Apple or Amazon or Bitcoin.
I didn't buy any of those.
Are you gonna give advice to someone they should put two or three or five percent of their portfolio in? It's like I think if you're going to do it, you should put in an amount of money that changes your life.
Yeah.
So, well, look, if you're diversifying and you find a brilliant idea, maybe you put five to 10% of your wealth in it because you want to stay diversified. But you know, Jeff Bezos didn't get rich by having 5% of his assets in Amazon and selling 95% of his Amazon stock as soon as he could, right? So Steve Jobs,
Ellison, Mark Zuckerberg, Jeff Bezos, you know, Elon Musk, Bernard Arno, they don't get rich by selling 95% of their good ideas and keeping the last five or by selling 90%. So, I just think when you find if you're pitching someone a digital real estate fund,
you know, and if real estate's going to go up 7% a year and Bitcoin's going to go up 30% a year, then you don't want it to be 10% Bitcoin and 90% real estate, it's just a little bit better than everything else in the world.
Why not put it half and half?
Yeah. And then why don't you deliver 20% gains a year when the entire rest of the real estate industry gives you seven? Because if it's a bad idea, it ought to be zero and 100% real estate. Yeah.
And if it's a good idea, then you might as well go 50-50 because that way you're giving someone juiced real estate three times as good as every other real estate investment in the world. I just think if it doesn't work and you put 10% of your money into it and it doesn't work, then you just had a dog real estate fund and it failed, right? Yeah.
So, so when you have an idea, you either think it's going to work and you might as well put in enough such that you win and everybody gets rich or don't do it at all. I'm not a big fan of the I'll give you one more example. I use,
you know, Rockefeller invents kerosene. Yeah,
you know, kerosene is the most highly distilled form of crude oil and it's jet fuel. It's rocket fuel, right? It's pure liquid energy.
Okay. So, a good idea is I build a rocket. I build a rocket ship. I build a jet engine. I build a jet airplane. Or maybe I create gasoline or diesel. I give you a car, a truck. Those are all good ideas. Henry Ford, Boeing,
you know, they did that. What's a conventional idea? Safe idea. I put a kerosene lamp in the back of my horse and buggy, right?
And I tell all my horse and buggy customers that now they can read a book while they're in the horse and buggy crossing the nation. Or I put a kerosene heater in the back of the buggy because my customers complain about it taking 30 days to go across the Rockies in a buggy and so I heat them up. And my point is, you don't really want to be the dude that's 2% invested or 3% invested in the revolutionary idea. You want to create the rocket ship. And so
in that case, I feel like either don't do it.
Yeah.
Or do it in such a way that it's so much better than everything else in the world that everyone will sell everything else and buy your thing and everybody, you know, lives happily ever after. So that's my view. Where do you think the diversification who sold the diversification to America and to the world? The idea to go into a Yeah. Just send it over to an ETF or a mutual fun.
It's a classic thing. I think when you don't know the answer, when you have a hundred choices and you genuinely don't know the answer and you're in the business of selling a diversified fund, you pitch in diversification.
Right. So I think partly the Vanguard 500, you know, John Bogle and then conventional finance people, but um
it's 11 trillion dollars sitting over there. It's done very well for them, but I don't know that it's done that well for the
world's full of hedge fund guys that created diversified portfolios and their pitch was no one decision we make is going to bankrupt you, so give us all your money.
Right? But if you actually look at the results, they underperformed
consistently. Uh the king of diversification is just to buy the S&P index. But generally, I think that there's a distinction here between the financial statisticians that want you to give them your money. For them, diversification's a good pitch because like, hey, you're a retail investor or you're busy and I'm going to protect your money by investing you in 27 uncorrelated diversified assets and I'm going to rebalance the portfolio every month and I'm going to have 50 analysts that rebalance the portfolio and I'm going to charge a 2% fee and 20% of the upside and my value added is consistent dynamic diversification. So that's what they're selling and they want you to believe that you need them and they charge you when you charge 2 and 20, you're basically taking 40% of somebody's capital over the course of 10 years, right? So it's pretty expensive service. On the other hand, there's another view of the world which is the engineers view of the world. When you build an airplane, you've got the choice of building the airplane in copper, aluminum, or steel or bronze or bricks or, you know, wood. And there's a right answer, aluminum, and everything else is the wrong answer. And if you build it in steel, it doesn't fly. And if you build it in clay, it doesn't work, right? You build it in copper, it's not working. So in engineering, there's a right answer. For the plane, it was aluminum. For bridges, there's a right answer. It's like steel, right? You know, when you're creating a window, there's a right answer for how you, you know, what kind of glass you use and then there's a wrong answer. So engineers are used to asking the question, what's the right answer? Like how about you want to conduct electricity through a line, copper or titanium or you can pick a hundred metals but there's one metal that works better than the other metals. So if you're an engineer and there's a right answer, you don't diversify. You pick the solution because otherwise you die. But when you don't know the answer, when you're not sure whether copper is going up or aluminum's going up or steel is going up or a bushel of corn is going up in price, you know, and nor does your customer know the answer.
Well, you can create a service which is I'll just give you a diversified mix of all of them and that justifies your business and you charge a lot of money for it. But, you know, I think the diversification only makes sense when there is no right answer. It's like the joke I, you know, example I use is yeah, you're on a sinking ship and there's 10 lifeboats, you know, and one of them is watertight and the others have holes in the bottom of them. Find the one that's watertight. Put the entire family on that one and then you live. And pick the one that isn't watertight. You're going to die, right? You're not going to diversify across a bunch of imperfect components.
Were you looking four or five years ago or before that? Were you looking for something other than what you were doing?
You know, in the during the COVID lockdowns in the middle of 2020, we had $500 million of cash and the bankers took the interest rate to zero.
And yeah, we were 500.
Half a billion of cash. Half a billion. And you know, so it's like you have a $500 million real estate portfolio and the mayor of the city unilaterally reduces your rents to zero and tells you they're going to rent control the rent to zero for the next five years because that's the right thing to do because we're in a crisis, right? There's COVID crisis and if you don't like it, then you must not be a good citizen, right? Right. There's something wrong with you, right? You're just insensitive capitalist. And the right thing to do is we just reduce the rents to zero forever,
which is easy to do with somebody else's money, right?
So that's kind of what happened during COVID, right? I mean, we literally did it with rent.
You know, and we did it with capital.
So when that happened, if that were to happen to you, if someone said, 'I'm reducing your rents unilaterally to zero forever, and you could sell the property and move to a different state or move to a different city.' You might very well do that, right? So, we had $500 million worth of property. It was called treasury bills. It was unilaterally reduced to a value of zero per year. And I think Jerome Pal gave a speech and he said very famously, he said, 'We're not even thinking about thinking about raising the interest rates until the year 2024 or 2025.'
Right? Repeatedly he said it.
I didn't need to hear that twice. So I thought I better go find something else to buy other than treasury bills. So we started thinking, could we buy a stock portfolio? Could we buy a portfolio of art? Could we buy some real estate? Could I buy a fraction of a sports team?
Should I buy a bunch of gold? Or should I buy a bunch of digital gold?
And by the process of elimination, we went through all those things.
Had you been introduced to Bitcoin prior to that?
No, not really. Okay. I mean, I'd never really seriously thought about it. Okay. Right. So I went through the process of elimination and I started thinking maybe I should buy gold. But then I thought what I'd really like is something that feels like gold, a non sovereign store of value bearer instrument like you know and I like something which is the best cross between gold and Google.
I wanted a digital monopoly on money,
digital gold. And I thought, well, this crypto stuff looks like it's digital gold. A crypto coin, 21 million crypto coins because the appeal of gold is it's scarce and desirable as a store of value. And the appeal of crypto is I can teleport it and I can self-custody it and I can program it. So then I just started thinking, well, what's the crypto network which is most like gold? And I eventually decided Bitcoin was digital gold. And so we bought Bitcoin because yeah, gold was the best idea of the 19th century. And arguably if you wanted portable capital, you wanted portable property, you wanted money for the past 5,000 years, right? Gold was generally a pretty popular idea. But in the 21st century, what you'd like is something that's as desirable as gold, but you want it to be programmable. You want to move it at the speed of light. You want to put it on an iPhone. You know, and the thing about Bitcoin which is better in addition to being programmable and digital was that it's absolutely hardcapped to 21 million coins and so the inflation rate of Bitcoin is zero. It was pretty obvious to me over the long time horizon as the limit goes from 0 to infinity the inflation rate is zero.
Because there's 21 million that's all there's ever going to be.
Okay. So there's 21 million.
Yeah. Right. And the rate at which we create more Bitcoin is asymptotically falling to zero. It's falling to zero.
You know, asymptotically, that's a big word, bro.
It's like if I try to go to the wall there and each time I move, I cut my step in half.
Okay? And I go half as far and half as far and half as far and half as
that's asymptotically approaching the edge of the room. But even over a billion trillion years, if I keep cutting my step in half, I'll never get there. Right. But on the other hand, you say, well, how wide is the room? It's like it's like 12 feet.
Well, so with Bitcoin, you know that there'll never be more than 21 million Bitcoin. And in public company parlance, you would refer to that as the fully diluted share count.
The fully diluted bit count count, Bitcoin count between now and a million.
You can't be any more shares.
It's like if you knew you were going to 21 million shares.
It's like when I'm valuing your company, I want to know, well, what's the total number of shares that can ever be issued between now and 100 years from now, right? I don't really care how many shares you issued this week or this month. I just want to know are you going to 21 million shares
or are you going to 2.1 trillion shares?
Right. Right.
Right. And so the fully diluted Bitcoin count was 21 million. And the significance of that is that means the inflation rate is zero.
But the inflation rate on gold is 2%. And the fully diluted gold count is infinite because if I keep increasing the amount of gold by 2% a year, that's infinite amount of gold. Um, if you want to figure out practically how you value it, well, when you increase the supply of something by 2% a year, that means that you're doubling the supply every 36 years. That means the economic halflife of your money is 36 years. That means the halflife is 36 years. That means you're going to live 70 years.
Okay. Well, what's the halflife if the inflation rate zero? Infinity. So what's your life expectancy if the inflation rate is zero? Your life expectancy is infinite. You're immortal. You're living for a billion trillion years.
Zero is a billion trillion years. You're a god.
2% is you're going to die. Half of you dies in 36 years. The other half dies in the next 36 years. Maybe you make a hundred years and you're pretty much done for. Right. And so it's the difference between a mortal life of a human being versus economic immortality. Um we can dismiss it if we just think in the next 12 month time frame. But you know if you're an engineer it's like well what's the difference between you lose 2% of your energy every cycle versus you lose none of your energy every cycle.
None of your energy every cycle is perpetual motion. You last forever. 2% of your energy every cycle and you spend it a 100 times. There's nothing left, right? You burn out the motor. Okay, so I like the idea of gold, but digital gold is better. And how much better? Infinitely better, right? Infinitely better. So, in 2020, we settled on Bitcoin as digital gold. We decided we're going to sell our $500 million worth of treasury bills and we're going to buy $500 million worth of Bitcoin.
First purchase was how big?
Wow, dude. Next purchase two weeks, three weeks later was no 20 days later or something was $175 million.
Your first purchase was a quarter of a billion dollars. Half of your cash was
Yeah. Well, actually, I would have bought it all by the way. I wanted to buy it all, but the board of directors wouldn't let me.
Well, like my idiots, huh?
I said that you didn't. So, so but let me ask you, how do you make a decision after years of accumulating that much fiat, that much cash?
How do you make a decision in a week? I'm going to drop a quarter of a billion dollars, half of my reserves into one investment. How do you get that much conviction that did it take a minute?
The lockdowns hit. The politicians make us close the office. Everybody goes home. Google and Apple and Amazon and Microsoft start sniping all of our employees from home, it's pretty clear, right? If I want to destroy your company, I sentence all of your employees to home jail, right? To home imprisonment, and then I offer them 20% more to redirect their computer browser to some other company. So, it's clear we're going to lose all of our human capital. The stock tanks to $9 a share and the company's worth nothing. This was Micro Strategy at the time. 2020. Yeah. I'm telling you the story of TW. You're asking me how did I get the audience? You're a software company. It's March of 2020. Okay. We're a software company. We're a $500 million software company and the lockdowns come and all of our employees get sent home and we're losing them to Microsoft and Amazon. And so we're losing our human capital. We're a public company. The stock tanks. You know, it's valued at half of revenue or something. Well, call it $3 a share. It's what the company's worth. And if we do, and then Jerome Pal says, well, you know, the 500 million in capital, that's worth nothing forever. Wow. And our choice is either sell the company. It's like a fast death. Just sell the company, give up, write off 30 years of work, or a slow death, cling on to $500 million of cash yielding zero, watch it get inflated 20% away a year, right? The inflation rate was 20% at that point. We're printing money like there is no tomorrow. Costs are, you know, you can't see the inflation in 2020 because it's illegal to buy anything, right? When there's a war and the government doubles the money supply, but it's illegal to buy anything. You don't see the inflation. You see the inflation after the war ends when you can go buy an airplane ticket or go to a concert or try to go to a hotel, you know, and at that point everything doubles or triples in cost except you don't have any money, right? Because the government doubled the money supply. So, it was pretty clear to me that the currency was collapsing and we were going to have all our human capital stripped away and we were, you know, having all of our financial capital stripped away and, you know, I think the stock traded a million dollars a day. Like there's no one cared at all about the company. And we're either going to basically sell the company, give up for, you know, $8 a share, $10 a share or whatever, or we're going to cling to life for five more years, at which point all of our employees will have quit. The product won't be any good anymore. We've just had all of our talent stripped away from us. And then the world will say, 'Well, you know, they went out of business because they deserved to go out of business because they couldn't compete with the big guys.'
You know, or we could do something. We could take a risk, you know. So, it's that point in the movie where the guy's sitting in the citadel with an army. Yeah. And he sees there's a war and there's the War of the Roses and there's the, you know, there's the white faction and there's the red faction, the Yorks and the Lancasters. And you're either going to sit there and get starved to death by both of them or you're going to pick a side and you're going to ride out and you're going to fight and if you win maybe you get to live and if you lose well at least you went out fighting right and so that was where we were at in 2020 and we decided it's either a fast death or a slow death or fight and I thought maybe I would prefer to fight.
So you thought at that time
Yeah. buying $250 million worth of Bitcoin in one day. Had you bought any up to this point at all? Like no. I mean the way we got there in no nothing
no I mean look it didn't happen in one day. What happened is I concluded by April that this was a way out. Bitcoin was growing 80% a year at the time. Uh so if you can buy something appreciating 80% a year that's a commodity on your balance sheet faster than your company. It's like, if you could buy a digital monopoly growing 80% a year at one times revenue, would you? Of course you would. If you could buy a digital monopoly growing 30% a year for the next 20 years at one time's revenue, would you? Everybody would. It's not complicated idea. But I expect Bitcoin to grow 30% a year for the next 20 years. It's a monopoly. You're getting it. You know, you buy $100,000 worth of Bitcoin, you're getting a $100,000 business growing 30% a year. That's a monopoly at one times revenue. Why wouldn't you? Everybody would. Uh the breakthrough was just thinking of it as doing a acquisition of a digital monopoly on Monday, right? It's the dominant digital monetary network, right? So we have to do a transformational acquisition and and since there's no other company growing 80% a year that's available at one times revenue that will sell itself to us, Bitcoin was the deal right Bitcoin was the yeah so so we looked at it and we thought we can buy the dominant digital monetary network at one times revenue it's growing 80% a year on paper it looks just fine it's just no one ever done it before but But um the theory isn't that complicated. I mean what did Facebook pay for WhatsApp or for Instagram? WhatsApp. Yeah. WhatsApp. I mean think what did Google pay for YouTube? Yeah. Okay. So it's not a complicated idea. You buy the monopoly something that a billion people need nobody can stop that's in hypergrowth mode that'll sell itself to you cheap. Why wouldn't you? Yeah. So I that wasn't the problem. The problem was no public company had ever done this before. And so first I have to convince the officers of the company. Then I have to convince the board of directors of the company, right? And that takes a while. And then then yeah, the logical thing is let's just go ahead. We're going to bet the company on this. Buy 500 million worth. But you know, between the lawyers and the risk managers, everybody thought, well, that's too risky. So let's do some I said, well, what about I'll 400 I'll do a buyback. 400 million of Bitcoin. I'll buy back 100 million of stock. No. 350 million of Bitcoin, I'll buy back 150 million of stock. No. 300 million of Bitcoin, I'll buy back 200 million of stock. No. Okay. Here's my best and final offer. 250 million of Bitcoin and I will buy back $250 million of the stock in the open market, the tender offer. Okay. So, so explain that to me. So, to you, so when we announced the deal, what we said was we're going to buy 250 million of Bitcoin. Yeah. And we're launching a tender offer. The stock was 120 bucks a share. We'll buy you out at 140 bucks a share if you don't like the idea. So we basically said who funded that? The company. Company. The company had $500 million. Got it. Okay. And the company said we're going to buy back real estate guy. You got to remember I'm a real estate guy, dude. It's like to us it's like I got to see it. I got to touch it. I got to feel it. So you got to go slow with it. I'm the CEO of a public company. Okay. And I want to do something very risky. Got it. But you're the outside shareholder and you think I'm crazy, right? So I say to you, I'm going to go bet the company on Bitcoin, but if you don't agree with me, I'll buy you out your shares. Got it. Got it. And so I'm going to offer you $140 a share. $20 premium. Yeah. Yeah. If you want to get off the ride, how many people took you up on that? So the way it worked is we announced the 250 million in Bitcoin. Then we had a 20-day tender period. We made a tender offer. We offered to buy up to $250 million. The stock traded up, then it traded above the $140 price, and everyone that didn't like it sold into the open market at north of 140. Wow. When the 20 days finished, we had $60 million worth of shares tendered. We paid off the $60 million at the of shareholders at 140. We had about $175 million of extra cash at that time. We turned it around. bought Bitcoin with that. So the first deal was 250 and that second deal was after the tender offer. It was the extra 175 million and then Bitcoin rallied, the stock rallied, ran through the roof, you know, and the rest is history.
So Bitcoin was what price then? Do you remember? I'm sure you do.
When we did the first deal, we bought Bitcoin and we bought it like 11,800.
Okay.
Now, do you just bang the bell, right? You just hit it. No. Then immediately Bitcoin crashed down to 9,600 or something and we lost $40 million in the next two weeks.
Oh my god.
what's going on for you when that happens?
Because that seems that's what happens every time I buy it. It drops 20%.
It's an instructive story because the point is it was never easy. It will never be easy. And if you were buying expecting to get an immediate risk-free return in the next two weeks, you have the wrong attitude.
So we bought it, the price crashed, we went through with the tender offer. We got 175 million and we went and we bought the next chunk at 10,200 or 10,300. So, we double down after the dip and then it turns around, flies through 12,000, runs to all-time highs of $19,000. The stock 10x's.
You know, all the stock options get exercised. We get another wall of money. We buy another $50 million worth.
Where's the wall of money come from? Explain the wall of money. It sounds sexy. Is his mic close enough?
Yes, it is.
Or does he need to be a little closer?
Is good.
Okay, sounds good. Thank you.
Okay.
The company
send me the wall of money.
All the employees had stock options.
And the stock options were Sorry, let me just adjust my cushion. Please help. The stock options are struck at whatever 90 bucks 80 bucks. This is pre-split. The company eventually split 10 to one. So if these numbers seem different to you, that's because we split it 10 to one. But so the stock options are whatever 80 90 100 110 when the stocks trading between 90 and 120 during the lockdowns the stock options worthless. When we bought the Bitcoin and Bitcoin rallied the stock went through the roof rallied up to 200 then $300 a share then $400 a share. When the stock rallies all the employees exercise the stock options and the company gets an avalanche of money from stock option exercise. So they're buying the shares at 110. No, the employees are selling the shares. They're selling the shares. Well, they're selling the shares at 400 and they're exercising the option, which means they're buying the stock at 110 and the company's getting the 110. So the company generated a lot of stock option income because the stock took off and so we bought another chunk of Bitcoin and the volatility spiked, the liquidity spiked, the stock went through the roof and by December of that year we were able to do a $650 million convertible bond offering at 75 basis points interest cost. So basically free money. Yeah, someone gave us $650 million of free money by December. And by February, we did a billion dollar deal at 10x. The strike price was $1,400 a share. Remember, the tender offer was $140 a share, right? So, we did a convertible deal at 10 times the price of the tender offer maybe six months previous or the tender offer was in September. So,
can you hold that? Can you hold that thought? Where did you learn the financial engineering part? Like I know you're an engineer by nature, okay? You're a very intelligent guy. You studied history, but where do you every time I'm with you, dude, I'm just like, where did you start seeing this? Did you look a lot? Did you see?
You know, I took the company public in 1998. And so I'd been a public company CEO for 22 years by the time we went into this.
You were how old? Um well when I took the company public I guess I was 33.
Okay.
I started the company when I was 24. So I started in '89. I was 24 and then we were a private company from '89 till '98 and at 33 I took the company public and then I lived through all sorts of
The route. What do you call that? The right of passage.
Yeah. And you know I'd had experience as a private investor and so I invested in all these big tech stocks and I made a fortune I made a lot of money investing in Apple and Amazon like 20x my money and all the big tech things and um and you know I had a vivid recollection that I'd worked myself to death like 3,000 hours a week for 10 years in my business and I couldn't get ahead. We were basically banging our head against the wall against Microsoft, but one hour a month I would invest in Google or Apple or something and I was making a fortune and it was easy.
And you know, I started thinking, you know, if I had to do it again, I think I take the company money and invest in the big tech stocks because then the shareholders would all get rich because simply working harder to compete with Microsoft is not a way to get ahead, right? They're just too powerful. It's you cannot compete against the monopoly of the world. So I had that experience. I had some experience trading swaps and currencies and other things. So I had an intellectual interest in these things. But really necessity is the mother of invention. Grant
it's like when someone tells you, you know, I got some bad news. It looks like you're going to die of something. You've got 12 weeks to live. You all of a sudden get religion and you start, you know, you go online and start interrogating the AI. You start with the AI about whether this is right or wrong and someone says maybe you might want to change your diet and the thing you dismiss for 50 years you think maybe I might want to change my diet
right right you know so I think you get open-minded when you have this neardeath experience and
what they say in the history of science and you know one of my degrees at MIT was the history of science they say um the only time you ever see a paradigm shift is either when the old guard dies like that, you know, people that think they know how the world works just have to die. Just got to have to get out of the way. Max Plank said, 'Science advances one funeral at a time, right?' And then the other time when there's a paradigm shift, when people embrace a new idea radically is during a war, right? War on COVID, World War II, World War I, someone's dropping a bomb on your head and you're an aircraft denier. You don't believe in air power, right? Right. You don't believe in nuclear power and they drop an atomic bomb on you. Okay. So, a lot of things that people rejected that we literally court marshal Billy Mitchell, right? Like the military court marshaled the guy that said, you know, the air force is important and airplanes are important. The army court marshaled him, right? I mean, you know, Pearl Harbor was a war.
What? You think COVID was a war or equivalent?
Absolutely. A war. There are two wars going on. Yeah. Right. Maybe three, right? There's a war in COVID technically, right? That biological war, there's a cultural war, right? There's cultural war. The war when we shut down every small midsize business and bankrupted gym owners and restauranteers and bar owners and everyone that work with their hands in the blue collar labor while we enriched Wall Street and hedge fund managers, right? Everybody on Wall Street had the best year of their life and everyone that actually was a, you know, a blue collar laborer. Not only were they bankrupted, they were thrown in jail for showing up to work. Right. Right. Had their reputations destroyed, their accounts frozen, etc. There was definitely a cultural war there. You still can't talk about it, right? It's still very difficult to talk about. And then you had a currency war, a war on the currency, right? When you basically determine that the interest rate is going to zero, you're inflating the currency through the roof, you're devaluing someone's assets, right? I am devaluing your currency and of course all of the derivatives of the currency. So, so there was a currency war as well and if you didn't notice it, right, you must have been in a coma for the year. I think everybody noticed it. And the issue is how did people react to it, right? And everybody's got their own story of how they reacted to it. But I think it was pretty transformational to a lot of people in the world.
So you're this is COVID. Your business is suffering. Your employees are losing. Did you lose a lot of employees to the big guys?
how many employees did you have?
I don't have the exact number, but I mean but when someone's got a trillion dollars, they're not offering less money to the employees they're hiring away than you're paying, right? and they could stay home. Yeah. Yeah. So, we were losing our employees. We were having our talent stripped from us. The business, as I said, it was either fast death or slow death that you fight. So, we just decided we were going to fight. And
when did you know you were right? How long before you're like, okay, this is going to be a new industry, not just a surviving business. by October of 2020 like we launched that tender offer August 10th August 11th of 2020 and made the second buy in September and right around the time that PayPal announced support for Bitcoin and then when Square came out and they bought Bitcoin and then Bitcoin rallied into the teens and ran toward the all-time high and our stock rallied it was clear we'd saved the company and you know and it was a gambit that it worked out.
When did you know you were creating an industry? I mean obviously
you know what happened was our journey was we started out of desperation and frustration right I would say Q2 Q3 was desperation and frustration you fight or you die and then I think we moved into
opportunistic phase it became opportunistic hey someone will give you a billion dollars for free for seven years to invest in your business do you want the money of Of course I want the money. Yeah. Right. Okay. So, it became opportunistic and then at some point we realized there weren't very many public companies being a public company that's a well-known seasoned issuer with an options market that can actually issue bonds and sell equity to buy Bitcoin made us a very unique creature. So, it became strategic. Right? There are a lot of people I meet even today and they go, 'Well, you know, I had money locked up in a 401k back in 2020 and I believed in Bitcoin, but I couldn't buy any and then you came along and so I could buy your stock and I made a fortune.' Right? People in the UK had money locked up in a retirement account. People in the US, you know, a lot of people, they could buy an equity, but they couldn't buy the underlying Bitcoin. And if you bought our equity, you could use uh money tied up in a retirement or IRA account. You could borrow against the shares, you could trade the options on the shares, all and then we created these convertible bonds. And if you know,
Yeah. Well, TW actually starting in 2020.
Right. I mean, if if you believed in Bitcoin in September of 2020, you can't buy Bitcoin.
because your money's in a retirement account
and and the Meil Lynch wouldn't allow me to.
Even today, you can't buy Bitcoin from a retirement account. Oh, really? Five years ago.
you can't buy you can't buy a crypto asset in a regulated retirement account in Australia or the UK or the US, you know, for the longest time. So, a lot of people had a lot of capital tied up. Even if your money was freely yours, you would then have to go and set up a relationship with a crypto exchange. That would take you 6 weeks to 12 weeks.
Then you would have to wire them the money. Then you would have to buy it. It was very difficult. Like so and even if you did it, let's say that you actually had money that was free and clear and you set up a crypto relationship. So you put all your money into that, but you can't borrow against it.
Mhm.
We were an institutional on-ramp for people.
Right. You can borrow against MSTR. You can buy MSTR. You can direct your retirement funds into MSTR. can that by the way
you know the story though in 2020 you didn't know this would happen right
I I learned it was it's a it was a fortunate happen stance a a a serendipitous
right uh I didn't know all those things all I knew was we're going to die unless we fought
and so your back is against the wall and you decide I'm not going to roll over and die I'm going to fight um what came out later was we we became the largest issuer of convertible bonds in the world and we had the most valuable convertible bonds because they're backed by Bitcoin. And so that was a lucky find that was worth $10 billion to us. And then it turns out there was no ETF. IBIT didn't exist until 2024. IB, you know, any Bitcoin backed ETFs didn't exist. So for 2021, 2022, 2023, 2024, there were no ETFs. And so we were the equity on-ramp for people and that was another fortunate happen stance. Then it turns out that people all the derivatives traders want to trade in the options market. You want to you want to buy calls or puts or whatever. Well, we ended up going from a $1 million open interest to a hundred billion open interest. Okay, hundred billion dollars makes you like one of the 10 biggest options markets in Wall Street. So, I didn't know that was going to happen. It didn't occur to me. But but because we were a a company that had been public since 98, we're a well-known seasoned issuer. So, the options immediately came to life. We could we could uh issue the bonds. We could do the financing. Our equity became liquid. You could borrow against it. And so, we inherited all of the financial apparatus of a Schwab or a JP Morgan or a Morgan Stanley. and we could, you know, our our security could be bought in, you know, UK retirement accounts. So, so we got a bit of a benefit there and a head start by being the pioneer,
When uh when the ETFs got approved by the SEC
Yeah. When they got approved, they were they were crippled by the SEC. um the options markets on the ETFs were [ __ ] You could only trade very small uh amounts of options contracts and so we still were the dominant derivatives on ramp and off-ramp for the entire crypto economy, right? Like at one point we were like a hundred billion dollars and the next closest thing was 10 billion. So we were 10 times bigger and you know and our stock was trading three four five billion a day and that was twice as much as everything else combined.
dollars.
Yeshu $3 billion? Three to five billion dollars of MSTR trading every day.
And and prior to that, what were you trading before? Before you
a day. Yeah. Yeah. Two. We went from 2 million to 4 billion.
Yeah. Uh and so even in 2020 though our equity was trading twice as much as all the other ETFs combined. So we be we became an institutional on-ramp for equity, for derivatives, for fixed income, for bonds and that was all serendipitous. So on the you know answering your story right we go from frustration and desperation to opportunistic then then it becomes strategic and one of the things you can do if you're a wixie a well-known seasoned issuer is you can file a registration statement to sell a billion dollars of bonds on a Monday and you can sell them on a Tuesday you don't have to wait for approval from the
well-known seasoned issuer
uh and you were wellknown
okay well you're well known because
it it's it's literally a legal term.
It is the term applied to a public company in the United States that can file a registration statement and sell securities to the public the next day without
well the well-known part is because you're public because you've been traded because you have
Don't ask me why they call it that. It's just a legal term, right?
Well, you know, the legal term is this is a company we know well.
It's seasoned. It's been issuing securities for a decade or some long time. Got it. And it's an issuer.
Well-known seasoned issuer. Wixie.
right? Everybody's learning something today.
We all learning something, guys.
Well, here's the important something to learn. There's 400 million companies in the world. There's 40 million companies in the US. There's 4,000 big publicly traded companies. There's maybe 400 Wixies.
There's maybe two to 400 well-known seasoned issuers. Wow. So, in the entire
You want to be one of those?
Okay. Yeah. The the punchline to the story is learn
if you can sell a billion dollars of security to the public without waiting for permission from the regulators, [clears throat] that's a massive competitive advantage,
right?
So, you announced on Monday, Tuesday, you're collecting money.
Yeah. And of course, this is something this is a capability we had in 2019 or 2020,
but of course, we never had a reason to sell securities. Mhm.
Most well-run uh public companies aren't in the business of selling or issuing securities. They're in the business of buying them back.
So, the big inversion, right, the the paradigm shift, the thing that allowed us to really, you said, when did you become, you know, the leader of the movement or or or create a new industry?
Yeah. Yeah.
Right. It's when we realized that if you're a well-known seasoned issuer, you can sell a billion dollars a week of securities. If you're not a well-known seasoned issuer, if you're a public company, but one of the smaller ones, you file the registration statement and you wait for three to six months to get permission
And by the time six months have gone by, it's too late.
Okay. Maybe you'd wait a year.
If you're not a public company, it's illegal to sell the securities. Then you know you might spend three years.
It takes three years to take a private company. Yeah. You know a little bit about this.
Yeah. Yeah.
You know it's not easy to go from being a private company to making possible.
They make it hard, don't they?
Why why do they make it so hard? Then we'll get back into this. But I
uh it go probably goes back years.
I don't think it's for the good of the investor though.
Yeah. Go back to 1930s with the SEC act of 1933. It was it was a reaction to the 1929 stock market crash and it was a bunch of guys in Washington DC making a power grab to centralize control of the securities industry in Washington DC and move it away from New York City.
Mhm. depending on who you believe. You know, there are a lot of historians that say this was a triumph of the Rockefeller interest over the JP Morgan interest and they wanted to prevent JP Morgan from creating so many companies and exercising so much control.
So in the SEC 40 act or the SEC 33 act, they basically said, you know, you have to get permission from an agency in Washington DC before you sell securities to the public and we might not give you that permission. So, I mean, I could talk about that for hours and hours, and there's tens of thousands of pages written on it, but all of it has to do with quote unquote investor protections. And you could characterize it as one point of view, right? The very regressive point of view is I can conceptualize of a of a situation where some investor might lose money or might be victimized and so therefore I'm going to prevent anybody from doing anything
and then the other point of view would be I think it's better to let a million a million businesses do things and if someone commits fraud they should be civily or criminally liable for the doing of everything. But let's let people drive the cars even though we know there's going to be an accident.
And let's let people sell products even though some of them may be defective because the alternative would be to shut down the economy. Right. So I I think that um with regard to securities, we kind of moved uh progressively each each crisis resulted in a tightening of the tourniquet and it got progressively more difficult and more expensive and more risky to sell securities until we got you know I think there were 12,000 public companies the turn of the century and all of the you know the Sarbain Oxway rules made officers is criminally liable for every mistake. And we went from 12,000 to 4,000 public companies and people just said screw it. I don't want to be public anymore.
It's too risky and it's not worth it and it's just too difficult. And so I would say we reached the low point in entrepreneurism and capital markets by about 2020. And uh the crypto movement was the opposite. the crypto movement is, hey, why can't I just launch a token in four hours for 40 bucks,
right?
Okay. So, and so if you look at it, you say there's 40 million companies in the US, but there's only like 0.01% of them that can access the capital markets. You know, in any other industry, if 99.99% of the businesses didn't have a telephone or a website or a truck,
Yeah. We would declare it to be a sick
Yeah.
and you know and more abund stagnating economy
and you're saying finance is like electricity.
Yeah. Capital markets are like that. So so uh coming back to our story though the point is we were a well-known seasoned issuer. We were we had an asset which we had not utilized. We had an under undervalued asset that is a public listing of a seasoned company and we accidentally discovered that we could use it when we when we you know when you issue stock options to employees and they exercise the stock options the company generates 50 or 100 million like that that's a public company benefit and then when you sell a billion dollars of convertible bonds that's another benefit you're finding literally money's dropping out of the scaz of you. Yeah. And then we discovered a new thing, something that Michael Milin had created uh many many years ago called the at the market offering, a shelf registration. And the idea was you file a shelf registration with the SEC and then on any given day you can sell the shares into the market on the same terms as every other investor. Okay, that didn't exist when I came public. But what that means is you file a billion dollar equity ATM, the company says, you know, from time to time over the next three years, we may sell equity and if the equity is trading strong in the market, you can go and sell a million dollars of it, maybe 10 million, maybe a hundred million. We had days where we sold a billion of it.
So you're explain to me the ATM. Now you're going to sell a billion dollars worth of stock.
We sell a billion dollars of stock. We take the billion. And then you do something with it. You can invest it in real estate. You could buy gold with it. You bought Bitcoin with it.
Okay. So, we didn't know about that. And it's not something that a normal well-run company would ever care about
because if you look at companies like
because you don't have anything to do with the billion dollars.
They don't have a use of proceeds,
right?
Apple, Amazon, Facebook, Google, every bank, they buy their stock back. Mhm. They generate cash flow by selling products and services and they buy the common equity back. That's their business model. Um, and that's because their capital asset is a is a money market instrument. Money market treasury bills, one month treasury. Uh, one month treasury is yielded on average over five years 2%. The cost of capital is set by the S&P index is about 14%. So, if I sell my equity and I buy the money market instrument, then I'm getting a minus 12% yield. So, I'm burning 12% of my capital. That means that if I've got a billion dollars in cash and I invest in treasury bills, I get 2%, but I might as well just give it back to the shareholders because they expect to get 14%. Right? So conventional corporate finance was
is you either dividend out your cash flows to your shareholders or you buy your stock back and the most taxefficient thing to do is buy the stock back. Right? So I have billions of dollars. I buy my own stock back. I surrender the capital to the shareholders. I create more leverage on the equity. The earnings per share is going up because the per share count is going down. Right? The share count's going down. That is conventional wisdom. 99% of all companies, maybe 99.9% of all companies just do that. Uh the only company that you know of that doesn't do that is Bergkshire Hathway, right? Warren Buffett says, 'We're not going to dividend out the cash. We're not going to buy the stock back. We're going to invest the capital because I think I can do a better job.' And so that's why they have the largest treasury of any public company because that was his practice for 30 years. But no one else wanted to do that. Everybody else will brag about the fact that they buy the stock back or they dividended.
Why Why do you think nobody else follows Warren on that? No dividends.
Okay.
All the REITs the REIT industry that I compete with.
90% of their revenue has to be distributed.
Um I'm like, well, if you if you got a lot of money
in the business, why don't you buy your buy more your businesses, expand the company? But they can't. So why why does
well they they think they're buying more of the business when they're buying their stock back.
That's what they're um the cost of capital the hurdle rate
is 14%. It's the S&P index. So for the last hundred years the cost of capital has been generally set by the S&P 500 index. So an equity investor would say if you're beating the S&P index you're beating my hurdle rate. You're a winner. And if you're underperforming the S&P index, I could have just bought the S&P index, right? Gone to sleep for a year. And so, you're a loser.
That's the hurdle rate. Okay. Well, it turns out that for the most part, real estate doesn't beat the S&P index. It it performs less than I mean, the SP is 10% a year for 100 years, right? So, and real estate's maybe 7% or something. The way you beat it is you have to lever the real estate, right? If you lever the real estate intelligently with the right capital, then maybe you can get something that's compelling.
Thank you for being generous there. You were sensitive to my situation.
I mean, well, I mean, there aren't many successful real estate investors that don't use debt.
No, that's right. Why not?
Right. I mean, it's it's all very difficult. Like,
what kind of leverage do you use and how intelligently do you use it? Um, so if you're a public company, then you're trying to beat that hurdle rate. And so the the issue is, okay, I've got a hundred billion dollars because I'm making Microsoft or Apple. Why don't you just buy the S&P index? And there's a simple answer to that because following the SEC Act of 1933, you had a lot of companies, the Morgan Interest, and they were trust companies, and they owned a bunch of other they owned each other shares. So I would create a company that would then own the shares in 10 other companies and then this company would own my shares and then this company would own the shares of my subsidiary and you had all these interlocking trust and interlocking companies and uh and the government decided they didn't like that and so the investment trust or the investment company act of 1940 the SEC act of 1940 made it illegal for a publicly traded company to have more than 40% of its liquid assets invested in securities and it defines securities as the equity of any other company or the bonds maybe of company but not government bonds. So it g you know technically treasury bills issued by the United States government are securities like technically but for the purposes of the investment company actu of 1940 they were they were given a waiver. So, the government passed a law allowing banks, allowing public companies to own government debt.
Mhm.
But not anybody else's securities.
And so if you're Apple or Microsoft, you can't just buy it.
You're forced you're forced to buy treasuries.
There's only one stock you can buy, your own.
So you're Apple, you can buy Apple stock.
And so if Apple stock is outperforming the S&P, you should buy your own stock. And if the Apple stock is underperforming the S&P,
you should give the capital backh, you know, somehow to the
But ironically, the truth is, you know, if you're underperforming the S&P, you still buy your stock. You're giving the capital back. You see?
You're just giving the capital back and then the investor getting the capital back buys the S&P index or something better. So, we're we're getting off topic because you asked me all they're very interesting questions and and they're important because they explain to you why
Thousands of companies do what they do and why the market is the way it is.
Why why the market's broken?
Why the market is Yeah. At the end of the day, why the capital market's broken and why are we
leading a revolution? Yeah.
In corporate finance thinking. Why is it revolutionary? Because of uh conventional thinking. So all these companies are capitalized on treasuries, on money market instruments, and the money markets don't beat the cost of capital. So corporate finance theory tells you to decoupleize, surrender all your capital, get rid of it, run on negative working capital, go into debt, do an LBO. I don't want to have $10 billion if I'm Toys R Us. I want to have minus $10 billion.
Right? Why did all these companies fail? Because instead of having $10 billion of equity that which would be a liability, equity co destroys 10 10% of shareholder value a year. I want 10 billion in debt. Debt becomes an asset because now I get to write it off
and the debt's depreciating, you know. So
we basically we encouraged all these public companies to go into massive debt and to decapize. And so what's the what's the game changer here? Well, what if I created um a digital monopoly, but the asset that you held wasn't a security. It was a commodity. Bitcoin, remember I said it's like a digital monopoly. It's like the Google of money or the Facebook of money. But there's two ways that it's better. One way, it doesn't have a management team or a company. There's no counterparty risk. There's no one to fail you or rug pull you. There's nobody to subpoena, right? That's a big advant. There's no workforce to unionize. Right. There's there's no headquarters, right?
It's not a product that you had to build, create. Yeah.
Companies have risk factors,
right?
Right. Nvidia is banned in China.
Apple is being investigated by the EU. Microsoft can be sued for antirust. Even the best company in the world, you can attack it, right? If it's not a company, there's no attack surface, right?
So that's one way that it's superior.
And then the second way is that it's not a security, it's a commodity. And because it's a commodity, it doesn't fall under the Investment Company Act of 1940. So there is no prohibition on having 100% of your liquid assets be invested in a commodity. You can create a company that's got a hundred billion dollars of gold or hundred billion dollars of uh soybeans or hundred billion dollars of natural gas or oil, but most of them don't outperform the S&P over the long term. The only one that even might pretend to maybe is gold, but the but no one ever bothered, just not compelling enough. And and uh timber and oil and soybeans don't work. They're not good investment assets. So, what's the king of all commodities? It used to be gold. By the way, gold is uh 14% a year for the last 5 years. It's literally tracking the S&P index right now in an inflationary environment. Gold performs like the S&P. That's the king of the of the metallic or physical commodities in the real world. Bitcoin is the greatest digital commodity. And so Bitcoin gives you a 50% ARR for the past five years. So it's triple gold, triple the S&P. So if I can beat the cost of capital and if I can do it with a commodity, I can capitalize a publicly traded company 100% on that new asset. I can even leverage it. I can go to 150%. Okay? And so the revolutionary paradigm shift here, right? The big innovation was take a hundredy old structure public companies in the United States introduce a digital commodity that you can and recapitalize the company on a digital commodity. If that company is now a Wixie and you start to sell billions of dollars of convertible bonds, those bonds will become the most valuable bonds in the world. And our bonds did. They became the most valuable, the highest performing corporate bonds, the highest performing convertible bonds in the world because they've got a 50% ARR 50 asset underlying the convertible bond. Then
so the convertible, let me understand this.
You're pay you you got threequarters of a billion of that
Oh, no, we sold 10 billion of it.
we sold 650 million then we sold a billion. Then we sold another 800 billion. We became the biggest issuer of convertible bonds in the world over the next 40.
A convertible bond means I can convert what?
you're converting or I the buyer the the issuer can convert.
Forgive my in my audience. Okay.
I'm taking it on the on the chin here.
Explain convertible bonds.
Okay.
So, I'm a corporation and uh I want to borrow money. So, I issue a $500 million bond.
Okay. and I agree to pay you 8%. That's a normal junk bond. Okay?
If it's unsecured, if I give you security, a lean on all my assets, it's a secured bond. Maybe I pay you 6% then.
A lower, you'd pay a lower because it's secured.
But what if I don't want to pay 6% or 8%. What if I actually want to pay one or two%.
Okay. There's another group of buyers of bonds. They're convertible arbitrageers or convertible bond investors. I can sell a $500 million bond to a convertible bond investor where I pay them 1%. And you're like, well, why would they take 1%. It's because I agreed to pay you back the 500 million in 5 years, either in cash or in equity at the time. And meanwhile, I will give you an option uh a warrant uh to convert that into $500 million of equity at a 40% or 30% premium to the current price of the stock.
anytime in that five years.
So, I'm giving you a stock option to buy $500 million of my stock for five years. And that option uh if the stock is trading at a hundred bucks, the option would be worth 20 or 30 bucks. Got it? Right. So, I'm giving you a $30 option and I'm also giving you uh a promise to give you back the $100 principal. And
so, so the investor knows they're going to get 30% of their money.
Yeah. And then what they do is they turn around and they're shorting your stock into the market in order to in order to they eliminate all the risk.
They basically hedge out their risk. They're arving out the risk and then they're just getting the upside. And so it's so it's a different type of investor. But a convertible bond is a bond with an option tied to it.
And who's the buyer of that or who's the seller? I guess the issuer.
The seller is my company, a public company.
So who's the issuer? Who's going to be the investor on the other side? Give me in the name of somebody that would be like
Millennium, Soros, Citadel.
These are just big hedge funds,
you know, mega hedge funds with billions of dollars.
And this is their their mandate is to find opportunities like this.
Yeah. There's hundred billion raised. It's a it's it's a part of the bond business. And they buy convertible bonds.
Is their job every day to go place money.
Every week there's a deal like that. That's what they do. And you knew this. Did you know this in the beginning or is this
Yeah. Somebody pitched that to me.
Uhhuh. I got it. So because the kind of the kind of issuer that can sell a convertible bond is a company with a very liquid stock that's very volatile because if you value options um you basically use the black shores equation and the input to the black shles equation which is first order most important is the volatility. So if you have a a stock with a volatility of 20, the option is not that valuable. But when the volatility goes to 80, the option becomes extremely valuable since I'm selling you a convertible bond and it comes with an option, right? Uh a convertible bond issued by a company with a V of 80 is going to be extremely valuable to the buyer. And that's why that that's how we can sell a billion dollar bond at zero coupon, right? I I only need to know two things. I need to know that there's enough liquidity that I can hedge it in the market. So, if you're trading a billion dollars a day, I can hedge out the bond. So, there's no risk for me. And then I need to know there's volatility.
And then I need to believe the volatility.
Volatility refers to what you're talking about it going up and down violently.
Okay. Volatility is another word for standard deviation. Okay. Okay. So, so if if I have a stock and it trades 100, 100, 100, 100, 100, 100, it is zero volt. Yeah.
And if it's trading like this, plus or minus, you know, 10, you've got like a a 10 ball.
And then when it's trading upper plus or minus 80,
call it an 80 volt, right?
And I want the ball. You want the ball.
Okay. Okay. Well, the guy that wants the ball is the options trader because he's going to buy it here. He's going to short it at 80. He's going to buy it back at min at 20.
Yeah.
He's going to short it at 180.
Do you do you play any of this game? Do you play any of the shorting?
I'm on the other side. I'm creating the tool for them to short.
Yeah. This is where the other the offerings come.
I mean, Grant, think about a roller coaster, right? I mean,
I I hate to think about him, dude. I can't invest like this. But the point is when you go to an amusement park, you want to go on the roller coaster ride.
Yeah.
If the roller coaster doesn't do this up and down and go fast doing that when I invest. That's why
I got enough drama in my life though.
Yeah. Well, the but the point is there's there's two types of investors. There's the investors that actually trade the volatility. They need the volatility. And then there's investors that just uh want to get wealthier with no risk, no volatility. That's a different type of investor. If you want to actually serve the latter, you have to understand the former because you're in this system together.
You you're providing a product over here for these guys.
So my point is we created a company. We plugged a highly volatile asset Bitcoin that was was 50 vol. It was it was growing up 50% a year with 50 balls. So call that call that a 50 ton flywheel spinning 50
Okay. Right. Can you imagine a 50tonon weight spinning zero RPM? That's just a sculpture.
Right. In your backyard, that's just a heavy sculpture.
But if I shape it like a flywheel and I spin it 50 times a minute,
that's a dynamo, right? That's a generator. I can generate power off of that.
Um, if I put that on the back of a train and the train goes 50 miles an hour, there's a lot of energy in that system, right?
So, what I did is I put uh I put an asset going 50 miles an hour
spinning 50 times a minute and then the issue was how much weight is that? Well, the number of dollars of capital.
If you have a billion dollars of capital spinning at 50 wall, got
appreciating at 50% a year,
that's a lot of energy. But if you get 100 billion capitals
that dynamo, we put that asset Bitcoin in the middle of the balance sheet of the company. And at that point that become that creates liquidity and volatility and we became the most volatile stock in the S&P index. We're not in the S&P, but we became more volatile than every stock in the S&P. You were up this last quarter to be in.
Little chip on your shoulder.
Different story. No, I'm We'll do that later. You know, it all works.
So, so how do I do this? How do I do this dynamo? How do I create this d how do I take this real estate that's very heavy? This is why I told you put a huge amount of Bitcoin in the company.
right? If if you take a company with a billion dollars of real estate and you can bolt on 500 million of Bitcoin, it's it's all of a sudden got a dynamo. you if you bolt on a billion dollars of Bitcoin.
Right now you've got a digital real estate company, you take that public and that's going to have a lot more liquidity, a lot more volatility. Now you can sell a convertible bond and you can use the convertible bond proceeds to finance whatever you want inside the company. So you get cheap cost of capital, right? Um let me just finish my story. Right.
Right. So after the company discovered the convertible bond market and we started to feed it,
we discovered the ATM market for equity and so we created we created an ATM
and most companies would never have a reason to sell equity. They're buying their equity. We became the first big well-run company with a reason to sell the equity
if if the equity is valued at more than the underlying asset. So if we're trading at two times NAV, right, we have a if we have a billion dollars of Bitcoin and a company's worth two billion in equity value, we just sell a we sell the equity, a dollar of equity, we buy back the Bitcoin, and we capture 50 cents of profit.
Mhm.
On the roundtrip transaction. So you could sell $10 million.
The dollar the stock's a dollar. The stock's a dollar and and and the and the company owns 50 cents a share worth of Bitcoin.
Got it. Got it.
So I sell the stock for a dollar and I buy back a dollar.
Is that how you come up with your BTC yield? That's what you talk about the yield.
Yeah. For for a long time. I'm like, what what yield is he talking about?
If you have a billion dollars of Bitcoin
And then you sell a billion dollars of stock backed by 50 cents a share of Bitcoin. If you sell the stock at MNAV of two,
Then you're going to sell a billion dollars of stock backed by 500 million of Bitcoin, buy back a billion of Bitcoin, capture a $500 million gain. You captured a $500 million gain on a billion dollars of Bitcoin, you've just generated a BTC yield of 50%. You see, you got a 50% tax-free dividend by simply selling the appreciated stock, buying back the underlying asset. So the BTC yield is a function of how much of that can you do versus your balance sheet.
Okay. But back to my story.
Yeah. Yeah. I'm sorry to throw you off.
You got a million questions.
No, because I mean you're sitting on 640,000 Bitcoin doing this.
Yeah.
Is that right? Somewhere around that and more on Monday.
So curious. We figured out that we could do an ATM and so we could sell the stock. We could sell a dollar of stock backed by 30 cents a bitcoin, buy back a dollar of bitcoin, capture a 70% spread. And so we got to the point we're doing at 10 million a day, then 20 million a day, then sometimes 500 million a day. We got pretty good at it. And we did a few billion of it. We made a billion dollars doing that. And then in October 30th of 2024, we had to renew that ATM shelf registration. It was a week before the elections and we decided, well, what the heck? 21's a magic number for Bitcoin. So, we're going to file a $21 billion shelf registration.
To sell $21 billion of equity. No one had ever done that in the history of the world. That was the biggest equity filing in the history of the capital markets. But no one ever had a use of proceeds. And at this point, our shareholders trusted us and they knew that every single time we did a transaction, it made them money, right? If you want Bitcoin and I buy the Bitcoin and I sell the stock at a premium to underlying Bitcoin, you just made money risk-free, you see? And so the BTC yield shows you that that was an accretive transaction. You got more Bitcoin per share. And so we came up with a way to do a high-speed accretive transaction. We could literally do it the same day, right? So it's like I do a billion dollar, I raise a billion dollars, I develop a billion dollars of real estate, I fully lease it out, I can show you I made money on it, I put that news on the wire, I go back next week, I raise another billion.
Imagine if you could just do that with no risk every single week, right? You're running a thousand times faster than the real estate business. That's what we did. And we learned that we stumbled onto that. We kind of figured it out.
We developed all the metrics like BTC yield. If we were to do a deal where the BTC
Is this you doing this your team? Who gets to take the most credit?
