Why $1 Million Bitcoin Is Corporate Math | Michael Saylor

Every company in the world is capitalized on a capital asset that's bleeding 10% of their economic value every year. There's 50,000 public companies. The 500 greatest ones are in the S&P 500. Most of them are US-based. And then of the 500, 493 of them are failing and there's seven that are winning. Every public company in the world is capitalized on euro debt or US dollar debt for 100 years. And now you have a commodity that's a scarcity that it's legal to capitalize a public company on. You take $50 million, you buy Bitcoin with it, you have a $50 million business growing 60% a year. There's not a single company in Europe growing 60% a year. You know, it's not going to zero, it's going to a million.

Thank you. Happy to be back.

I think it's gotten much easier over the last 12 months because now you've got the explicit endorsement of the president of the United States. You've got a White House crypto czar. You've got a public position that Bitcoin is a digital commodity. You've also got a public position that it's the only globally acknowledged digital commodity. So the big existential question has been: is it a commodity? Is it a security? And the conclusion of it being a commodity makes it a 100x more powerful than a security. And then the second competitive question is: is there a competing digital commodity? And the answer is no. And we fought over that for four years, but now there's pretty much no fighting. David Sacks said, 'The White House acknowledges that this is a decentralized network, an asset without an issuer, it's special and there's no second best. There's no other thing.' And so I've said, you know, if it's not going to zero, it's going to a million. The point really is every public company in the world is capitalized on euro debt or US dollar debt for a hundred years. And now you have a commodity that's a scarcity that it's legal to capitalize a public company on. If you can capitalize a company on an asset that's appreciating 55% a year and if the S&P is appreciating 12 or 13% a year and if the after-tax return of euro debt, the euro one-year rate was 200 basis points when I last checked and SOFR's 400. So if you're capitalized on stuff that's got an after-tax yield of two to 3%, you're 10% less than the cost of capital. So ergo, every company in the world is capitalized on a capital asset that's bleeding 10% of their economic value every year. And this is the first time we've got one that is positively yielding. And we've only known that without debate. I mean, truth is what settled the debate: the SEC approving Bitcoin ETFs in January, followed by the embrace of Bitcoin by the Trump administration, followed by the designation that it is the unique digital commodity in the world by David Sacks in March. That's how long, plus followed by the accounting profession mandating fair value accounting and the Secretary of the Treasury telling banks, and the banks not just in the US but by inference every bank in the world is being directed to start banking Bitcoin by the head of the Treasury, the FDIC, and the OCC. So all of that dates to November 5th of last year. So we're really in, we're not at the end of year one. We're in year one of institutional adoption, the inflection point where it's pretty clear it's not going to zero. And it's pretty clear that it's at least as valuable as gold, but no one can capitalize on gold. So it must be 10 times more valuable than gold. Nobody can stop it. No one wants to stop it. And yet 99% of corporate executives don't appreciate it.

Today, you mean?

Most of the things that I'm famous for, I was made famous for by the cyber hornets, by all the Bitcoin maxis. And the hornets out there in cyberspace, they decided that they're the ones that clip it, they amp it, they speed it up, they put music to it. It's all their ideas. I look, even this orange tie, this was not my idea. This is Led Doer's idea. He basically decided he wanted to create images of me. Then he created an AI to create images. Then he decided to give me an orange tie. Then I literally woke up this morning and I saw someone generated a picture of me in a black suit with an orange tie and I'm like, that's what I got to wear today.

You know, and so a lot of the best ideas, they really come from the Bitcoin community. And I might have said it, but they endorsed it and told me it was a good thing. So then I said it again.

You know, all the second sons of nobles in Europe came to the United States.

Because it was hopeless for, or maybe it was the third son or the second or third. But if you feel like your path to success is blocked, then you get on a ship and you risk your life and you go to the new world. And that's a metaphor. But the people that embrace Bitcoin first are people who either felt that their path to success was blocked by the conventional world or the traditional world or it was hopeless or they're staring at a certain death. And so I think that the people that get it first, they're the teenagers, the 20-somethings. I every time I go to a conference full of wealthy people, it's always the sons of the billionaires who know me. I'm very famous with rich kids. All the rich kids in the world know me, all of them. They're like, 'Could you convince my grandma to buy Bitcoin or my dad? I want you to talk to my dad and explain to him.' So it's the 20-somethings and they're looking for the next thing, or it's the zombie companies, or it's the Metaplanets. It's like I had a hotel chain is going bankrupt. I'm dead. It's the people that have a terminal illness. So they're all very motivated to open their mind to a new idea. I think that if you're comfortable and happy, you're not. And the problem is, I mean, it's a very comfortable life here, right? A lot of Europe is very comfortable. There are beautiful buildings that were built by people a thousand years ago or 500 years ago.

It's like so there's a lot of beautiful things, a comfortable climate, comfortable everything. You have to be uncomfortable to embrace a new idea or you have to feel like your path to success is blocked. So well-run successful companies will be the last to embrace this. The people that will embrace it will be the ones that have a gun to their head or they feel their back is against the wall or they have nothing to lose or they're desperate or occasionally you get an inspirational figure.

No, I think I'm actually pleasantly surprised it's going a bit faster than I had thought. We there were like there was one and then there were two in 2020 and last I checked there were like 140 or 150 on the Bitcoin standard and I saw someone say there's 270 crypto public companies that have some kind of crypto on their balance sheet or something. So maybe I'm undercounting. I think I'm undercounting because I'm just discovering some every day that have Bitcoin that I didn't even know about. I think that the inflection point was November 5th of last year. If you had to point to one, this entire industry was waiting to see whether the securities regulators would embrace it, whether the banking regulators would embrace it, whether the commodities regulators would embrace it. And I think we knew the answer. We knew we were going to win in 2020, but it was going to be a long grinding battle of attrition to win, but we knew we were going to win. But after November 5th, it became like a landslide obvious. It's like, okay, the entire government flipped. The Senate's pro Bitcoin. The House is pro Bitcoin. The cabinet is pro Bitcoin. The head of the NSA, the CIA, the FBI, the Department of Health and Human Services, they're all pro Bitcoin. All the financial regulators are pro Bitcoin. And everybody else in the world, every other regulator takes their cues from the US. Even if they claim they don't.

I think that the European markets are catching fire. If you look at the results of Blockchain Group or Smarter Web Company or H100, there's just a lot of Bitcoin treasury companies popping up here. There's probably going to be one unicorn, or superstar in every single market that catches fire and grows 100% plus a year or hypergrowth and then you'll see a dozen others that will follow it. And I think they will do it because the equity capital markets in Europe are more abundant and the credit markets in Europe are weaker than the US, right? I mean, the US credit market is 4% interest or 420 for a one-year bond, but in Europe it's like 220. So basically you're not getting any yield if you're a credit investor and the equity is based upon growth. But all equities valued based upon future expectations of fiat cash flows. And if you're not growing fast, then the equity is going to be weak and illiquid. And the dirty secret is there's 50,000 public companies. The 500 greatest ones are in the S&P 500. Most of them are US-based. And then of the 500, 493 of them are failing and there's seven that are winning. And so the dirty secret is out of 50,000 companies, there's the number you can count on one hand or two hands at any given time that are winning and everybody else is just trying to keep up, right? And how do you win? You need a digital monopoly, right? If you happen to have a digital monopoly and you can sell something to a billion people, then you're going to win. And that's what Meta is and Google and Apple and Microsoft. They're all digital monopolies. They're more powerful than governments, right? And so now if you're one of the 400 million private companies or one of the 50,000 not digital monopoly monster companies, how do you win? And the answer is you basically merge with a digital monopoly bolted onto your capital structures. You ever see that movie X-Men, where you see the Wolverine and he starts out as just a normal dude and then they actually fill him with the adamantium and they give him indestructible exoskeleton and that makes him the Wolverine. Well, Bitcoin is that. You're this normal dude and what you want to be is indestructible super mortal or superhuman. And I'm telling you what you do is you basically infuse the capital structure of the company with digital energy or digital capital and that turns you from a $10 million dying hotel company into an $8 billion monster, right? And so I think it's a matter of time before people realize like you can't fly, you don't have laser eyes, you're not indestructible, and Apple and Microsoft are. And your choices, you can be like one of those mere mortals in the TV series The Boys. You guys see The Boys where the superheroes are all bad and they actually just beat up on all the mortals. Like you can either be crushed underfoot by evil superheroes or you could take Compound V and you become the superhero, or in this case Compound B. Right? So I think it's one of those things where at some point the company says, 'Well, I'm not going to be Apple and Google and I'm either going to be crushed to death or I'm going to be a superhero.' And then Bitcoin comes along and Bitcoin offers to make you a superhero. And so, take Compound B and what happens? You take $50 million, you buy Bitcoin with it, you have a $50 million business growing 60% a year. There's not a single company in Europe growing 60% a year, right? I don't think there's... Well, not that I... I bet you if we look at all of the companies with a market cap of a billion dollars or billion euros or more in Europe, I would be shocked if there's one that's growing 60% a year. And yet every single company in Europe if they simply recapitalize a Bitcoin would be bolting on a company growing 60% a year to whatever size of their balance sheet is. And then once you've done that, the aha moment is now you can issue equity or credit instruments, recycle it back into Bitcoin and grow 100% a year. And so it's like, do you want to be a mortal, destructible, or do you want to fly with laser eyes and be indestructible? And it's like you have to take the Compound B. And it may be a little bit scary. It is volatile and it's bubbling. It's orange. You have to drink the orange fluid.

I think that Trump realizes that Bitcoin and the crypto industry in general is incredibly powerful politically and economically and technically and he attributes a fair degree of his political success to the support of the entire community. So they're very enthusiastic. Every cabinet member is enthusiastic. The Trump administration's enthusiastic. They're going to harness it for, they're going to harness it technically and economically and that will progress and I think the GENIUS Act, the launch of stablecoins, the Bitcoin strategic reserve, all of those things are indicative. The US went from grudging acceptance of Bitcoin, dragging their heels on everything else, and being fairly indifferent to the opportunity as of a year ago to enthusiastic embrace of Bitcoin, enthusiastic embrace of all the digital assets industry, and they went to leading the industry, and now they're kind of in the driver's seat. They're probably the most progressive, and other companies, countries are going to have to keep up.

Yeah, sure. It just takes clarity and it takes conviction and it takes consensus. The challenge with nation states is they have like 10,000 people on the board of directors. I mean technically how many senators, how many congresspersons, how many political actors? So in my experience it only takes one member of the board of directors who's a conventional thinker to block the entire company. And so generally the problem with corporate adoption is one conservative or traditionalist on the board cripples the company. In a country you have a lot of parties and a lot of concerns about that. So the obvious winning move is if I ran a country and if I had the power, I would print my currency, buy Bitcoin, and if I after I finished with that, I would borrow money, sovereign debt. I would print debt and I'd buy Bitcoin. But I don't have a country. It's above my pay grade. And countries have a lot of other dynamics. There are a lot of other political actors. You've got your unions. You've got your political parties. You've got the IMF, the World Bank. You've got the opinions of your neighbors. You've got the opinions of your citizens. You've got the opinions of everybody under the sun and the media. And so I'm not here to tell you what they can do. I'm an idealist. That's what I would do if I could. But neither am I critical. Well, the truth is there's a million people that don't go 150% all in on Bitcoin. And I don't judge them for it. Maybe they had a reason to not do it, right?

Or sometimes somebody sees the need, but they can't build consensus. Like a CEO sees the need, but he can't convince the board of the need.

Yeah. Leadership matters. And if you have one leader, they create air cover for people to come behind them, whether it's a nation or a company or an individual. And so I think it does matter and each time you do something, it gets easier for the next cycle. Like even with us, when we decided we wanted to sell a preferred stock, everybody said that's impossible. No one's ever done it before and it was difficult. It took us a couple tries. The second time we did it was much easier. The third time we did it, it was the easiest deal we've ever done. The first Bitcoin company that does it, they'll be following us and they'll just say, 'Yeah, it's just going to be like this one.' Well, the first two we did were the two most successful preferred stocks in the century. So the Bitcoin company that issues a preferred stock backed by Bitcoin will say, 'Well, you see, people thought it couldn't be done, but Strategy did it and it was the most successful preferred stock in the last 30 years, so that's why we're doing it.' And then the investors will nod and say, 'Okay, I get it.' So the point is, you have to do it. And then you have to, sometimes it takes two or three tries and sometimes you get your nose broken or bloodied a bit. But you know the alternative is always worse.

Well, there's a ton of corporations and actors that adopt Bitcoin that I didn't even know about that did it for reasons I'm unaware of. And of course, the classic example are all the OGs that adopted Bitcoin because they came out of Argentina and they were victims of currency collapses and I didn't live through their bank collapses, through their currency collapses. I would say the beauty of Bitcoin is it is a solution to the economic problem faced by 8 billion people and 400 million companies and who knows how many entities and all of their problems are different. All their circumstances are different and it offers a different solution for someone living in a war zone than it is for someone living in Shanghai than it is for someone living in North Korea than it is for someone living in Germany than it is for someone living in Nigeria and even is different for you in Nigeria 5 years ago versus you in Nigeria five weeks ago. So dynamically everybody's economic challenge is evolving, their circumstances and businesses are different and it offers everybody this opportunity to solve their problem with technology. And the reason it's successful is because it's this massive parallel shared nothing network where you've got hundreds of millions of people thinking independently for themselves and their own local circumstances without asking for permission from anybody else to think. So for me to presume that I know why someone did it or I understood the problem is like no one person really understands the entirety of the human experience, it's just too multifaceted, too high bandwidth. And generally the best solutions. The reason that Bitcoin works is because someone that you don't know with a problem you don't have in a place you've never been to settles upon Bitcoin as a solution and then you're walking down the street in a random place. They're like and they think, 'Oh, we are comrades.'