Michael Saylor Keynote Address | Clear Street Disruptive Technology Conference

I'm going to get started.

The next speaker needs absolutely zero introduction in this crowd.

So Michael were delighted to have you.

So Michael, Sailor, ladies and gentlemen, executive chairman of strategy.

Nice to see you all today.

I'm grateful to be invited to speak.

It's a lovely hotel.

I woke up this morning.

The wades were lapping on the shore.

There's a palm beach experience.

I'm going to speak about the digital transformation of our capital markets.

And specifically, three things.

The formation of digital capital, the formation of a new asset class, digital credit, and then

a new business model, a new type of company, the digital treasury company.

And I think that we're in year one of this digital transformation because we didn't have

global consensus on digital capital until March of this year.

No one had seen digital credit instruments before January and February of this year.

And even in the area of the business model digital treasury, there wasn't even clear

in our mind exactly what the business model was long term until just a few months ago.

Just in the past few months, I think it's all clicking and I'm delighted to share it

with you.

So let's start with digital capital.

Well, you know, for those who didn't guess Bitcoin is digital capital.

Capital, economic, well, long term store of value.

People talk about a store of value asset.

It's capital.

What is 20th century capital?

20th century capital is equity.

We call them the equity capital markets.

The private equity, public equity, real estate, sometimes art held as a store of value could

be capital, maybe a sports team, gold.

Capital is the left hand of money.

The right hand of money is currency.

Medium of exchange, the dollar, the peso, the yen, the euro.

Stable coins are currency.

Bitcoin is capital.

A lot of times people come to erroneous conclusions because they think about money and they think

money is currency as opposed to money is capital.

But of course, money could be used, the phrase could be used to refer to currency or to capital.

It just happens that a lot of people are lazy thinkers and they insist upon interpreting

it as currency when it should be capital or interpreting it as capital when it should

be currency.

And I, well, Bitcoin must be awful because I can't buy coffee with it.

But of course, Apple stock isn't awful because I can't buy coffee with it.

But Apple is capital.

And so if you define Apple as currency, then Apple is an awful currency.

And Apple will never be in the world reserved currency.

And therefore, I must not value Apple.

But of course, that's stupid.

Of course, Apple isn't currency.

Apple is capital, just as in Bidia, just as a sports team is, just as gold is.

People never really used gold as a medium of exchange.

It's always been backing some credit instrument for thousands of years.

So it's a myth to say, oh, yeah, we used gold as currency and as a store of value.

Generally you do one or the other.

So this capital idea, store of value capital, wouldn't it be great if I somehow came up with

a digital way to store my economic world for all of eternity?

So Toshi figured it out.

People for 17 years couldn't agree on any thought over it.

And the battle was decided by this administration after the number fifth.

On March of this year, David Sacks said, beck one is digital gold.

We recognize it as special.

And as you can see, JD Vance thinks it's digital gold.

Donald Trump thinks it's digital gold.

Thank you.

Heard from Eric Trump this morning who agrees it's a digital gold.

Head of the SEC, Paul Actance thinks it's digital gold.

But so does the head of the National Intelligence Director, I mean Toshi Gabbard or Kelly

Laughler or Bill Polti or Robert F. Kennedy or Howard Lutnik or Cash Patel.

Now those are people you wouldn't expect to have an opinion on the distinction between

currency and capital and medium of exchange and store of value, right?

It's a, by the way, if I took 100 PhD economists that are a classically trained, they probably

wouldn't get it right because they tend to wrote, wrote, recite things that they learned

40 or 50 years ago out of a textbook without thinking much about it.

And of course, the phrase that everyone recites without thinking much about it is money

is a store of value, medium exchange and unit of account there.

And they stop and they don't really say much more about it.

And of course, if it's very obvious to every member of the cabinet, Bitcoin is digital

gold.

And it was obvious to the President of the United States, you know, then that's a pretty

big step forward.

12 months ago we had one member of the cabinet, well 13 months ago.

One member of the cabinet, Gary Gensler, who was a Bitcoin Maximist, you know, people,

you could tell if you were sophisticated Gary Gensler was a Bitcoin Maximist for four

years.

The only people that couldn't tell were the alt coiners, but maybe they could tell too,

which is why they didn't care for him that much.

But Gensler's view was Bitcoin is a commodity, it's a digital asset, it is sort of a digital

gold.

He didn't care for anything else.

And no one else in the Biden administration had any opinion whatsoever other than a negative

skeptical one.

So the November election was important.

This decision to embrace Bitcoin was a very important move because that rippled everywhere

in the world.

What's the idea of digital gold?

Gold, a bearer, non-sovereign, bearer instrument store a value asset that I can teleport from

here to there on a digital rail.

Okay, straightforward idea, you need a network to do it.

The question is which network and which protocol.

And for 15 years we all fought about which network, which protocol and the matter is

decided by political power, it's decided by financial support, the banks have embraced

crypto, but specifically they've embraced Bitcoin as digital capital.

In the next six months you'll see a ton of banks start to custody Bitcoin and extend credit

against it.

In the past six months we've had about half of the major banks of the United States start

to extend credit against Ibit, which is Rapp Bitcoin.

So all that's happening this year as we speak, money determines the winner.

So Wall Street embraced Bitcoin, the Ibit ETF is the most successful ETF in the history

of Wall Street.

I've often times said the war to determine the future of the money is going to be fought

and won with money.

So it's a question of how much money is going to go on to what network are we going to

designate Dogecoin or Yo-Yo coin as digital capital, we're going to designate Bitcoin.

And of course that's 140 billion from the ETFs.

Companies 200 them capitalized on Bitcoin and they put about 100 billion in.

Our companies spent a decent amount of that but we're not the only ones.

If you were to say, what's the big idea?

The big idea is a bunch of rich people want to keep their money and they don't trust the

bank, they don't trust the government, they don't trust each other, they don't trust anybody.

And they like to keep their money forever.

So we created digital bank, we put it in cyberspace and since we don't trust each other, we

all run a copy of the software and that's a decentralized network.

Okay, well that's not a bad idea.

This idea that we're going to put our money in a bank in cyberspace and we're going to

run a decentralized protocol.

And once you've decided that, the question is, well, can a human being engineer that?

Well, yeah, they tried 50 times.

Eventually Satoshi did it with Bitcoin, it worked, it caught.

And the second idea is, well, is that the winning network or is there another protocol

that's going to supplant it?

That took about a decade to settle that question.

There was the block size wars, there was a lot of struggle.

But people oftentimes, they make the mistake of thinking this is an asset, it's not an

asset, it's a protocol.

It's a protocol that actually inspires a network, the network is hardware and software

run by people.

There's an asset circulating on that network.

But the big idea is an economic protocol for digital capital.

And if people all worry, well, what if that gets hacked?

And the point that I make is, English is a protocol.

Why are we speaking English?

Because a bunch of smart, powerful people fought over this matter.

And the people that spoke English won.

If Napoleon had won, we'd be speaking French.

If Hitler had won, we'd be speaking Germany.

It turns out that the English speakers won the wars.

We speak English.

Why do we speak English?

Because all the rich, powerful people speak English.

Are there other languages, of course, there are?

Can you imagine a better language, of course you can?

Are there more beautiful languages, of course, there are?

But the point is, the rich, powerful people don't speak that.

The rich, powerful people speak English.

You have kids, you want them to be rich and powerful, teach them English.

Same is true with Arabic numerals.

It's not the first system of numbers.

The Babylonians have a different system, 360 degrees, 60 minutes, base 60 type system.

The Greeks had a different system.

The Romans had a different system.

And then the Arabic system was a force system.

There's probably who knows how many other systems of math, right?

I mean, computers spoke base two, binary system.

So people that used the protocol that won that didn't fight the war over the protocol forget

that it was a decision made.

And why do we use 0123456789?

Because all the rich, powerful people settled upon it.

By the way, not just because they settled on it, it was better.

If you actually try to do math or build computers with Roman numerals versus computers with

Arabic numerals, you know, or work, it just Arabic just worked better.

Right?

So sometimes a protocol has an advantage.

And that advantage manifested itself.

And if you look at this picture, what is this telling you?

This is saying that the most Bitcoin is the winner because it's the most powerful electrically.

It's got 24 gigawatts of electricity.

It's the most powerful computationally.

It's got 1,100 exa hash.

That's more computer power than Microsoft and Amazon and Apple can muster to attack the

network right now.

So it was the most powerful computationally.

It's the most powerful commercially, right?

What you got as security or stock?

How many of your stocks traded on a thousand exchanges simultaneously everywhere in the

world 24, 7, 365?

That's a simple question for me to answer because the answer is none.

Right?

It's like, I just listed a stock in Europe.

We listed an STRE.

We listed on the Luxembourg Stock Exchange.

That's one of 27 capital markets in Europe.

One of 27.

I tried to actually list a Euro stock on the NASDAQ.

NASDAQ doesn't support Euros.

You can't have a Euro based stock on the NASDAQ.

So what you find is that for the most part, a lot of assets don't trade 24, 7 globally.

They trade very locally in the local nation, the local language, the local time zone.

Bitcoin trades everywhere.

So what other kind of power does it have?

Well, it has hundreds of millions of holders.

It has 700 million crypto believers.

Has a lot of political power.

The crypto lobby tipped the election in November.

They're very powerful.

So what do you want?

You want political power?

You want electrical power?

You want computational power?

You want commercial power?

And then the other thing it has is economic power.

There's $1.2 trillion of actual dollars that have been invested in that network.

My company alone put $48 billion of actual cash in that network.

That's probably on the order of, if not 10, somewhere between 10 and 100 times more than

any other network.

So the battle to determine the world's reserve capital network was determined by what?

By smart people with money.

And it's been never ending.

It's been going on.

And what you see today is this manifestation.

A lot of smart money made a decision.

A lot of smart people decided like Google or they decided like Apple or they decided like

Amazon.

And you could say well I can copy Amazon or my favorite is why New York City?

I can create a city.

Yeah, you can create a city.

It's not that complicated to create a city.

You create another city.

There's a lot of port cities.

There's one New York city because all the smart people with money decided that was the

one that was best for a lot of reasons.

If you go to San Francisco and you look, you can see that's a pretty good natural port

too.

Well what about some other port?

The point is all the people with money and power picked that one.

That's the network.

That wins the war.

And so once you understand that, you've got a digital capital network, 21 million coins.

There's never going to be more than 21 million coins.

And the question is is it better than gold?

Yeah, a lot better.

How much better?

Infinitely better.

Gold has an inflation rate of 2% Bitcoin has an inflation rate of 0%.

2% means you got a half life of 36 years for your money.

Means you live 100 years.

0% means you have a half life of a billion trillion infinite years, which means you're going

to live infinity.

One of them is immortal.

One of them is immortal, your godlike or you're just a person.

When someone tells you 2% inflation doesn't matter, it matters.

I'm going to build a machine and I'm going to remove 2% of the energy every cycle on the

machine.

Doesn't matter?

Of course it matters.

Every engineer knows you can't have 2% friction on every turn of the wheel.

And yet that's what 2% inflation is.

So gold is metallic capital.

Bitcoin is digital capital.

Digital capital is this idea that I think I just like to keep my money forever.

What's the product?

121 million of all the money in the world forever.

That's the product.

Okay.

Good product.

Can you design it?

Yeah.

It's a winning protocol.

Well, I think so.

It beat everybody else.

Why?

Because there needs to be a winner.

There needs to be, I mean, because of your smart and you have a, if you got 100 families

with a billion dollars each and they want to keep their money and their choices, pick a

winner or lose all their money.

The shelling point is why don't we just pick the winner?

We'll all use the winning network and we get to keep our money.

What's the alternative?

We lose our money.

We go poor, right?

So it's not a complicated idea.

The game theory is pretty straightforward.

The world's full of people that would like to keep their money.

And who do they trust?

They don't trust the French.

They don't trust the Brits.

They don't trust the Italians.

They don't trust the Germans.

They don't trust anybody in the Middle East.

They don't trust anybody in Africa.

They don't trust any South American company.

They don't trust the Canadians.

They don't trust the Australians.

The Chinese don't trust the Chinese.

It's illegal to take money out of China.

Why?

Because everybody wants to do it.

The Europeans don't trust the euro.

They want the dollar.

All the billionaire families I know live in Stodd.

All the billionaires I know that have a villa in France.

They have an apartment in Monaco.

Why?

Think hard about it.

Okay, so who are you going to trust?

This is a tricky thing.

Generally, the view of the world is everybody wants to move themselves and their money to

the safest network, the most secure network.

So where is that?

That's the United States.

I want United States property.

I want my kids to have United States citizenship.

I want to use the US dollar.

I want US equities.

But the problem is, you know, the United States is not always welcoming to foreigners.

Right?

Certainly, the Russian oligarchs don't get to move here.

Right?

The world is full of people that they would love to have economic security to the US.

But then again, maybe your life is in Europe.

Or your life is in Brazil.

And maybe your life is in Mexico.

You know, I live in Miami Beach.

And I look across Indian Creek and I see these big condos and they're like 95% empty.

It's all the Latin Americans.

They come by a condo.

They keep it.

That's where they, you know, that was their Bitcoin.

They were like putting their property in the US.

They end to a piece of foreign real estate, you know, and then their daughters get pregnant

and they send them to Miami to have the child so their kid has citizenship.

Whether it's Venezuela or Mexican or Brazilian or whatever.

It's not irrational.

It's very rational.

You can see it going on.

But what does Bitcoin represent?

It represents that the most secure property network in the world for people that don't get

to move their personal or their money to the United States.

By the way, if you live in the United States, there's this blue state red state thing and

a lot of people worry in the blue state that maybe their property is not so secure and

they move to the red states and that's what's driving immigration into Florida right now.

So that's the first big idea, digital capital.

The second big idea, digital treasury, the treasury company.

What happens if you capitalize on digital capital?

So we capitalize on Bitcoin.

We bought it about 87 times.

I want you to understand what we're doing.

I believe Bitcoin is going up 30% a year for the next 20 years.

It's been going up 50% for the last five years.

It was going up 80% for eight years.

So 30% represents a deceleration for 50% all the way down to 20% or 15% over 20 years.

Every time we buy it, we're buying a digital monopoly, the world's dominant digital monetary

network.

We're going 30% a year at one time's revenue.

Ask any CEO.

If you could buy a monopoly growing 30% a year for the next 20 years at one time's revenue,

would you do it?

And the answer is of course you would.

I mean, everyone would kill to be able to buy a company growing 30% a year at one time's

revenue.

Well, we just did the same roll up 87 times.

We're just rolling up the digital monopoly on money.

And of course, once you've done it once, you're like, well, what's the risk?

Well, the risk is your wrong on Bitcoin.

If I'm wrong on Bitcoin, that's the risk, right?

The existential risk is Bitcoin.

It's like, I bet on New York City, well, what if Bitcoin sinks beneath the waves?

I'm going to lose my bet.

The risk is thermonuclear warhead goes off in New York Harbor and my real estate is not

that valuable or it sinks underneath the waves.

The risk here is Bitcoin fails.

So let's say you assume that risk.

So what is the incremental risk on transactions one, two through 87?

Nothing.

So in fact, the risk-free rate for us is 30%.

Once you've assumed the existential risk of capitalizing on Bitcoin, then you're basically

buying something at one time's revenue growing 30% a year with no additional risk.

That's the same risk.

You might not agree with me if you hate Bitcoin, but what matters is that the 1% of people

in the world that agree with me own the equity, and that's their view, they think Bitcoin's

going up 30% a year.

So once you get that, it's like, some people don't like New York City, but the ones that

live in New York City, you will pry their apartment from their cold dead fingers.

They think the world is New York and everything else is downhill from there and they're going

to live there and you can give them a million excuses or a million reasons why it's risky

to live there.

What if this and what if that and one of the other thing in their view is, well, it's New York.

You don't get it.

It's New York, right?

So in this particular case, you buy into the risk of Bitcoin.

Now you do 87 acquisitions and we ended up acquiring 649,000 Bitcoin, about 3.1% of the

network.

It's not unlike buying 3.1% of the real estate in New York City.

It's just big reat, right?

We decided we believed in Howard Hughes bought up a lot more of Vegas, right?

He came to Vegas.

He bought up all of Vegas, right?

Summerlin, all the strip, made insane amounts of money because he believed in Vegas.

So you just buy up the real estate under a line the thing you believe in.

What about the fifth largest treasury in the S&P 500?

What's the big idea here?

The only company on this list that actually keeps their capital is Berkshire Hathaway.

The conventional corporate finance strategy is to return capital to the shareholders or

surrender the capital or decapalyze.

And that's because those companies are capitalized on sovereign debt, or in this case short

dated treasuries.

They're negatively polarized to capital.

So the big idea I have here is that if you're negatively polarized to capital, you have

to get rid of your capital because it's toxic.

If you're positively polarized to capital, then the more capital you raise, the more money

you make.

Once you understand that, for example, the Venezuelan Bolivar could be viewed as capital.

And if you were capitalized on the Bolivar before it lost 99.9% of its value, I think you

can see by a common sense that you're negatively polarized to capital.

You have to get rid of it.

If you want to be rich in a hyperinflating economy, the way to do it is go into debt, borrow

a billion dollars when it's worth a billion and pay it off when it's worth a million.

So you need negative working capital if you're negatively polarized to capital.

So a rational CFO, they would just go to negative working capital.

That's why you do LBOs.

You borrow $10,20,30,50 billion because the cost to capital is lower than monetary inflation

rate and you don't want to carry the capital.

If you capitalized on Bitcoin, then it's the opposite.

Then you're outperforming the cost to capital.

And this chart illustrates it.

You see over the last five years, the cost to capital is 14%.

It's set by the S&P.

Guess what else is yielding 14%.

It turns out low and behold, the gold is yielding 14%.

How do you like that?

So 14% is your hurdle rate.

The normal capital asset is short dated treasury.

That's the money chart.

Money markets.

It's 3%.

Blended.

Okay.

Investing at 3, your hurdle is 14, your minus 11, you're destroying 11% of your treasury

every year, you're negatively polarized to capital.

If you could capitalize on the S&P, you could keep all your capital, meet the hurdle

rate.

The problem with that is it's illegal.

The investment company active 1940 made it illegal for a public company to capitalize

on a portfolio of securities.

Not something you might not everybody knows this.

I didn't know this.

But I never had reason to think it.

It was so ingrained that you just wouldn't do it.

It never occurred to me why, but it's written into the investment company active 1940.

So if you can't invest in the S&P, then you probably can't capitalize on Mag 7 stocks

either.

They're also securities.

There's only one Mag 7 stock that Nvidia can buy.

It's its own stock.

There's only one stock that Apple can buy.

Apple.

Why do we have buybacks?

Because it's the only stock that companies can buy per the SEC 40 act.

But look at Bitcoin.

Bitcoin is 48%.

Bitcoin is actually outperforming the cost to capital by 34% margin.

So this big idea is not that complicated.

If I have digital gold and it's deflationary, the definitely 2% and 0% is going to give

you the 48% instead of the 14%.

So if I have a deflationary digital gold like Bitcoin, then I can capitalize and I can

even leverage the company on it.

What else could you capitalize on?

You could capitalize on actual gold or real estate.

People tried to capitalize on gold.

It didn't work so well for a bunch of reasons.

But you can see at the end of the day, there's not enough juice in it to make it worth the

trouble.

And real estate underperforms the S&P.

Bonds don't work.

Art.

Not going to work.

You need a commodity or a property to capitalize company.

So Bitcoin is a breakthrough because it's a commodity but it's also a scarcity.

You can design a commodity that inflates 10% a year.

It's still a commodity.

It's an asset without an issuer.

But Satoshi's genius is designing a commodity that's an asset without an issuer that inflates

0% a year and the limit is T goes to infinity.

Dogecoin is inflationary by the way.

If you guys like Dogecoin, they have like 5 million or 5% a year or something like that.

It's not quite a percent but it's inflationary over time.

So this chart tells you everything you need to know.

In fact, this chart is pretty much the macro economic map for the last 5 years.

And what it tells you is if you're capitalized on bond you're in deep trouble.

That's why Silicon Valley bank went bankrupt.

That's why all the banks were technically insolvent because they're just awful investments.

And you can see that the secret to MSTR's performance is we fund at the cost of credit

or the cost of equity which is somewhere between 6 and 14%.

And then we invest at 48%.

And then our equity then is able to outperform Bitcoin.

We've grown through a number of cycles.

First we use cash flows.

Then we use senior debt.

Then we use convertible debt.

At one point we use some asset back debt.

And eventually we realize that the best sort of amplification for the equity was preferred

shares that are perpetual that never come due because that strips all the credit risk.

Senior debt doesn't work because you have eva.covenants.

Asset back debt doesn't work because you get margin called.

Convertible bonds worked to the $10 billion worth of it but at some point you outstrip the

convertible bond market.

And all of those are examples of using credit as a tactic to support the equity.

So the first four years of our company the equity was the product.

And the credit was the tactic.

When you're issuing 144 debt instruments that's a tactic to juice your equity.

What happened in 2025 is we realized that we should create a credit product and the credit

became the product, not the equity.

The equity became the byproduct of selling the credit.

We inverted the entire business model and strived stretch, stream, strike and stride at the

bottom.

Those are products.

They're credit products sold to the general public that then that in themselves have the

value and the equity is imbued with value because of the credit instruments.

And this picture helps a little bit more than this.

What is the treasury business model?

It's simple.

I raise capital.

I buy digital capital.

I strip the risk, the volatility, the delta and the duration off the capital.

I transform it into the currency of your choice.

And I give you the pure yield.

I give you a credit spread above the risk-free rate.

So what you can see here is the Bitcoin is about a 48% annualized yield.

It was a rolling 38-vol.

Call it like a 40% yield, 40% ARR, 40-vol type instrument.

If you walk down the street and you ask the average person, do you want to put your life savings

into that instrument?

The answer is generally no.

If they spend 100 hours or a thousand hours, they get convicted.

And if they don't need the money for four years, then that money they don't need for four

years after they spend 100 hours, they might put some of that in the Bitcoin or all of that.

That's the Bitcoin community.

But as you can imagine, you're not going to sell a product to a billion people if it takes

100 hours to understand it and if they can't use it for four years.

I have a beautiful car.

You can't drive it for four years.

There's a 100-hour course before you can buy it.

But after four years, it's going to be the best car ever.

That is not a consumer product.

That's something different.

It's almost like a religious product.

And if you go to Bitcoin conferences, we're pretty fervent.

We're pretty passionate.

But you can see what strategy is doing is we're taking the capital and we're stripping

the risk in the wall, extracting the yield and selling it as a credit instrument.

The first one was strike.

It was convertible preferred.

And we gave you a portion of the upside and we gave you a liquidation preference and

we give you a fat dividend.

So it's like a Bitcoin fellowship.

You get some upside, you get paid a living stipend while you wait and you get way over collateral

eyes and it's for someone that wants to have their cake and eat it too but doesn't want

the roller coaster.

So we did that and that was a billion dollar idea.

And then we did strife, STRF and that was 10% dividend at par.

And that was, I'm just going to pay you 10% forever.

And here's the other interesting observation.

We would like to have paid 5% instead of 10%.

But we realized we'd have to pay 10% to sell the preferred.

And then it occurred to me that it's a lot better to pay 10% forever than 5% on a 5-year

note.

If you pay 5% on a 5-year note, you're like any of 50,000 other corporate issuers.

When you pay 10% forever, you're the best if the person wanted to buy fixed income.

So what turned out to be the bug inverted to be the feature.

And that's actually the theme of my entire presentation, which is the bug of Bitcoin becomes

the feature.

The bug of digital credit becomes the feature.

Over and over again, the bug of the business model becomes the feature and that's the innovation

here.

So we did a few other deals.

We did stride where we stripped a cumulative right off of the instrument and it adds about

a 400 to 500 basis point credit spread.

So you either get the 10% in the investment grade bond-like instrument or you get the 15%

in the equity-like instrument.

And the truth is, the people that want the former don't want the latter.

And the people that want the latter prefer the latter over the former.

And so we just tapped into two different pools of capital there.

And while we were working through this, we tried to go do a deal in Europe and we got

stymied by a regulator and we couldn't do something so I, in the summer, I thought,

what can we sell in the US?

And we thought about selling a Euro instrument on the NASDAQ, but the NASDAQ wouldn't list

it because they can't support foreign currencies.

And then we thought about it again and we could do that.

So we thought, well, what can we do in dollars?

And we'd already done the long end of the yield curve.

We sold a 10-year duration instrument.

So I thought, what about a one-month duration instrument?

And we started thinking about an adjustable variable rate monthly preferred stock.

And partly it was, what could we do or what we haven't done?

And then partly it was people just want to get their principal back.

And partly as they want cash dividends.

So we started thinking about this product stretch and stretch became the biggest piece

of financial engineering.

It stretches like kerosene distilled from a barrel of crude oil.

It's just pure liquid energy.

And as you can see, the way the tower is working right now is we've stripped the 38 to 28

to 21 to 16 and a 9 ball.

There is a conservation of energy.

There is no such thing as a free lunch.

That's a law of thermodynamics.

So if I make the volatility go away from the credit, it has to go somewhere.

So what it does is it floats up to the equity.

And so does the excess performance.

So we end up creating a highly volatile high performance equity by creating lower volatility,

lower performance, less risky credit instruments.

And the entire company's reason for being is to actually take an asset Bitcoin,

which is call it a 10-year duration instrument with 50 ball and 50 AR.

And we carve out of that a one month duration or one year duration.

And we carve out of that 10% AR.

And we carve out of that we stripped 90% of the volatility off or 90% of the risk off.

And we offered that to a credit investor.

In the process of doing that, we actually create Bitcoin per share.

So we're creating BTC yield.

We're adding Bitcoin, Satoshi's per share every single time period.

Because when I sell a billion dollars worth of credit and buy back a billion of Bitcoin,

I wish you'd know common stock.

But I have actually bought a billion of Bitcoin so the equity gets amplified.

And you can see here a snapshot of the capital structure.

And as since with $61 billion of Bitcoin value,

we have a bit of debt, 8.2 billion of convertible debt from our last four-year period.

We will equitize that over time, but that's about 13% of our hard assets.

That means that Bitcoin could fall 85% and we're still covered, over collateralized on the debt.

But the more interesting thing is that the dividend payments represent 1.3% of the net assets.

So that means Bitcoin has to appreciate 130 basis points a year to cover the dividends forever.

There's perception that somehow this is risky.

But the bet that we're making is we think Bitcoin will go up 1.3% a year.

And if we're wrong in 77 years, we have to come up with a different idea.

That's if we're wrong.

Assuming Bitcoin goes up zero.

If Bitcoin goes to zero tomorrow immediately forever, then of course, this is not going to work.

But the way the math works is you create shareholder value and you pay the dividends forever.

If you get 130 basis points of BTC gain or appreciation.

If Bitcoin appreciates faster than the blended dividend rate, the 10% or so,

then you actually outperform Bitcoin with the equity.

So your two numbers are, your minimum is your creating value.

The 10% hurdle is your outperforming Bitcoin.

And at 0% and 77 years, you run out of money.

We just managed to get a credit rating from the S&P.

This is challenging given the Basel Accords, Basel Framework value Bitcoin is zero.

But as Basel gets updated and it looks like it will get updated, I think we'll move our way up this credit stack.

The advantage of getting the credit rating is that triple the addressable market for our credit instruments overnight.

So that was good.

There's a lot of people that like digital assets and believe in Bitcoin, but they couldn't buy without a credit rating.

And so this was very important to them.

And so now we get to the third part digital credit.

Well, these are the products, right?

What is strike?

Well, it's got an equity component.

It's got an effective yield and its 4x over collateralized.

What is stride?

It's a long duration high yield instrument.

So it has an effective yield of 14%.

Tax equivalent yield of 22.

Why is it tax equivalent yield of 22%?

Because it's a return to capital dividend, a rock dividend.

It means that it's tax-deferred until you reduce your basis to zero.

So one of the elegant things about digital credit is they're all rock dividends if they're issued by a treasury company.

You can see what you're competing against, but I think you guys know what you can get in the market.

Normal junk bonds or private credit are half of that.

Strifa pays 9.5%, even 10% tax equivalent yield is 15.

It's the most highly over collateralized.

It's the long-as-duration instrument.

And stretch is treasury credit.

So if you think about, if you were to say, what I think is the perfect product,

the perfect product is 600 to 800 basis points of pure yield over the risk-free rate

in the currency of your liabilities in a stable instrument.

Like, that's what, it's a high yield bank account.

Who wants that? Everybody wants that.

The only question is, what's the catch?

And the catch is you have to believe in Bitcoin.

That's your first risk, and then you have to trust the issuer.

If you trust the issuer, you believe in Bitcoin, then you're probably going to ask,

well, what is the ball and what is the liquidity to decide,

can you get 20 million in and out of it, or is it 2 million in and out, or 200,000 in and out?

But the idea of treasury credit is just a fortunate, serendipitous discovery.

We tripped over it.

Nobody in the history of the capital markets has created a monthly variable rate preferred stock.

It's not that it's illegal.

It's not that you can't.

So the security law lets you do it.

You can do just about anything with a preferred stock.

It's just that no well-run company ever thought to do it, or had a motive to do it, or a reason to do it.

And so when you put together digital capital with AI, with a publicly listed preferred,

with a shelf registration, with an ATM, now we blended all the best elements of crypto and ETFs

and public companies and ATMs, all of them together with a digital distribution channel.

And now it seems like a pretty obvious idea.

But I can even say, I don't think this was developed over the weekend by me out of frustration of not being able to do anything else using an AI.

And if I had not had an AI, and I hadn't had the other experiences of having done strike and strife

and done the $30 billion of ATM revenue.

And if I hadn't, you know, if it hadn't all come together the same time we never would have found this.

So it's a simple thing to do in the year 2025 with all the right technology.

But in the year 2022 or 2019, it would never happen.

Stream is the deal we did just two weeks ago.

It's basically a version of strife that's in euros, 100-year-old par of value pays 10% at par.

It turns out that we were like one of the first issues a preferred stock in Europe.

Because most of the time fixed income in Europe is hybrids, they're bond instruments.

And they're bond instruments because the companies that issue them want to be able to deduct the dividend,

or deduct the dividends as interest because it's to their advantage.

And here you stumble on a very another theme, which is most credit instruments are issued to the benefit of the issuer,

or they're crippled because the credit is issued tactically to fund a project,

an automobile, a building, a service, a stock buyback.

People are issuing credit to benefit the equity or the product or the service.

Let me invert your worldview.

What if you issued the credit as the product?

What if the goal was I want to create the best credit instrument for someone to buy?

Well, for what purpose? Just to do it.

What are you going to do with the money? I'm going to buy Bitcoin.

Do you have done that before?

Yeah, 100 times before.

So what's the unique project? There's no unique project.

So what are you trying to do?

I'm trying to create the credit, which is the best in the world.

So now you invert.

You're like, I'm not going to cripple the credit.

I'm actually going to make the credit fly.

I want to empower it.

So with stretch, we created it.

It came out at 90 and it's on this path to stabilize it 100.

And we have a lot of tools to do it.

Partly time does it.

Partly is the AUM grows.

It gets stable. Partly it's marketing.

Partly we adjust the dividend up if it's weak.

And if it trades above 100, we can exercise the ATM to trim the ball off the side.

So there's a lot of things going on here as it approaches par and stabilizes.

But that's the first four months.

So this is our digital credit line.

And what you can see is we kind of went from a $0 business to $7.6 billion

or business in 10 months.

And I joke with people.

It took me a decade to come up with a billion dollar idea.

I'm talking to the company public.

Then I spent 20 years trying to come up with a second billion dollar idea.

I could not find it.

I tried 20 things.

They all didn't work.

And then the COVID lockdowns came and we discovered digital capital.

And that was the second billion dollar idea.

And then converts with a third billion dollar idea.

And then the ATMs were the fourth billion dollar idea.

And that all happened over the next four years.

And then in 2025, we combined AI with preferred, with credit.

And we came up with strike, strife, stride, stretch, and stream.

And it was literally a billion dollar idea every eight weeks.

A billion dollar business.

So why we're combining digital capital, digital intelligence,

great digital credit.

And what market are you targeting?

You're targeting the $300 trillion credit market.

So what's special about these things?

Well, they're the most liquid preferred stocks in the history of the world.

You can see the liquidity which started at $70 million.

And we're up to like $387 million a week.

And so they're starting to trade in sane volumes.

The normal preferred stock trades $100,000 a day over the counter.

The public listed hybrid or preferred trades a million dollars a day.

The first tries we had, we're trading 20 million or 30 million, 20 or 30 X that.

And then stretched traded 100 X that.

And now it's moving to 200 X that.

And it's the first year.

So we really have line of sight to something that trades a billion dollars a day.

And if you ask the average sales person in finance, what do you think about

prefs?

They think, well, these things are all kind of dogs.

They're boring.

They're complicated.

I mean, it's all kind of garbage.

I mean, I think it's garbage.

It's like you're yielding 6% and is it issued by one of 5,000 regional banks.

It's heterogeneous credit.

You don't have any bond guarantees.

The yield isn't that good.

It's over the counter traded.

You can't find it.

You need a Bloomberg and an Accusive number to figure out what's going on.

It's almost like constructed to make it difficult for people to buy it.

And that's what happens when you think the credit is the tactic as opposed to the credit

is the product.

Now I talked about serendipity.

We kept stumbling upon things, right?

Credit on Bitcoin is better.

ATMs are better.

Four letter tickers are better.

Shop registrations are better.

And then we stumbled on the fact that all of our dividends are tax-free.

Tax deferred technically.

When we pay you the dividend, it's a return of capital, which means if you're a retail

investor, you don't pay city tax, state tax, or federal tax on it.

You just reduce your basis.

So your 10% is a 10% cash dividend.

How do you do that?

Well, you have to have negative earnings and profit.

So as a practical matter, no well run bank can do that.

They're always going to be taxable.

No well run company can do that.

You have to build a treasury company from the beginning that was never to generate earnings

and profit in order to do this.

So the bug becomes the feature.

Again, that's the theme.

The bug is the feature.

How do you pay the dividends?

Well, you either sell the capital that you bought, right?

You buy Bitcoin at 10,000.

It goes to 100,000.

You sell some of it.

You pay the dividend.

That is a return of capital.

Or you sell the equity back by the Bitcoin, and that is a return of capital.

And how long can you do that?

Well, you can do that forever.

What do you need?

You're going to go up more than 130 basis points.

Is that sustainable?

Of course it is.

Now that has some profound consequences.

The first is now you've got a path to amplify your equity, right?

If you just start selling it, if you have 60 billion of Bitcoin, you sell 6 billion

dollars of credit, you've generated 10 percent yield, and you've generated an amplification,

and you end up creating Bitcoin per share.

So you just sell the credit in order to outperform Bitcoin.

It's a pretty straightforward thing.

But I don't really want to talk about the equity so much.

The equity used to be the product.

Now the credit is the product.

I think the most interesting thing is digital credit.

So let's talk a little bit about the theory of digital credit.

Well, digital credit is built on Bitcoin.

That's an appreciating asset.

The mortgage back credit is built on someone's house.

It's a depreciating house or commercial credit, or it's backed by products and services

of a company.

So a lot of collateral is depreciating, but Bitcoin is a appreciating.

When you're holding a billion dollars of mortgage back securities that you're back by 8,000

loans, it's heterogeneous, it's opaque, it's discrete.

When you're holding a billion dollars of Bitcoin credit is backed by Bitcoin.

It's transparent, it's homogenous and continuous.

On our website, we have our credit model.

We updated every 15 seconds.

You can go to the credit tab.

You can type in the ball, volatility forecast.

You can type in your AIR.

You can type, it loads with the current ball, the current price of Bitcoin every 15 seconds.

But you can type in your own assumptions.

And it'll spit out the credit spreads, the risk, et cetera.

You can't do that with commercial credit, retail credit, credit card credit.

You can't do it with sovereign credit.

The credit risk on Ukrainian bond tends to discreetly change depending upon the disposition

of politics in the war.

So the third big, by the way, and each time we do something like that, we can pay a higher

yield.

So the reason these digital credit instruments pay a higher yield is because structurally

they're just better.

For example, bank credit is a bank deposit.

Bank deposits are two day loans.

The bank has to give you back your money in 48 hours or 24 hours if you want it back.

It's overnight money.

Corporate debt is three to five year duration capital.

So what you have is overnight money or short duration capital and most credit instruments.

They amplify risk.

It's kind of obvious if I basically take $10 billion of bank deposits and then I issue $10

billion of mortgages for 20 years, I have borrowed short.

I have lent long.

That's why I get to run on the bank.

If I go into the repo market and I borrow the money for two weeks or a month and then I

go and buy mortgages or I love her up, that's what Lee's Shearson or, well, that's what

Lehman Brothers did.

You're just borrowing short lending long.

You blow yourself up.

But the beauty of preferred equity is, first of all, it's not debt, it's equity.

It's literally not leverage.

It never comes due.

And so equity mitigates risk.

It doesn't amplify risk.

It's still credit.

It's equity credit, not debt credit, not deposit credit.

Most people think of credit in the form of deposits.

Those companies in Europe, they want to issue debt so they can get the tax treatment,

but they're actually making them liabilities, not assets.

We took it one step further.

We actually made the equity perpetual, so it never comes due.

You could call provisions and refinance provisions in a preferred stock to make it look shorter

duration.

But if you want to invest the money in Bitcoin forever, then you'd like to have the money

forever and then you match your durations and you've got an indefinite duration liability

and an indefinite duration asset.

And then how do you make it better?

Well, you know, you hear a lot about private credit.

Private credit is illiquid, unbranded, local, and difficult access.

Public credit.

STRC is public credit.

It's got a ticker.

You can buy it in London or any stock exchange.

It's branded.

It's got a happy name, stretch.

It's global.

It's easy to access.

You can buy it on Robinhood.

So it seems pretty clear that the difference between JPM19972 QCIP on a Bloomberg versus

STRC is night and day for the retail investor.

And then you've got the digital creation.

If you want to buy a billion dollars of mortgage-backed securities at $355 in the afternoon on Thursday,

how do you create a billion dollars worth of the loans?

How much effort does it take to issue a billion dollars worth of commercial credit or retail

credit or mortgage-backed credit?

It's a lot of work.

That's why there are 50,000 and 100,000 employees working at a bank.

There's a lot of paperwork.

But in this particular case, if you want to buy a billion dollars worth of digital credit

at $355, we literally print the thing.

And then we hedge it out that day by 8 a.m. the next morning, we have backed the billion

dollars of credit with another billion dollars of new collateral and we're generating these

instruments digitally in real time.

And that's a big breakthrough, right?

I mean, you don't see that with other forms of credit.

And then the last big breakthrough is their rock dividends.

And return a capital dividends.

They've been around since 1910.

You see them used by real estate companies, oil pipeline companies, master limited partnerships,

REITs sometimes.

But normally you're limited to 3, 4, 5% dividend and you're capped out by your amount of capital

you can depreciate.

And it's very difficult to scale those things.

No one's ever created a 10% dividend paying preferred that was a rock dividend.

And they definitely never figured out how to pay $100 billion of them.

And so what's really interesting here is this treasury model which is the capital is raised,

tax deferred, the earnings are generated, tax deferred, the dividends are paid, tax deferred,

the entire thing is a massive flywheel.

It's the most tax-efficient way to generate fixed income in the world.

And I think that the profound insight we had, and really this is an aha moment over

the past 12 weeks, is that we inadvertently created the most tax-efficient generator

of fixed income in the world.

Like there's no one else that's going to tell you they can pay billions of dollars a year

where at the dividends that are all returns of capital.

So the company is a digital credit factory.

If you understand swaps, if you ever traded interest rate swaps or any kind of swap,

what's going on here is we're giving credit investors a USD yield and we're swapping that

into a BTC yield for the equity investor.

The equity people want to outperform Bitcoin, the credit investor wants to outperform the

money market.

And so how do you do that?

Scalably with no credit risk, you need to do it with a perpetual preferred equity publicly

listed.

Right there are other ways to create that swap, but if it's not publicly listed, you have

redemption risk, you have also to other scalable problems.

And so we figured out a way to create scalable swaps.

And we can do it in US dollars, we can do it in Euros, we can do it in any currency

in theory.

It just happens probably the most important ones are the top ones.

You can quantify the value of return to capital dividends.

If you're holding the instrument for 10 years and you're a retail investor, you get 64%

more money if you're using rock dividends or receiving them.

And if you're a taxpayer in California, for example, owning a money market.

And so if we boil down the opportunities, this is a snapshot of stretchy yield versus other

credit instruments in the US market.

And you can see what's going on here is we're paying two and a half times as much as a money

market, but we're paying four times as much on a tax equivalent basis if you're a Florida

resident.

If you're a New York resident, it turns out that we're paying five times as much.

If you live in New York City, it's like a bank account that yields 22%.

If you live in San Francisco, like 21%.

So you can see the competitor is the money market.

The money market has one advantage.

It's a very low volatility and it's very well distributed.

And what we're offering is something which is just four times better if you can get over

the risk.

This is what stream looks like in Europe.

They're the 10-year rate is 260 basis points.

We're paying 12 and a half.

The money market's pay 1.5% taxable.

Tax equivalent yield there is nearly 20%.

And now that's what it looks like to someone in Vienna.

Think about that.

A bank account that pays you 27.8% in Vienna versus what the bank actually pays, which is

nothing.

So this is new, but you look at it, you're like, well, what's the catch?

It's like, do you trust Bitcoin?

Do you trust the issuer?

You can see we're on an evangelical campaign.

We need to preach the merits of digital credit.

If you look across all those credit instruments, what you can see is they're all twice as good

as private credit.

They're like four times or five times as good as money markets.

They're 10 times as good as European money markets.

What's the monetary revolution?

It's why don't we give a billion people a bank account that pays 10% tax to ferd?

It doesn't take a hundred hours to figure that out.

And here's a snapshot of currencies in the world.

You see, the US has actually got the highest risk free rate.

But look at Singapore, 140 basis points.

Japan, 50 basis points.

So what's the travesty?

The travesty is somebody in Japan collecting nothing on their life savings and they could

be collecting 10%.

That's the travesty.

So all told when you put these together, like if what you want is enhanced exposure to

digital capital and digital credit near an equity investor and you can handle long time

frames and a lot of volatility, you would buy our equity.

If you don't trust anybody and you want to just invest in digital capital with no counter

party risk just buy Bitcoin.

If you want a blend of both, you buy the convert.

If you want maximum cash flows, you buy that high yield junior instrument.

If you want the highest seniority, you take the senior instrument.

And if you just want stability and you want a high yield bank account, you buy the treasury

instrument.

And if you don't know what you want, you want stretch.

If you don't know what you want, this is 15 seconds.

That's the offer.

That's the product.

I have spent the last five years giving hundreds of hours of talks about Bitcoin.

Trust me.

It takes a long time to get Bitcoin.

But again, Bitcoin is the perfect product as long as you don't need to use it for four

years.

And this is the product for someone that needs their money back in four weeks that has

a short attention span.

And at this point, you know, where stretches one basis point, 1% of 1% of the treasury market

in the US.

So if we can be 1%, it could be 100 times as big.

It could be a $300 billion AUM if we just get to 1% of the treasury market.

That is the campaign.

So with that, I want to thank you all for your time and your attention.

I appreciate it.