Fireside Chat with Michael Saylor: High-Conviction Capital Allocation in the Bitcoin Era |

[Applause]

[Music]

Please welcome to the stage Nico Yolk

and Michael Sailor.

Hello everyone. It is my absolute

pleasure to do this for the second time

in two years here in Prague with Michael

Sailor. I think he doesn't need any

introduction, but I'm going to do a

short one anyway. Is the executive

chairman and co-founder of Strategy, a

company that did not just buy Bitcoin,

it rewrote the corporate playbook on

capital allocation in the digital age.

His high conviction bet on Bitcoin has

made waves from Wall Street to

Washington, influenced CEOs, CFOs, asset

managers, and even nation states.

Michael, welcome to Prague.

>> Thank you. Happy to be back.

Since we last talked here in Prague, the

government, the American government has

boarded a Bitcoin train. Other countries

are talking about it. Companies have

adopted a Bitcoin strategy and the price

has exploded yet. When you go to the

streets, many will still be very very

skeptical about Bitcoin.

Has your argument for the core case for

Bitcoin evolved? And if yes, where where

does it stand today? Uh, I think it's

gotten much easier over the last 12

months because now you've got the

explicit endorsement of the president of

the United States. You've got you've got

a white house cryptos are you've got a

public position

that Bitcoin is a digital commodity. Uh,

you've also got a public position that

it's the only globally acknowledged

digital commodity. So the big

existential question has been is it a

commodity? Is it a security?

And the conclusion of it being a

commodity makes it a 100x more powerful

than a security.

And then the second competitive question

is, is there a competing digital

commodity? And the answer is no. And we

fought over that for four years, but now

there's pretty much no fighting. David

Sax said, "The White House acknowledges

that this is a decentralized network, an

asset without an issue or it's special

and there's no second best. There's no

other thing." And so I've said, you

know, if it's not going to zero, it's

going to a million. The the point really

is every public company in the world is

capitalized on euro debt or US dollar

debt for a hundred years.

And now you have a commodity that's a

scarcity that it's legal to capitalize a

public company on. If you can capitalize

a company on an asset that's

appreciating 55% a year and if the S&P

is appreciating 12 or 13% a year and if

the after tax return of euro debt the

euro one-year rate was 200 basis points

when I last checked and sofur's 400. So

if you're capitalized on stuff that's

got an after tax yield of of two to 3%

you're 10% less than the cost of

capital. So airgo every company in the

world is capitalized on a capital asset

that's bleeding 10% of their economic

value every year. And this is the first

time we've got one that is positively

yielding. And we've only known that

without debate. Um I mean truth is what

settled the debate? The SEC approving

Bitcoin ETFs in January followed by uh

the embrace of Bitcoin by the Trump

administration

followed by the designation that it is

the unique digital commodity in the

world by David Sachs in March.

That's how long plus followed by the

accounting profession mandating fair

value accounting and the secretary of

the treasury telling banks and the banks

not just in the US but by inference

every bank in the world is being

directed to start banking Bitcoin by the

head of the treasury the FDIC and the

OC. So all of that dates to November 5th

of last year. So, we're really in the

we're not in at the end of the year one.

We're in year one of institutional

adoption, the inflection point where

it's pretty clear it's not going to

zero. And it's pretty clear that it's at

least as valuable as gold, but no one

can capitalize on gold. So, it must be

10 times more valuable than gold.

Nobody can stop it. No one wants to stop

it.

And uh and yet 99% of corporate

executives don't appreciate it.

>> That is true. Quick quick question. Your

your quote with there is no second best.

Was that a spontaneous thing or did you

think about that and did that you wanted

to plant that in an interview

>> today? You mean?

>> No, the original the original.

Mo most of the things that I'm famous

for, I was made famous for by the cyber

hornets, by all all the all the Bitcoin

maxis and uh you know, and the hornets

out there in cyerspace. They decided

that they're the ones that clip that,

they clip it, they amp it, they speed it

up, they put music to it.

It's all their ideas. I look, even this

this orange tie, this was not my idea.

This is Led Doer's idea. He basically

decided he wanted to create images of

me. Then he created an AI to create

images. Then he decided to give me an

orange tie. Then he I literally woke up

this morning and I saw someone generated

a picture of me in a black suit with an

orange tie and I'm like, that's what I

got to wear today.

>> Yeah.

you know, and so a lot of the best

ideas, they really come from the Bitcoin

community and uh you know, I might have

said it, but they endorsed it and told

me it was a good thing. So then I said

it again.

>> One of the insights that really

resonated with me because I see it in in

my own work basically every day is that

Bitcoin is there if you need it. And

there's many different needs for

Bitcoin, but when it comes to corporates

and even nation states, um you said that

99% don't see it yet. That is true. But

it feels like in Europe even less than

what than 99% or even more than 99%

don't see it yet. Why are we lagging in

Europe?

>> Um

you know

all the second sons of nobles in Europe

came to the United States.

>> It's true. Why?

Because it was hopeless for or maybe it

was the third son or the second or

third. But if it if you feel like your

um path to success is blocked, then you

get on a ship and you risk your life and

you go to the new world. And that's a

metaphor. But uh the people that embrace

Bitcoin first are people who who either

felt that their path to success was

blocked by the conventional world or the

traditional world or uh it was hopeless

or they're staring at a certain death.

And so I think that the people that get

it first, they're the, you know, the

teenagers, the 20somes.

I every time I go to a conference full

of wealthy people, it's always the sons

of the billionaires who know me. Like

I'm very famous with rich kids. All the

rich kids, all the rich kids in the

world know me, you know, all of them.

They're like, "You know, could you

convince my grandma to buy Bitcoin?" Or,

"My dad, you know, I want you to talk to

my dad and explain to him that so it's

the 20somes and they're looking for the

next thing or it's the zombie companies

or it's the Metaplanets. It's like I had

a hotel chain, it's going bankrupt, I'm

dead." You know, it's the it's the

people that have a terminal illness. So,

they're all very motivated to open their

mind to a new idea. I think that if

you're comfortable and happy, you're

not. And the problem is

I mean it's very comfortable life here,

right? Uh a lot of Europe is very

comfortable that there are beautiful

buildings that were built by people a

thousand years ago or 500 years ago.

>> Those were the kings that sent their

sons to America.

>> It's like so there's a lot of beautiful

things, a comfortable climate,

comfortable everything. You have to be

uncomfortable

to embrace a new idea or you have to

feel like your path to success is

blocked.

So well-run successful companies will be

the last and and last to embrace this.

uh the people that will embrace it will

be the ones that have a gun to their

head or they feel their back is against

the wall or or they have nothing to lose

or they're desperate or occasionally you

get u an inspirational figure but

>> are you are you surprised by how many

companies have boarded the train now in

the US or are you disappointed or you

know know what I'm

>> No I think it's I think I'm actually

pleasantly surprised it's going a bit

faster than I had thought um you We

there were like there was one and then

there were two in 2020 and last I

checked there were like 140 or 150 on

the Bitcoin standard and I saw someone

say there's 270 crypto

>> public companies that have some kind of

crypto on their balance sheet or

something. So maybe I'm underounting. I

think I'm underounting because I'm just

discovering some every day that have

Bitcoin that I didn't even know about.

Uh I think that the inflection point was

November 5th of last year if you had to

point to one. The this entire industry

was waiting to see whether the

securities regulators would embrace it,

whether the banking regulators would

embrace it, whether the commodities

regulators would embrace it. And I think

we knew the answer.

We knew we were going to win in 2020,

but it was going to be a long grinding

battle of attrition to win, but we knew

we were going to win. But, uh, I think

after after November 5th, um, it became

like a landslide obvious. It's like,

okay, the entire government flipped. The

Senate's pro Bitcoin. The House is pro

Bitcoin. The cabinet is pro Bitcoin. the

head of the the head of the NSA, the

CIA, the FBI, the you know, healthc

care, the Department of Health and Human

Services, they're all pro Bitcoin. All

the financial regulators are pro

Bitcoin. And everybody else in the

world, every other regulator takes their

cues from the US. Even if they claim

they don't,

>> even the even the enemies of the US, the

Russians, the Chinese, anybody that's

that's deemed to be a political

competitor, they still actually take

their cues from the US. So if the US

embraces this as a digital commodity,

Hong Kong flips, China flips, Russia

flips, everybody flips, and that the

dominoes are falling pretty rapidly for

the past six months. So, not only in

Bitcoin, but especially in other in

other topics, the strategy here in

Europe seems to be to whine and moan

about Trump um not being a very nice guy

and then do exactly what he wants. So,

we should see the same thing probably in

financial markets at some point

here in Europe.

>> I think that I think that the European

markets are catching fire. If you look

at the at the results of Blockchain

Group or Smarter Web Company or H100,

uh there's just a lot of Bitcoin

treasury companies popping up here.

There's probably going to be one

unicorn,

you know, or superstar in every single

market that catches fire and grows 100%

plus a year or hyperrowth and then

you'll see a dozen other that will

follow it. And I think uh I think they

will do it because the equity capital

markets in Europe are more abundant and

the credit markets in Europe are weaker

than the US, right? I mean I the US

credit market is 400 4% interest or 420

for a one-year bond, but in Europe it's

like 220. So basically you're not

getting any any uh yield if you're a

credit investor and the equity is based

upon growth. but all equities valued

based upon future expectations of fiat

cash flows.

And if you're not growing fast, then uh

the equity is going to be weak and

illquid. And the dirty secret is is um

there's 50,000 public companies. The 500

greatest ones are in the S&P 500. Most

of them are US-based. And then of the

500,

493 of them are failing and there's

seven that are winning. And so the dirty

secret is out of 50,000 companies,

there's the number you can count on one

hand or two hands at any given time that

are winning and everybody else is just

trying to keep up, right? And and how do

you win? You need a digital monopoly,

right?

If you happen to have a digital monopoly

and you can sell something to a billion

people, then you're going to win. And

that's what Meta is and Google and Apple

and Microsoft. They're all digital

monopolies. They're more powerful than

governments, right? Um and so now if

you're one of the 400 million private

companies or one of the 50,000 not

digital monopoly monster companies, how

do you win?

You know, and the answer is you you

basically merge with a digital monopoly

bolted onto your and onto your capital

structures. You ever see that movie in

you ever see X-Men, you know, where you

see the Wolverine and he starts out as

just a normal dude and then they

actually fill him with the adamantium

and and they give him indestructible

exoskeleton

and that makes him the Wolverine. Well,

Bitcoin is that like you you're this

normal dude and what you want to be is

indestructible super mortal or

superhuman. And I'm telling you what you

do is you basically infuse the capital

structure of the company with with uh

digital energy or digital capital and

that turns you in, you know, from a $10

million dying hotel company into an

eight billion dollar monster, right? And

um and so I think it's a matter of time

before people that realize like you

can't fly, you don't have laser eyes,

you're not indestructible, and Apple and

Microsoft are.

And your choices, you know, you can be

like one of those

we have this uh the mere mortals in uh

in the TV series The Boys. You guys see

the boys where the where the superheroes

are all bad and they actually just beat

up on all the mortals. Like you can

either be crushed underfoot by evil

superheroes or

you could take compound V and you become

the superhero

or in this case compound B. Right? So,

I think it's one of those things where

at some point the company says, "Well,

I'm not going to be Apple and Google and

I'm either going to be crushed to death

or I'm going to be a superhero."

And then Bitcoin comes along and Bitcoin

offers to make you a superhero.

And so, take Compound B and what

happens? You take $50 million, you buy

Bitcoin with it, you have a $50 million

business growing 60% a year.

There's not a single company in Europe

growing 60% a year, right? I don't think

there's Well, not that I I bet I bet you

I bet you if we look at all of the

companies with a market cap of a billion

dollars or billion euros or more in

Europe, I would be shocked if there's

one that's growing 60% a year. And yet

every single company in this in Europe

if they simply recapitalize a Bitcoin

would be bolting on a company growing

60% a year to whatever size of their

balance sheet is. And then once you've

done that, the aha moment is now you can

issue equity or credit instruments,

recycle it back into Bitcoin and grow

100% a year. And so it's like, do you

want to be a mortal

destructible,

you know, or do you want to fly with

laser eyes and be indestructible? And

it's like you have to take the compound

B. And it may be a little bit scary. It

is volatile and it's bubbling.

>> It's orange. You have to drink the

orange fluid.

But I think it's that simple really. And

it's happening. And what you're seeing

is people are like, "Yeah, I yeah, I

want to be a superhero." Why wouldn't

you want to be a superhero?

>> There is a British TV show, it's called

Devils. You might have you have you seen

the episode? There is one episode in the

second season. So, it's Patrick Dempsey,

McDreamie from Grey's Anatomy. He's

playing a banker, American banker, but

his actual job is to fight the financial

war for the American deep state against

China. And in the second season, there

is a whole episode. what is called

Satoshi Nakamoto and it's all about how

they are using Bitcoin in order to stay

on on top of China. So that leads me to

the question is what you just said

really also applicable for nation

states? Is this really the strategy of

the Trump administration to use Bitcoin

to stay you know basically the world's

top dog?

I I think that uh Trump realizes that

that uh Bitcoin and the crypto industry

in general is incredibly powerful

politically and economically

and technically and he attributes he

attributes uh a fair degree of his

political success to the support of the

entire community. So they're very

enthusiastic. Every cabinet member is

enthusiastic. The Trump administration's

enthusiastic. They're going to harness

it for they're going to harness it

technically and economically and and uh

that will progress and I think you know

the genius act the launch of the you

know of stable coins the bitcoin

strategic reserve all of those things

are indicative. The US went from

grudging acceptance of Bitcoin, dragging

their heels on everything else, and

being fairly indifferent to the

opportunity as of a year ago to

enthusiastic embrace of Bitcoin,

enthusiastic embrace of all the digital

assets industry, and they went to

leading the industry, and now they're

kind of in the driver's seat. They're

probably the most progressive, and other

companies, countries are going to have

to keep up. But would you say that we

can we can apply the playbook, you know,

acquire Bitcoin, laser eyes,

indestructible. Can we can we apply that

to nation states?

>> Yeah, sure. Um, it just it just takes

clarity and and it takes uh conviction

and it takes consensus. The challenge

with nation states is they have like

10,000 people on the board of directors

and in

I mean technically how many senators,

how many congress persons, how many how

many political actors? So in my

experience it only takes one member of

the board of directors who's

conventional thinker to block the entire

company.

And so so generally the problem with

with corporate adoption is one uh one

conservative or traditionalist on the

board cripples the company in a country

you have a lot of parties and a lot of

concerns about that. So the the obvious

winning move is if I if I ran a country

and if I had the power, I would print my

currency, buy Bitcoin, and if I after I

finished with that, I would borrow

money, sovereign debt. I would print

debt and I'd buy Bitcoin.

But I don't have a country. It's above

my pay grade. And uh and countries have

a lot of other dynamics. There are a lot

of other political actors. You've got

your unions. You've got your political

parties. You've got the IMF, the World

Bank. You've got the opinions of your

neighbors. You've got your opinions of

your citizens. You've got your opinions

of everybody under the sun and the

media. And and so I'm not I'm not here

to tell you uh what they can do. Uh

I'm an idealist. That's what I would do

if I could. But neither am I critical.

Well, the truth is there's a million

people that that don't go 150% all in on

Bitcoin. And I don't judge them for it.

Maybe they had a reason to not do it,

right?

>> Or they didn't see the need. That's what

you always talk about. And I think

you're very right with that.

>> Or sometimes somebody sees the need, but

they can't build consensus. Like a CEO

sees the need, but he can't convince the

board of the need.

>> Or you're the, you know, you're the

mayor or the or the president of a

country and you see the need. That

doesn't mean that every member of the

Senate and the House and your cabinet

sees anything. So it's a political

process. You have to build consensus.

>> But if the US really, you know, goes

through with the strategic Bitcoin

reserve, that is a signal to every other

government in the world that that is

something that we have to look at. That

is actually even a signal to Apple and

Google and Facebook and Amazon that they

have to look at Bitcoin, isn't it?

>> Yeah. Leadership matters. And if you

have one if you have one leader, they

create air cover for people to come

behind them, whether it's a nation or a

company or an individual. And so I I

think it does matter and and uh each

time you each time you do something, it

gets easier for the next uh cycle. Like

even with us like uh when um

when we uh decided we wanted to sell a

preferred stock, everybody said that's

impossible. No one's ever done it before

and it was it was difficult. It took us

a couple tries. The second time we did

it was much easier. The third time we

did it, it was the easiest deal we've

ever done. The first Bitcoin company

that does it, they'll be following us

and they'll just say, "Yeah, it's just

going to be like this one." Well, the

first two we did were the two most

successful preferred stocks in the in

the century. So, the Bitcoin company

that issues a preferred stock backed by

Bitcoin will say, "Well, you see, people

thought it couldn't be done, but

Strategy did it and it was the most

successful preferred stock in the last

30 years, so that's why we're doing it."

And then the investors will nod and say,

"Okay, I get it." So the point is you

have to do it and then you have to

sometimes it takes two or three tries

and sometimes you get your nose broken

or bloodied a bit but you know the

alternative is always worse.

One thing that is absolutely fascinating

about Bitcoin and gives me high

conviction is that I see people from all

you know kinds of countries all age

groups all wealth groups adopting

Bitcoin for different reasons. Um, you

see Bhutan, they are mining Bitcoin

because they they have hydropower. You

see El Salvador, they're doing Bitcoin

because they want people to come to

their country. They want capital to come

to their country. Now you have the US.

Um, are there any examples that you can

think of of of of people, governments or

um corporations adopting Bitcoin where

you say, "Huh, I didn't think of that."

Well, there's there's a ton of of

corporations and and uh actors that

adopt Bitcoin that I didn't even know

about that did it for reasons I'm

unaware of. And and of course, you know,

the the the classic example are all the

OGs that adopted Bitcoin because they

came out of Argentina and they were

victims of currency collapses and and I

didn't live, you know, through their

bank collapses, through their currency

collapses. I would say the beauty of

Bitcoin is it is a solution to the

economic problem faced by eight billion

people and 400 million companies and who

knows how many entities and all of their

problems are different. all their

circumstances are different and it

offers a different it's a different

solution for someone living in a war

zone than it is for someone living in

Shanghai than it is for someone living

in North Korea than it is for someone

living in Germany than it is for someone

living in Nigeria and even it's

different for you in Nigeria 5 years ago

versus you in Nigeria five weeks ago so

dynamically everybody's economic

challenge is evolving their

circumstances are different and it

offers everybody uh this this

opportunity to solve their problem with

technology.

And the reason it's successful is

because it's this massive parallel

shared nothing network where you've got

hundreds of millions of people thinking

independently for themsel and their own

local circumstances without asking for

permission from anybody else to think.

So, so for me to presume that I know why

someone did it or I understood the

problem is it's like no one person

really understands the entirety of the

human experience, it's just too uh too

multiaceted, too high bandwidth and and

that and generally the best solutions,

the reason that the reason Bitcoin works

is because someone that you don't know

with a problem you don't have in a place

you've never been to

settles upon Bitco Bitcoin is a solution

and then you're walking down the street

in the random place. They're like and

and they think, "Oh, we are comrades."

>> Yeah.

>> Right. It's like how I don't know you,

but but I had a different thing, but we

solved it with a with a common network

and a common asset and a common

protocol. And you might not even have

time to figure out what their problem

is, but it doesn't matter. They're

helping you. You're helping them, right?

It's it's just one of the most magical

examples of human cooperation to further

uh the human condition and the

civilization that

I've seen. I I met a Estonian death

metal musician on the streets of Vienna.

He wanted to sell me his CDs because he

needed money to go back to his home

country. And I said, "Do you accept

Bitcoin?" He said, "Yeah, I have to got

the wallet of Satoshi." So, I bought the

CD. Problem is, I don't have a CD player

there. So, you know, digital digital

money, digital music. Um, I do want to

open this up for for uh for questions

real quick because real soon because I

know that you all have many questions.

Um, but I will squeeze in one more

because this is something that we've

talked about here in the morning and

it's something where we want your

perspective on. Um, you said about the

bare market, right? Bitcoin

corporations, what's going to happen to

them in a possible bare market or is

there not even going to be a bare

market? Because I think you said in one

interview you said winter is not coming.

Yeah. Um I think that that um there's

one group of people and they tend to uh

be traders and they're charters and they

like to you know fill up their charts

and their and their computers with lots

of data and then they like to back

calculate and backsolve and do

regression models and they try to fit

cycles and they try to use whatever

happened in the past to predict what

happened in the future. And I I think um

I think that idea of of using data from

the past to predict what happens in the

future, it works in a closed system in

an adiabatic system

where there are no there's no new

energy. There's no new structural

elements introduced. And so like I I get

it for predicting a pendulum or a swing

or something like that, right? Uh or

maybe tidal forces acting on the earth

for the last five billion years because

the moon hasn't changed. But if a new

moon came along, right? If if all of a

sudden a third a second moon and then a

and then a third moon came along and

someone was looking at all the title

patterns for the past hundred years, you

would say, you know, are you crazy?

there wasn't a third moon a 100 years

ago. So if the structure of the system

changes, if uh if it's not a closed

system, when it's an open system, when

new new developments are forming, I

don't think you can look back. So for

example, the crypto winter took place

because massive structural leverage and

rehypothecation. you you stacked up

people took uh you know they issued uh

Luna token and then they issued you know

US they issued terra stacked on Luna and

then they traded US for Bitcoin and then

when the Luna collapsed the terra

collapsed the Bitcoin got panic sold and

that created a rippling wave of of

redemptions and you know it it

bankrupted FTX and Genesis Genesis and

BlockFi and Celsius and they had daisy

chained a whole set of uh credit

instruments on top of tokens which were

100 to one levered backed by air.

Okay. And

if you have that structure where you

have if I took a public company and I

capitalized it on a security with 1% of

the float outstanding and then I took

another public company and capitalized

it on the second public company with 1%

of that float and if I took a third

public company and capitalized it on the

the second and I would have a,000 to one

or 10,000 to one lever and there's $1

million backing 10 billion dollar of

market cap,

then when I crush the one in the middle,

everything collapses and you get your

crypto winner. And that's what we got in

2023. You had massive

massive uh structural leverage uh that

was backed by air tokens

uh from all of these crypto cowboy

unregulated exchanges. is they were

making loans they never should have made

backed by collateral they never should

have taken, right? And so you get a 75%

draw down. Well, what's the difference

today? Well, first of all, they all got

wiped out, right? They all all the

companies went bankrupt. They're all in

jail. There is no FTT token. There is no

Terra Luna token, right? Anybody stupid

enough to give you a$2 billion dollar

loan in return for $1.5 billion dollars

of Yo-Yo token, like where are they?

Right? they're they're either in jail or

they're bankrupt or they've they've

quietly withdrawn from the industry. So

the industry grew up. It grew out of

that crypto cowboy phase. The capital in

the business today is much more

permanent capital. Like so we buy we

spend 40 billion dollars plus buying

Bitcoin and our use case is to hold it

forever. Okay, that's 40 billion of real

capital. Uh I don't think there was

never $40 billion. I I don't think

anybody ever invested a billion dollars

in any other token in 10 years. So it's

a different capital structure. You have

institutional investors with permanent

money. You can't lever up 20 to one and

daisy chain three times. You've got a

functioning options market. Options on

MSTR, options on iBit. The options are

damping the volatility. So if you're

looking at the at the market today, you

know, the observation is there's more

permanent capital, there's less

leverage, it's not even possible to

create that leverage, there's more

derivatives, the deriv there's less

volatility,

there's um there's a use case, uh, you

know, long-term capital. And today

there's 150 public companies that are

all vying to use Bitcoin as long-term

capital. And four years ago, there was

one public company that was trying to

figure out what, you know, what what are

we going to do with Bitcoin? And so, the

markets changed, the structures changed,

the capital has changed, the leverage

has changed, the volatility has changed.

It's reasonable to expect drawdowns and

runups but not of the same nature that

you saw you know when the industry was

unregulated offshore and the the real

source of volatility is the cross

collateralization to yo-yo tokens.

>> Right.

>> Yeah. And and what's happening is as

there's less of that and there's more um

institutional buying and selling and

trading uh the volatility and the nature

of it starts to drift more toward

conventional equity assets away from the

crypto assets of 2017.

>> So in a very real sense we are moving

away from crypto and now we are we are

we are discovering what Bitcoin really

is.

Well, I mean, Bitcoin is the one digital

commodity, therefore, it's the one

institutional grade asset. And as it

gets embraced as digital gold or digital

capital, and as it gets

crossolateralized with the S&P or with

sovereign debt or with real estate or

something like that, it'll start to

it'll start to drift toward their

degrees of volatility. That does that

does make

>> stabilize.

>> Thank you very much, Michael. Um, we did

agree that we wanted to take as many

questions as possible because I'm sure

that you have many the gentleman in the

maybe Okay, I'm giving up the the power.

>> I'm Michael. I'm Alex. I'm a startup

investor in Germany. Um, we're really

impressed with your vision and your

action and and your leadership. Now,

many companies are following your

reserve asset strategy. And if you look

at the numbers, I mean, there's many

many companies currently buying. You are

buying a lot. The ETFs are accumulating.

Everybody here is buying. And the

question really is who's selling? I

mean, where do the Bitcoin come from?

And more specifically, do you think

there's artificial or even paper Bitcoin

being generated that, you know, that

sort of like distort the market?

>> I I I don't think there's paper Bitcoin

generated. I do I think that that um

there's a lot of people that own Bitcoin

at a thousand and when it got to a

100,000, they're starting to sell 10% or

5% in order to live. Um because I I

think the situation right now is

um

Bitcoin is a $2 trillion asset class,

but it's the it's the least it's the

it's an underbanked $2 trillion asset

class. So if I had $2 trillion worth of

Apple stock, I could get a margin loan,

you know, with a 50% plus advance rate.

So for plus 50 basis points and I could

finance I could finance a trillion or a

trillion and a half of it. And right now

if you look at the amount of Bitcoin

that's financable, it's like not even

5%. So I if you're an OG crypto holder

and you got rich and you're you're a

billionaire on paper, you you

might be able to borrow money at 12, 13,

14% interest, but you got to jump

through hoops and you can't get it from

JP Morgan. So for them if they want to

buy their whatever house jet put their

kids through college or whatever they're

going to sell. So I think there are

people that have held you know from 2013

on and you know uh they're they're at a

point where

do you want if you were to say to me

what's your forecast for when you'll be

able to borrow against your Bitcoin at

sofur plus 100 basis points from JP

Morgan. like I I'm not thinking in the

next 12 months or next 24 months or next

36 months. So I think um most of the

bitcoin is is offshore not institutional

like what percentage of bitcoin is held

by ibit or my company or wall street not

10% 15%. So it means 85% of the $2

trillion is held by individuals and they

can't get they can't get a loan. So I'm

I would you know I think that uh crypto

companies, crypto holders, whatever if

they want any liquidity at all, they

have to sell. And then I think there's a

lot of hedging and a lot of a lot of

people of all traders and and they will

sometimes sell. But as a general rule, I

think we're we're boiling our way

through this point. You know, the

natural sellers are getting the

liquidity they want. Uh and at some

point, uh we'll be done with all the

natural selling and Bitcoin will um

surge up again.

>> Hi, Michael. really nice to uh listen to

your show. Uh I'm a uh miner from uh

China. We also mine in the US and uh in

East Africa. So uh recently we we just

raised uh some equity money and uh uh we

are thinking we still stick to our

mining strategy or we adopt this uh

Bitcoin treasury strategy. Uh because my

my problem is that the it seems that uh

it's as long as you have the money you

can be a a Bitcoin treasury company but

you have to have a lot of operation

capacity to become a mining company

which in theory you you can get bitcoin

in a discount. So uh I'm wondering why

uh there there seems u you know to go

into treasury company but the mining

company seems does not perform that that

well. What's the difference between the

mining company and the treasur?

>> If I had a mining company, I'd take it

public. I'd capitalize it on Bitcoin and

then I would start issuing equity and

credit instruments to buy more Bitcoin.

I do it as fast as I could. And

and uh

it's kind of simple. You're either going

to invest a billion dollars in hardware

that's depreciating 30 or 40% a year or

you're going to invest a billion dollars

in Bitcoin appreciating 30 or 40% a

year.

So, I I would definitely do it. Um, you

know, why don't they do it? Uh, your

board of directors might be

conservative. Maybe the management

team's conservative. Maybe they're

they're trapped in other circumstances.

Some can't go public. Some can't

finance. Everybody's got their own

reasons or or issues. Some miners are

better at it than others. But I think

you're in the Bitcoin industry. If

you're a Bitcoin miner, you have to have

a you have to believe Bitcoin is going

up 30 to 60% a year to be in the Bitcoin

mining business. Uh and so once you've

agreed that it's going up 30 to 60% a

year, then borrow money at less than 10%

and invest it at 30 to 60% a year and

recycle that and you've got a cap

capital amplifier.

>> Yeah, it's I would do it in a heartbeat.

>> Next question.

>> Hello, Michael. Yeah,

>> I think it would be valuable if you

could elaborate on conviction and how it

gets generated because looking at your

success, I think it's obvious that

conviction plays a huge role whether it

was with Micro Strategy, you're going

all in on the Magn Magnificent Sevens in

2010 and now most famously with Bitcoin

and I think I heard you speak about how

despair creates conviction, how courage

creates conviction and I think

personally also self-esteem generates

conviction. So my question is what are

the generating functions of conviction?

>> Everybody gets their motivation from a

different place and and sometimes it's a

hybrid. Um

if if you live in a hyperinflating

economy and your family loses everything

or if the bank freezes your assets and

you're destitute and bankrupt, you know,

then that's a way to get conviction. You

can get excited about being on your own

bank and self-custoding Bitcoin if you

lived in Lebanon or Turkey or Argentina

or wherever. So sometimes it's a

currency collapse or economic uh crisis.

Uh in the technology world uh I think if

you look at successful technology

investors look at the story of Apple.

Apple was successful with the iPhone and

every other company in the space lost

money competing with them and there was

one winner and everybody else was a

loser. In fact, there was one winner and

20,000 device manufacturers were losers.

And with Amazon, you had one winner and

20,000 retailers that were losers. And

with Facebook, you had one winner and

20,000 newspapers and journalists or

whatever were losers. And with Google,

same thing. And with Microsoft, you

know, you have one winning enterprise

software company and then you had 20,000

losers. And so I if you have experience

in business, right, that also gives you

conviction. You just realize that the

world is a very difficult place and the

odds are 99.9% that you're going to lose

if you don't find the right thing. It's

like uh when you find a good thing, when

you find a good territory, when you find

a safe, you know, there are there are a

number of safe places to live and then

there are a lot of not safe places to

live. The people that grew up in the

safe place don't appreciate it. But the

people that grew up in an unsafe place,

if they ever get, they will basically

risk life and limb and do anything

possible to get to a safe place. So I

think life experience builds con

conviction and it and the people that

don't have conviction,

they either don't have the experience or

or they don't have the desperation.

It's like, you know, you're 18 years old

and you know there's no hope for you

unless you pick up electric guitar and

then maybe people will pay attention,

but everything else doesn't work for

you. Sometimes it comes from talent, by

the way. It's like someone's got a

certain talent for something at age

three and they're good at it and people

praise them and they get a lot of

feedback and then by the time they're

18, they've been praised a thousand

times and now they got conviction

because they were just genetically

lucky. And that can work too. Uh I

however you get there, right? I I think

the lesson that you learn is the the

world is a very competitive place. Um

there are a lot of wrong ways to do

things. Uh and there's one right way to

do something and uh once you find the

right way to do it, it's a million times

more efficient than every other way to

do it. And so what you want to do is is

quickly find the right way and lock in

on it. I think the challenge people have

with Bitcoin is a lot of people just

don't realize they have a problem.

So they don't realize it's the solution.

They're very comfortable

uh comfortable and and a little bit

ignorant of the problem. So they're just

kind of going along quietly.

And um the people that really get it are

the ones that get jolted out of their

apathy or their indolence or their or

their their comfort zone by something.

And what is that something? It's

different every everywhere with

everybody.

>> Hello, Michael. Um the narrative behind

Bitcoin being the best commodity on the

planet is clear, but what are your

thoughts on on Bitcoin, the ledger being

the best settlement

layer uh powering, you know, the

financial rails of the future.

I think um yeah, Bitcoin is um

it's a network and it's an asset, you

know, it's based on a protocol, you

know, rooted in an ideology and uh the

network is emerging as as uh the most um

anti-fragile,

right, most robust, resilient uh

compelling settlement network in the

world. I think um I think David Marcus

is doing really good work here at

LightSpark on this and I think that um

right now for this 4year time frame,

you know, there's an explosion in

capitalizing on the asset just because

it can happen at the rate of a billion a

month or 10 billion a month or billion a

day and it's very straightforward. But I

do think uh it seems rational that you

would um you can regground the entire

financial system and the banking system

of the world on Bitcoin the network. If

we get to the point where 40,000 banks

are all using Bitcoin and custoing their

own Bitcoin, running their own nodes,

they'll all be peer-to-peer trading with

each other. You can imagine a banking

system in the 21st century where you

have 40,000 banks trading with each

other on the Bitcoin network which is

the pure digital network and the Fed

wire is the fiat network or the or the

other other traditional corresponding

bank systems. And then you can also

imagine you'll get the point where you

have 400,000 companies that are all

peer-to-peer settling with each other.

Uh, and so I just I think there's

tremendous opportunity either to plug

the banking network into it or to plug

corporations into it or to or to plug

consumers in it via the lightning layer,

you know, lightning on top of Bitcoin.

And so I do think it's it's uh, you

know, critical infrastructure for a pure

digital economy. If you ever want to get

to the point where

where uh 10 billion AIs are trading a

million times a second with each other

or you have 10 billion 10 billion

transactions a second between 10 billion

counterparties all with final settlement

frictionfree. It's clear it's going to

be on something like lightning

sitting on something like Bitcoin

and uh you know that that is um I think

that's the basis of the 21st century

digital economy. So So I'm bullish. I

just think it's it's more of a

technology thing. It'll probably take 10

years before people start to see uh to

see that moving

uh at the same economic scale as they

see the financial players moving to

securitize the network.

>> Is there any connection with the Bitcoin