Is the biggest Bitcoin treasury company in the world and it's been on a Bitcoin buying spree amassing a whopping 45,000 coins over just the past 30 days, the fastest pace of accumulation since April of last year, that according to data analytics company Crypto Quant. In order to double down on its wager on crypto, the company laying out a plan to issue $42 billion in common and preferred shares. With four trading days left in March, Strategy is on track to snap an 8-month losing streak, but the stock still down about 70% from its 52-week high. It's volatile like Bitcoin. Bitcoin by the way in the same period down about 40%. Joining us now for an exclusive interview on set, Michael Saylor, co-founder and executive chair of Strategy. Really appreciate you coming out to New Jersey, Michael, thank you.
Okay, this is so the volatility. Crypto's fallen over 50% I think minimum of 10 times. If you are invested in crypto, you have to have a bit of a thick stomach, correct? Like deal volatility. The same thing has been true of your stock and your new stock STRC, you call it stretch. Are you trying to strip some of that volatility out with that equity?
Yeah, the idea is to create a on-ramp for people that believe that Bitcoin's going to be around for the long term but they can't handle the volatility in the near term. So the idea of Bitcoin is you get on a roller coaster and you're expecting 30% or more but you got to hold it for a decade. The idea of stretch is we're going to strip the first 10 to 11% of that return, we're going to pass that to the credit investor. Our equity investors accept the excess volatility, they over collateralize it, they get the excess performance. So STRC is a preferred stock that pays a monthly dividend, it's about 11 and a half percent annualized right now. It's way over collateralized. The bet of the company Strategy is Bitcoin will go up more than 11% a year and our equity holders are going to make a fortune. And the bet that the credit investor is making is Bitcoin's a real legitimate thing but I want to get paid 11% and ideally defer the tax.
11% is a huge number as a dividend effectively. You know, there are people watching and listening right now that are saying they're using my initials BS in vain, bull pucky, right? How is 11% possible? That is a big number.
Bitcoin's up about 37% a year for the past 5 years, that's the slowest it's ever grown. Our company Strategy is up about 55%, we've levered that Bitcoin. The bet is Bitcoin is going to outperform the 11% over the next decade. Now if Bitcoin outperforms the 11%, then our company equity is making a lot of money. If Bitcoin performs just if it's up 2% a year, all it needs to be is 2% a year, we can pay those dividends forever, Brian. And if Bitcoin is just up 2%, we just because we're sitting on a mountain of equity, we're sitting on more than 50 billion dollars of Bitcoin as collateral. So Bitcoin only needs to go up 2% a year for us to pay the dividends forever. The equity MSTR wouldn't make as much money but the credit's fine. If Bitcoin goes up 0% a year, then in 50 years we got to figure something out.
So private credit has been a two bad words lately, you know that right? You look at Ares, KKR, Blue Owl, Apollo, some of these funds, private credit, all the cracks, blah blah blah. Does your then private digital credit I think is a fair way to say it, does that run alongside private credit or is it meant to supplant private credit?
Right, if you're the investor that you want a credit instrument that pays you double-digit yields, normally you had to go after something like private credit but the price you paid was illiquidity, it's not liquid and it's not genius.
Money you can't do it, give it to me back, give it.
Genius, it's like a thousand different investments that's illiquid and they're going to lever it a bit to try to give you an 8% or 9 or 10% return. What we've done is taken the world's most liquid asset, Bitcoin, which is global capital, very volatile, and then we built a credit instrument where the idea is let's make it extremely liquid, let's make it double-digit return, let's make it homogeneous. The credit, the underlying collateral of STRC is Bitcoin itself. So you can assess the credit risk of STRC every 15 seconds by looking at the price of Bitcoin move.
And how does it trade relative to Bitcoin then? You said you wanted to strip out the volatility.
How do you do that? If you go back to
October 6th Bitcoin hit an all-time high of 127,000 or whatever it was, yeah, and it's down about 40-45% since then. STRC is flat at $100 plus or minus a nickel. And so we have stripped all of the principal volatility out of the instrument. In fact, Bitcoin's been about a 55 vol asset for the past 30 days, STRC is a two vol asset, right? And so we have actually by creating a volatility of two or less, we've created a product with a Sharpe ratio of three to five.
