Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: But let's talk about bitcoin, because gold it's not pacing
Speaker 2: bitcoin so far this year, with as we discussed, the
Speaker 2: US Treasuries gold reserves reaching is staggering one at trillion
Speaker 2: dollars during that record run. But of course that hasn't
Speaker 2: stopped Strategy, the world's largest corporate holder of bitcoin, from
Speaker 2: going full steam ahead into derivatives products such as bitcoin
Speaker 2: back digital credit instruments, including the first Treasury preferred Bitcoin
Speaker 2: backstock and joining us now and please to say we
Speaker 2: have Strategy Executive Chairman Michael Saylor. Michael, great to have
Speaker 2: you with us. This is Bloomberg Television. So we're going
Speaker 2: to go into all of the financing strategies, but let's
Speaker 2: talk a little bit first about micro strategies premium to
Speaker 2: its underlying bitcoin holdings, the m NAV, if you will.
Speaker 2: So it's interesting if you take a look at the
Speaker 2: past few months, micro strategy or Strategy shares have actually
Speaker 2: been underperforming Bitcoin. That has taken your premium down to
Speaker 2: about one point four times. And I would love to
Speaker 2: hear your perspective on why that dynamic exists. Is it
Speaker 2: something about the market, is it the fact that you
Speaker 2: have all these digital asset treasury companies coming to the
Speaker 2: fore is it something else?
Speaker 3: You know, the market's still working to digest the new
Speaker 3: business model. The bitcoin treasury company is an idea that's
Speaker 3: only come to the forefront in the past year or so.
Speaker 3: For three hundred years or so, the world revolved around
Speaker 3: gold backed credit instruments. People issued bonds and credit based
Speaker 3: on gold. We've discovered the killer app and the bitcoin
Speaker 3: world is bitcoin back credit. I'll call it digital credit.
Speaker 3: You know, on the twentieth century, we had bank credit,
Speaker 3: we had mortgage credit, We've got commercial corporate credit, you've
Speaker 3: got sovereign credit. Well, digital credit is a new creature,
Speaker 3: and bitcoin treasury companies exist to issue digital credit. So
Speaker 3: the reason there's a premium in the equity is because
Speaker 3: we can create digital credit instruments. If we were just
Speaker 3: an ETF, if we wouldn't be able to create credit instruments.
Speaker 3: The credit itself is an extraordinary new asset class.
Speaker 2: Well, when we talk about the premium, and it's been
Speaker 2: at lower levels, but you think about the premium coming down,
Speaker 2: I think it was closer to two a couple of
Speaker 2: months ago. Is that something that concerns you as you
Speaker 2: look at these different types of financing vehicles that you have.
Speaker 3: No, I'm not really concerned. What happens is the premium
Speaker 3: will expand as our leverage increases, and as the volatility
Speaker 3: and bitcoin increases. When the volatility falls and our leverage falls,
Speaker 3: sometimes the premium contracts. But the real key key here
Speaker 3: is the digital credit we're issuing like Stretch, that represents
Speaker 3: us stripping away the volatility and the risk from a
Speaker 3: commodity from bitcoin the digital capital instrument, and then distilling
Speaker 3: out a particular currency USD, a particular yield, say ten
Speaker 3: percent on Stretch, and then a certain duration for that yield,
Speaker 3: and we offer those of the credit markets. So we
Speaker 3: don't really need a premium to issue digital credit. Our
Speaker 3: business model works fine. Whether or not the equity trades
Speaker 3: at a premium or a discount to the underlying bitcoin,
Speaker 3: the equity will have value because people understand the value
Speaker 3: of the credit instruments. And we've launched four credit instruments
Speaker 3: this year, four billion dollar product lines, and the year's
Speaker 3: not even over yet. So that's a lot for the
Speaker 3: world to digest since they didn't see a new class
Speaker 3: of credit for one hundred years. Before us.
Speaker 1: Are you concerned at all, Michael though about some of
Speaker 1: the newer entrants into this space and whether that may
Speaker 1: be not necessarily U SERPs what you're doing, but I
Speaker 1: guess augments it in a way that your next fundraising
Speaker 1: and your next and your next efforts might not get
Speaker 1: the same attention and buy in as you did in
Speaker 1: the past.
Speaker 3: No, I see it as a positive thing. There's been
Speaker 3: an explosion of bitcoin treasury companies and digital asset treasury
Speaker 3: companies in general. I think we were the first. There's
Speaker 3: two hundred and fifty now there are tens of billions
Speaker 3: of dollars of capital flowing in the space. We're the
Speaker 3: first company to show that we could create a treasury
Speaker 3: preferred stock like Stretch. We were the first ones to
Speaker 3: issue any kind of bitcoin back credit like Stride or
Speaker 3: Strike or Strike. We're going to be differentiated based upon
Speaker 3: the quality of the credit instruments we bring to the market,
Speaker 3: the degree of collateralization, the degree of liquidity, and of
Speaker 3: course the risk. And because we're the largest player in
Speaker 3: the space, we can offer the most liquidity, the most
Speaker 3: collateral the strongest brand, and the deepest markets in those instruments.
Speaker 1: How do you respond to some of the concerns out there,
Speaker 1: if not just direct criticism about the potential sales of
Speaker 1: any of your holdings and what that could do to
Speaker 1: the market.
Speaker 3: We're so way over collateralized, it's hardly a concern. I
Speaker 3: think we've got seventy four billion dollars a bitcoin. We've
Speaker 3: got six billion dollars of these preferred credit instruments outstanding
Speaker 3: right now that I maan, come do. I think it
Speaker 3: takes one or two percent of our annual equity issuance
Speaker 3: to cover our dividends. So not a big concern.
Speaker 2: Not a big concern. It's interesting. I mean, you think
Speaker 2: about the position that you hold when it comes to bitcoin,
Speaker 2: which is basically never sell, you hold forever. And then
Speaker 2: I was listening to a conversation this morning with Tim
Speaker 2: Draper on BTV with Matt Miller, who was saying that
Speaker 2: bitcoin is the currency of the future. You're going to
Speaker 2: have a day where you have US retailers using bitcoin
Speaker 2: instead of US currency, and it falls into basically the
Speaker 2: store value versus currency debate. And I wonder, Michael, whether
Speaker 2: those two viewpoints can and coexist together or is it
Speaker 2: going to be one or the other.
Speaker 3: Now? I think that the digital asset economy is exploding,
Speaker 3: and the winning digital currency is the tokenized dollar in
Speaker 3: the form of tether and circle, and that entire asset
Speaker 3: class is exploded about two hundred and fifty billion dollars.
Speaker 3: I mean, so if people want to circulating medium of
Speaker 3: exchange on crypto rails, they're using stable coins in the
Speaker 3: form of tokenized dollars. Bitcoin is emerged as digital capital.
Speaker 3: What you want is a commodity that's also scarce and
Speaker 3: decentralized as a long term capital asset. So the killer
Speaker 3: application of bitcoin is digital credit issued against digital capital,
Speaker 3: whereas the killer application for medium of exchange is a
Speaker 3: digital currency in the form of a stable coin. I
Speaker 3: think the crypto industry understands this, and I think the
Speaker 3: people of the world understand it. If you talk to
Speaker 3: anybody and ask them how are they going to pay
Speaker 3: for their cup of coffee, They're going to send a
Speaker 3: state coin from their mobile phone app. And if you
Speaker 3: ask them what do you give to your granddaughter, they're
Speaker 3: going to say give them a bitcoin.
Speaker 2: There you go, Michael. Before we let you go, we
Speaker 2: talked about some of the different types of financing that
Speaker 2: you have when it comes to herds when it comes
Speaker 2: to convertible debt, and of course when it comes to
Speaker 2: common stuff. Are you considering any new type of debt
Speaker 2: or are you happy with the categories that you have
Speaker 2: right now?
Speaker 3: Well, if we look at these preferreds, first of all,
Speaker 3: they're leverage, but they're not debt because the principle never
Speaker 3: comes due. Stretch, I think represents kerosene. It's like extracting
Speaker 3: jet fuel from a barrel of crude oil, and so
Speaker 3: we're very excited about that, and we think that there's
Speaker 3: an opportunity to create stretch type instruments in euros or
Speaker 3: yen or Canadian currency or pounds. In essence, everybody in
Speaker 3: the world would love to have a high yield bank
Speaker 3: account that yielded ten percent or more, or they'd love
Speaker 3: to have a money mark mar they gave them double
Speaker 3: or triple their normal money market. We have shown that
Speaker 3: you can extract that sort of instrument from raw bitcoin
Speaker 3: if you have enough bitcoin. So I think that we
Speaker 3: will continue to grow the aum of stretch, and then
Speaker 3: we'll look at opportunities to transform it into different currencies
Speaker 3: around the world.
Speaker 1: All Right, Michael really appreciated Michael sailor there executive chairman.
Speaker 1: Over at Strategy, we should point out Bitcoin, after two
Speaker 1: straight weeks of declines, getting its mojo back over the
Speaker 1: last couple of sessions of Micro Strategy, right now on
Speaker 1: its strongest two day run going back to the beginning
Speaker 1: of July