Michael Saylor: 'I Expect Bitcoin Will Appreciate 30% a Year for the Next 20 Years'

I expect Bitcoin will appreciate about 30% a year for the next 20 years. And I think that if you look at it as an asset, the volatility is going to click down. It's gone from 80 to 70 to 60 to 50. The V is going to go from 50 to 45 to 40 to 35 to 30 to 25. It's going to grind down towards something which is 50% more volatile than the VIX.

Yeah, happy to be here.

Yeah, I think, you know, when I started on this journey, I was looking for digital gold. I was looking for a digital capital network and it looked like Bitcoin was that network. But of course, five years ago not everyone in the world agreed with me and we saw it as the best idea and so we just kept investing. I think we acquired Bitcoin more than 87 times and we rode it up and then down and then up and then down and then up again. I think we saw some nice breakthroughs in 2024 with the approval of the ETF in January and then in the November election cycle. We got a very pro-crypto and pro-Bitcoin administration. And then in January of this year, we got an upgrade to the accounting for all digital assets. And now we're moving into the phase of banking acceptance and we're starting to get banks that are willing to extend credit on the ETFs like IBIT. And now many like Schwab and Citigroup have announced they're going to start to custody crypto assets like Bitcoin. So I think the last five years have been quite the journey, and I couldn't have predicted everything that would have happened along the way, but I'm pleased with the outcome so far.

You know, when I got involved, I started paying attention in March of 2020, and if you remember what happened in March of 2020, I think Bitcoin traded from 10,000 down to 4,000 in one day. It was terrifying, but all the markets were terrifying. And at that point, looking back, Bitcoin had a history of more than a 100 V and more than 100% ARR. And later that year, it was sort of an 80 V asset with an 80% ARR. And then every year for the past five years, it's sort of decelerated. It was a 70 V, 70 ARR, and then 60 60. And then after about 5 years it looks like about 50 V 50 ARR. And so 50 V is still very volatile. It's still three times the S&P volatility but, believe it or not, it is actually seasoning and it is institutionalizing at a reasonable rate if you just click off the volatilities in 10% increments.

Well, you know, early on, there was the question of accounting, right? We had indefinite and tangible accounting. So, what are the accounting issues? What are the legal issues? What are the regulatory issues? Can I take the company public? How do I deal with investors? And so those were challenging issues. But I think in the last 12 months, we've now had 200 plus companies put some kind of Bitcoin on their balance sheet and probably we're 300 plus with some crypto asset on their balance sheet. So we've gone from it being just a handful of companies to being hundreds of companies. And so now we're really evolving. We're not dealing with the question of can I actually hold a digital asset or is Bitcoin capital, can I hold it, but rather what should I do with the capital once I get it? What do I do if I have a billion dollars worth of Bitcoin? How do I create value with the billion dollars of Bitcoin other than just holding it? And that ushers in the entire digital credit conversation. I mean, there are a lot of things you can do with capital to generate shareholder value. But we become big enthusiasts into digital credit. So most of my conversations discuss how do you create digital credit collateralized by digital capital.

So if you look at Bitcoin, you're like, okay, this is a 50 V asset and it's got 50% ARR returns annual over five years. And everybody kind of knows if you're going to own that, you need to hold it for more than four years. And I would say the natural duration is 10 years. So, Bitcoin represents a financial solution to someone that's going to hold the product for 10 years and endure a 50 volatility roller coaster in order to get really good returns. The world's full of investors that... if I was selling a product like a car and I said, 'This is a levitating hover car and you have to buy it now, but you don't get to use it for 10 years.' It wouldn't be an easy consumer product. I have this can of Coca-Cola. It's going to taste really good, but you got to put it in your refrigerator for four years and then you can take it out and drink it. Well, I mean, there's a lot of people that want instant gratification. It's like, give me the car that drives now. Give me the fast food, right? So, how do you actually strip the volatility, strip the duration, and compress the performance into something that a mere mortal can appreciate? And so the idea of digital credit is most people they don't want to wait 10 years to get an insanely good return. What they want is say a bank account that pays 10%. Without the volatility. Like I put my money in the bank, they pay me 10%, that's better than 2% or 1% or 4%. So in order to create something which has the volatility stripped off of it and the risk stripped off of it and the yield distilled, and you convert it into the currency of choice. Like I live in Japan. I want 8%. I want a bank account that pays me 8% in yen with a stable value. That would be a digital credit instrument in Japan and that's something like say a MetaPlanet could create. And what we've created is products like STRC, which is a treasury credit instrument in US dollars. And if I have $10 billion of capital in Bitcoin, then that's going to be very volatile. You're going to live on that roller coaster and you got to hold it for four years or longer, ideally 10 years. But I can take $1 billion of my capital structure. I can create some credit instrument which is 10x over-collateralized and I can sell that in the market and I can offer say 10% dividend yield and I'm going to fund the dividend yield with the first 10% of the return of the Bitcoin. So I sell the billion dollars of credit, I buy a billion dollars of Bitcoin. Bitcoin is going to be a roller coaster for 10 years. The credit investor doesn't want that. The retiree doesn't want that, but the equity investor and the company can absorb that. We would like to collect 30% and pay 10. And we're willing to stomach days where we're down a lot or we're up a lot and smooth it over a decade. And the credit investor is like a 20-something in grad school or they're a retiree or they're a fixed income investor. So what we're doing as a treasury company is we are swapping stability and yield in dollars or it could be in euros. We just created a digital credit instrument that pays yield in euros. We're swapping that in order to get the capital to buy Bitcoin, which is digital capital. And at the end of the day, what you do is you create an equity instrument for equity investors that want amplified Bitcoin, that they want more volatility and they want more performance. And then you create credit for credit investors that want damped Bitcoin. They want... if I'm 10x over-collateralized, I've stripped 90% of the risk away, right? Bitcoin has to fall by 90% and I'm still collateralized. So I've stripped 90% of the risk away. I've stripped 90% of the volatility away. I'm not giving you the 30%. I'm giving you the 10%. But that's totally fine because if you walk down the street and you ask 100 people, 'Do you want to buy a really killer complicated digital capital asset you got to hold for a decade to get insane returns, or do you want to buy a bank account that gives you 10% without that volatility?' Most people want the 10% bank account powered by digital capital rather than the 30% ARR on the volatility roller coaster. And so the digital credit idea is you serve all constituencies. But by the way, there's three. If you don't trust anybody, if you just want to own the crypto asset, the commodity, you buy Bitcoin. And then if you're an equity investor and you want to buy a company that's on a rocket ship or the jet engine on the roller coaster, then you buy the equity. And if you're the credit investor and you want a comfortable retirement and social security, then you buy the credit. And that way everybody's getting what they want out of this trade.

I think the most exciting... There are a lot of ways you can create value from capital. For example, banks use their capital to create consumer credit and commercial credit. Insurance companies use capital to create innovative insurance, life insurance, health insurance, car insurance, reinsurance, different types of insurance programs. But a treasury company like a Bitcoin treasury company or a digital treasury company, the most compelling thing is to create digital credit. And right now you've got three companies that have been leading the way. Our company has created five digital credit instruments and probably the flagship is STRC, a variable rate monthly preferred credit. Think of it as treasury credit or a high yield bank account. Strive created a product called SATA, which is sort of similar to STRC. It is also a treasury credit instrument that pays dividends. They're return of capital dividends just like STRC pays these return of capital dividends. And return of capital dividends are very cool because they're tax deferred. You get paid the dividend, there's no capital gains tax or income tax on it. You just reduce the basis in the instrument and so you're getting a huge amount of cash flow. And then there's a third company, MetaPlanet. And MetaPlanet just created a digital credit instrument called Mercury, which was convertible preferred. It's very similar to what we did first called STRK. And MetaPlanet announced Mars, Metaplanet Adjustable Rate Security, that will be a treasury credit instrument in yen. So you have those three examples of companies that are creating adjustable rate digital credit instruments, treasury credit instruments, all powered by Bitcoin. They're all going to pay much higher dividend yields than your money market or your bank account could. They all work well for the treasury company because if you're a digital treasury company, you want to generate BTC yield for your equity investors. So what is the motor to create shareholder value if you're the treasury company, right? And the motor is to sell digital credit. When you sell $100 million of digital credit and you buy $100 million worth of Bitcoin, you're creating a $100 million Bitcoin gain for the equity investors upfront without any shareholder dilution. And then you're creating a high yield bank account for the credit investor via that swap. And you're using the digital capital as the collateral in order to strip the risk and the volatility off of the credit, which then makes it appealing to the risk-averse credit investor who would never ever want to buy the underlying commodity. They just couldn't handle the volatility and there's no yield in Bitcoin and there's a lot of V in Bitcoin. And the world's full of investors that don't want the V and they do want the yield. So, I think I'm not going to tell you what every treasury company or what every digital asset holder should do because in theory you could accumulate $10 billion of Bitcoin and you could write insurance policies with it or you could also loan out the Bitcoin to another counterparty. So there is a banking model, there's an insurance model, but I personally believe the most compelling business model is the treasury model. And the treasury model is I raise capital and then I create credit and I sell the credit. I sell public credit. I sell an STRK or an STRC via an IPO on NASDAQ. It's publicly listed. It trades like STRC is trading hundreds of millions of dollars a day and it's a global credit instrument that provides liquidity and yield and lower volatility and less risk to a different set of customers. And I think, not to wax philosophical on this, but if you're asking what's the perfect product, you know the iPhone is a pretty good product. That made Apple a trillion dollar company. But I think the perfect product is I give you a treasury credit instrument that pays you 8% more than the risk-free rate in the currency that your expenses or your obligations come in. So if I give you 8% in yen or 10% in euros or 10% or 12% in dollars, then I'm giving you this massive high yield bank account. You know, you don't need to be able to read. A three-year-old would get value from it. An 80-year-old would get value from it. If you're in a coma, you would get value from it, right? Your unborn children will get value from it. The trustees, the foundation, it pretty much is the gift that keeps giving, right? It's such a good product. The reaction of anybody would be, 'Well, what's the catch?' And the catch is you need a dynamo to power the dividend and that's digital capital, Bitcoin. And then you need to trust the creditworthiness of the issuer. So you want to create a digital treasury company that's got very transparent credit, that's got a lot of collateral, that is understandable, that acts in a very predictable, transparent, consistent fashion over time. And that's what makes you creditworthy. And that is, I think, the digital credit revolution.