protocols that are being

321
00:19:45,320 --> 00:19:47,920
Speaker 3: worked on right now, it's going to go through the roof.

322
00:19:48,400 --> 00:19:51,879
Speaker 3: So I think AI is really a demand driver for bitcoin.

323
00:19:52,040 --> 00:19:56,520
Speaker 3: It's going to accelerate the entire digital assets economy. And no,

324
00:19:57,200 --> 00:20:00,439
Speaker 3: I'm not worried about the threat the AIS can't crack

325
00:20:01,040 --> 00:20:04,840
Speaker 3: public private key cryptography. What they can do is imitate

326
00:20:04,880 --> 00:20:08,080
Speaker 3: you and talk you into doing something stupid if you're

327
00:20:08,240 --> 00:20:10,280
Speaker 3: listening to them. And so they are a threat to

328
00:20:10,320 --> 00:20:13,119
Speaker 3: all the other systems in the world, not to Bitcoin.

329
00:20:13,640 --> 00:20:15,360
Speaker 1: All right, Michael, we got to leave it there. It's

330
00:20:15,400 --> 00:20:18,159
Speaker 1: always great to speak with you appreciate the time that is.

331
00:20:18,200 --> 00:20:21,280
Speaker 1: Strategy co founder and executive chairman, Michael Saylor