You know, one thing that I think people sometimes forget is this company, formerly MicroStrategy, was founded in 1989 by Michael Saylor. It went public in 1998. We added Bitcoin to our balance sheet starting in 2020. And so, from 1989 to 2020, for 31 years, our executive chairman had experience of running a company through ups and downs and ups and downs. And that's what makes a company resilient and strong. So, for me, 2022 was a tough time. It created resiliency for those who stuck through it. And so, what is it like? It's going to build strength. And ultimately, why am I not phased? Because I believe in the underlying. I believe in Bitcoin. I believe that Bitcoin creates self-sovereignty and freedom for people all around the world. I believe it is a much better way for finance to move along rails, digital rails. I believe it is a programmatically superior digital asset and scarce asset. And so, if you believe in that underlying, then everything else will work itself out.
Well, it was the Bitcoin sale heard around the world. Just 32 Bitcoin sold at Strategy. And the rest of the market figuring out what that means, not just for Bitcoin, but also for Strategy and for stretch holders out there. Excited to have on with us today, joining us on Coinage, the CEO of Strategy, Phong Le. Making his Coinage debut. Phong, it's good to see you, sir.
Yeah, it's good to see you, too. Thanks for hosting me.
Of course. And I think, you know, part of this interview is mostly just kind of digging deeper into behind the scenes, how the decision was reached, and really what comes next for a lot of people out there who have been riding the Strategy buys on the way up, the first sale. There's a lot of questions. So, for you, how's it been watching the market react to this and what's maybe the number one thing that you'd want to clarify?
You know, they say in the short term, the market is a voting machine, and in long term, the market is a weighing machine. And we don't look for people to vote on how do we accrete Bitcoin per share. We transparently provide our KPIs, and we provide them with a long-term view. And so, we've been at this since 2020. And we've certainly every single year since the beginning driven increases in Bitcoin per share to our common shareholders. We issued a set of debt including convertible debt that was extremely accretive to the debt holders, and now we have preferreds that are out there that are also accretive if you look at a total shareholder return for the most part, especially in a Bitcoin bear cycle. So, I'll say there's always the short-term reaction, and then there is long-term are we creating value for all classes of shareholders and Bitcoin, too, for that matter. So, what do I do? I don't spend too much time reading all the comments on X, but I think it's useful to see how that short-term voting machine is. It's good to see how our security's price is. It's good to see what happens to Bitcoin. But everything we're doing, we take a daily lens, we take an annual lens, and then we take a long-term lens. That long-term lens is what's most important for our decisions. We sold Bitcoin and bought it back in 2022. So, this isn't the first time. This is the second time. It was a much more material amount then. This time we sold two and a half million dollars of Bitcoin and we bought a hundred million dollars the next week and the previous week we actually bought about a billion and a half of Bitcoin. So, the total is we're not aggregators of Bitcoin and we're not trying to increase Bitcoin per share for everybody.
Look, there is a responsibility we have which is we provide week to week transparency into what we're doing. That's voluntary through 8-Ks and disclosures and we do that because we want to be more transparent with everybody and that'll lead to people providing positive feedback and negative feedback and I guess that's the responsibility we have with the transparency and also being the largest holder of Bitcoin, largest identified holder of Bitcoin in the world.
Yes, and I guess that's an important distinction too. Maybe to clarify there, I guess maybe it was the first sale since you rebranded the strategy. I'll defend myself that way. If you think about the historical precedents of the sale, there were a lot of people before you guys even made the decision to sell. It almost seemed like the market or at least those big players in the space had made up their minds that in order to know whether or not what you guys are trying to do could work, you needed to make some sort of sale. And I've heard you describe it as inoculate the market to the idea of you guys selling. And is that fair to say that you had heard from people that maybe hey look, we don't know how the market might react to this. We don't know if there may be fears and certainly people have made comparisons to other projects that have some cyclical and knock-on effects like a Terra when you design certain things this way that you could have some sort of cascading loop of sell pressure. And there's not really a strong way to know exactly how much leverage is built around the products you guys offer by other investors. So, is that fair to say that that was maybe one thing you were hearing before the sale?
That was not the driver. I don't think we were that concerned that there were levered D5 protocols built on top of stretch that were going to create this cascading loop. The primary reason is a large amount of stretch is owned by retail, about 80%. A good amount is owned by large institutions that buy and hold. And so the percentage that is owned by D5 protocols is pretty small. I think it's less than 10% if my recollection is correct. When we say inoculate the market, what is important here? One, we do have a category of shareholders, especially our stretch shareholders, and our debt holders that want to know that our largest corporate asset that makes up almost 100% of our asset base, Bitcoin, can be utilized at periods of time when we need to, right? And so we've been, we said that we won't sell our Bitcoin and those sorts of things and they say, 'Well, now you're saying you would sell your Bitcoin if you needed to to pay a dividend on stretch as an example,' which is not why we did it. But if we needed to, we would and they're like, 'But you're also saying you won't.' So, we said, 'Okay, let's sell it just to show people that we are willing to sell our Bitcoin,' right? And so if you're a credit digital credit holder, if you're a bond holder, the folks on the debt and credit side of our balance sheet, those folks want to know that we're willing to sell our Bitcoin and the ratings agencies want to know that we're willing to sell our Bitcoin. That's one part of inoculating the market. The other part is testing out processes. So, we provide transparency into who our custodians and how much Bitcoin we hold with those custodians. We don't provide proof of reserves because we don't want to disclose our Bitcoin addresses right now. Although we're looking at ways to provide that. But as an example when we move Bitcoin from cold storage to a hot wallet, there are people who are looking at what we're doing, trying to guess which wallets are ours, identifying what we might do. And so we want to see how that entire flow works when we sell Bitcoin. So that's part of a test of the market. So those are a couple of things when we say we're inoculating the market, what are we doing? And we're the largest corporate holder of Bitcoin. We should be able to sell our Bitcoin without the market overreacting to a 2 and a half million dollar sale. And so hopefully the next time we do this, the market doesn't overreact.
Yeah, and as a community on show, we have a lot of people who throw in questions. One of them is kind of around the idea of how you landed on 32 Bitcoin. Maybe giving some insights into how decisions are made there at strategy because again, we've seen certain experiments in crypto. And I ask this personally now because we've covered certain things with SPF, Do Kwon, and very smart, powerful men. What you guys are doing at strategy though, you've got you and you've got Sailor and you've got shareholders voting on things, which is distinct. So I would ask you two in terms of maybe how decisions like these get made and how to land on 32 Bitcoin.
Yeah, so I'll zoom out and then in. At a corporate level, we're a publicly traded US company that's listed on the Nasdaq. It's a well-known season issuer. We don't have a majority shareholder anymore. Mike does not have a majority share. And we have eight board members. And then we have all of our shareholders, right? And of the common, we have shareholders of the preferred and we have holders of debt. And then we also look at the Bitcoin holders, the broader community. And frankly, I look at the crypto community all as people that we have to answer to in some way, shape or form. Big picture, we actually on a quarterly basis try to provide updates to what's happening with the company. And those updates, for example, last quarter, we talked about all the optionality that the company has. The fact that we can sell equity, we can sell preferreds, we can sell US dollars, we can sell Bitcoin. We can buy all those things, too. We can buy back convertible notes. And we talked about this as a deliberate strategy to make sure the market understood as the largest corporate holder of Bitcoin in the world, largest holder of Bitcoin in the world now, that we have a lot of optionality. And we talked about that with the board, got the board on board with this idea. And then we talked about it in our investor relations call, our earnings call. And so that's a pretty big deal. And then we talk about it on podcasts, we do presentations, Mike Saylor and I are on, other people are on. And so we have this responsibility, first of all, to come up with a corporate strategy, get alignment with the board, talk about it with our shareholders, look at the reaction from our shareholders. That's sort of a corporate quarterly thing, right? And then monthly, we look at, okay, what should we be doing? How does it impact Bitcoin per share? How does it impact Bitcoin yield? And then, how does it impact debt? And so we have a model that we run that looks at our equity and looks at our credit and the quality of both. It's a pretty sophisticated, detailed model. We run different scenarios on it, run simulations on it. And then on a weekly basis, Mike and I will talk and we'll say, 'Hey, here's our goal for the week.' And literally on a daily basis, every morning, we'll discuss, 'Okay, what are the instructions for today?' And we discuss that with our treasury team, with our IR team. We talk about it with our traders. And so that's the cascading of how decisions are made, how do we make a decision to buy back 1 and a half billion dollars of notional convertible. We start at the board level and that cascades all the way down to the execution of that with our banks. We didn't talk to the board about was it 32 Bitcoin, but we talked to the board about, 'Hey, we think it makes sense to sell Bitcoin.' And what are the trades we want? And then the day-to-day decisions are made between Mike and I and members of our Bitcoin team in the company. But I say that because there is not an action we take that isn't thoughtfully and thoroughly deliberated with many many constituents. And then we look at the reaction of what happens and then we adjust the decision based off the reaction. And that reaction happens to our share price. And the share price of our preferreds. We look at the reaction on X. We do Grok sentiment analysis on X, and we say, 'What did people think? What's the percentage positive? What's the percentage negative?' We look at how people visit our website and who's using our strategy app. I mean, we are an analytics company. We do a lot of analytics to every decision we make.
Well, I think that's important to highlight both in terms of just like your governance that most of crypto might not be used to since some of it is sometimes theater. And I say that as someone who's worked on trying to get our governance right. And so it's important to make sure people understand how those decisions are made. And you kind of touched on a little bit of the analytics piece and really what I think like strategy also offers. And I wanted to ask you too when it comes to the fundraising side. Because Strategy obviously still trading below par. What other elements there could be for where you guys start to look at some of those optionality, those levers that you want to pull. Are there other things out there beyond it because again, there was an era where strategy didn't have stretch yet and convertible debts and all these different pieces. Is there something else that maybe you guys are looking into or discussing here if stretch does remain below par and other fundraising mechanisms?
Yeah, I mean, so what are the different things we can do? We can issue equity, right? And as long as that is accretive to Bitcoin per share over the long run, we could do that. So as an example, we issue equity quite often to pay our dividends, right? And our equity trades with $2.7 billion a day. It's one of the top 20 most liquid stocks in the world. It is the most liquid stock in the world when compared to our market cap. So that is a fundraising mechanism we've used historically. We can issue prefers and to your point, we wouldn't issue stretch below par, but we could issue other prefers if we wanted to. We can sell Bitcoin, if it made sense and it was accretive to Bitcoin per share. And then we could issue more convertible debt. The market's quite open to us. We've made a decision not to. Issuing convertible debt could be long run accretive to Bitcoin per share, but we're putting a senior obligation on top of our prefers. That's why we choose not to and there's a lot of other reasons why we choose not to do that. By the way, we also own 845,000 Bitcoin. We could do nothing. Like we could do nothing during a bear market, which is sort of what we did in 2022. We reached French. We paid back some of our senior secured notes and our Bitcoin backed debt. And otherwise we did very little during the year of 2022. We sat there with a Bitcoin stack, and as Bitcoin went back up, our company accreted Bitcoin per share and it accreted valuation and everybody won. So, the doing nothing option isn't necessarily a bad thing. In fact, the temptation when you're going through a Bitcoin bear market to do something like sell Bitcoin in mass, that's not something we would contemplate doing either. So, I guess we have a lot of options. Doing nothing is one of those options.
That's true. That is important to also note as well. I guess no one has ever experienced some of those swings just because of how big strategy has gotten now. Sometimes when you're doing nothing, you watch paper losses stack up in the billions of dollars, which is maybe not something a lot of people ever have to experience. What's that like for you personally?
