WEBVTT - Strategy CEO Mike Saylor Talks Buying Bitcoin

0:00:02.520 --> 0:00:07.040
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

0:00:07.880 --> 0:00:11.000
<v Speaker 2>But let's talk about bitcoin, because gold it's not pacing

0:00:11.039 --> 0:00:14.000
<v Speaker 2>bitcoin so far this year, with as we discussed, the

0:00:14.280 --> 0:00:17.320
<v Speaker 2>US Treasuries gold reserves reaching is staggering one at trillion

0:00:17.400 --> 0:00:20.040
<v Speaker 2>dollars during that record run. But of course that hasn't

0:00:20.040 --> 0:00:23.759
<v Speaker 2>stopped Strategy, the world's largest corporate holder of bitcoin, from

0:00:23.800 --> 0:00:27.880
<v Speaker 2>going full steam ahead into derivatives products such as bitcoin

0:00:27.920 --> 0:00:32.159
<v Speaker 2>back digital credit instruments, including the first Treasury preferred Bitcoin

0:00:32.240 --> 0:00:34.560
<v Speaker 2>backstock and joining us now and please to say we

0:00:34.600 --> 0:00:38.239
<v Speaker 2>have Strategy Executive Chairman Michael Saylor. Michael, great to have

0:00:38.360 --> 0:00:40.800
<v Speaker 2>you with us. This is Bloomberg Television. So we're going

0:00:40.800 --> 0:00:43.400
<v Speaker 2>to go into all of the financing strategies, but let's

0:00:43.440 --> 0:00:46.760
<v Speaker 2>talk a little bit first about micro strategies premium to

0:00:47.000 --> 0:00:50.960
<v Speaker 2>its underlying bitcoin holdings, the m NAV, if you will.

0:00:51.040 --> 0:00:53.120
<v Speaker 2>So it's interesting if you take a look at the

0:00:53.120 --> 0:00:56.280
<v Speaker 2>past few months, micro strategy or Strategy shares have actually

0:00:56.280 --> 0:00:59.600
<v Speaker 2>been underperforming Bitcoin. That has taken your premium down to

0:00:59.640 --> 0:01:02.560
<v Speaker 2>about one point four times. And I would love to

0:01:02.600 --> 0:01:05.960
<v Speaker 2>hear your perspective on why that dynamic exists. Is it

0:01:06.000 --> 0:01:08.080
<v Speaker 2>something about the market, is it the fact that you

0:01:08.120 --> 0:01:11.120
<v Speaker 2>have all these digital asset treasury companies coming to the

0:01:11.160 --> 0:01:12.679
<v Speaker 2>fore is it something else?

0:01:14.040 --> 0:01:18.360
<v Speaker 3>You know, the market's still working to digest the new

0:01:18.360 --> 0:01:23.920
<v Speaker 3>business model. The bitcoin treasury company is an idea that's

0:01:23.959 --> 0:01:27.040
<v Speaker 3>only come to the forefront in the past year or so.

0:01:27.800 --> 0:01:31.200
<v Speaker 3>For three hundred years or so, the world revolved around

0:01:31.440 --> 0:01:35.600
<v Speaker 3>gold backed credit instruments. People issued bonds and credit based

0:01:35.640 --> 0:01:39.319
<v Speaker 3>on gold. We've discovered the killer app and the bitcoin

0:01:39.400 --> 0:01:42.960
<v Speaker 3>world is bitcoin back credit. I'll call it digital credit.

0:01:43.440 --> 0:01:45.360
<v Speaker 3>You know, on the twentieth century, we had bank credit,

0:01:45.400 --> 0:01:48.760
<v Speaker 3>we had mortgage credit, We've got commercial corporate credit, you've

0:01:48.800 --> 0:01:52.800
<v Speaker 3>got sovereign credit. Well, digital credit is a new creature,

0:01:52.880 --> 0:01:57.000
<v Speaker 3>and bitcoin treasury companies exist to issue digital credit. So

0:01:57.040 --> 0:02:00.280
<v Speaker 3>the reason there's a premium in the equity is because

0:02:00.360 --> 0:02:03.360
<v Speaker 3>we can create digital credit instruments. If we were just

0:02:03.400 --> 0:02:06.440
<v Speaker 3>an ETF, if we wouldn't be able to create credit instruments.

0:02:06.960 --> 0:02:10.720
<v Speaker 3>The credit itself is an extraordinary new asset class.

0:02:11.360 --> 0:02:13.839
<v Speaker 2>Well, when we talk about the premium, and it's been

0:02:13.960 --> 0:02:17.359
<v Speaker 2>at lower levels, but you think about the premium coming down,

0:02:17.520 --> 0:02:19.519
<v Speaker 2>I think it was closer to two a couple of

0:02:19.600 --> 0:02:22.760
<v Speaker 2>months ago. Is that something that concerns you as you

0:02:22.840 --> 0:02:25.560
<v Speaker 2>look at these different types of financing vehicles that you have.

0:02:27.160 --> 0:02:31.320
<v Speaker 3>No, I'm not really concerned. What happens is the premium

0:02:31.360 --> 0:02:35.200
<v Speaker 3>will expand as our leverage increases, and as the volatility

0:02:35.400 --> 0:02:40.280
<v Speaker 3>and bitcoin increases. When the volatility falls and our leverage falls,

0:02:40.360 --> 0:02:46.040
<v Speaker 3>sometimes the premium contracts. But the real key key here

0:02:46.200 --> 0:02:51.080
<v Speaker 3>is the digital credit we're issuing like Stretch, that represents

0:02:51.440 --> 0:02:55.160
<v Speaker 3>us stripping away the volatility and the risk from a

0:02:55.200 --> 0:03:00.160
<v Speaker 3>commodity from bitcoin the digital capital instrument, and then distilling

0:03:00.200 --> 0:03:05.280
<v Speaker 3>out a particular currency USD, a particular yield, say ten

0:03:05.360 --> 0:03:09.280
<v Speaker 3>percent on Stretch, and then a certain duration for that yield,

0:03:09.720 --> 0:03:12.320
<v Speaker 3>and we offer those of the credit markets. So we

0:03:12.400 --> 0:03:15.480
<v Speaker 3>don't really need a premium to issue digital credit. Our

0:03:15.520 --> 0:03:18.880
<v Speaker 3>business model works fine. Whether or not the equity trades

0:03:18.960 --> 0:03:22.160
<v Speaker 3>at a premium or a discount to the underlying bitcoin,

0:03:22.720 --> 0:03:27.160
<v Speaker 3>the equity will have value because people understand the value

0:03:27.200 --> 0:03:31.880
<v Speaker 3>of the credit instruments. And we've launched four credit instruments

0:03:31.919 --> 0:03:35.200
<v Speaker 3>this year, four billion dollar product lines, and the year's

0:03:35.240 --> 0:03:37.800
<v Speaker 3>not even over yet. So that's a lot for the

0:03:37.840 --> 0:03:40.600
<v Speaker 3>world to digest since they didn't see a new class

0:03:40.640 --> 0:03:43.200
<v Speaker 3>of credit for one hundred years. Before us.

0:03:43.840 --> 0:03:45.720
<v Speaker 1>Are you concerned at all, Michael though about some of

0:03:45.760 --> 0:03:48.880
<v Speaker 1>the newer entrants into this space and whether that may

0:03:48.880 --> 0:03:52.200
<v Speaker 1>be not necessarily U SERPs what you're doing, but I

0:03:52.200 --> 0:03:55.560
<v Speaker 1>guess augments it in a way that your next fundraising

0:03:55.640 --> 0:03:58.600
<v Speaker 1>and your next and your next efforts might not get

0:03:58.600 --> 0:04:01.720
<v Speaker 1>the same attention and buy in as you did in

0:04:01.720 --> 0:04:02.120
<v Speaker 1>the past.

0:04:03.440 --> 0:04:05.680
<v Speaker 3>No, I see it as a positive thing. There's been

0:04:05.720 --> 0:04:09.320
<v Speaker 3>an explosion of bitcoin treasury companies and digital asset treasury

0:04:09.320 --> 0:04:11.320
<v Speaker 3>companies in general. I think we were the first. There's

0:04:11.360 --> 0:04:14.680
<v Speaker 3>two hundred and fifty now there are tens of billions

0:04:14.720 --> 0:04:17.880
<v Speaker 3>of dollars of capital flowing in the space. We're the

0:04:17.920 --> 0:04:21.440
<v Speaker 3>first company to show that we could create a treasury

0:04:21.520 --> 0:04:24.919
<v Speaker 3>preferred stock like Stretch. We were the first ones to

0:04:25.000 --> 0:04:28.960
<v Speaker 3>issue any kind of bitcoin back credit like Stride or

0:04:29.040 --> 0:04:33.280
<v Speaker 3>Strike or Strike. We're going to be differentiated based upon

0:04:33.440 --> 0:04:36.200
<v Speaker 3>the quality of the credit instruments we bring to the market,

0:04:36.560 --> 0:04:41.400
<v Speaker 3>the degree of collateralization, the degree of liquidity, and of

0:04:41.440 --> 0:04:44.359
<v Speaker 3>course the risk. And because we're the largest player in

0:04:44.400 --> 0:04:47.600
<v Speaker 3>the space, we can offer the most liquidity, the most

0:04:47.640 --> 0:04:53.520
<v Speaker 3>collateral the strongest brand, and the deepest markets in those instruments.

0:04:53.960 --> 0:04:56.560
<v Speaker 1>How do you respond to some of the concerns out there,

0:04:56.640 --> 0:05:00.520
<v Speaker 1>if not just direct criticism about the potential sales of

0:05:00.560 --> 0:05:02.320
<v Speaker 1>any of your holdings and what that could do to

0:05:02.360 --> 0:05:02.800
<v Speaker 1>the market.

0:05:05.520 --> 0:05:09.919
<v Speaker 3>We're so way over collateralized, it's hardly a concern. I

0:05:09.920 --> 0:05:13.120
<v Speaker 3>think we've got seventy four billion dollars a bitcoin. We've

0:05:13.120 --> 0:05:18.200
<v Speaker 3>got six billion dollars of these preferred credit instruments outstanding

0:05:18.279 --> 0:05:21.640
<v Speaker 3>right now that I maan, come do. I think it

0:05:21.680 --> 0:05:25.400
<v Speaker 3>takes one or two percent of our annual equity issuance

0:05:25.400 --> 0:05:29.000
<v Speaker 3>to cover our dividends. So not a big concern.

0:05:30.040 --> 0:05:33.400
<v Speaker 2>Not a big concern. It's interesting. I mean, you think

0:05:33.440 --> 0:05:35.719
<v Speaker 2>about the position that you hold when it comes to bitcoin,

0:05:35.760 --> 0:05:39.240
<v Speaker 2>which is basically never sell, you hold forever. And then

0:05:39.279 --> 0:05:41.440
<v Speaker 2>I was listening to a conversation this morning with Tim

0:05:41.520 --> 0:05:44.240
<v Speaker 2>Draper on BTV with Matt Miller, who was saying that

0:05:44.440 --> 0:05:46.680
<v Speaker 2>bitcoin is the currency of the future. You're going to

0:05:46.720 --> 0:05:50.000
<v Speaker 2>have a day where you have US retailers using bitcoin

0:05:50.080 --> 0:05:53.479
<v Speaker 2>instead of US currency, and it falls into basically the

0:05:53.520 --> 0:05:57.799
<v Speaker 2>store value versus currency debate. And I wonder, Michael, whether

0:05:57.880 --> 0:06:01.560
<v Speaker 2>those two viewpoints can and coexist together or is it

0:06:01.600 --> 0:06:02.799
<v Speaker 2>going to be one or the other.

0:06:04.240 --> 0:06:07.960
<v Speaker 3>Now? I think that the digital asset economy is exploding,

0:06:08.320 --> 0:06:12.760
<v Speaker 3>and the winning digital currency is the tokenized dollar in

0:06:12.800 --> 0:06:16.520
<v Speaker 3>the form of tether and circle, and that entire asset

0:06:16.560 --> 0:06:19.320
<v Speaker 3>class is exploded about two hundred and fifty billion dollars.

0:06:19.360 --> 0:06:22.240
<v Speaker 3>I mean, so if people want to circulating medium of

0:06:22.279 --> 0:06:25.599
<v Speaker 3>exchange on crypto rails, they're using stable coins in the

0:06:25.600 --> 0:06:30.039
<v Speaker 3>form of tokenized dollars. Bitcoin is emerged as digital capital.

0:06:30.400 --> 0:06:33.440
<v Speaker 3>What you want is a commodity that's also scarce and

0:06:33.480 --> 0:06:37.440
<v Speaker 3>decentralized as a long term capital asset. So the killer

0:06:37.480 --> 0:06:42.760
<v Speaker 3>application of bitcoin is digital credit issued against digital capital,

0:06:43.160 --> 0:06:46.640
<v Speaker 3>whereas the killer application for medium of exchange is a

0:06:46.720 --> 0:06:49.719
<v Speaker 3>digital currency in the form of a stable coin. I

0:06:49.720 --> 0:06:53.320
<v Speaker 3>think the crypto industry understands this, and I think the

0:06:53.360 --> 0:06:55.880
<v Speaker 3>people of the world understand it. If you talk to

0:06:55.920 --> 0:06:57.400
<v Speaker 3>anybody and ask them how are they going to pay

0:06:57.400 --> 0:06:59.760
<v Speaker 3>for their cup of coffee, They're going to send a

0:06:59.760 --> 0:07:02.960
<v Speaker 3>state coin from their mobile phone app. And if you

0:07:03.000 --> 0:07:05.360
<v Speaker 3>ask them what do you give to your granddaughter, they're

0:07:05.400 --> 0:07:06.960
<v Speaker 3>going to say give them a bitcoin.

0:07:07.839 --> 0:07:10.160
<v Speaker 2>There you go, Michael. Before we let you go, we

0:07:10.240 --> 0:07:12.640
<v Speaker 2>talked about some of the different types of financing that

0:07:12.720 --> 0:07:14.920
<v Speaker 2>you have when it comes to herds when it comes

0:07:14.960 --> 0:07:17.280
<v Speaker 2>to convertible debt, and of course when it comes to

0:07:17.320 --> 0:07:21.080
<v Speaker 2>common stuff. Are you considering any new type of debt

0:07:21.280 --> 0:07:24.520
<v Speaker 2>or are you happy with the categories that you have

0:07:24.640 --> 0:07:25.080
<v Speaker 2>right now?

0:07:26.560 --> 0:07:29.040
<v Speaker 3>Well, if we look at these preferreds, first of all,

0:07:29.040 --> 0:07:32.280
<v Speaker 3>they're leverage, but they're not debt because the principle never

0:07:32.320 --> 0:07:37.400
<v Speaker 3>comes due. Stretch, I think represents kerosene. It's like extracting

0:07:37.520 --> 0:07:41.040
<v Speaker 3>jet fuel from a barrel of crude oil, and so

0:07:41.200 --> 0:07:44.680
<v Speaker 3>we're very excited about that, and we think that there's

0:07:44.720 --> 0:07:49.400
<v Speaker 3>an opportunity to create stretch type instruments in euros or

0:07:49.560 --> 0:07:54.080
<v Speaker 3>yen or Canadian currency or pounds. In essence, everybody in

0:07:54.120 --> 0:07:56.120
<v Speaker 3>the world would love to have a high yield bank

0:07:56.160 --> 0:07:59.040
<v Speaker 3>account that yielded ten percent or more, or they'd love

0:07:59.120 --> 0:08:01.360
<v Speaker 3>to have a money mark mar they gave them double

0:08:01.440 --> 0:08:05.640
<v Speaker 3>or triple their normal money market. We have shown that

0:08:05.760 --> 0:08:10.560
<v Speaker 3>you can extract that sort of instrument from raw bitcoin

0:08:10.720 --> 0:08:13.760
<v Speaker 3>if you have enough bitcoin. So I think that we

0:08:13.880 --> 0:08:16.960
<v Speaker 3>will continue to grow the aum of stretch, and then

0:08:16.960 --> 0:08:19.920
<v Speaker 3>we'll look at opportunities to transform it into different currencies

0:08:19.920 --> 0:08:20.600
<v Speaker 3>around the world.

0:08:20.920 --> 0:08:24.600
<v Speaker 1>All Right, Michael really appreciated Michael sailor there executive chairman.

0:08:24.720 --> 0:08:27.880
<v Speaker 1>Over at Strategy, we should point out Bitcoin, after two

0:08:27.960 --> 0:08:30.520
<v Speaker 1>straight weeks of declines, getting its mojo back over the

0:08:30.560 --> 0:08:33.280
<v Speaker 1>last couple of sessions of Micro Strategy, right now on

0:08:33.360 --> 0:08:35.720
<v Speaker 1>its strongest two day run going back to the beginning

0:08:36.000 --> 0:08:36.720
<v Speaker 1>of July