Phong Le: Why Strategy Built a Massive Cash Reserve & Wont Sell Bitcoin | Full Interview Bloomberg

Well, you know, we have a long-term strategy, which is to buy and hold Bitcoin. It's our primary treasury reserve asset. And we have short-term dollar obligations that are created because of the dividends we have on our preferred notes. And we want to maintain and create more Bitcoin yield, Bitcoin per share. And we really don't want to have to utilize that Bitcoin at times when our equity value goes below 1x. So we said, well, if we want to really create a bulletproof balance sheet, let's have the global reserve digital asset which is Bitcoin for the long term and the global reserve digital currency for the short term. And so that's why I created a US dollar reserve to pay down our dividends in the short term in case that we need it. And we thought that just makes our balance sheet even stronger than it has been in the past.

Yeah, companies do suspend the dividend, but it creates fear, uncertainty, doubt in our preferred shareholders, which will impact our convertible shareholders, which will impact our equity shareholders. So I think preserving the payment of the dividend, even if our board has the rights to suspend it, it's the right thing for the short term for the next one, two, three years. And it's important. It's also important for the Bitcoin asset class, and we realize we play a role bigger than just strategy in the Bitcoin world.

Never say never, Jim, but our objective is to pay the dividend into perpetuity.

Yeah, you know what we did in the last couple weeks was to address some of the misconceptions around strategy. And I do think some of the price action in Bitcoin could have been related to the concerns around our company. Here's misconception number one: we're highly levered. We have 12% leverage. If you add in our preferreds, it's 27% leverage. A typical company that's public in the US has 60 to 80% leverage. A highly levered company is 2 to 3x, 200 to 300x leverage. We're not even close to those levels. That was misconception number one. Misconception number two is that we're not able to pay down our dividends using our balance sheet. And I get the concern around our ability to issue equity. Look, in 8 and a half days, we issued $1.44 billion of equity. In 8 and a half days, we issued enough equity to cover 21 months. And then on the back end of that, we have 74 years of dividends in our Bitcoin. So we've addressed this concern around us selling Bitcoin. Now, if we were able to grow our cash reserve to call it two or three years of dividends, we're really talking about the end of 2028, January 2029, where we might have to consider, do we have to sell Bitcoin? We would if we had to to pay our dividends, but I don't think we're realistically going to be in that situation now that we've built up the cash reserve.

I think we'll try to maintain a two to three year cash reserve equal to our dividends, which will grow as we issue more preferred. And it is something that I think we'll do for the next five years and we'll reassess it.