Watch CNBC's full interview with MicroStrategy CEO Michael Saylor at Bitcoin 2022

so we had kathy wood on the show today

and you were on a panel with her this

morning and you unequivocally said do

not sell your bitcoin so what is your

outlook for the market

you know my output is very long term and

and and the reason i say do not sell

your bitcoin is because if i look back

at my life as an investor

the things that i regret

are

when i found a really good idea

and i under-invested in it i i

you know

google was a good idea facebook was a

good idea apple was a good idea amazon

was a good idea a digital monopoly that

changes the world for a billion people

is a good idea

and yet

the most common two mistakes

after finding a good idea is first

mistake is

someone says something they talk crap

about your idea there's flood

oh

australia is going to tax google

or somebody's going to regular amazon's

going to get regulated or something will

happen and so people panic sell

and so whenever there's anxiety in the

market and you panic sell and then you

never buy back in you regret that and

the second thing you always regret is

you wish you bought more

and

so

a lot of people in the world i mean

they're

they're basically being uh

knocked around and traumatized

because the media is incentivized to

generate a new story every day and if it

bleeds it leads

and nobody wants to read a story that

the risk profile hasn't statistically

changed versus last year and there's no

reason to read beyond this sentence

so normally they always write

inflammatory anxiety-inducing stories

and when people read them and they think

about it gets them on the skin and they

they panic and they do something

irrational

bitcoin represents the dominant digital

property network of the 21st century

it's a very simple idea

take the money you want to give to your

grandchildren

convert it to bitcoin

put in cold storage and wait

let the rest of the world do the work

and you'll be the beneficiary of all the

intelligent people no matter where they

might be in the world you'll be the

beneficiary of all their work with doing

nothing else there's only one mistake

you can make and the mistake you can

make is study the world get anxiety

about something going on somewhere in

the world and sell

your

bitcoin

so um

i think that the the common phrase

you do not sell your bitcoin is similar

to

what's written on the back of

hitchhiker's guide to the galaxy

which is the famous

two words

from douglas adams

don't panic

you basically wrote the corporate

handbook on adding bitcoin to your

balance sheet and taking that approach

you just borrowed fiat cash against

using your bitcoin as collateral 205

million dollars to buy more bitcoin is

this what all companies should be doing

now and whatever way they're able to um

you know allocate funds in that

direction we want to set an example for

corporations and so

bitcoin is

pristine collateral it's theoretically

the ideal collateral against which to

take a loan

and so we felt that by us doing this

deal with silvergate bank

it would um it would make other banks

either jealous

or comfortable

and hopefully we'll see an entire

bitcoin banking sector evolve and we

want to support silvergate bank

you know as they move into this space

i think on the flip side from the point

of view of a bitcoin holder

there's been this uh this meme of oh

well i buy some bitcoin i wait and

eventually i sell it to buy a lambo

and i think it's very important for

people to know that

if you owned a block in manhattan on

central park in the year 1900 and if

your father grandfather grandmother a

great great grandmother ever sold that

to buy

a lambo you'd be very angry at them

and if you go back in time and give them

advice you would say

mom don't sell the family property

borrow against the family property to

buy the lambo and then

i will inherit the family property

which will be marked up by a factor of

100 and i can also mortgage it or

re-mortgage it to buy my own

you know electro hover car

so

a friend of mine sold his tesla stock to

buy his wife's engagement ring and he

did it at the most inopportune moment

now he looks at that ring and he's like

that is the most expensive thing i've

ever bought in my entire life so it's

the same principle

you know

my house in miami beach is 305 times as

expensive as it was in 1930 when it was

first sold i have the bill of sale on my

wall

if you back calculate you conclude that

the actual

inflation rate of the money supply

against scarce desirable assets is seven

percent a year for a hundred years

the government statistic is less than

two percent

and so

you just have to ask yourself the

question do i want to sell something

going up in value seven percent a year

when i could borrow money at three

percent a year

and of course the bitcoin is more

extreme i mean bitcoin is appreciating

not because of the rate of currency

expansion but also because of the rate

of

general mainstream investor adoption and

also because of the increase in

technical utility to the things like

lightning

and the beautiful things that are being

done by cash app and the like

so

you know we set up a credit line uh we

borrow against it we do it responsibly

we had 5 billion in collateral we

borrowed 200 million dollars so i'm not

telling people to go out and take a

highly leveraged loan

what i am doing i think is uh doing my

best

to lead the way and to normalize

uh

the bitcoin-backed financing industry

and i think the corporate beneficiaries

should be the bitcoin miners

we're not the only ones with a

silvergate uh credit line marathon did a

credit line with silvergate bank against

their bitcoin

so i there's 24 publicly traded bitcoin

miners around now

and so i think there should be dozens

and dozens of publicly traded companies

that are doing this

i think there's a lot of bitcoin holders

that have always despaired they'd have

to sell their bitcoin but they didn't

want to

i had many people that are large bitcoin

holders text me and message me after

they read about our deal and they said

can you hook me up

with the bank i want to do the same

exact thing and i was like no problem

here you go

and so i think it helps them

i think it also is very helpful

in the uh institutionalization and the

maturity of the asset class

because

if you roll the clock back uh to the 90s

it used to be

in mexico you couldn't get a mortgage

and you couldn't you know i i hired a

bunch of people from mexico city and

they said you know mike

uh we have to pay cash for a cart

and we can't get a mortgage

and so no one can buy anything yeah

at the point that people started

securitizing cars and securitizing

houses and remember the great american

program was fannie mae and freddie mac

and the idea was to make uh to make it

easy to securitize mortgage so you could

drive down the price of borrowing so

that a 23 year old

could buy a house

and i think that

bitcoin is an asset class

right is going to benefit from the same

securitization and the same uh financial

development

as people realize they can borrow

against something

then they realize they never have to

sell it

and then they start to stretch their

time horizon from it's a 36-month

speculation to it's a 36-year holding

i really want people to think of it as

the family farm

i'm living on this beautiful farm

because my grandfather or my great great

grandmother found came here and said

this is where we should make a life

not selling it right this is this is my

vehicle

uh to achieve my goals

and my children's goals

when do you stop buying bitcoin for

microstrategy

[Laughter]

no i tell people we will be buying

bitcoin at the top forever

i'm not i'm not trying to time the

market i don't intend to stop

um mike you could think of a micro

strategy is

um

we're kind of like your your

non-existent spot etf

yeah if there was a spot etf

you'd be paying one percent fee

and it would be not leveraged with

microstrategy we have a software company

that generates cash flow and so we

convert our cash flows into bitcoin

and so we don't charge you a fee

we give you a yield

and between the cash flows from the

software company and just a little bit

of leverage that we can take by things

like the silvergate loan

we can give you a spot etf that

generates a four or five percent

tax deferred

yield

and that's kind of an exciting thing

and when will we stop well why would we

ever stop well we'll just keep accreting

it should get exponentially more

expensive

to buy the bitcoin but that's okay

you know

when bitcoins 500 000 a coin

someone's going to say well why are you

buying that you bought some at 10 000

and the answer is going to be because

it's more scarce desirable property than

anything else that i could buy and

when will you sell it you're not going

to sell it until you've got something

better to buy but there isn't anything

that i can see in this universe better

to buy

so

as we generate cash flows

we think that the responsible thing to

do for our shareholders is

we convert currency which is devaluing

into an asset which is appreciating

and we don't diversify

because we're a public company and we

have a we have a strategy

in our 10k and our shareholders know

what to expect they want us to pursue

this strategy

they can diversify

right if you want to be two percent

exposed to bitcoin you put two percent

of your portfolio in a micro strategy

and the other 98 of your portfolio could

you can invest in whatever you want

they don't want the ceo of a publicly

traded company to be unpredictable and

random yeah so you can imagine if i said

you know mackenzie i think i'll buy some

of this but if i feel better about that

or if i feel the risk is different then

i'll change

and the problem with that is that no one

else can rely upon us and i think trust

it's a paramount theme

trust is what built bitcoin bitcoin is

this universal trust network and the

people that all these people here love

this

is because they found something that

they can depend upon and they can trust

across borders across time

across cultures and that is such a

precious thing

in the capital markets

the same thing holds if you want to run

a publicly traded company it is very

important that your shareholders trust

you

and your customers trust you

and trust means

be predictable and do what you say

you're going to do

right and

and let other people

someone wants to hedge

they can hedge

right i'm not going to hedge for them

i'm going to stay true to our mission

and when we decide to change our mission

we'll disclose it in an 8k a 10k or a

10q

and and the market will react

accordingly do you want to lend out your

bitcoin to generate yield

we've thought about it

you know we have all this collateral we

have you know we have five billion

dollars of unpledged bitcoin

and we thought

do we lend it to someone to generate

yield or do we borrow against it

okay so we borrowed

205 million against it bought 195

million of bitcoin and we generated a

tax free yield right so in essence we

bought bitcoin you don't have 125 000

you have 129

000 now you got an extra 4 000 bitcoin

and then

whatever gain we get will be tax

deferred

so we figured that was a tax efficient

strategy because you know we've got

interest payments

and it's also tax efficient for our

shareholders because we're not occurring

an operating income charge or a dividend

charge

we could have

gone to um

we could go to an organization and lend

them some bitcoin they would lend it out

to someone else they would give us a

yield

that someone else would short the

bitcoin in the market

and then we would be taking the

counterparty risk and if if the if they

lend it out and then their balance sheet

unwinds

we lose our bitcoin okay so

that was a risk uh and we didn't have a

counterparty that we wanted to

put a billion dollars of our bitcoin

with because

we have to calculate what's the

theoretical risk versus the yield and

then if you calculate the theoretical

risk versus the after-tax yield

they pay us a yield we have a taxable

income stream

what you realize there is you're working

very hard taking a lot of risk to get

not very far after tax

and then the other possibility is

look of a big bank if jp morgan wanted

to custody our bitcoin and pay us a

yield so it felt risk-free just about as

close to risk-free as possible

then we'd just be comparing the do we

want taxable income

versus do i want bitcoin exposure

and

if you think that bitcoin's going to go

up 50 a year

[Music]

no one's paying you 50

yield so

i would rather have the extra thousands

of bitcoin and get the appreciation tax

free

so

that being the case

we don't jp morgan's not in the business

of custodying bitcoin and giving yield

uh and so what we did allowed us to

basically put our bitcoin in cold

storage

we maintain custody of it

right we found a bank that's fdi seed

insured that wanted to give us a loan

they're not lending it out

we're not risking our our shareholders

balance sheet to any other counterparty

we're paying what we think is a very

reasonable interest rate

and

we're getting the the yield which which

is the pure bitcoin yield tax-free and i

think the pure bitcoin yield is

something like

5x to 10x

what most counterparties would give us

unless

we went to those hedge funds and they

just lent it out to someone that wanted

to short it

and then you're just you're in a

different risk management universe and

i

i'm a public company i want it to be

simple

i don't i do not want my shareholders to

be calculating what is the theoretical

risk of the micro strategy of the macro

strategy it's there's a benefit to

being simple and predictable

plus

i just want the bitcoin

uh today you said that the executive

order from biden a few weeks ago

essentially gave the green light to

bitcoin so are you feeling pretty

optimistic about where we're headed in

terms of regulations yeah i i don't

think it could have been better than

that never in 100 years did the

executive branch ever endorse an asset

class when commodity index came out the

executive branch didn't say figure out

the commodities index

when john bogle evangelized the vanguard

500 the president didn't say every

american and every agency should study

the vanguard 500 an indexing of equities

right um the last time the executive

branch had something to say about asset

costs was

the gold edict back in 1933 right

so i i feel like

we've got really good support from the

administration

i think the regulators are progressive

and very area diet um

you know when jerome powell janet yella

and gary gensler have been asked about

this they say

look it's a it's a store of value asset

it's speculative and people want to

speculate they can

it's not a currency

i think that all the

all the regulatory agencies have some

legitimate responsibility

to work through i think um

here's the big idea mackenzie which is

for a year i've been in rooms with

trillions and trillions of dollars

you know and this is it's like the ray

dalio comment the jamie diamond comment

it's something like this it seems

engineered perfectly it's obviously

better than gold it's obviously better

than all the other ideas we have

it's

too perfect

it's too good to be true and so i think

someone's going to ban it

that's the and that's not uncommon

people with large sums of money that are

buying fixed income or buying equity

index are like yeah it sounds really

good on paper but you know it must be

too good to be true nobody's going to

let that

around

and so how do you answer that criticism

when someone says it's too good to be

true

and it's it is too good to be drunk it's

like perfect money it's a it's a perfect

gold

with none of the defects of gold

and it's a big tech monopoly

with none of the exposure that google

facebook apple and amazon have because

they have people and they do things

and so i wanted something better than a

big tech monopoly and i want something

better than gold and so i have bitcoin

it's too good to be true someone's going

to ban it

and the single best way to refute that

is say well this is what the president

united states has said

whereas 40 million americans want this i

direct you

to figure out how to bring it in the

public policy framework

it's not going to be banned

if you disagree with the white house the

administration the senate and congress

i'm not going to get your order i get it

you'll be a late adopter

but i really think that uh we couldn't

have had a better development than than

that executive order obviously you're a

pioneer in terms of institutional

adoption

russia just saw its fx reserves

weaponized against them

and typically you have you have this

dictator's dilemma a country like china

and russia is usually resistant to a

currency that they can't control but had

they had you know had russia had bitcoin

on its balance sheet it would have been

a different story and so

do they become first movers in terms of

countries adopting bitcoin putting it in

their reserves

you know uh bitcoin's a paradigm shift

and the thing that causes new paradigms

to be embraced is either

the old guard dies

generational shift like the millennials

below age 40 they all get it or the

other thing is a war

and when you're forced

by a war

and this is a classic example where

russia is forced to reconsider their

treasury reserve strategy

and then every other country is invited

to consider their treasury reserve

strategy

because the i mean the two challenges of

a treasury strategy is will my assets be

confiscated or will they be inflated

away to be worth nothing

and if you're the chinese you have three

trillion dollars of of sovereign debt

and if the money at the dollar is

devalued by 20

then your citizens paid a 600 billion

dollar fee to to basically support

inflation of some other country's

currency

it's a deep argument inflation

unfortunately a lot of people they'll be

inflated away

before they come to their senses but

when you confiscate someone's money

right in front of their face immediately

that shocks them into action

so i think that the russian

sanctions have shocked a lot of it

shocked russia obviously they have to

figure out a new strategy

but i think all their trading partners

now are forced to figure out how they

feel about a different strategy

the indians etc and then the middle

easterners start to think about this and

the chinese

have to think if there's ever a squawk

in or there's ever a disagreement about

the south china sea

you know what happens to three trillion

dollars of their reserves

i think that in the near term it creates

a bit of chaos and anxiety

over the midterm it creates a lot of

inefficiencies and we go from

a single

strategy to multi-polar

and over the long term i think all

rational individuals conclude that

being able uh to rely upon a neutral

non-sovereign

technically secure

ethically sound fair

uh

monetary network

is a reasonable compromise for all sides

a switzerland

that allows no one to victimize anybody

else

and not only is it fair and ethical

it is also

functional and it is uh progressive

because we can build a better world for

eight billion people

on a network which moves money at the

speed of light and moves all forms of

money at the speed of light

and it's clear that gold is not going to

move all forms of money at the speed of

light

and it's pretty clear that we can't have

chinese trading you know a bunch of

asbestos to the russians for a bunch of

oil

at scale

and it's pretty clear to the world that

the system we had was the best we could

do in the 20th century

and it just doesn't work for russians

and ukrainians and people in africa and

asia and south america and the 21st

century

and so i think this is just a big

catalytic event

that invites everybody in the world to

ask the question is there a better way

and i think bitcoin is the better way

and the result will be

hopefully peaceful peaceful resolution

and efficient

settlement

for everybody