“I’ve Never Seen A Setup Like This Before" - Michael Saylor Bitcoin Interview

Everybody kind of gets what they want. And we're even powering the TradFi people like investors that are buying private credit or junk bonds or investment grade bonds. They're buying illiquid, low-yielding, risky instruments, and we're going to give them something twice as good or three times as good. So, we're really just in the business of fixing the money and digitally transforming the capital markets. And we're creating this digital equity class, MSTR, digital capital, BTC, and digital credit, STRC. And I don't know why that just can't continue year after year at a bigger and bigger scale.

Yeah, the addressable market is trillions and trillions of dollars. So, our end game is to create that credit and strip away the risk. We strip away the currency risk, we're stripping the economic risk, we're stripping the volatility, we're distilling the yield, compressing the duration, and we're handing people that want to invest their capital in credit this very low volatility, like a digital money market fund for people that trust digital assets and believe in digital capital.

Right? And then, because we're doing that, that creates amplification for the equity. So, our common shareholders, MSTR shareholders, they outperform Bitcoin. So, if Bitcoin does 20% over the long term, they would do 30 or 40, right? And right now, say Bitcoin has been it did 40% a year for the past 5 and 1/2 years, and our common stock is 60% a year. So, we give amplified Bitcoin to the equity holders. We give damped, low-risk Bitcoin with cash flows to the creditors. And then, because we're actually raising that money, we're the biggest buyer of Bitcoin. So, we're powering up the Bitcoin network. And if you're a capital investor in Bitcoin, well, we started the Bitcoin price was 10,000 when we started. It's 80,000 now. There's trillion dollars of wealth that's been created. We're not the only actor, but we're an actor. So, our job is to power up the Bitcoin network and keep driving that network, and I think we'll buy it at 100,000, we'll buy it at 200,000. We'll buy it at 500,000, we'll buy it at a million, 2 million, 4 million, 8 million. So, it's a very simple business, which is just drive Bitcoin to millions of dollars. Expand the capital network to hundred trillion dollars, hundreds of trillions of dollars. Create trillions of dollars of digital credit, and then create a lot of money for our common stock shareholders. And then the last point I'll make is there's a thriving ecosystem right now if you look downstream of us, corporations are using our credit to power them, people are using our credit to power the ETFs. Companies like Apex and Saturn are creating yield coins that like stable coins that pay you 8% or 10% or 15% and those tokens or yield coins are going in a DeFi protocol and people will loop that and generate 25 or 30% so there are yield products, investment products, yield coin products, digital tokens, public funds. At some point I think a bank. Wouldn't it be nice if your bank just said we'll just give you 8% on your money instead of 0% or 3%? You know, why not, right? And so at some point we will power bank accounts, we will power crypto accounts, we will power yield coin tokens, we'll power a DeFi and finance and trading and of course we'll power the people that don't trust any of it. Like let's say you hate all of it and you don't trust corporations and you don't trust crypto, you just want to hold the Bitcoin, hold your own keys, be self-sovereign. We're powering you up too, right? You're going to own Bitcoin that's worth a million dollars a coin and you're not going to have to trust anybody. So everybody kind of gets what they want. And we're even powering the TradFi people like investors that have private credit or junk bonds or investment grade bonds. They're buying illiquid, low yielding, risky instruments and we're going to give them something twice as good or three times as good. So we're really just in the business of fixing the money and digitally transforming the capital markets and we're creating this digital equity class, MSTR, digital capital, BTC, and digital credit, STRC. And I don't know why that just can't continue year after year at a bigger and bigger scale. First of all, my job will be done when I can't do it anymore and I will gracefully retire and move on, but strategy is a corporation with an infinite life expectancy. You know, the next generation of leadership is the CEO Phong Le and Andrew Kang and CJ and they're much younger than me and they'll be going for 10, 20, 30 years after I am and then they'll pass the torch to someone else. You know, Lloyd's of London has been around for hundreds of years. You know, and so I don't know why the company can't continue for hundreds of years. Its job will always be done and its job will be to create the credit from the capital, in order to create an on-ramp, a low volatility, highly liquid on-ramp for people to create their digital money, digital currency, digital yield, and all the other derivative products. It's a mission and, you know, why wouldn't you just keep doing it as long as the civilization needs the money fixed?

I don't know the exact number. My view is Bitcoin would have been successful without me, and without our company, and if we hadn't done it, someone else would have stepped into that role. But, you know, presumably somewhere between 10,000 and 80,000. It wouldn't be as high as it is right now. We've spent $62 billion to support the network, and we spent a lot of time advocating. I don't know. Halfway between? Maybe it'd be 40 or 50,000 instead of 80,000. It's hard to know, but generally, it'd be a little bit lower than it is right now. But, on the other hand, the other theory, the counterfactual, is maybe somebody else would have become the strategy, and if we left a vacuum, they would have done everything that we did, and so that's always possible. The beauty of a decentralized network is there's always a vacuum to be filled, and there's millions of companies, and everyone has the ability to plug into that network and add value to it wherever they see a vacuum or a niche. So, maybe there'd be someone else that would have done it better than us, and Bitcoin would be higher, and maybe no one would have done it, and it would have not grown as fast, but it is probably somewhere in between that. Sure, STRK is a preferred stock. It's targeted to trade around $100, between 99 and $100. It's senior to the common stock, so it has liquidation preferences. And the company's, it is a preferred stock with about 8 and a half billion dollars outstanding in an enterprise that has 85 billion dollars of enterprise value. So, you could think of the senior 10% of the enterprise is STRK. And the mission of STRK is to pay a monthly dividend such that it trades around 100. And so, right now that monthly variable monthly rate is 11 and a half percent. We pay that each month. It was like 95 cents or something, 90-something cents last month. It's a return of capital dividend. And what that means is that when you receive the dividend, you reduce your basis in the investment by the amount of the dividend. So, if we pay you $10 in dividends on a $100 share, you reduce your basis to $90, but you pay no tax. And then the next year you reduce it to $80, and you pay no tax. And after 10 years of $10 a year, you would reduce it to $0. At that point, it would become a qualified dividend distribution, so you would start paying long-term capital gains tax on it. But the way to think of it is it's tax-deferred fixed income. And the company uses all of its resources to strip the volatility to make it trade pretty close to $100. If it trades below $99, we'll raise the dividend, or we'll raise capital, or we'll do something to get it back to 100. And when it trades at $100, we sell that security in order to raise capital. So, we wouldn't sell it at $99.99. We won't sell it. But at $100.01, we sell it to the market in order to allow other people to access it without overpaying. We never want someone to pay more than $100.01 for it. And you could think of it as like a digital money market instrument. It's not a pure money market. It's a little bit riskier. It's a little bit more volatile than a money market, but it is a stable instrument and it's designed to generate three times the performance of a money market for people that believe in digital assets, and it's the most tax-efficient credit instrument that you can buy because if you buy bonds, you pay ordinary income. You have to pay 40% to 50% tax on a corporate bond. If you bought a bank preferred stock, it's qualified dividend distribution. You'd pay long-term capital gains tax at the federal and the state level. But with STRK, you get these two big advantages.

For generational wealth. One advantage is when you buy a $100 share, you get $100 of dividends tax deferred and you can reinvest them and it compounds. And then if you pass the share to your heir, if you give it to your daughter or your son in your will they get a step up in the basis to $100 and they collect another $100 worth of dividends tax deferred. So your family might very well collect dividends for 20 years all tax deferred, which you can't do with a bond and you can't do with a normal preferred stock. And so it's a very interesting way to preserve wealth if you don't want to see your principal fluctuate, you don't like volatility, and you aren't really pleased with the bank providing you a zero or a money market where you get like 2% after tax. I think allocation is a decision that everybody has to make, and it all comes down to how comfortable you are with the risk you're assuming. So, probably not overnight you wouldn't want to. A Bitcoin maximalist, a person that's got a lot of money in Bitcoin and believes in Bitcoin, they might very well prefer to put most of their working capital, the money they need the next 4 years, they might put that into STRK or digital credit because they're a Bitcoin maximalist. The average investor would probably say, 'I want to have my investments across two, three, four different sources of credit.' And I really just think it depends upon what's your time horizon and how comfortable you are with Bitcoin. You have to trust Bitcoin, and you have to trust the issuer. So, the issue is, would you put all your money in one bank called strategy, and then would you trust that the Bitcoin network is robust and is not going away? And that's just a statistic decision, so probably some portion depends upon how comfortable they are with digital assets and digital capital.