Saylor Reveals The $300T Market That Sends Bitcoin To $1.5M

We want five or 10% of all the credit in the world. So if the credit's 300 trillion, we want 15 to 30 trillion of it to flow into Bitcoin-backed credit instruments. We want 5, 10, 20, 30% of all the money markets in the world to flow into digital money. There's 1 trillion in Bitcoin and there's 1,000 trillion elsewhere. Digital capital is competitive with metallic capital, real estate capital, equity capital, and credit capital. What is money? Well, gold is money. Everything else is credit according to JP Morgan 100 years ago. Bitcoin is money. Everything else is credit according to Michael Sailor.

Yeah. On Bitcoin, I think we're in a classic bear market. I think it's a really mild bear market by Bitcoin standards to date. I think interestingly you would think about an issuer of digital credit, someone that tries to amplify Bitcoin exposure. And I just can't wait to get into the answers to the questions from the last panel. But I would expect in a Bitcoin bear market when Bitcoin's at its 200-week moving average for capital markets for someone like us to be largely shut. That was our assumption. Two weeks ago we had the largest Bitcoin buy in our history. Bought over 200 Bitcoin. The week before, 1100 Bitcoin. For us that's massive raises. Even last week we bought 32 Bitcoin, which if you know, you know.

You know, Matt, I'm gonna want the 32 Bitcoin back. The price may be higher. But I think the capital market's open, which means that the bear scenarios for us are less bad than I think that they could have been and that we were prepared for. And so we're ready to weather the storm. I think digital credit is behaving really well. It's interesting to note that Bitcoin is down over 50% since its high. Right now, both Seda and STRC has had positive total returns during a Bitcoin bear market. And if you think about that as a capital allocator, someone that wants to buy something that has reduced volatility, that has income, that is success in my view. So to me, all systems go, we're in a bear market, we'll weather the storm and we'll get out. What's your perspective?

That's a good point. If you put on the Austrian economic hat, gold is money, everything else is credit. Bitcoin is money, everything else is credit. But in the fiat school, money is something with zero volatility to fiat currency. So digital capital, digital credit, digital money are fiat terms. Digital money means a zero-vol digital currency backed by Bitcoin that pays a yield. 99.9% of capital is on a fiat standard. So to bridge into Bitcoin, we need to attract that capital by offering something that looks like money to them: pegged to fiat, zero vol, yield. We want 5-10% of the $300 trillion credit market to flow into Bitcoin-backed credit, and 5-30% of money markets into digital money. In the conventional view, money is a medium of exchange, unit of account, store of value. 99.9999% of prices are in fiat, so if you want to create perfect money in the eyes of those with the capital, it must be pegged to the dollar with zero vol, paying a yield above debasement. That's what I mean by digital money.

Yeah. I have a big following among Bitcoin believers. Some think we're encouraging people not to buy Bitcoin when we sell SATA or STRC. But I've never met anyone who thought that was a substitute for Bitcoin. They bought it instead of holding money market or other credit. We're attracting non-Bitcoin holders. If you're a Bitcoiner and need money in the next 12 months, half your kids won't get to school without credit. So we provide an alternative to low-yield money markets. These products are competing with stable coins and other yield coins, not with Bitcoin. They expand the Bitcoin network. The real competition is the $999 trillion of capital in TradFi. For crypto yield, people buy Solana, Ethereum, or Bitcoin-backed tokens. These tokens compete with Solana, Ethereum, other yield coins, or stable coins. When you create these products, you draw more capital into the base layer. Also, selling Bitcoin to corporations is hard; we only got 0.1% of Microsoft shareholders to vote for it. But everyone is interested in something that pays 2-4 times money market yield if you strip the vol. To grow Bitcoin 10x or 100x, you can't just educate; you need a product that spreads virally. The world is not ready for a 40-vol asset for most capital.

Sure. To invest responsibly in the equity of a publicly traded company, you need to read filings. There are misnomers. Selling equity is massively accretive when done at a premium to net asset value after adjusting for liabilities. We raised $21 billion of equity in 2024 at a 200% premium over Bitcoin. That banked a $14 billion gain. Even if Bitcoin trades down 30%, you'd show a loss, but you bought with equity that was triple the price. The only thing that matters is whether you did it at a premium. With long-dated debt or preferred stock, it's different. Preferred never comes due, so no liquidation event. The stochastic cost of capital is lower than nominal. For STRC, we have options to lower dividends or delay them. If you think Bitcoin will appreciate more than 8.5% a year, all gains are net income. If Bitcoin appreciates 3.2% a year, we pay dividends forever without selling stock. The credit bet is that Bitcoin appreciates 3% or more over 30 years. The equity bet is that Bitcoin outperforms the company's cost of capital (around 10%). If Bitcoin goes up 10% a year, equity outperforms. Between 3% and 10%, equity may underperform. If Bitcoin falls 10% a year, credit becomes distressed. People often miscalculate. They think preferred equity is a liability, but it's only a liability in liquidation. Since we never have liquidation because we have minimal debt, preferred is equity. Most narratives assume Bitcoin falls 80% and never recovers, which would doom any business. But if you think more thoughtfully, the businesses are anti-fragile. As equities fall, amplification increases. Digital credit is self-healing. If Bitcoin crashes, demand for digital credit falls, improving credit profile. We're attracting demand for credit and equity as assets trade down, creating stability.

Um, on the second one, Satoshi seems to have a number of wallets and there's like a bit more than a million bitcoins. So I suppose Satoshi is the largest holder. On the first question, we actually have a bunch of ATMs. We...

We have ATMs on the perpetual instruments like STRD, STRF, STRK. We have an ATM on the common equity MSTR, and we have an ATM on the credit instrument STRC. They're all dynamically adjusted and programmatically run based upon a set of parameters. It's a function of the equity capital markets, the credit markets, the Bitcoin market, our decision about what to buy or sell or swap. It's not just adjusted weekly or daily, but literally minute by minute. We think we have other options, like we could go out and sell bonds. You'll notice we have six bonds outstanding. We haven't sold any more bonds. We'll retire all the bonds. So that's just turned off the debt. The debt part of our business we don't see as being strategic or advantageous. You'll notice in our 8K filings we haven't sold any STRD, STRF, or STRK. That's because we think they're undervalued. The cost of capital would be too high and we'd be locking in that dividend too long perpetually. So what I would say to you is if you like Bitcoin and you like the company, you should buy those things because I'm not selling those things. I wouldn't sell them because I think they're too expensive as a form of capital and they're undervalued. We do actively manage that. If STRF were to trade to $200 a share and the cost of capital is 5% for perpetual money, maybe we might start selling it again. We consider that based on SOFR and the forward yield curve and the credit markets with STRC. We won't sell at a penny below par, and we will sell a lot of it at a penny above par because one of the primary functions of that is to strip all the volatility and support the instrument. We allocate our capital to buying Bitcoin or buying dollars depending upon the credit markets. We're swapping back between buying debt, buying dollars, buying Bitcoin. We've sold some Bitcoin. We sell credit, we sell dollars to buy the bonds. There's a lot of things we're doing. They're all dynamically adjusted, a function of the forward curves and the premiums in the derivatives market, the capital market, the equity market, and all the credit markets. We evaluate them all the time with the theme that we want to do things that are equity positive, accretive to the equity. We want to do things that are credit positive, supportive of the credit, especially STRC. We've done a dozen things to support STRC. And we want to do things that are Bitcoin positive. Sometimes the interests of those three groups are a little bit across purposes, and we have to balance those interests. That's pretty much our business, thinking thoughtfully all the time about those things.

A point I'll make on that, and we'll take the next question. If you think Bitcoin is going to appreciate at about 10% or about our cost of capital, then when we report a Bitcoin gain comparable to net income, we have a $5 billion Bitcoin gain this year so far. We're on track to maybe get to 10, but we had just slightly south of 10 last year. For you to believe that $5 billion Bitcoin gain is valuable, you have to assume Bitcoin is not falling to zero tomorrow. If you think Bitcoin is falling 10% a year, then the Bitcoin gain isn't that interesting because you're discounting at 10%. If you think Bitcoin is going up 0% a year, then we might have incurred a liability. We sold STRK to buy the Bitcoin. If you think Bitcoin is going up 10% a year, I sold a billion dollars of STRK to buy a billion dollars of Bitcoin. I'm never paying the money back. The Bitcoin I bought with it is paying the dividend cost because it's going up 10% a year and compounding. If Bitcoin could go up 8% a year and we have a cost of capital of 10%, all of the gain is net income. If you think Bitcoin is going up 30% a year, when we report a $5 billion Bitcoin gain, that's like $15 billion. It's $5 billion up front and probably another $10 billion on the back end. The business has obscene profitability, but the reason it's so controversial is your view of the equity is going to be modulated through your view of the forward Bitcoin price, just like your view of the credit has to be modulated through your view of forward Bitcoin performance and Bitcoin volatility. You can come to an opinion that the credit is distressed and the equity is awful if you have a negative Bitcoin opinion. And you can come to an opinion that we're going to dramatically outperform Bitcoin and generate 50% a year, which is what we've done for the past five years, and that the credit is all investment grade if you have a positive view toward Bitcoin. Since most people in the market have very divergent views or don't even articulate their view before expressing an opinion, that's why you get so much controversy. Next question.

Hey Jack.

First of all, the way we define it is we take the equity market cap, add in the net debt, and add in the notional preferred equity to create an MNAV, which we put on our website. But a lawyer will tell you that a public company cannot have a publicly traded security based strictly on a single website disclosure. If you look at what we publish, we publish 8Ks, 10-Qs, and 10-Ks. If you read them, you'll see a raft of language saying this is not a measure of liquidity, this doesn't show the full financial picture, and you have to take into account all the liabilities and assets of the company to form an opinion. I don't think there's anything wrong with our MNAV calculation, but it's not the only calculation. You can also calculate net assets: take the assets of the company, subtract the debt, and you could subtract the preferred stock if you wanted, and you would have a net asset value per share. You can have gross assets per share and net assets per share. These things don't matter if the company is substantially equity financed or the debt is small. They start to matter when the company has 30%, 40%, 50% preferred stock. Assets per share could be $100, and net assets could be $80 or $90 per share. If you're calculating the price you have to sell the stock at to generate a BTC yield, it's a higher price than the price to generate a US dollar yield. If the company is worth a billion dollars and you sell $100 million of stock, is it dilutive? If you trade $100 million of stock for $10 million in cash, it's dilutive. Classic dilutive deals: I bought someone's billion-dollar business for a billion of stock and wrote it down a year later because it was only worth $50 million. That was $950 million dilution. Dilutive deals happen when you buy an intangible asset like a company with goodwill and overvalue it. If I bought a Picasso for $100 million and it was only worth $25 million, that might be dilution. When you trade $100 million of stock for $100 million of cash, there's not much room to write the cash down. The likelihood of a surprise write-down of goodwill is next to nothing. A billion-dollar company that issues $100 million of equity has not diluted the shareholders. It simply expanded the capital structure from $1 billion to $1.1 billion. You still have the same assets per share. You have 10% more shares and 10% more cash. You're expanding the capital structure, which is credit positive. The company is more creditworthy, and you're increasing liquidity of the equity. It's not dilutive at all. It's just growing the company. The calculations get complicated with various types of liabilities. Let's say I have $10 billion of debt due in a year. That's not the same as $10 billion of credit with a variable dividend rate that never comes due. You can treat them the same, but one is a liability in liquidation but an asset in operation. That's why it's a hybrid and complicated. There are many times when it makes sense to expand the capital structure and add cash or Bitcoin, which decreases credit risk and increases equity liquidity. The lawyers would say you cannot mention these things in a quarterly filing without 95 pages of documents showing the complete balance sheet, all cash, net debt, and obligations. As a public officer under Sarbanes-Oxley, I sign every quarter stating there are no off-balance-sheet liabilities undisclosed. To understand whether the company is accreting or diluting, you must understand all tangible assets, cash, and liabilities. Is it appropriate to subtract a billion dollars of preferred equity as a liability? Not if you're a bank. It's mezzanine capital, equity. It is a dividend liability, cumulative or non-cumulative, but not a balance sheet liability. Generally, if the company sells equity above net asset value per share and swaps it for tangible assets like Bitcoin or cash, it will be accretive. If you calculate net asset value per share (Bitcoin plus cash minus all liabilities) and sell equity below that number, it will be dilutive. There are equity swaps that are dilutive, but they must consider a model of liabilities, assets, and the full balance sheet per share at the time of the swap. You're right that you can come up with another MNAV that might be better. When we invented BTC yield, we hadn't invented digital credit yet. The business model has changed in the last 12 months. Digital credit is only 10 months old, and we didn't know it would work until three or four months ago. The business model is evolving, and the metrics are evolving. Until you guys came public, we weren't able to publish Bitcoin per share on our website. Now we have Bitcoin per share and new credit metrics. I don't think we're done. BTC yield can only be understood if you make an assumption about BTC ARR for the next 30 years. BTC yield isn't wrong if you're forecasting 10 years at 20% ARR. But if you ask me what the accretion of the deal is this minute when we publish the 8K, you would calculate net assets and Satoshis per share on a net basis attributable to common shareholders after subtracting liabilities. It's simple to subtract debt liability because it's a hard dollar amount with a date certain. There's still debate about the right way to value a hybrid credit instrument like STRC. The trolls say it's not credit, but it is. Preferred stocks that pay a dividend are credit. Our debt has options to the benefit of the creditor. The convertible bond buyers have the right to put it back to us if it's trading below par on a put date. That's an option to them. The STRC preferred credit has options that accrue to the issuer. It's the exact opposite. The creditor has an option that is a liability to the company; the credit issuer in a pref has an option that is an asset to the company. There is no one simple metric. The set of digital metrics for a digital treasury company are evolving. They change what we do, and we're learning from each other. The business models aren't even 12 months old. If I say I generated $5 billion in Bitcoin gain assuming Bitcoin appreciates 10% a year, an equity investor must assume Bitcoin appreciates 10% a year for a decade, the business model of selling digital credit is stable for a decade, and Bitcoin volatility is stable for a decade. If yes to those three, I'll give you a P/E of 10. If not, maybe a P/E of 2. There is massive room for people to value these instruments based on sophisticated models. The company's obligation is to publish everything. The critics don't listen to the earnings call or read the document. If you don't have the attention span to read a page, you won't read 100 pages. My advice is to put the document into AI and ask it to read and analyze it. That will give you an informed opinion, unlike someone who just wants to tweet for clicks.

$15 billion preferred.

For the record, we were the biggest equity issuer in the world last year, but we won't be this year. Everybody is doing ATMs and preferreds. There's a lot going on.

If you sell a billion dollars of equity to invest in semiconductors with a useful life of four years, it's probably dilutive unless you can prove the business will generate cash flows to offset that dilution. Most people who issue equity, when you are a $4 trillion company and sell a trillion dollars of equity to buy a trillion dollars of cash, it's not dilutive. All you've done is expand the capital structure. It's not dilutive at the time you did it. The argument is that I'm investing the cash in a money market yielding 2% or 3% after tax, and the existing business was generating a 12% return on capital. That's how it becomes diluted. Whenever you sell equity or swap equity for another asset, if the other asset has a higher return on capital than your existing business, it will be accretive. If it's equal, it's neutral. If you buy a business that underperforms, it's dilutive. The definition of accretive or dilutive comes down to the use of proceeds. If I'm buying Bitcoin by swapping stock above net asset value, it's always accretive. If I'm buying cash that underperforms Bitcoin instead of Bitcoin, the question is why. If I did it to make the credit more creditworthy and sell $20 billion of STRC next year, I'm investing in the credit business by buying cash, which makes it accretive. You can do a dilutive capital raise, but you have to consider the use of proceeds. Take Oracle. They did a hundred acquisitions. Were they accretive or dilutive? On every acquisition, their CFO creates a 10-year cash flow model and tells investors it's accretive because they'll take out costs and improve margins. Successful companies do accretive transactions. Wall Street is littered with companies that failed doing dilutive transactions. If you buy hardware that depreciates in four years and the business falls apart, trading equity in a good monopoly for that is dilutive. If you buy a monopoly growing at the same rate or better than your existing business with equity, it's accretive.

Your leverage has gone through the roof. If there's a bull market, the equity could go to $12 a share in 2022 and then roar back.

Any equity investor must have a clear opinion of the forward volatility curve of Bitcoin and the forward price curve of Bitcoin. With those, you can create a model of the company, understanding its assets, liabilities, duration, and cost of capital. You plug in your assumptions, and it will spit out the fair value of the equity and the credit risk. Every investor I know does that. Our major investors have their own models. They plug in assumptions and decide if the credit or equity is cheap or rich. The best investors will buy our stock at an MNAV of 1.2 and sell a bit when it gets to 3. They trade it. Our stock trades in line with Bitcoin every minute. That's not me. That's traders at Susquehanna, Citadel, or Soros with models on Bloomberg. They buy and sell based on fair value. On our website, you can plug in the forward Bitcoin volatility and ARR curve and get the fair credit spread. Once you have an opinion, you have an idea of fair value and can make an investment decision. You cannot make it on one number without a sophisticated view and a full capital model. If you don't want to do that, just buy the credit or hold Bitcoin forever.

I don't think the markets form consensus about MNAV being the only metric. There are many other metrics. If you read our disclosures, the lawyers have one page pointing out that every metric has limitations. You must take the entirety of all financial reports and SEC filings to form a responsible opinion. I can put one clause in one security instrument that negates any metric. That's why we file the filings and encourage people to read them. We try to overcommunicate. There is no single metric, even though some are useful. Looking at your MNAV versus ours should be apples and oranges in a major way. You have to go a layer deeper. Our reported MNAV on our website is consistent with what the average institutional investor looks at, but even among them, there is no consensus. The best thing is to provide all the data you can, open source it, and let people build. As they build, we learn and continue to give the best perspective. These business models are embryonic in their first year. They're all different. In the retail business, they have the same filings for 80 years. Many industries are stable for 50 years. You can't expect that in our business since this stuff is all 12 months old. It's more dynamic.