If you want Bitcoin to become 500x, if you want $20 million Bitcoin, the capital will have to flow from the credit markets, right? One way or the other. BlackRock and Strategy collectively are trustees for about 7.12% of all the Bitcoin in the world. You know, that means 92% of the Bitcoin in the world is worth 10 times as much. The reason Bitcoin went from 10,000 to 100,000 is because the ETFs invested 100 billion because Strategy invested 64 billion because we got 30 billion from other institutional sources. If that money didn't flow, Bitcoin would be trading 5,000 or 10,000 a coin. Right now, I have a plane. I can pull the stick back here. This is 30% Bitcoin yield, but it's taking on more risk. And the plane then stalls. Or I can put the nose down and say, 'What I want is 15% Bitcoin yield.' Wait a minute, you're going slower. No, but I'm going to keep climbing at 15%. And so what we want to do is find the right balance of risk versus growth. A simplistic troll would say selling Bitcoin is bad. But the truth is,
Yeah. Well, our company is like a Bitcoin reserve bank. So the idea of the company is you have a tower of equity. You have $50 billion or more of equity capital. You own Bitcoin with that equity capital and then you issue credit against it. And we've tried lots of types of credit. We've tried bonds, senior bonds, we did asset-backed loans, we did convertible bonds, then we did perpetual preferred stocks. And our most successful credit instrument is STRC, which is a variable monthly now semi-monthly preferred stock. So the company's entire existence, the whole point of the company is to create Bitcoin-backed credit, right? That's if we weren't creating the credit, we would just be a holding company and we would look like an ETF holding Bitcoin. That's what ETFs do. ETFs just have a bunch of Bitcoin. They're pure equity and they trade at the price of the Bitcoin. We're an operating company. So the question is what's an operating company going to do? And what an operating company there are a lot of things you could do. But what we choose to do is create Bitcoin-backed credit. And then through the process of elimination, we have determined that the greatest form of Bitcoin-backed credit is short-dated treasury credit like STRC. And so for the company to create good credit, we actually need to assure the credit investors that we're backing the credit with some collateral and that we can generate the cash flows to pay the dividends. So the way the company's business model works is we convert a capital gain in Bitcoin into a credit dividend. Okay, now that being the case, the obvious simple business model is we sell a billion dollars of credit, we buy a billion dollars of Bitcoin, Bitcoin appreciates, and then we sell a hundred million of the Bitcoin to pay the dividend, right? It's a very simple business model.
So if people believe that we were unwilling to sell the Bitcoin, then what follows is if you're not willing to sell the Bitcoin, you can't pay the dividend. And if you can't pay the dividend, I can't buy the credit. And the business model is broken. So the most important thing that we've been communicating to the market, which is well understood by our investors, it's just not always well understood by Twitter trolls and by pundits on X, is the company makes a capital investment in digital capital and then it converts an unrealized capital gain into a credit dividend. And so that means that you would like to get credit rating agencies to rate your credit. It also means you would like the credit investors to be comfortable that they've got good collateral and that you're going to pay the dividend. It also means that you would like the equity investors to be comfortable that the business of reserve banking, the business of creating credit, is a profitable business and that the equity is going to have value. So it's not, I don't think it's a complicated idea but it's a novel idea and the idea is very simply: we sell a dollar of credit, we buy a dollar of Bitcoin. Bitcoin appreciates in value over time. We pay a portion of the capital appreciation back as a credit dividend.
And all of the technique and the artistry in that is being economically efficient and efficient in a tax format. So if we sell a derivative of the Bitcoin, we can generate cash flow that's tax deferred and then we don't generate an earning or a profit. So then we pay a dividend which is return of capital dividend. So the idea is to have tax deferred capital appreciation and then monetize it to pay tax deferred dividends. What we have done in the past is we sell the equity to pay the dividend but critics say you have to sell the equity and therefore you will sell the equity and that's created a bit of confusion and criticism. So it's important for us to point out that now we don't have to sell the equity. We can actually sell the capital asset. The capital asset is the Bitcoin. So in the event that the equity capital markets value our equity at a premium of Bitcoin, it makes sense to sell the equity. In the event that the equity capital markets value our equity at a discount, it's important to demonstrate to the market that you would sell the capital. If you took the position you would never sell the capital, in theory, a short seller could short your stock down to a dollar a share with a 99% discount to the capital. And then if you insisted on selling your equity, you would be selling it at a 99% discount, which is foolish. So no equity investor would endorse that. They would say, why don't you just sell the capital?
Okay. So, we've just demonstrated that we can sell the capital. We've told the market it definitely makes economic sense to buy the Bitcoin and then sell the Bitcoin in order to pay the dividend. Especially if we can do it without generating a taxable event when we sell the Bitcoin. In fact, we actually generate a tax credit if we sell the Bitcoin that's got a higher basis than the current market price. So if you're running the company, what you want to do is sell Bitcoin when it generates a tax credit and when it is beneficial to the shareholders and you want to sell the equity when that is the most beneficial to the shareholders. And in either case, you use it to pay the credit. And if your equity shareholders believe you'll be rational, then the equity will trade up. If the equity shareholders think you're irrational, the equity will trade down. If the credit investors believe that you will never sell the Bitcoin, if you have a hundred billion dollars of Bitcoin and the credit investors believe you would never sell it, then you have zero dollars in assets and you have zero dollars in collateral and they're undercollateralized, which means the credit rating would be distressed junk.
So the challenge we had with the credit rating agencies is conventional credit rating agencies deemed Bitcoin to be an illegitimate asset and so they value it at zero. Of course it's not zero but the only way that Bitcoin is a tangible asset is if you're willing to sell it. And so what's important for the credit investors is for us to show that we have tangible capital assets that we can monetize if we need to. What's important to the equity investors is show them that we sell the equity when it's advantageous for them to do it, but we sell the capital, the Bitcoin when it's advantageous for us to do it. Now, a simplistic troll would say selling Bitcoin is bad. But the truth is if the selling of the Bitcoin creates equity value and improves creditworthiness then that allows us to sell billions of dollars of credit and that causes the equity to trade up by billions of dollars and that allows us to raise billions in the equity market and that allows us to buy billions of Bitcoin. So in fact the machine working properly and rationally is good for Bitcoin. It's good for the credit STRC and it's good for the equity. This is not really controversial amongst equity analysts, credit analysts or equity investors. It's only controversial on Twitter and X because most of the people that want to tweet, they will say, 'Well, you told us not to sell it and you sold it.' And that, 'Haha, that's a good gotcha point.' Most will not actually read a 100 page financial filing. And they won't really think through the dynamics and the relationship between creditworthiness and equity premium and growth of the business and rational operations and then all the game theory that comes into play with short sellers and derivative traders. So the bottom line is what's best for the company is to be rational. What's best for Bitcoin is for the company to grow and raise capital. And if the company's going to raise capital, it has to raise capital in the credit markets and the equity markets, right? We're not raising capital by selling Bitcoin. We're raising capital by selling STRC and selling MSTR. So, if I tell the STRC shareholders, I'll never sell Bitcoin to pay your dividend, they're not going to buy STRC. And if I tell the MSTR shareholders, I'll never sell Bitcoin to defend the stock against short sellers, they're not going to buy MSTR. So what we do as a management team is rational for all of our shareholders and by being successful we have become the biggest holder of Bitcoin in the world and we're the biggest buyer of Bitcoin in the world and that will continue as long as we act rationally. So, we occasionally respond to the Twitter trolls because it drives engagement or we have to be maybe there's a crazy idea that's just wrong that's trending. And so sometimes we'll respond to clarify a misconception. But we run the company based upon very, very thoughtful multivariate dynamic computer models that take into account the derivatives market, the equity markets, the credit markets, and then the capital markets, all of them dynamically evolving every day.
