Michael Saylor: Spot Bitcoin ETFs, The Halving, Bitcoin's Next Bull Run and Building Wealth

welcome to the coin Stories podcast

where we talk about investing hard money

Bitcoin and how technology is

revolutionizing the global economy I'm

Natalie Brunell and I'm here to learn

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it's time for the show

it is great to have the one and only

Michael Saylor back thank you so much

for joining me there's so much to talk

about over the next 12 months we're

going to have a having potentially a

spot Bitcoin ETF approved we've got

fasbi rules changing so Michael thank

you for joining me first of all how are

you

always happy to see you Natalie so tell

us what do you think your outlook is for

Bitcoin over the next 12 months given

all of these developments and the

regulatory environment really changing

with with so many actions coming down

recently

bullish

[Laughter]

I've never been more bullish I I think

that um all the indicators are very

auspicious

um

if if we look at uh the situation we're

in right now I think there's never been

more clarity or differentiation for

Bitcoin

as as the dominant crypto asset than

today I think we've we've got pretty

good Clarity and uh Universal consensus

that Bitcoin is an asset without an

issuer that it's a global asset that it

is it is a non-sovereign store of value

strategy for someone seeking to escape

uh currency debasement

and I think uh I think the fact that

Larry Fink running the world's largest

asset manager vocalized all those ideas

on public television of late was a

milestone for the space

I think the second milestone for the

space is um

is the um

Groundswell of positive sentiment

for Bitcoin both in the form of overall

crypto positivity and Bitcoin positivity

um the statements by Ron DeSantis

emphatically supporting you're right to

bitcoin the statements by Robert F

Kennedy emphatically supporting your

right to bitcoin

the the disclosure that Kennedy actually

purchased a bunch of Bitcoin for his

children publicly is a big step forward

I think the fact you have two other

presidential candidates uh mayor Suarez

and ragaswamy also announcing support

for uh Bitcoin I think those are really

big deals

so that combined with

um The Regulators endorsing at the cftc

and the SEC

combined with the

the tone

and the tone and treatment of mainstream

media

if we look at the treatment of Bitcoin

in the mainstream media both across CNBC

Fox Bloomberg The Wall Street Journal

the times and the like

I think you could see a marked rotation

of

um of sentiment over the past two years

uh from one of incredulity and suspicion

and fear and concern

to uh respect either a grudging respect

or this you know or I guess this thing

is more than we thought it was so that

that uh sentiment has changed I think

it's it's pretty clear

that um there is support for Bitcoin in

both parties and the Democratic party

the Republican party at the White House

level

and I think there's obviously has been

Universal support for Bitcoin across the

crypto ecosystem and

the regulatory developments of the past

uh six months if anything they've

increased uncertainty around everything

else in crypto

the the crypto exchanges the crypto

currencies that are stable coins the

crypto Securities the crypto tokens the

crypto

exchanges and Define networks that the

the uncertainty there is still there if

not greater but they've increased the

certainty around Bitcoin

um all of the companies the large uh the

large Financial companies filing for a

spot ETF

companies all the Bitcoin miners

continuing to operate companies like

microstrategy and uh and asset managers

uh all of them uh moving forward with

Bitcoin I think that's been very

so I I feel like we're at an inflection

point it's it's a point at which you

have the most information

to conclude

that Bitcoin is a differentiated

International asset store of value and

digital commodity and and unique in the

world

and useful to the world you have the

most information to conclude that

and yet

the ability

of the retail public and the ability of

Institutions and governments is still

largely impaired to act on that it's uh

it's very difficult for uh a retiree

with a pension fund to make an

investment in Bitcoin it's very

difficult for a large corporation to

invest in Bitcoin it's difficult for a

sovereign wealth fund it's difficult for

a government it's difficult for a hedge

fund

and so you have an example where you

know you know where the world is headed

you know what the world needs

rational people will eventually get

there

you also have uh you have a list of

reasons why it's difficult right why is

it difficult it's difficult because the

accounting is indefinite and tangible

instead of fair value so you have a

challenge and you have a solution

a process to create fair value

accounting with the with the end of the

tunnel clearly in view if it's not

happening by another year it's happening

within 12 months

um you have a challenge I can't buy a

you have a solution you have a host of

spot ETF applications that are on

version three right we're probably

people have been trying to do it must be

on version 4 or version five iteration

but you have version five that that are

much more compelling than the previous

version and you have a lot of political

pressure and sentiment and conviction to

support it

and that is a solution

right you you have a challenge

um I we need uh digital assets exchange

to be transparent and regulated you have

a solution surveillance agreements

coinbase has already agreed to a

surveillance agreement publicly with

half a dozen or more of these ETF filers

you have a process

uh the SEC the cftc engaged in bringing

exchanges into compliance

so you have all these challenges to

action you have all of these Solutions

in play

um it's really just a matter of which

quarter how many quarters does it take

before we put all the Solutions in play

When the solutions uh when the rails go

in place then there's a huge amount of

capital that will flow against a limited

Supply so you have

if we look at the demand side

I I've you know my my description here

is buying Bitcoin is like buying a

beautiful house you know in a foreign

neighborhood and you have to pay cash up

front and it takes you a year of of work

to do it

whereas buying Bitcoin via spot ETF is

like buying the same beautiful house in

your neighborhood

with no money down tomorrow

and so there are many many people that

will not buy a house if they have to pay

in cash

even ever right like there are many

people that will never ever buy a house

in cash one could say the great majority

and there are many people that will say

I would pay 20 more for that house if I

could Finance it at the bank

so

we have a large pool of capital that

would love to be in the space but they

can't easily do it without things like

uh Bitcoin Securities or spot ETFs and

and so that's going to be a big Catalyst

for demand

and we already know it's coming and it

hasn't come which means it has not

reflected itself fully in the price now

on the other side we have two facts

about Supply we know that there will

never be more than 21 million Bitcoin

that's the that's the overarching

important first order fact

and the second order fact we have

is that uh there's a having coming that

will cut the supply that the miners have

available to sell in half and that's

nearly five billion dollars a year worth

of supply

and then we have a third order fact

the third order fact is if large

institutions can now comfortably own

Bitcoin on their balance sheet they're

going to buy it and hold it forever and

the people that exist that hold it now

aren't going to want to sell it so the

supply available for sale from existing

holders is going to decrease

the supply available for sale from

miners is going to decrease

and yet the demand uh to purchase it

will increase and the duration

right the amount of time that someone

wants to hold this asset is going to

decrease all right sorry it's going to

increase if you decide to buy Bitcoin

and hold it for a year then that means

every year 10 billion is being bought

and 10 billion is being dumped on the

market but when you decide to buy

Bitcoin and hold it for a decade that

means every year 10 billion is being

purchased in 1 billion is being dumped

on the market so all of these things put

together they increase the demand they

stretch out the duration they decrease

the supply and they decrease the the

friction to anybody to act in the favor

of the network so put them all together

and the summary is never been more

well I wanted to ask you about the spot

Bitcoin ETFs because at the start of the

Year there was probably only a one

percent chance that one of these would

be approved then it moved to 50 and I

think you mentioned in your one of your

latest news hits that Bloomberg analysts

say it's up to like 65 percent that they

will be approved why do you think right

now there is so much momentum and action

around these why now

well first of all there's broad base

demand everywhere in the world right

everybody wants to buy Bitcoin but they

want to buy Bitcoin uh through their

existing money manager or financial

manager or bank and and that means pick

up the phone buy 10 million dollars

worth of it or ten thousand dollars

worth of it in 30 seconds so there's

demand at the retail level

and there's demand at the institutional

and uh in order to meet that demand in

size

people need a security like that that

travels on the conventional Wall Street

rails

right we've talked about it it's just

like everybody wants a house but if

everybody has to work for 30 years save

cash and then at the end of their career

take the cash to the bank to buy the

house

you know demand for housing would be

five percent of what it is right now so

there's broad base demand and that's

building

um the second is there's there's massive

political pressure

from from uh everybody the industry has

brought a huge amount of pressure on the

regulators and huge amount of pressure

on the political system we see a massive

amount of political pressure

um coming from uh the house Financial

Services committee and the and the

pressure is to do something

we're approaching an election year

and um and it it's in the best interest

of both parties to be constructive and

to do something that's that's

Progressive for the voters and you know

there really isn't a constituency that

doesn't like Bitcoin right you're either

ignorant of it and you don't know

anything about it or you're extremely

pro-bitcoin

so politically it's it's very

advantageous to do something Pro Bitcoin

here on on the Republican side and on

the Democratic side and it's the least

controversial

most constructive thing that can be done

and what you have is uh just amount a

large amount of pressure in the industry

and in the media and in the political

system to do something and you have now

Wall Street firms BlackRock and Fidelity

lining up again so so that's why you

would say it's 65 likely I think

the other uh thing that's driving it is

the awareness that uh simply

relying on the litigation or the legal

system to resolve ambiguities is not

optimal right if you want to solve the

problem with litigation it's going to

take five to ten years it's going to

cost a hundred million dollars an issue

and you're going to get a delphic answer

which is ambiguous at the end of the

time period that covers 10 percent of

the scope so the industry knows that uh

that litigation is not going to solve

the problem I think politicians realize

litigation will not solve the problem

even The Regulators are starting to

realize that enforcement and litigation

is not going to solve this problem so

that means there's just uh there's a lot

of pressure on on two groups there's

pressure on The Regulators to put

forward some constructive path uh clear

rules or constructive path forward for

this Innovation to manifest itself

and then there's pressure on the

politicians to put forth constructive

legislation to allow people a path

forward

and uh and that pressure has been

I think probably just immediately in the

afternoon aftermath of FTX people were

shell shocked

right but if you look at every month

since then

right uh the sentiment is

The Regulators ought to do something the

politicians ought to do something right

and the industry's gotten louder

and then support for Bitcoin and

awareness of the value of Bitcoin has

only increased and not decreased so so I

think that that all of the forces

uh at play here are are compelling

action and the question is what's the

most likely action or the path of least

resistance

for that energy to manifest itself in

and and there's a lot of a lot of things

people would like but by far

you know the universal consensus if you

were to take a vote of 100 people in the

crypto industry and say are you in favor

of a Bitcoin spot ETF you would get 99

out of 100 saying of course why not

right so it's the one thing that is

least controversial

that um that has the most consensus and

it looks

I think there's one more Factor it looks

capricious to keep denying it when

um when there is a Futures based ETF

that is currently trading on on Futures

data and um

a year ago you might have made the

argument that a technical argument well

you know the Futures is good enough and

it trades on the CME and it's good

enough and we like we like our our

surveillance agreement with the CME

better you could have made that argument

the difference between today and a year

ago

is that um this year uh Bitcoin is up

75 percent and the Futures ETFs are up

45 percent

so this year what's happened is the

Futures have disconnected with the

underlying index so Futures ETFs aren't

really tracking Bitcoin right now you

know in fact they're kind of

destroying in the range of 10 to 20

percent of your capital a year

so that being the case you can't it's

clear to any quantitative analyst or

investor that Futures ETFs don't provide

an on-ramp for a reasonable investor

without serious wealth destruction and

so you wouldn't I couldn't in good

conscience uh recommend that you use a

Futures ETF when I know it's going to

cost you 10 to 20 percent of your

Capital every year for no reason

other than the fact that the Futures

Market isn't there's a strategy of using

Futures isn't an effective way to track

the spot bitcoin price it just isn't

working

so there you go you've got you've got

one idea not working you've got another

idea that should work you've got massive

demand you've got massive pressure to do

it and at some point that uh pressure's

got to find a release valve

well I want to ask you about some of

these other vehicles that already do

exist but first for the hardcore

bitcoiners out there who feel that the

whole mission behind Bitcoin is to be

self-sovereign and to self-custody it

who don't trust and don't want you know

third parties to be involved at all what

do you say to them and their distrust

for companies like BlackRock and some of

these big Wall Street firms who maybe

they feel have contributed to some of

the wealth concentration and and erosion

of of the American worker

I would say that Bitcoin fixes

everything and so if if we think about

what that means Bitcoin fixes everything

and we need to be prepared for Bitcoin

to infuse everything

you're an individual

and uh so you believe being a sovereign

individual so you buy Bitcoin and you

hold your own keys

okay good

now you get married and now there's two

of you

and one of you doesn't want to do the

work so the other one takes

responsibility and so now one of the two

of you in the marriage holds the keys

okay that's a family a family should be

able to do and then you have okay so

then you have uh four kids and 16

grandkids and the children are are three

years old and you're gonna hold uh some

Bitcoin for the three-year-old and then

eventually you have grandparents and

they're 85 years old and they don't use

computers that well

so now the family becomes an extended

family with 28 people and perhaps two

people or three people hold the key so

now you've got a little fetty man or

you've got a multi-cig the family

Treasury

what do I say uh to the people you know

the 85 year old the family that says I

want to hold my own keys well my answer

is they're not saying it right like the

three-year-old and the one-year-old and

the 85 year old is not complaining that

you know

their two sons or the mother and the

father hold their keys right any more

than I didn't complain that my mother

and father had the car keys when I was

12 years old and I didn't get the car

keys the answer is families are going to

have a uh you know there's a custodial

relationship right you're the mother and

you have six kids and you have the car

keys and they don't have the car keys

and you drive them to school in station

wagon that's custodial like what I have

to say is that's fine right it's okay to

be an individual it's okay to be a

couple it's okay to be a family now

after that your school

okay so when your school actually has

400 people in it and an endowment and

it's a private school you know and they

have a multi-sig relationship and

there's three people or five people on

the board of directors that hold the

keys is it okay that the 500 parents

don't

is it okay is it okay that the 500 kids

okay what about the country club what

about the church

is it okay you know that 10 people hold

the keys for a thousand people in the

church

now you get to the city well what about

the city wants to have a Bitcoin

endowment uh do we give the keys to the

mayor of the city

I I wouldn't I mean I think that maybe

the city council might have a

multi-signature thing but there's going

to be a custodial relationship there

right and then you you know

should you be able to start a company

can the world exist without companies

no we need companies we need companies

to create food and operate restaurants

so if the guy that runs the restaurant

wants to have a treasury

is it okay for the CEO of the restaurant

right to have some Bitcoin and then now

the question is

well what happens when uh you have a

pension fund or a union

or a university endowment

well uh as those things happen you're

going to have

um other types of custodians

and then what happens if a country wants

to back its uh treasury or or put

Bitcoin into its Treasury

while countries are not going to let the

Secretary of the Treasury hold the keys

on behalf of 50 million people

I think the right way to think of it is

Bitcoin is going to be a base layer and

there's going to be layer twos like

lightning to move things fast but

there's going to be layer threes that

are custodial like cash app like

coinbase like fidelity

like uh JP Morgan like Bank of America

uh like apple like Google they're going

to be custodial layer threes and they're

going to exist either to provide

functionality like

do we want a billion people on Apple

iPhones to be able to move Bitcoin

instantly from the iPhone using the

Apple iOS and it's probably yeah so

they're going to be technical reasons to

trust

um a third party

there are going to be political reasons

like the mayor of New York is the mayor

of New York and we and we put someone in

charge of New York so when New York

wants to hold Bitcoin

you're going to have New York as

custodian New York city so there's a

political reason unless you get rid of

New York City

and I don't think California or New York

City or the United States or Iceland as

a country I don't think they're going

away this decade so so I think they're

going to be political distinctions that

cause uh the need for custodians then I

think uh they're also going to be other

sorts of um

natural reasons like

I have Alzheimer's and I'm 85 years old

and who can I trust or I Want to Leave

It To My Unborn grandchild in a trust

okay how do I do that

and so I I think the best way to think

about Bitcoin is Bitcoin offers

sovereignty and integrity and and

empowerment not just to the individual

but also to the family the clan The

Village

the city

the county

the state The Province the country the

company the institution the agency

right they you know the group

the community organization

every one of those entities they all

have their own agency and and um we

don't want them to not have access to

this

right Bitcoin makes your country better

makes your company better makes your

family better makes your community

better makes your school better makes

you better right it's gonna it's gonna

make everything better but

there are different types of wrappers we

need to put it in some people will

always be you know self-custody some

will be multi-sig some will be multi-sig

Layer Two some of them will need a layer

3 custodian they'll either need it for

political purposes or they'll need it

for utility purposes or functionality

purposes or they'll need it because

they're wrapping it into another good or

a product or service that they're

offering that runs on that layer three

so we shouldn't be afraid of those

things

someone said um someone said well are

you afraid that these big organizations

are going to buy Bitcoin and centralize

it and I said

well it's like it's like asking me if

I'm afraid that someone in Japan is

going to speak English and if that's

going to undermine the English language

right if Samsung and is the biggest

company in Korea and they start speaking

English and they build support for

English into their products does that

corrupt the English language

no it actually makes English better they

they're going to use it differently

what's the likelihood that Samsung can

change the definition of Love or change

the meaning of a hundred different words

you know by adopting it it's like not

likely but so uh so I think that it's a

protocol

the protocol is going to infuse

everything and we shouldn't be afraid of

all the different ways the people choose

to integrate wrap in bed or uh or or

um execute with Bitcoin there's no one

right answer you know and the

marketplace will determine the right mix

um of Integrations of Bitcoin it's time

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and coin kite alright back to the show

well just like you said there's going to

be a lot of different options in the

marketplace there already really is I

think it would be really interesting to

hear you maybe talk about the difference

between what currently exists a Futures

ETF there's gbtc that a lot of people

hold there there are a lot of questions

with because of the grayscale loss soup

but that was for some the first way to

invest in in Bitcoin for their

retirement there's microstrategy and

then there's this theoretical spot

Bitcoin ETF can you maybe break down the

differences in these Investments

sure

um well let's start with the base layer

Bitcoin so Bitcoin itself is it's it's

the pure asset

and um

it's the atomic level asset so the value

is is it's the pure commodity when the

asset without an issuer and the most

Global most timeless

asset with the most optionality and uh

and the least counterparty risk you know

theoretically no counterparty risk but

you know unless you worry about like

some core Dev campaigning to change the

protocol but but fairly uh fairly um

it's it's the it's the global standard

for a digital commodity

um one of the challenges the challenges

are

you can't Finance it

so you so if you want to buy it you have

to actually establish a a new

relationship with the crypto exchange

you have to put cash up front

and uh and so that could be a scary

proposition it would take a typical

investor a year to uh to vet a new a new

exchange partner and then they would

have to change their Charter

has different tax consequences sometimes

they're not allowed to buy property or a

commodity asset they can only buy

security so so it's a different type of

asset with a different uh purchase

Channel and then you have to come up

with a custodian that you trust or you

have to come up with a custody protocol

so if you're a pension fund the issue is

which of the people in the pension fund

get the private Keys is it one person

three people or do you trust a custodian

you'll probably have to choose an

Institutional custodian so choosing an

exchange and choosing a custodian

changing your Charter and and vetting

everything

uh that's going to take you a year and

then after you do it if you want to buy

a million dollars worth of bitcoin you

have to have a million in cash

so that's that's the challenge the

advantage is you can hold it forever and

you can transfer it to other

counterparties without a taxable event

after you've owned the Bitcoin so if

you're if you're going to hold it for a

hundred years and you're really focused

then you want to own the asset uh the

pure asset but if you're in if you're

um an agency an endowment an institution

a corporation they typically want to be

able to use their existing Bank

and they want to be able to use and they

want the bank to be the custodian or

they want the money manager to be the

custodian and they don't want to pay

money I mean they want it on credit

right so coming back to the home buyer

really you just want to buy the house

and get the bank to give you 100

mortgage right that makes it easy

so um

a spot ETF

would be the ability to buy that asset

and you buy it through your existing

Bank like Bank of America or JP Morgan

or the like or and

um you buy it for almost no transaction

fee if you can if you can get

effectively a five or ten basis point

transaction fee or less in the ETF

you would buy it instantly uh instead of

taking a year uh you could do it in a

minute

and instead of coming up with a million

dollars you would just ask the bank to

give you the million dollars of

financing at five percent interest so

the bank will forward you the cash it's

like buying it instantly no money down

and then you don't have to change your

Charter you don't have to adopt or trust

a new exchange you don't have to trust a

new custodian

most of these institutions Natalie um if

I were to say they've been doing

business with the same bank or the same

Investment Company for 20 years that

would be short most of them have been

doing business with the same Investment

Company for 40 years

or 50 years but but 40 years is not

unreasonable so you're talking about a

publicly traded company Apple Amazon

Microsoft Google they've got

relationships since they were founded

and um they could buy a billion dollars

of Bitcoin in a minute

in a minute

no money down

on a phone call

and no one would say a second thought if

it comes through a spot ETF but if they

were to say I want to buy a billion

dollars of Bitcoin the commodity

they would need to have

16 board meetings 100 lawyers and

accountants review it they would have to

go through all sorts of contortions they

would have to dedicate a team of five

people they would have to draft a

thousand pages of operating procedures

there would be endless debate and they

would have to come up with a billion

dollars of cash

right so so the difference between

Bitcoin and the spot ETF is profound for

the institution

now

um the spot ETF is zero is one-to-one

leverage you know you put a million

dollars in and you got a million dollars

of Bitcoin and it's probably a fee

anywhere from 50 to 100 basis points so

that means that that um every year

you're going to pay up to one percent of

your assets in order to hold that

position so so what that means is over

an indefinite time period

that means that 20 percent of your

assets go to the um the trustee or the

operator of the ETF or the money manager

So when you buy the Bitcoin directly you

might be able to get in size if you used

a custodian you might be able to get to

five basis points a year of a custody

fee

and uh you know at a billion dollars or

more if you're a spot ETF 50 basis

points would be the cheapest

so five basis points

times 20 means that if I buy a hundred

million dollars of this I pay a million

in custody fees over

the lifetime of the asset

and uh on the other hand at 50 basis

points

then uh when you buy a hundred million

dollars of it you have to multiply that

by 20 and that means over the course of

the duration you pay 10 million dollars

right

instead of one million so it's more

expensive uh to go to go through that

operator now um

if you go to the to the idea of a oh the

other advantage of having the the ETF is

there will be an options market and a

put and call options market and that

means that you can sell volatility and

generate yield of some sort by giving up

upside or you can hedge downside

it's not a strong options Market but it

is an options market now go to the

Futures ETF the Futures ETF is probably

double the cost of the spot ETF and so

now you're talking about instead of

paying 10 10 million over the course

you're paying 20 million dollars right

so you've gone from 1 million to 10

million to 20 million dollars in manager

fees so it's gotten more expensive

but then but that's not the big cost the

big cost is you have a hundred million

dollars invested and you lose 20

performance so you've all you've lost 20

million a year for five years

and you're losing all 100 million over

five years so it's underperformed yeah

if you want to use a snarky phrase right

you would say the spot ETF is like you

bought the beautiful house across the

street and the bank financed it all

but the Futures ETF is you bought the

same house but it's on a lot with a

sinkhole and the entire thing's going to

sink into the sinkhole in five years

and you know it's collapsing so you can

see you don't really want to make you

know make your uh Financial foundation

on sinking sand

and that's what the Futures are right

now and that's there's no reason to

think it's going to change it we don't

see it

so then you go to grayscale grayscale is

um it's a closed in trust or a closed-in

fund which means that they're unable to

sell the Bitcoin to buy uh to buy their

own shares if you were in a a true ETF

if the net asset value gets out of whack

with the share price then you sell the

Bitcoin to buy the share and otherwise

you sell the share to buy the Bitcoin

but you're keeping sort of a one-to-one

you know uh arrangement

but with a closed-in fund you can

actually trade at a discount

right and uh you could trade at a

premium which is not a problem but when

you traded a discount the problem is

there's no mechanism for the management

team to Arbitrage out the discount

they're not an operating company so they

can't take on Leverage and they can't

really buy and sell their shares you

know easily they've got it's a one-way

thing

so the gbtc in particular had a two to a

two and a half percent fee but then when

it trades at a 25 discount that starts

to look like a three and a quarter or

three and a half percent fee annually so

now you're a 350 basis points but 350

basis points forever times 20 means that

70 percent of your assets are being

eaten by the fee over the course of 20

years right so so that just gets it gets

extremely expensive right and um

and uh there's just a lot of uncertainty

about how that gets cleared so that is

going to be converted into the the spot

ETF do you think they'll win the lawsuit

um I uh I do think it'll be converted

I'm not so sure they'll win the lawsuit

legal legal actions are very uncertain

you could be a hundred percent right and

you're 50 likely to win you know so you

could be sometimes people are 100 wrong

it seems to me you know and they're

still 30 percent likely to win and uh

it's very difficult to find a universal

objective Arbiter of right and wrong so

generally what happens is you spend five

to ten years spending a huge amount of

money going back and forth with a series

of motions and appeals and you settle 10

or 20 percent of the matter and

eventually everybody just gets so tired

of the litigation that they that they

settle it somehow

so I I think that um that the regulatory

action on the part part of the

regulators and political pressure will

resolve the issue before the court

system resolves it the issue

um but that's just my opinion uh you

know even if they won the lawsuit there

are so many grounds uh for The

Regulators to appeal it to stall and

delay or bring up other

you know other issues it it seems to me

that it's very challenging uh there

so what I what I think though is there's

a lot of political pressure

um and a lot of um momentum

to approve a spot ETF

and it's going to be very difficult for

The Regulators to approve one but not

the rest right right uh that'll be an

interesting political football how they

do that

um the the ideal thing the right thing

to do would be to prove them all at the

same time but the next best thing to do

would be to approve them sequentially as

as the action comes due

it's going to be pretty difficult to

defend approving some and not others

unless you can point to a lack of

confidence in the management team or

some other mitigating factor that that

would imply that you should deny it in

order to protect investors but in this

particular case denying grayscale's

conversion wouldn't be protecting

investors if it results in a Perpetual

lingering discount to net asset value so

I I would think that uh their fate is

the same as all the other spot ETF Fates

and

and so

that's that now coming

so we've worked our way through through

Bitcoin the spot ETF the Futures ETF

then you've got

um microstrategy and you've got Bitcoin

miners microstrategies

um a levered Bitcoin operating company

so on one hand we have an operating

business with exposure to business

intelligence and artificial intelligence

it's a it's a 500 million dollar

business that's a Cash Cash Generator

so that business is Diversified and it's

and it's just a diversified enterprise

software company generating cash flow

but it's an operating company it's as

opposed to an SEC 40 financial company

and the difference that's very important

distinction is an operating company can

take on Leverage like an operating

company can issue a billion dollars of

bonds at zero percent interest

and that's what we did or an operating

company can issue a 650 million dollar

convertible Bond at 75 basis points of

interest and we did that you couldn't do

that with the trust well you couldn't do

it with like an ETF right they're just

not allowed they can't go and they can't

pledge or you know uh or or hypothecate

uh or borrow against the underlying

assets so

because microstrategy can do it we are

able to raise 2.2 billion dollars of

capital or debt Capital at a blended

interest rate of 1.6 percent

and let's say 1.7 billion of it is

convert which means it's not secured

against anything

like there's no recourse so

to the extent that we issue convertible

bonds that are backed by the stock of

the company and people believe the stock

is valuable because it's backed by

Bitcoin we're in essence borrowing

against Bitcoin

but we're not pledging the Bitcoin so we

don't we don't have uh we don't have to

pledge the asset there's no Margin Call

risk there's no Mark to Market risk

so that means that we can go and borrow

money at a low interest rate without at

a long duration we could borrow money

for five years at one percent interest

or two percent interest uh and not

pledge any assets and then invest in

so uh we're fairly unique in that regard

uh you know there really isn't another

company that that is issued uh

convertible debt senior secured debt or

Equity to buy Bitcoin with it so we're a

levered long Bitcoin company

and uh and we don't charge a fee so

although we custody 4.6 billion dollars

of Bitcoin right one percent fee would

be 46 million dollar a year bill but we

don't charge the fee

we generate a yield

right we generate the yield by

generating cash in the enterprise

software business and buying Bitcoin

with it

and we generate a yield by doing a

creative financings of equity or debt

and so all all of those are different uh

levers we have and and we can we can uh

we can leverage deleverage we can issue

debt we can retire the debt you know we

can issue Equity we could buy the equity

back if we wanted to we could you know

we could sell Bitcoin we could buy

Bitcoin right we we have all options

we're an operating company uh and uh the

price we pay

is we have to make lots of disclosures

right so you see there's 200 pages in

our latest 10q