June 10, 2025 • 20 mins
Strategy Executive Chairman Michael Saylor dismissed short-seller Jim Chanos’s recommendation to short the shares of the Bitcoin treasury company and buy the cryptocurrency because of the large premium the company’s common stock commands over the value of its token holdings. Saylor spoke with Bloomberg's with Katie Greifeld and Matt Miller.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:07):
Another success story in terms of the stock that just
climbs and climbs and climes is Strategy. The company bought
recently one thousand and forty five more bitcoin, bringing its
total supply to five hundred and eighty two thousand, worth
more than sixty billion dollars. Bloomberg News took a look
at Strategy and it's seventy separate Bitcoin purchases since Michael
(00:29):
Sailor began to invest cash from the company's balance sheet
into the token in the middle of twenty twenty, and
every purchase over the last four years plus is now
a profitable purchase well.
Speaker 1 (00:42):
And pleased to say that joining us now is Strategy
Executive Chairman Michael Sailor himself. Michael, it's great to have
you with us. We have a lot to talk about,
and one of those things is a recent call from
Jim Chenos. Of course, he's a legendary short seller. He
came out recently and said basically, buy bitcoin short Strategy shares,
(01:03):
and just to set the scene here, I'm curious what
you make of that.
Speaker 3 (01:08):
You know, I don't think he understands what our business
model is we're actually the largest issuer of bitcoin back
credit instruments in the world. So last week we just
raised a billion dollars by selling a preferred stock non
cumulative called Stride. That means we basically borrowed money that
we never have to pay back, that we pay a
(01:30):
dividend on, but we could suspend the dividend if we
needed to. So Jim has been thinking that we somehow
needed to sell the equity. We now are in a
situation where we have Strike, Stride and Strife, three publicly
floating preferred stocks that are not deluded to the equity.
They all meet a different market requirement. Right that one
(01:52):
hundred and ten million dollars a bitcoin we bought last
week that was acquired without issuing any common stock. So
what's going on here is that we're using our sixty
billion dollars a bitcoin collateral to issue credit instruments. They
never come due. There's no liquidation risk, there's not even
an interest rate risk. Right, It's a noncumulative preferred and
(02:15):
we could suspend the dividends. So at the end of
the day, if he's lucky enough to short the stock
below one time's nab we're going to issue the preferreds,
buy back the stock and make money for our shareholders.
If the stock trades at a week premium, we're just
going to sell the preferreds, and if the stock rallies up,
he's going to get liquidated and wiped out.
Speaker 1 (02:38):
Well, let's talk about that premium, because that is the
heart of his short call on Strategy, as you point
out here. So he said recently on a podcast that
shareholders are paying around two hundred and twenty thousand dollars
for bitcoin that trades at one hundred and ten thousand dollars.
But the company is doing everything it can to close
that spread, which is great, there's a catalyst. So he's
(02:59):
referring to the fact that you are selling your own
shares and buying bitcoin. But when it comes to the
premium that Strategy shares enjoy over the price of bitcoin itself,
do you think that that's sustainable? The fact that he
points out that basically you're the value of your company
is treating at twice that of bitcoin itself.
Speaker 3 (03:20):
What he still doesn't understand is we're not a holding
company or a closed and trust. We're an operating company.
So when we issue trust, can't leverage the bitcoin. They
can't issue preferred shares, they can't issue permanent shares of
equity out of premium. We can. Our companies generated a
BTC dollar gain equal to about eight point four billion
(03:44):
dollars in the first two quarters of this year. That's
the equivalent of earnings for a bitcoin treasury company. Our
target for the year is fifteen billion dollars. And so
he's valuing the business that's generating eight point four billion
dollars of shareholder of value at zero, and he's hoping
(04:05):
that somehow the equity will trade to NAB. But what
he's what he's not paying attention to, is if we
can issue preferred shares that yield ten percent and invested
in bitcoin, which has been going up fifty fifty seven
percent for the past four and a half years, we're
capturing the forty seven percent arbitrage effectively risk free for
(04:28):
our common stock shareholders. And if you want to value
the company, you have to value the company's ability to
generate bitcoin yield or bitcoin games over and above the
actual holdings of the bitcoin the company has.
Speaker 2 (04:43):
So, as you said, you have about sixty billion, sixty
three sixty four billion dollars orth the bitcoin your company
is worth about twice that at one hundred and six
hundred and seven billion dollars in market cap, and you
also have obviously in enterprise analytics software business. How do
you break down the value of the rest of your
(05:04):
company x bitcoin holdings.
Speaker 3 (05:09):
If the company generates ten billion dollars of bitcoin gains
this year, you've got to put a ten or twenty
multiple on it. Right, So the bitcoin treasury company operation
is worth a multiple of ten, twenty, thirty or forty
times the BTC yield we're generating. That's the number one
(05:31):
source of value for the operating business. And then the
company also has sixty billion dollars plus worth of bitcoin,
and I would I would say to investors look at
it that way. A BTC dollar gain is like our
earnings equivalent, and then the bitcoin nav is the assets
on the balance sheet, and you should just look at
(05:53):
the earnings equivalent and put the multiple do you think
is appropriate on it. To come to an opinion about
the value of entire enterprise.
Speaker 2 (06:02):
Michael Nobody has to explain the rapid rise and bitcoin
to me. I started buying bitcoins at eight hundred dollars.
I bought one as low as six hundred, but I
spent them. Unfortunately, How how do you expect the asset
to continue a price increase at these levels that we've seen,
(06:22):
I mean, can it keep that up over the next
five years, over the next ten years? And at what
point do we see, you know, winter coming again? Because
that's been a permanent fixture of this asset class. Right,
It's gone from zero or ony to twenty and then
(06:42):
back down to three or four, and then up to fifty,
and then back down to fifteen and now up to
one ten, Like, when does it drop again?
Speaker 3 (06:51):
Winter is not coming back. We're past that. We're past
that phase. If bitcoin's not going to zero, it's going
to a million dollars, and you have all the evidence
you need to determine that. Right. The President of the
United States is determined he supports bitcoin, The Cabinet supports bitcoin.
Scott Peasant supports bitcoin. Paul Atkins has shown himself to
(07:12):
be an enthusiastic believer of bitcoin and digital assets. Ken
Tez a CFTC feels the same ray the banks are
going to custody bitcoin. Bitcoin has gotten through its riskiest period,
the accounting has been corrected. There's now only four or
fifty bitcoin a day available for sale by natural sellers,
(07:34):
that's the miners. At this level, that works out to
about fifty million dollars a bitcoin available for sale every day.
If that fifty million dollars is spot, then the price
has got to move up to find any natural any
seller that's priced sensitive. Now, if you do the math,
you'll actually see the Bitcoin Treasury companies by themselves or
(07:55):
buying the entire natural supply. Black Rock and the ETFs
are buying another measure of that. And we've got nation
state actors coming into the space. So I think when
bitcoin rallies, if it surges to five hundred thousand or
a million dollars, then maybe we could talk about it
(08:15):
crashing down by two hundred thousand dollars a coin. But
at the current price levels, it only takes fifty million
dollars to turn the entire drive shaft of the crypto
economy one turn, and you've got the Trump Media Organization
announcing two and a half billion, you've got Game Stop
announcing five hundred million, You've got my company that's raising
(08:36):
billions and billions of dollars. So the writing is on
the wall. Bitcoin's moving higher.
Speaker 1 (08:41):
Okay, so there's a few things to dig into there.
One that, in your words, Bitcoin Winter is not coming back.
I'm rereading Game of Thrones right now, so that statement
gives me the shivers. But I did want to go
to the competitive landscape if you can freeze it that way,
and you went there, naturally, you think about the ets
suites out there. Bit for example, already up to seventy
(09:02):
two billion dollars in assets. There's a lot of bitcoin
treasury companies that have come to the scene, as you mentioned.
Twenty one Capital comes to mind, started by Jack Mallers,
and they all have the intention of just accumulating bitcoin.
That would be good for the price. Michael, as you say,
but do you worry about the competition out there to
(09:23):
buy bitcoin? It's going to become more and more expensive,
and everyone's competing for a shrinking pie, if you will.
Speaker 3 (09:32):
I think we're in a digital gold rush, and you've
got ten years to acquire all your bitcoin before there's
no bitcoin left for you. The competition is a virtuous competition.
Metaplanet's the hottest company in Japan right now. They went
from ten million to a billion dollar market cap to
a five billion dollar market cap. They're going to raise
(09:52):
billions of dollars. They're going they're going to pull the
liquidity out of the Japanese market, so they'll be right
in capital and Tokyo and the Tokyo Stock Exchange. Obviously,
none of the rest of us are trading or selling
equity in the Tokyo Stock Exchange, so it's not competitive,
it's cooperative. There are companies coming public in Brazil right now,
(10:14):
like Orange BTC that'll come public in some timeframe and Meluse.
They're actually supporting equity capital markets in Brazil. You know,
the game stops. They already had six billion dollars a
capital and so for them to start to take some
of that capital and funnel into bitcoin, it's good for
(10:35):
all of us. Knakamoto in twenty one, they'll bring their
own particular twist. Our company is a very particular business model.
It's to issue bitcoin back credit instruments like bitcoin back
bonds and especially bitcoin back preferred stocks. We're the only
company in the world that's ever been able to issue
a preferred stock back by bitcoin. We've done three of
(10:58):
them in the past five months. We're not competing against
the bitcoin treasury companies. We're competing against ETFs like PFF
that have portfolios of preferred stocks or corporate bond portfolios
that are trading as ETFs in the public market, and
(11:19):
the way we compete is we offer foreigner basis points
more yield on an instrument that is much more heavily
collateralized and more transparent. And that's we're not going to
saturate that market anytime soon. That's one hundred trillion dollars
or more of capital in those markets.
Speaker 2 (11:35):
It sounds like, you know, when you talk about what
you're doing in terms of financial engineering in terms of
financial markets with bitcoin, clearly it's I mean, you're doing
a lot more than just holding the bitcoin. So it's
I think unfair to compare you to an ETF, But
it sounds like you may be inviting competition from a
JP Morgan for example, which then makes me wonder, when
(11:57):
does this asset start to convince the naysayers? You know,
Jamie Diamond has famously said it's worthless, Warren Buffett has
called it probably rat poison squared. When when does it
win those people over?
Speaker 3 (12:12):
People called the electricity worthless and aircraft worthless too when
they didn't understand them. So I welcome the competition from
JP Morgan, I hope to enter the space. Our advantage
is that we're one hundred percent bitcoin, so whenever we
create a preferred stock, it has the Bitcoin performance, and
(12:33):
it has a measure of Bitcoin performance and a fraction
of Bitcoin volatility. That allows us to issue the most
liquid preferred stocks in the world. The highest performance Strike
was up twenty nine percent when the rest of the
market of preferregs was down six percent. Strife was up
twenty two percent when the rest of the market was
down four point six percent. It's impossible to issue bitcoin
(12:58):
backed convertible preferreds and bitcoin backed fixed preferreds unless you're
willing to make one hundred percent of your balance sheet bitcoin.
So I'm not really worried about competition from JP Morgan
or Berkshire Hathway. I would love for them to enter
the bitcoin space buy up a bunch of bitcoin. When
they do it, they'll be paying a million dollars a bitcoin.
(13:20):
The price will go to the moon. That will be
good for the entire crypto economy and beneficial to everyone
that holds any BTC backed equity or credit based instrument.
Speaker 1 (13:33):
Well, I'm still thinking about you saying that you view
yourself in competition, not with the bitcoin treasury companies, but
with some of the ETFs that hold preferred shares, that
that is the strategy that they're tracking. And when it
comes to your own financing and the fact that you
have been pivoting to issue more preferred stocks to fund
your purchases, why is that? Why go towards preferreds rather
(13:55):
than convertible bonds? Is it just a question of demand
or is there something to it?
Speaker 3 (14:02):
The convertible bond market normally is a short duration investor.
They want to hold the bond three or four years,
and the calls that are embedded in the bonds are
capped calls capped at one hundred and thirty percent of
the strike and sorry of the conversion price. And so
that's a short duration call investor and a short duration
(14:24):
credit investor. What we sold with Strike SDRK was a
perpetual call option good for one hundred years or forever.
And then we sold a perpetual dividend you could hold
for one hundred years and give to your grandkids. So
long duration credit, long duration call, and that preferred never
(14:46):
comes due for us, so we don't have liquidation risk.
We don't have credit risk, So it's a much better
instrument if you intend to invest in a volatile asset
like bitcoin and hold the investment forever. Now, the other
point I'll make, Katie, is if you think about what
we're competing against. There's like eighty billion dollars worth of
(15:08):
corporate credit and preferred equity based ETFs that we identified.
Most of them charge a fee of fifty to eighty
basis points a year, most of them generate a yield
of six or seven percent, and most of them have
very heterogeneous o PAI credit, low volatility, and very low liquidity.
(15:30):
We're offering preferred instruments that have eight to ten percent
dividend yields at par ten to one hundred x higher liquidity.
They trade really really hard, very very liquid, and their
homogeneous credit and they're six x over collateralized. So it's
(15:53):
a very compelling instrument if you believe in bitcoin as
a digital assets.
Speaker 1 (16:00):
To finish the thought here, and I'm looking at invescos
preferred ETF. The ticker there is pg X that charges
in expense ratio of fifty one basis points. It has
about four billion dollars in assets. When you say that
you're in competition with funds such as this one. Are
you referring to the fact that you're competing for investor
attention with these ETFs? I just want to make sure
(16:21):
I'm understanding your point.
Speaker 3 (16:22):
Yeah. What I'm saying is you go buy that, maybe
you get seven percent yield effectively, and you pay the
fifty basis points, and some of that is QDI eligible,
and some of that is taxable. When you buy one
of our preferreds, like Stride is yielding like eleven percent
pluss right now, and Strife is yielding nine nine and
a half percent, you buy that, it's all QDI eligible.
(16:47):
It's it's trading ten to fifty times more liquid on
a dollar for dollar basis. It's very homogeneous credit and
you get an extra foreigner basis points of yield, better
tax treatment, et cetera. So we're actually competing against that.
We're offering tax efficient, zero fee fixed income yield to
(17:12):
someone that wants to hold that in their portfolio.
Speaker 2 (17:16):
Michael, I would at least in the top five most
important characteristics of bitcoin is its security, right, I mean,
scarcity has to be one near the top. And the
Ledger obviously was a genius move by Satoshi, but it
seems to be uncrackable, and I'm wondering if that will
hold true far into the future with the development of
(17:37):
quantum computing. Do you worry about that?
Speaker 3 (17:41):
I don't worry about it, And I make the point.
You know, Microsoft and Google market their quantum projects, but
they would never sell a quantum computer that cracked cryptography
because it would destroy their own companies. And there isn't
a practical use case for those quantum projects they've been marketing.
I think at some point a decade out, maybe ten
(18:03):
twenty years, maybe whenever, there'll be a powerful computer it
may start to threaten modern cryptography. When it does it,
it'll be a threat to Microsoft, Google, JP Morgan, the
US government. It may be a threat to bitcoin. When
it is a threat, all of these organizations are going
to upgrade their crypto protocols to be quantum resistant. You'll
(18:26):
see it coming a mile away. And every other digital
entity in the world is more vulnerable to that idea
or that threat than Bitcoin, and so they're all going
to upgrade, and we'll be talking about it while you're
reviewing Microsoft stock or Apple stock exposure.
Speaker 2 (18:44):
I only I don't want to go too deep into this, Michael,
because it's only a half hour program. But I feel
like AI could You know, everyone's worried that AI may
turn on us, and this could be a way in
which AI has real power. Is that not the thing
that keeps you up at night.
Speaker 3 (19:03):
I'll make a point here. The typical person might do
ten thousand transactions in their lifetime, maybe one hundred thousand
if they're very busy. The AIS are going to do
one hundred thousand transactions of minutes. They're not going to
suffer the existing credit systems, in the existing banking systems
of the twentieth century. They're going to want to move
(19:24):
digital money at high frequency, at the speed of light.
That means digital assets like bitcoin over the Lightning network
or via Layer three protocols. The demand for digital capital
which is what bitcoin is, and digital networks like Lightning,
and like all of the crypto protocols that are being
(19:45):
worked on right now, it's going to go through the roof.
So I think AI is really a demand driver for bitcoin.
It's going to accelerate the entire digital assets economy. And no,
I'm not worried about the threat the AIS can't crack
public private key cryptography. What they can do is imitate
you and talk you into doing something stupid if you're
(20:08):
listening to them. And so they are a threat to
all the other systems in the world, not to Bitcoin.
Speaker 1 (20:13):
All right, Michael, we got to leave it there. It's
always great to speak with you appreciate the time that is.
Strategy co founder and executive chairman, Michael Saylor
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:07):
Another success story in terms of the stock that just
climbs and climbs and climes is Strategy. The company bought
recently one thousand and forty five more bitcoin, bringing its
total supply to five hundred and eighty two thousand, worth
more than sixty billion dollars. Bloomberg News took a look
at Strategy and it's seventy separate Bitcoin purchases since Michael
(00:29):
Sailor began to invest cash from the company's balance sheet
into the token in the middle of twenty twenty, and
every purchase over the last four years plus is now
a profitable purchase well.
Speaker 1 (00:42):
And pleased to say that joining us now is Strategy
Executive Chairman Michael Sailor himself. Michael, it's great to have
you with us. We have a lot to talk about,
and one of those things is a recent call from
Jim Chenos. Of course, he's a legendary short seller. He
came out recently and said basically, buy bitcoin short Strategy shares,
(01:03):
and just to set the scene here, I'm curious what
you make of that.
Speaker 3 (01:08):
You know, I don't think he understands what our business
model is we're actually the largest issuer of bitcoin back
credit instruments in the world. So last week we just
raised a billion dollars by selling a preferred stock non
cumulative called Stride. That means we basically borrowed money that
we never have to pay back, that we pay a
(01:30):
dividend on, but we could suspend the dividend if we
needed to. So Jim has been thinking that we somehow
needed to sell the equity. We now are in a
situation where we have Strike, Stride and Strife, three publicly
floating preferred stocks that are not deluded to the equity.
They all meet a different market requirement. Right that one
(01:52):
hundred and ten million dollars a bitcoin we bought last
week that was acquired without issuing any common stock. So
what's going on here is that we're using our sixty
billion dollars a bitcoin collateral to issue credit instruments. They
never come due. There's no liquidation risk, there's not even
an interest rate risk. Right, It's a noncumulative preferred and
(02:15):
we could suspend the dividends. So at the end of
the day, if he's lucky enough to short the stock
below one time's nab we're going to issue the preferreds,
buy back the stock and make money for our shareholders.
If the stock trades at a week premium, we're just
going to sell the preferreds, and if the stock rallies up,
he's going to get liquidated and wiped out.
Speaker 1 (02:38):
Well, let's talk about that premium, because that is the
heart of his short call on Strategy, as you point
out here. So he said recently on a podcast that
shareholders are paying around two hundred and twenty thousand dollars
for bitcoin that trades at one hundred and ten thousand dollars.
But the company is doing everything it can to close
that spread, which is great, there's a catalyst. So he's
(02:59):
referring to the fact that you are selling your own
shares and buying bitcoin. But when it comes to the
premium that Strategy shares enjoy over the price of bitcoin itself,
do you think that that's sustainable? The fact that he
points out that basically you're the value of your company
is treating at twice that of bitcoin itself.
Speaker 3 (03:20):
What he still doesn't understand is we're not a holding
company or a closed and trust. We're an operating company.
So when we issue trust, can't leverage the bitcoin. They
can't issue preferred shares, they can't issue permanent shares of
equity out of premium. We can. Our companies generated a
BTC dollar gain equal to about eight point four billion
(03:44):
dollars in the first two quarters of this year. That's
the equivalent of earnings for a bitcoin treasury company. Our
target for the year is fifteen billion dollars. And so
he's valuing the business that's generating eight point four billion
dollars of shareholder of value at zero, and he's hoping
(04:05):
that somehow the equity will trade to NAB. But what
he's what he's not paying attention to, is if we
can issue preferred shares that yield ten percent and invested
in bitcoin, which has been going up fifty fifty seven
percent for the past four and a half years, we're
capturing the forty seven percent arbitrage effectively risk free for
(04:28):
our common stock shareholders. And if you want to value
the company, you have to value the company's ability to
generate bitcoin yield or bitcoin games over and above the
actual holdings of the bitcoin the company has.
Speaker 2 (04:43):
So, as you said, you have about sixty billion, sixty
three sixty four billion dollars orth the bitcoin your company
is worth about twice that at one hundred and six
hundred and seven billion dollars in market cap, and you
also have obviously in enterprise analytics software business. How do
you break down the value of the rest of your
(05:04):
company x bitcoin holdings.
Speaker 3 (05:09):
If the company generates ten billion dollars of bitcoin gains
this year, you've got to put a ten or twenty
multiple on it. Right, So the bitcoin treasury company operation
is worth a multiple of ten, twenty, thirty or forty
times the BTC yield we're generating. That's the number one
(05:31):
source of value for the operating business. And then the
company also has sixty billion dollars plus worth of bitcoin,
and I would I would say to investors look at
it that way. A BTC dollar gain is like our
earnings equivalent, and then the bitcoin nav is the assets
on the balance sheet, and you should just look at
(05:53):
the earnings equivalent and put the multiple do you think
is appropriate on it. To come to an opinion about
the value of entire enterprise.
Speaker 2 (06:02):
Michael Nobody has to explain the rapid rise and bitcoin
to me. I started buying bitcoins at eight hundred dollars.
I bought one as low as six hundred, but I
spent them. Unfortunately, How how do you expect the asset
to continue a price increase at these levels that we've seen,
(06:22):
I mean, can it keep that up over the next
five years, over the next ten years? And at what
point do we see, you know, winter coming again? Because
that's been a permanent fixture of this asset class. Right,
It's gone from zero or ony to twenty and then
(06:42):
back down to three or four, and then up to fifty,
and then back down to fifteen and now up to
one ten, Like, when does it drop again?
Speaker 3 (06:51):
Winter is not coming back. We're past that. We're past
that phase. If bitcoin's not going to zero, it's going
to a million dollars, and you have all the evidence
you need to determine that. Right. The President of the
United States is determined he supports bitcoin, The Cabinet supports bitcoin.
Scott Peasant supports bitcoin. Paul Atkins has shown himself to
(07:12):
be an enthusiastic believer of bitcoin and digital assets. Ken
Tez a CFTC feels the same ray the banks are
going to custody bitcoin. Bitcoin has gotten through its riskiest period,
the accounting has been corrected. There's now only four or
fifty bitcoin a day available for sale by natural sellers,
(07:34):
that's the miners. At this level, that works out to
about fifty million dollars a bitcoin available for sale every day.
If that fifty million dollars is spot, then the price
has got to move up to find any natural any
seller that's priced sensitive. Now, if you do the math,
you'll actually see the Bitcoin Treasury companies by themselves or
(07:55):
buying the entire natural supply. Black Rock and the ETFs
are buying another measure of that. And we've got nation
state actors coming into the space. So I think when
bitcoin rallies, if it surges to five hundred thousand or
a million dollars, then maybe we could talk about it
(08:15):
crashing down by two hundred thousand dollars a coin. But
at the current price levels, it only takes fifty million
dollars to turn the entire drive shaft of the crypto
economy one turn, and you've got the Trump Media Organization
announcing two and a half billion, you've got Game Stop
announcing five hundred million, You've got my company that's raising
(08:36):
billions and billions of dollars. So the writing is on
the wall. Bitcoin's moving higher.
Speaker 1 (08:41):
Okay, so there's a few things to dig into there.
One that, in your words, Bitcoin Winter is not coming back.
I'm rereading Game of Thrones right now, so that statement
gives me the shivers. But I did want to go
to the competitive landscape if you can freeze it that way,
and you went there, naturally, you think about the ets
suites out there. Bit for example, already up to seventy
(09:02):
two billion dollars in assets. There's a lot of bitcoin
treasury companies that have come to the scene, as you mentioned.
Twenty one Capital comes to mind, started by Jack Mallers,
and they all have the intention of just accumulating bitcoin.
That would be good for the price. Michael, as you say,
but do you worry about the competition out there to
(09:23):
buy bitcoin? It's going to become more and more expensive,
and everyone's competing for a shrinking pie, if you will.
Speaker 3 (09:32):
I think we're in a digital gold rush, and you've
got ten years to acquire all your bitcoin before there's
no bitcoin left for you. The competition is a virtuous competition.
Metaplanet's the hottest company in Japan right now. They went
from ten million to a billion dollar market cap to
a five billion dollar market cap. They're going to raise
(09:52):
billions of dollars. They're going they're going to pull the
liquidity out of the Japanese market, so they'll be right
in capital and Tokyo and the Tokyo Stock Exchange. Obviously,
none of the rest of us are trading or selling
equity in the Tokyo Stock Exchange, so it's not competitive,
it's cooperative. There are companies coming public in Brazil right now,
(10:14):
like Orange BTC that'll come public in some timeframe and Meluse.
They're actually supporting equity capital markets in Brazil. You know,
the game stops. They already had six billion dollars a
capital and so for them to start to take some
of that capital and funnel into bitcoin, it's good for
(10:35):
all of us. Knakamoto in twenty one, they'll bring their
own particular twist. Our company is a very particular business model.
It's to issue bitcoin back credit instruments like bitcoin back
bonds and especially bitcoin back preferred stocks. We're the only
company in the world that's ever been able to issue
a preferred stock back by bitcoin. We've done three of
(10:58):
them in the past five months. We're not competing against
the bitcoin treasury companies. We're competing against ETFs like PFF
that have portfolios of preferred stocks or corporate bond portfolios
that are trading as ETFs in the public market, and
(11:19):
the way we compete is we offer foreigner basis points
more yield on an instrument that is much more heavily
collateralized and more transparent. And that's we're not going to
saturate that market anytime soon. That's one hundred trillion dollars
or more of capital in those markets.
Speaker 2 (11:35):
It sounds like, you know, when you talk about what
you're doing in terms of financial engineering in terms of
financial markets with bitcoin, clearly it's I mean, you're doing
a lot more than just holding the bitcoin. So it's
I think unfair to compare you to an ETF, But
it sounds like you may be inviting competition from a
JP Morgan for example, which then makes me wonder, when
(11:57):
does this asset start to convince the naysayers? You know,
Jamie Diamond has famously said it's worthless, Warren Buffett has
called it probably rat poison squared. When when does it
win those people over?
Speaker 3 (12:12):
People called the electricity worthless and aircraft worthless too when
they didn't understand them. So I welcome the competition from
JP Morgan, I hope to enter the space. Our advantage
is that we're one hundred percent bitcoin, so whenever we
create a preferred stock, it has the Bitcoin performance, and
(12:33):
it has a measure of Bitcoin performance and a fraction
of Bitcoin volatility. That allows us to issue the most
liquid preferred stocks in the world. The highest performance Strike
was up twenty nine percent when the rest of the
market of preferregs was down six percent. Strife was up
twenty two percent when the rest of the market was
down four point six percent. It's impossible to issue bitcoin
(12:58):
backed convertible preferreds and bitcoin backed fixed preferreds unless you're
willing to make one hundred percent of your balance sheet bitcoin.
So I'm not really worried about competition from JP Morgan
or Berkshire Hathway. I would love for them to enter
the bitcoin space buy up a bunch of bitcoin. When
they do it, they'll be paying a million dollars a bitcoin.
(13:20):
The price will go to the moon. That will be
good for the entire crypto economy and beneficial to everyone
that holds any BTC backed equity or credit based instrument.
Speaker 1 (13:33):
Well, I'm still thinking about you saying that you view
yourself in competition, not with the bitcoin treasury companies, but
with some of the ETFs that hold preferred shares, that
that is the strategy that they're tracking. And when it
comes to your own financing and the fact that you
have been pivoting to issue more preferred stocks to fund
your purchases, why is that? Why go towards preferreds rather
(13:55):
than convertible bonds? Is it just a question of demand
or is there something to it?
Speaker 3 (14:02):
The convertible bond market normally is a short duration investor.
They want to hold the bond three or four years,
and the calls that are embedded in the bonds are
capped calls capped at one hundred and thirty percent of
the strike and sorry of the conversion price. And so
that's a short duration call investor and a short duration
(14:24):
credit investor. What we sold with Strike SDRK was a
perpetual call option good for one hundred years or forever.
And then we sold a perpetual dividend you could hold
for one hundred years and give to your grandkids. So
long duration credit, long duration call, and that preferred never
(14:46):
comes due for us, so we don't have liquidation risk.
We don't have credit risk, So it's a much better
instrument if you intend to invest in a volatile asset
like bitcoin and hold the investment forever. Now, the other
point I'll make, Katie, is if you think about what
we're competing against. There's like eighty billion dollars worth of
(15:08):
corporate credit and preferred equity based ETFs that we identified.
Most of them charge a fee of fifty to eighty
basis points a year, most of them generate a yield
of six or seven percent, and most of them have
very heterogeneous o PAI credit, low volatility, and very low liquidity.
(15:30):
We're offering preferred instruments that have eight to ten percent
dividend yields at par ten to one hundred x higher liquidity.
They trade really really hard, very very liquid, and their
homogeneous credit and they're six x over collateralized. So it's
(15:53):
a very compelling instrument if you believe in bitcoin as
a digital assets.
Speaker 1 (16:00):
To finish the thought here, and I'm looking at invescos
preferred ETF. The ticker there is pg X that charges
in expense ratio of fifty one basis points. It has
about four billion dollars in assets. When you say that
you're in competition with funds such as this one. Are
you referring to the fact that you're competing for investor
attention with these ETFs? I just want to make sure
(16:21):
I'm understanding your point.
Speaker 3 (16:22):
Yeah. What I'm saying is you go buy that, maybe
you get seven percent yield effectively, and you pay the
fifty basis points, and some of that is QDI eligible,
and some of that is taxable. When you buy one
of our preferreds, like Stride is yielding like eleven percent
pluss right now, and Strife is yielding nine nine and
a half percent, you buy that, it's all QDI eligible.
(16:47):
It's it's trading ten to fifty times more liquid on
a dollar for dollar basis. It's very homogeneous credit and
you get an extra foreigner basis points of yield, better
tax treatment, et cetera. So we're actually competing against that.
We're offering tax efficient, zero fee fixed income yield to
(17:12):
someone that wants to hold that in their portfolio.
Speaker 2 (17:16):
Michael, I would at least in the top five most
important characteristics of bitcoin is its security, right, I mean,
scarcity has to be one near the top. And the
Ledger obviously was a genius move by Satoshi, but it
seems to be uncrackable, and I'm wondering if that will
hold true far into the future with the development of
(17:37):
quantum computing. Do you worry about that?
Speaker 3 (17:41):
I don't worry about it, And I make the point.
You know, Microsoft and Google market their quantum projects, but
they would never sell a quantum computer that cracked cryptography
because it would destroy their own companies. And there isn't
a practical use case for those quantum projects they've been marketing.
I think at some point a decade out, maybe ten
(18:03):
twenty years, maybe whenever, there'll be a powerful computer it
may start to threaten modern cryptography. When it does it,
it'll be a threat to Microsoft, Google, JP Morgan, the
US government. It may be a threat to bitcoin. When
it is a threat, all of these organizations are going
to upgrade their crypto protocols to be quantum resistant. You'll
(18:26):
see it coming a mile away. And every other digital
entity in the world is more vulnerable to that idea
or that threat than Bitcoin, and so they're all going
to upgrade, and we'll be talking about it while you're
reviewing Microsoft stock or Apple stock exposure.
Speaker 2 (18:44):
I only I don't want to go too deep into this, Michael,
because it's only a half hour program. But I feel
like AI could You know, everyone's worried that AI may
turn on us, and this could be a way in
which AI has real power. Is that not the thing
that keeps you up at night.
Speaker 3 (19:03):
I'll make a point here. The typical person might do
ten thousand transactions in their lifetime, maybe one hundred thousand
if they're very busy. The AIS are going to do
one hundred thousand transactions of minutes. They're not going to
suffer the existing credit systems, in the existing banking systems
of the twentieth century. They're going to want to move
(19:24):
digital money at high frequency, at the speed of light.
That means digital assets like bitcoin over the Lightning network
or via Layer three protocols. The demand for digital capital
which is what bitcoin is, and digital networks like Lightning,
and like all of the crypto protocols that are being
(19:45):
worked on right now, it's going to go through the roof.
So I think AI is really a demand driver for bitcoin.
It's going to accelerate the entire digital assets economy. And no,
I'm not worried about the threat the AIS can't crack
public private key cryptography. What they can do is imitate
you and talk you into doing something stupid if you're
(20:08):
listening to them. And so they are a threat to
all the other systems in the world, not to Bitcoin.
Speaker 1 (20:13):
All right, Michael, we got to leave it there. It's
always great to speak with you appreciate the time that is.
Strategy co founder and executive chairman, Michael Saylor
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
Ridiculous History
History is beautiful, brutal and, often, ridiculous. Join Ben Bowlin and Noel Brown as they dive into some of the weirdest stories from across the span of human civilization in Ridiculous History, a podcast by iHeartRadio.