1
00:00:02,520 --> 00:00:07,040
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:07,880 --> 00:00:11,000
Speaker 2: But let's talk about bitcoin, because gold it's not pacing

3
00:00:11,039 --> 00:00:14,000
Speaker 2: bitcoin so far this year, with as we discussed, the

4
00:00:14,280 --> 00:00:17,320
Speaker 2: US Treasuries gold reserves reaching is staggering one at trillion

5
00:00:17,400 --> 00:00:20,040
Speaker 2: dollars during that record run. But of course that hasn't

6
00:00:20,040 --> 00:00:23,759
Speaker 2: stopped Strategy, the world's largest corporate holder of bitcoin, from

7
00:00:23,800 --> 00:00:27,880
Speaker 2: going full steam ahead into derivatives products such as bitcoin

8
00:00:27,920 --> 00:00:32,159
Speaker 2: back digital credit instruments, including the first Treasury preferred Bitcoin

9
00:00:32,240 --> 00:00:34,560
Speaker 2: backstock and joining us now and please to say we

10
00:00:34,600 --> 00:00:38,239
Speaker 2: have Strategy Executive Chairman Michael Saylor. Michael, great to have

11
00:00:38,360 --> 00:00:40,800
Speaker 2: you with us. This is Bloomberg Television. So we're going

12
00:00:40,800 --> 00:00:43,400
Speaker 2: to go into all of the financing strategies, but let's

13
00:00:43,440 --> 00:00:46,760
Speaker 2: talk a little bit first about micro strategies premium to

14
00:00:47,000 --> 00:00:50,960
Speaker 2: its underlying bitcoin holdings, the m NAV, if you will.

15
00:00:51,040 --> 00:00:53,120
Speaker 2: So it's interesting if you take a look at the

16
00:00:53,120 --> 00:00:56,280
Speaker 2: past few months, micro strategy or Strategy shares have actually

17
00:00:56,280 --> 00:00:59,600
Speaker 2: been underperforming Bitcoin. That has taken your premium down to

18
00:00:59,640 --> 00:01:02,560
Speaker 2: about one point four times. And I would love to

19
00:01:02,600 --> 00:01:05,960
Speaker 2: hear your perspective on why that dynamic exists. Is it

20
00:01:06,000 --> 00:01:08,080
Speaker 2: something about the market, is it the fact that you

21
00:01:08,120 --> 00:01:11,120
Speaker 2: have all these digital asset treasury companies coming to the

22
00:01:11,160 --> 00:01:12,679
Speaker 2: fore is it something else?

23
00:01:14,040 --> 00:01:18,360
Speaker 3: You know, the market's still working to digest the new

24
00:01:18,360 --> 00:01:23,920
Speaker 3: business model. The bitcoin treasury company is an idea that's

25
00:01:23,959 --> 00:01:27,040
Speaker 3: only come to the forefront in the past year or so.

26
00:01:27,800 --> 00:01:31,200
Speaker 3: For three hundred years or so, the world revolved around

27
00:01:31,440 --> 00:01:35,600
Speaker 3: gold backed credit instruments. People issued bonds and credit based

28
00:01:35,640 --> 00:01:39,319
Speaker 3: on gold. We've discovered the killer app and the bitcoin

29
00:01:39,400 --> 00:01:42,960
Speaker 3: world is bitcoin back credit. I'll call it digital credit.

30
00:01:43,440 --> 00:01:45,360
Speaker 3: You know, on the twentieth century, we had bank credit,

31
00:01:45,400 --> 00:01:48,760
Speaker 3: we had mortgage credit, We've got commercial corporate credit, you've

32
00:01:48,800 --> 00:01:52,800
Speaker 3: got sovereign credit. Well, digital credit is a new creature,

33
00:01:52,880 --> 00:01:57,000
Speaker 3: and bitcoin treasury companies exist to issue digital credit. So

34
00:01:57,040 --> 00:02:00,280
Speaker 3: the reason there's a premium in the equity is because

35
00:02:00,360 --> 00:02:03,360
Speaker 3: we can create digital credit instruments. If we were just

36
00:02:03,400 --> 00:02:06,440
Speaker 3: an ETF, if we wouldn't be able to create credit instruments.

37
00:02:06,960 --> 00:02:10,720
Speaker 3: The credit itself is an extraordinary new asset class.

38
00:02:11,360 --> 00:02:13,839
Speaker 2: Well, when we talk about the premium, and it's been

39
00:02:13,960 --> 00:02:17,359
Speaker 2: at lower levels, but you think about the premium coming down,

40
00:02:17,520 --> 00:02:19,519
Speaker 2: I think it was closer to two a couple of

41
00:02:19,600 --> 00:02:22,760
Speaker 2: months ago. Is that something that concerns you as you

42
00:02:22,840 --> 00:02:25,560
Speaker 2: look at these different types of financing vehicles that you have.

43
00:02:27,160 --> 00:02:31,320
Speaker 3: No, I'm not really concerned. What happens is the premium

44
00:02:31,360 --> 00:02:35,200
Speaker 3: will expand as our leverage increases, and as the volatility

45
00:02:35,400 --> 00:02:40,280
Speaker 3: and bitcoin increases. When the volatility falls and our leverage falls,

46
00:02:40,360 --> 00:02:46,040
Speaker 3: sometimes the premium contracts. But the real key key here

47
00:02:46,200 --> 00:02:51,080
Speaker 3: is the digital credit we're issuing like Stretch, that represents

48
00:02:51,440 --> 00:02:55,160
Speaker 3: us stripping away the volatility and the risk from a

49
00:02:55,200 --> 00:03:00,160
Speaker 3: commodity from bitcoin the digital capital instrument, and then distilling

50
00:03:00,200 --> 00:03:05,280
Speaker 3: out a particular currency USD, a particular yield, say ten

51
00:03:05,360 --> 00:03:09,280
Speaker 3: percent on Stretch, and then a certain duration for that yield,

52
00:03:09,720 --> 00:03:12,320
Speaker 3: and we offer those of the credit markets. So we

53
00:03:12,400 --> 00:03:15,480
Speaker 3: don't really need a premium to issue digital credit. Our

54
00:03:15,520 --> 00:03:18,880
Speaker 3: business model works fine. Whether or not the equity trades

55
00:03:18,960 --> 00:03:22,160
Speaker 3: at a premium or a discount to the underlying bitcoin,

56
00:03:22,720 --> 00:03:27,160
Speaker 3: the equity will have value because people understand the value

57
00:03:27,200 --> 00:03:31,880
Speaker 3: of the credit instruments. And we've launched four credit instruments

58
00:03:31,919 --> 00:03:35,200
Speaker 3: this year, four billion dollar product lines, and the year's

59
00:03:35,240 --> 00:03:37,800
Speaker 3: not even over yet. So that's a lot for the

60
00:03:37,840 --> 00:03:40,600
Speaker 3: world to digest since they didn't see a new class

61
00:03:40,640 --> 00:03:43,200
Speaker 3: of credit for one hundred years. Before us.

62
00:03:43,840 --> 00:03:45,720
Speaker 1: Are you concerned at all, Michael though about some of

63
00:03:45,760 --> 00:03:48,880
Speaker 1: the newer entrants into this space and whether that may

64
00:03:48,880 --> 00:03:52,200
Speaker 1: be not necessarily U SERPs what you're doing, but I

65
00:03:52,200 --> 00:03:55,560
Speaker 1: guess augments it in a way that your next fundraising

66
00:03:55,640 --> 00:03:58,600
Speaker 1: and your next and your next efforts might not get

67
00:03:58,600 --> 00:04:01,720
Speaker 1: the same attention and buy in as you did in

68
00:04:01,720 --> 00:04:02,120
Speaker 1: the past.

69
00:04:03,440 --> 00:04:05,680
Speaker 3: No, I see it as a positive thing. There's been

70
00:04:05,720 --> 00:04:09,320
Speaker 3: an explosion of bitcoin treasury companies and digital asset treasury

71
00:04:09,320 --> 00:04:11,320
Speaker 3: companies in general. I think we were the first. There's

72
00:04:11,360 --> 00:04:14,680
Speaker 3: two hundred and fifty now there are tens of billions

73
00:04:14,720 --> 00:04:17,880
Speaker 3: of dollars of capital flowing in the space. We're the

74
00:04:17,920 --> 00:04:21,440
Speaker 3: first company to show that we could create a treasury

75
00:04:21,520 --> 00:04:24,919
Speaker 3: preferred stock like Stretch. We were the first ones to

76
00:04:25,000 --> 00:04:28,960
Speaker 3: issue any kind of bitcoin back credit like Stride or

77
00:04:29,040 --> 00:04:33,280
Speaker 3: Strike or Strike. We're going to be differentiated based upon

78
00:04:33,440 --> 00:04:36,200
Speaker 3: the quality of the credit instruments we bring to the market,

79
00:04:36,560 --> 00:04:41,400
Speaker 3: the degree of collateralization, the degree of liquidity, and of

80
00:04:41,440 --> 00:04:44,359
Speaker 3: course the risk. And because we're the largest player in

81
00:04:44,400 --> 00:04:47,600
Speaker 3: the space, we can offer the most liquidity, the most

82
00:04:47,640 --> 00:04:53,520
Speaker 3: collateral the strongest brand, and the deepest markets in those instruments.

83
00:04:53,960 --> 00:04:56,560
Speaker 1: How do you respond to some of the concerns out there,

84
00:04:56,640 --> 00:05:00,520
Speaker 1: if not just direct criticism about the potential sales of

85
00:05:00,560 --> 00:05:02,320
Speaker 1: any of your holdings and what that could do to

86
00:05:02,360 --> 00:05:02,800
Speaker 1: the market.

87
00:05:05,520 --> 00:05:09,919
Speaker 3: We're so way over collateralized, it's hardly a concern. I

88
00:05:09,920 --> 00:05:13,120
Speaker 3: think we've got seventy four billion dollars a bitcoin. We've

89
00:05:13,120 --> 00:05:18,200
Speaker 3: got six billion dollars of these preferred credit instruments outstanding

90
00:05:18,279 --> 00:05:21,640
Speaker 3: right now that I maan, come do. I think it

91
00:05:21,680 --> 00:05:25,400
Speaker 3: takes one or two percent of our annual equity issuance

92
00:05:25,400 --> 00:05:29,000
Speaker 3: to cover our dividends. So not a big concern.

93
00:05:30,040 --> 00:05:33,400
Speaker 2: Not a big concern. It's interesting. I mean, you think

94
00:05:33,440 --> 00:05:35,719
Speaker 2: about the position that you hold when it comes to bitcoin,

95
00:05:35,760 --> 00:05:39,240
Speaker 2: which is basically never sell, you hold forever. And then

96
00:05:39,279 --> 00:05:41,440
Speaker 2: I was listening to a conversation this morning with Tim

97
00:05:41,520 --> 00:05:44,240
Speaker 2: Draper on BTV with Matt Miller, who was saying that

98
00:05:44,440 --> 00:05:46,680
Speaker 2: bitcoin is the currency of the future. You're going to

99
00:05:46,720 --> 00:05:50,000
Speaker 2: have a day where you have US retailers using bitcoin

100
00:05:50,080 --> 00:05:53,479
Speaker 2: instead of US currency, and it falls into basically the

101
00:05:53,520 --> 00:05:57,799
Speaker 2: store value versus currency debate. And I wonder, Michael, whether

102
00:05:57,880 --> 00:06:01,560
Speaker 2: those two viewpoints can and coexist together or is it

103
00:06:01,600 --> 00:06:02,799
Speaker 2: going to be one or the other.

104
00:06:04,240 --> 00:06:07,960
Speaker 3: Now? I think that the digital asset economy is exploding,

105
00:06:08,320 --> 00:06:12,760
Speaker 3: and the winning digital currency is the tokenized dollar in

106
00:06:12,800 --> 00:06:16,520
Speaker 3: the form of tether and circle, and that entire asset

107
00:06:16,560 --> 00:06:19,320
Speaker 3: class is exploded about two hundred and fifty billion dollars.

108
00:06:19,360 --> 00:06:22,240
Speaker 3: I mean, so if people want to circulating medium of

109
00:06:22,279 --> 00:06:25,599
Speaker 3: exchange on crypto rails, they're using stable coins in the

110
00:06:25,600 --> 00:06:30,039
Speaker 3: form of tokenized dollars. Bitcoin is emerged as digital capital.

111
00:06:30,400 --> 00:06:33,440
Speaker 3: What you want is a commodity that's also scarce and

112
00:06:33,480 --> 00:06:37,440
Speaker 3: decentralized as a long term capital asset. So the killer

113
00:06:37,480 --> 00:06:42,760
Speaker 3: application of bitcoin is digital credit issued against digital capital,

114
00:06:43,160 --> 00:06:46,640
Speaker 3: whereas the killer application for medium of exchange is a

115
00:06:46,720 --> 00:06:49,719
Speaker 3: digital currency in the form of a stable coin. I

116
00:06:49,720 --> 00:06:53,320
Speaker 3: think the crypto industry understands this, and I think the

117
00:06:53,360 --> 00:06:55,880
Speaker 3: people of the world understand it. If you talk to

118
00:06:55,920 --> 00:06:57,400
Speaker 3: anybody and ask them how are they going to pay

119
00:06:57,400 --> 00:06:59,760
Speaker 3: for their cup of coffee, They're going to send a

120
00:06:59,760 --> 00:07:02,960
Speaker 3: state coin from their mobile phone app. And if you

121
00:07:03,000 --> 00:07:05,360
Speaker 3: ask them what do you give to your granddaughter, they're

122
00:07:05,400 --> 00:07:06,960
Speaker 3: going to say give them a bitcoin.

123
00:07:07,839 --> 00:07:10,160
Speaker 2: There you go, Michael. Before we let you go, we

124
00:07:10,240 --> 00:07:12,640
Speaker 2: talked about some of the different types of financing that

125
00:07:12,720 --> 00:07:14,920
Speaker 2: you have when it comes to herds when it comes

126
00:07:14,960 --> 00:07:17,280
Speaker 2: to convertible debt, and of course when it comes to

127
00:07:17,320 --> 00:07:21,080
Speaker 2: common stuff. Are you considering any new type of debt

128
00:07:21,280 --> 00:07:24,520
Speaker 2: or are you happy with the categories that you have

129
00:07:24,640 --> 00:07:25,080
Speaker 2: right now?

130
00:07:26,560 --> 00:07:29,040
Speaker 3: Well, if we look at these preferreds, first of all,

131
00:07:29,040 --> 00:07:32,280
Speaker 3: they're leverage, but they're not debt because the principle never

132
00:07:32,320 --> 00:07:37,400
Speaker 3: comes due. Stretch, I think represents kerosene. It's like extracting

133
00:07:37,520 --> 00:07:41,040
Speaker 3: jet fuel from a barrel of crude oil, and so

134
00:07:41,200 --> 00:07:44,680
Speaker 3: we're very excited about that, and we think that there's

135
00:07:44,720 --> 00:07:49,400
Speaker 3: an opportunity to create stretch type instruments in euros or

136
00:07:49,560 --> 00:07:54,080
Speaker 3: yen or Canadian currency or pounds. In essence, everybody in

137
00:07:54,120 --> 00:07:56,120
Speaker 3: the world would love to have a high yield bank

138
00:07:56,160 --> 00:07:59,040
Speaker 3: account that yielded ten percent or more, or they'd love

139
00:07:59,120 --> 00:08:01,360
Speaker 3: to have a money mark mar they gave them double

140
00:08:01,440 --> 00:08:05,640
Speaker 3: or triple their normal money market. We have shown that

141
00:08:05,760 --> 00:08:10,560
Speaker 3: you can extract that sort of instrument from raw bitcoin

142
00:08:10,720 --> 00:08:13,760
Speaker 3: if you have enough bitcoin. So I think that we

143
00:08:13,880 --> 00:08:16,960
Speaker 3: will continue to grow the aum of stretch, and then

144
00:08:16,960 --> 00:08:19,920
Speaker 3: we'll look at opportunities to transform it into different currencies

145
00:08:19,920 --> 00:08:20,600
Speaker 3: around the world.

146
00:08:20,920 --> 00:08:24,600
Speaker 1: All Right, Michael really appreciated Michael sailor there executive chairman.

147
00:08:24,720 --> 00:08:27,880
Speaker 1: Over at Strategy, we should point out Bitcoin, after two

148
00:08:27,960 --> 00:08:30,520
Speaker 1: straight weeks of declines, getting its mojo back over the

149
00:08:30,560 --> 00:08:33,280
Speaker 1: last couple of sessions of Micro Strategy, right now on

150
00:08:33,360 --> 00:08:35,720
Speaker 1: its strongest two day run going back to the beginning

151
00:08:36,000 --> 00:08:36,720
Speaker 1: of July