WEBVTT - MicroStrategy CEO on Bitcoin Surge

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<v Speaker 1>This is Bloomberg Business Week with Carol Messer and Bloomberg

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<v Speaker 1>Quick Takes Tim Stinovic from Bloomberg Radio. Before the Game

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<v Speaker 1>Stop Frenzy, which we've all been obsessed with, we had

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<v Speaker 1>the Bitcoin frenzy, and if you go back a month

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<v Speaker 1>or more, we were regularly talking about the run up

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<v Speaker 1>and bitcoin. It's up about so far this year after

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<v Speaker 1>gaining more than last year. One of our listeners, Alexander,

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<v Speaker 1>messaged me and said, you really need to be talking

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<v Speaker 1>to our next guest, and uh, that was confirmed by

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<v Speaker 1>our own Bloomberg Intelligence commodity strategist Mike mcglome. So he

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<v Speaker 1>joins us. Are Mike mclog He's on the phone in Connecticut.

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<v Speaker 1>He follows bitcoin as well and joining us right now.

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<v Speaker 1>Our guest is Michael Sailor, Chairman, CEO and founder of

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<v Speaker 1>micro Strategy, and he joins us as well. So, Mike, Michael,

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<v Speaker 1>both of you. Great to have you here. Michael, Um,

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<v Speaker 1>we did see bitcoin go above forty dollars. You were

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<v Speaker 1>buying last year, you are this year? Where are you

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<v Speaker 1>in terms of your buying strategy? You know how much

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<v Speaker 1>of your balance sheet are you committing to do it? Um?

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<v Speaker 1>Well more than a dent because we're leverage. We've we've

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<v Speaker 1>invested all of our free cash and we've borrowed six

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<v Speaker 1>hundred fifty million dollars. So I don't know two of

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<v Speaker 1>our balance sheet something like that, but but we're up

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<v Speaker 1>about one point two billion since we started buying, So

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<v Speaker 1>so we have a lot of bitcoin um in terms

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<v Speaker 1>of our strategy. We were buying it at ten thousand,

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<v Speaker 1>we were buying it at eleven thousand, we bought it

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<v Speaker 1>at nineteen thousand, and twenty one thousand, at thirty one thousand,

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<v Speaker 1>and just today I announced to the world that we

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<v Speaker 1>bought our last batch of ten million dollars worth of

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<v Speaker 1>thirty three thousand, eight hundred. I think we'll be buying

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<v Speaker 1>it forever forever. Where do you see it going buying? Well, yeah,

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<v Speaker 1>we know, we know you like it um. Where do

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<v Speaker 1>you see the value going. We've had, you know, various

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<v Speaker 1>guests come on and talk about a quarter of a

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<v Speaker 1>million dollars. Where do you see it going? Well, I

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<v Speaker 1>think bitcoin is digital gold on the world's first digital

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<v Speaker 1>monetary network, and so it represents a high yield savings

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<v Speaker 1>account to consumers, and there's plenty of them that would

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<v Speaker 1>like to get paid tax free. It represents digital gold

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<v Speaker 1>for institutions and they've got a big problem. They need

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<v Speaker 1>a safe haven. It represents a monetary network for Facebook

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<v Speaker 1>and Google and Amazon investors, and it's a lifeboat for

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<v Speaker 1>a billion people in the developing world that have currencies

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<v Speaker 1>that are collapsing. So if you wonder where's it going, Well,

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<v Speaker 1>at first it's going to flip gold, which is going

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<v Speaker 1>to take it to five hundred thousand dollars a coin.

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<v Speaker 1>Then it's going to start to it's going to start

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<v Speaker 1>to attract capital from weaker safe haven assets like negative

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<v Speaker 1>yielding sovereign debt, low yielding stock indexes, other types of

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<v Speaker 1>medals and commodities and uh and the light and that

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<v Speaker 1>that will take it up another factor of ten. Mike mcglo,

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<v Speaker 1>you want to come out, come on in on this conversation.

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<v Speaker 1>Oh yes, well, Michael, thanks for coming on. And what

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<v Speaker 1>the key thing that struck me about when I really

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<v Speaker 1>heard what you were doing last summer and you just

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<v Speaker 1>nailed the media and you hover and covered it so

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<v Speaker 1>well as your your sense of the history. So think

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<v Speaker 1>the key question I really want to get out of

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<v Speaker 1>an I think from you today's how do you think

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<v Speaker 1>future generations will look back upon you and us and

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<v Speaker 1>what we're doing now in bitcoin, um, say fifty hundred

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<v Speaker 1>years from now, or maybe even just ten years from now.

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<v Speaker 1>I think for five thousand years we had the Goal standard,

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<v Speaker 1>and that was a non sovereign bearer instrument store of value.

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<v Speaker 1>I think for forty or fifty years we've we've drifted

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<v Speaker 1>through the Fiance standard, and we've been looking for a

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<v Speaker 1>new anchor. And I think the Bitcoin is going to

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<v Speaker 1>is the emergent digital monetary protocol for moving money through

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<v Speaker 1>time and space, and I think it's good for another

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<v Speaker 1>five thousand years. Mr mcglow, I think it's I think

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<v Speaker 1>that fifty years from now people are to say this

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<v Speaker 1>was that transition period when the world figured out what

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<v Speaker 1>a digital monitoring network was and what a protocol for

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<v Speaker 1>moving money around is, and they can't imagine a world

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<v Speaker 1>without it. Michael, though, let me understand something, because what

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<v Speaker 1>I keep hearing as though there's going to be a

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<v Speaker 1>fixed supply, So how can it then become something on

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<v Speaker 1>par there's a fixed supply of gold as well, but

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<v Speaker 1>can it be something that we really put on par

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<v Speaker 1>with gold? And I'm just curious what your thesis is BEI,

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<v Speaker 1>you know, behind investing so much in in one asset

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<v Speaker 1>essentially well, you know, people say fixed supply, but of

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<v Speaker 1>course what we're really talking about is twenty one million

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<v Speaker 1>coins infinitely divisible. They're divisible infinitely, so it's only fixed

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<v Speaker 1>in the sense that the numbers one through ten are fixed.

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<v Speaker 1>You have the principles of mathematics or arithmetic and geometry,

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<v Speaker 1>there's three or sixty degrees in a circle, specified supply,

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<v Speaker 1>and fix supply applies the geometry, arithmetic and conservation of

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<v Speaker 1>energy and the laws of physics, like there's a fixed

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<v Speaker 1>supply of energy and you can't make or eliminate it.

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<v Speaker 1>So it's not a limitation in fact. In fact, conservation

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<v Speaker 1>of the laws of physics and energy are critical to

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<v Speaker 1>the working of electrical systems, pneumatic systems, hydraulic systems, every

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<v Speaker 1>engineering system on the face of the earth. And so

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<v Speaker 1>when people talk about fixed supply of bitcoin, what they

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<v Speaker 1>mean is this is a monetary network that works and

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<v Speaker 1>doesn't leak. Listen, Michael, one thing that we've got to

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<v Speaker 1>ask you about is risk, and um, what could go

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<v Speaker 1>wrong here when it comes to bitcoin? Is this a

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<v Speaker 1>question for Michael mcgloan or Michael Sailor from Michael Sailor

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<v Speaker 1>for you. Okay, I know it's confusing. Yeah, Um well

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<v Speaker 1>I think that, uh, most of the risk around bitcoin

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<v Speaker 1>is really just news fund and regulatory fund cons earns

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<v Speaker 1>about how will various governments treated and what will happen. Um,

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<v Speaker 1>as governments normalize the regulation, they're putting some know your

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<v Speaker 1>customer and anti money laundering rags in place to normalize

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<v Speaker 1>it compared to other assets, and sometimes people get a

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<v Speaker 1>little bit skittish about it, but but ultimately as it normalizes,

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<v Speaker 1>that risk will go away. Um, Michael, Mike McGlone. How

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<v Speaker 1>about any The question I've heard from other people is

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<v Speaker 1>this is a revolutionary and nary technology. How about another

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<v Speaker 1>technology improving upon it or replacing it? And that's from

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<v Speaker 1>a person as it was, the markets guy, not really

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<v Speaker 1>technology guys. There is that a risk? Do you view

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<v Speaker 1>that as a potential risk? You know? I think non

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<v Speaker 1>technologists sometimes think that, But what they don't understand is

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<v Speaker 1>that it's a monetary protocol like t C P I P,

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<v Speaker 1>or like the English language, Like when everybody agrees to

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<v Speaker 1>speak English, there might be a better language, but we're

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<v Speaker 1>not replacing it. When we all agree to use inches

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<v Speaker 1>and pounds, the metric system comes along, but it's really

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<v Speaker 1>difficult to get people to replace it. And bitcoin is

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<v Speaker 1>a monetary protocol. All the innovations going on on the

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<v Speaker 1>edge with companies like Square and PayPal, and the underlying

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<v Speaker 1>protocol has power because of the network effect and the

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<v Speaker 1>and the network is not just a function of the

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<v Speaker 1>hundred million plus people to use it. The other part

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<v Speaker 1>of the network effect is new Tony and laws of gravity.

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<v Speaker 1>When you have hundreds of billions of dollars of monetary

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<v Speaker 1>energy on the network, there's no way that's moving. Once

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<v Speaker 1>people decide what's the winning network, they're going to stick

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<v Speaker 1>with it, just like we stick with Twitter and Facebook

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<v Speaker 1>and Google and YouTube. It's incredibly powerful and new technology

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<v Speaker 1>like a better YouTube rank better Twitter isn't gonna win,

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<v Speaker 1>and everybody knows that they're not winning. We want the

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<v Speaker 1>network that all of our friends is where all the

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<v Speaker 1>money is. Yeah, it's interesting. Well, you know, I have

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<v Speaker 1>someone tweeting at me, Michael, and they're saying, I'm curious

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<v Speaker 1>about all the people have lost their mind bitcoins. Lots

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<v Speaker 1>of people have have lost them, and a lot of

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<v Speaker 1>them have been hoarded, So how do you factor that in,

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<v Speaker 1>especially if you're thinking that this can be something that

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<v Speaker 1>is accepted, you know, much more broadly and use more

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<v Speaker 1>widely financially. You know, in the early days of the Internet,

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<v Speaker 1>we didn't have Netscape browsers and web browsers, and people

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<v Speaker 1>had to type the tcpaddresses in by hand, and it

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<v Speaker 1>was really difficult and only the techies did it. But

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<v Speaker 1>then along came Netscape and it got really easy and

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<v Speaker 1>it became consumer thing. So when people talk about losing

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<v Speaker 1>their bitcoin, it's like the early days when they're trying

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<v Speaker 1>to do it all in machine code. You can also

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<v Speaker 1>buy bitcoin by owning a share of gray Scale, or

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<v Speaker 1>or you can actually buy it with one click on PayPal.

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<v Speaker 1>That's like ten thousand times easier. And so there's a

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<v Speaker 1>lot of ways to have bitcoin, and the new ways

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<v Speaker 1>are wrapped in consumer apps by Square and PayPal. People

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<v Speaker 1>aren't losing their bitcoin with those apps, right, It's a

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<v Speaker 1>different thing, it's and it's much simpler. Well, one of

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<v Speaker 1>the main question I have to ask you, Michaels, we're Americans.

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<v Speaker 1>We deal with the reserve currency, the dollar, and it's

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<v Speaker 1>still the reserve currency so how about the rest of

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<v Speaker 1>the world doing something similar that you did with corporate treasuries.

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<v Speaker 1>It seemed to me that's much more prudent um for

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<v Speaker 1>most of the most of the company's the rest of

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<v Speaker 1>the world that are not dollar based, even those that

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<v Speaker 1>aren't eural based. I operate a business in Argentina and

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<v Speaker 1>I watched, and our business makes a lot of money.

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<v Speaker 1>I watched the pay soo go from a paso to

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<v Speaker 1>the dollar, to two to a dollar, to ten to

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<v Speaker 1>the dollar, to twenty to the dollar, to forty to

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<v Speaker 1>the dollar, to eighty to the dollar, to and now

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<v Speaker 1>the block market rates a hundred and fifty to the dollar.

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<v Speaker 1>Now our our logical policy as we sweep all our

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<v Speaker 1>patios into dollar and we get them out of Argentine

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<v Speaker 1>banks as soon as possible. But I've still lost millions

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<v Speaker 1>of dollars in Argentina. So clearly I think I think

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<v Speaker 1>it's common sense anywhere in the world you do business,

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<v Speaker 1>if the currency is weakening or collapsing, you convert your

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<v Speaker 1>local currency into a scarce asset. You know, if I

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<v Speaker 1>had known about bitcoin twenty years ago, I would have

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<v Speaker 1>bought bitcoin instead of losing all my money with paso devalued.

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<v Speaker 1>And you know, two years ago my lawyers came and

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<v Speaker 1>said the paso's devaluing again and there's capital controls And

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<v Speaker 1>I said, can we buy gold? They said no, you

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<v Speaker 1>can't get it to the airport. I said, can we

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<v Speaker 1>buy a yacht and sailor from Argentina to the Caribbean.

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<v Speaker 1>And it looked at me like I'm out of my mind.

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<v Speaker 1>If I know it about bitcoin, I would have bought bitcoin, right,

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<v Speaker 1>hard asset. Hey, listen, one thing we want to ask

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<v Speaker 1>you about. UM. You are hosting a bitcoin conference and

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<v Speaker 1>it's a lot of leaders, executives, UM officers and directors

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<v Speaker 1>and advisers of corporation and what is it about the

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<v Speaker 1>conversation around bitcoin? Do you think that has changed dramatically

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<v Speaker 1>that tells you maybe about where it's going? And and

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<v Speaker 1>just got about a minute here. Yeah, a bitcoin rotated

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<v Speaker 1>from being a consumer leveraged, you know, strange digital asset

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<v Speaker 1>to being an institutional safe haven store of value in

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<v Speaker 1>the last twelve months. Every corporation with cash on the

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<v Speaker 1>books has a liability as the money supply explates by

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<v Speaker 1>fiercent a year, if they can flip it to a

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<v Speaker 1>scarce asset like bitcoin. It becomes an asset, not a liability.

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<v Speaker 1>That's driving thousands of companies to want to do this,

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<v Speaker 1>and that's that those the people that will be at

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<v Speaker 1>our conference tomorrow. Alright, interesting, interesting stuff. Is there anything

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<v Speaker 1>that keeps you up at night over Bitcoin? Just got

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<v Speaker 1>like twenty five seconds here. I think it's a certain

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<v Speaker 1>that I'm gonna lose se of my value in cash

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<v Speaker 1>instruments over the next ten years. So no, I'm not

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<v Speaker 1>kept up at night at all. I'm happy to have

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<v Speaker 1>done it and I and I think that everybody can

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<v Speaker 1>benefit from discovering bitcoin is a store of value. All Right,

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<v Speaker 1>we're gonna leave it on that note. Listen, Michael, thank

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<v Speaker 1>you so much, really appreciate it. Michael Sailor, chairman, CEO

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<v Speaker 1>and founder of micro Strategy joining us on the phone

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<v Speaker 1>and her own Mike mcglogan. Pretty cool stuff, Mike, that's great,

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<v Speaker 1>Thanks for having me. Yeah, thanks to both of you.

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<v Speaker 1>Mike mcglogan also of our Bloomberg Intelligence team. He's a

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<v Speaker 1>commodity strategist and follows bitcoin for us