Michael Saylor on Bitcoin crash, Luna/Terra Meltdown, inflation, market selloff and BTC Spot ETF

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all right well michael it's so nice to

have you back on you're actually my most

popular episode of this entire podcast

so welcome back

let's go no pressure

uh first of all i guess i just want your

overall reaction on just the markets the

macro environment it's been a really

crazy week there are a lot of people

watching and i think getting a little

nervous especially those that got in

maybe in the 50 or 60k range i know

you've bought some coins in that range

so what's your overall take right now

i think uh if you look at the macro

climate uh in the middle of 2020 jerome

powell said we're not even thinking

about thinking about it raising interest

rates until the year 2024.

so then we had uh the fed uh

basically buying 120 billion dollars a

month worth of uh bonds

and interest rates plugged at zero and

then uh everybody said well there's

inflation but

you know but the politicians said

there's no inflation for a year even

though we had massive hyperinflation in

assets for a year but you know they

denied the inflation and then and this

is a result of them just tracking the

cpi index

because you know as we talked about

before cpi is is one

out of many uh inflation metrics you

could measure so they track the one that

is going to have the longest lag

because like if you lock people down for

a year and and they can't take a cruise

and they can't go to a concert and they

can't go to a restaurant

then they can't consume so if you can't

consume consumer products you can't by

definition you can't have inflation in

those products there's no demand

so the later you know there's a lag in

some demands like

it takes you six months to buy a house

so there's a slight lag in house prices

there's no lag at all in asset prices

like bonds hyper-inflated in minutes

equities hyper-inflated that the amazon

price you know hyper-inflated you know

it went to thirty four hundred dollars

from eighteen hundred dollars like in a

short period of time

so i think the politicians they

from a monetary point of view they

looked at the wrong indicator and they

waited and they waited

and they still only had raised interest

rates like 25 basis points as of a

couple days ago right

and uh

so

now we've gone from uh there is no

inflation and we're not even thinking

about thinking about doing anything to

oh my there's tons of inflation

and we have to go faster

and uh i think uh like this morning

these uh 8.5 inflation number came out

and it was higher than people expected

and then the markets think

oh well they'll have to even raise

interest rates faster so we went from

not even thinking about thinking about

to

constantly continually thinking about

thinking about

and going faster and

it's like you know if you're if you're

putting 120 billion in bond purchases in

the market every month that's like kind

of

uh it's pumping heroin or morphine into

the patient

now we take the patient off the morphine

and we tell them that we're jacking the

interest rates through the roof and of

course that's a massive contraction

like a withdrawal

the markets are going into withdrawal

right and and uh

you know one part of the market is the

real estate market and so the way that

we help the real estate market is we

double the mortgage rates in 12 months

okay uh

and that takes the wind out of the real

estate market and then they take the

wind out of the equity market and then

after they talk about

kicking the equity market then they kick

it and they talk about kicking out again

and then they kick it again and then

they talk about maybe kicking it more

and on top of all that monetary distress

i would i would say we went from like a

massive macroeconomic or a monetary

tailwind to a massive monetary headwind

or currency headwind but then you have

the ukraine war

then you have the russian sanctions

then you have the escalation of the

russian sanctions then you have the

escalation of the ukraine war like we

want it to last longer then you have the

potential you know we literally have

people joking about potential nuclear

war

this weekend

i had a meeting with an investor and the

investor got on the call and they go

yeah so i mean assuming there's no

nuclear war you know what's the outlook

for microstrategy

oh my gosh i shouldn't laugh this is not

funny

there's nothing

so what's going on right now is a

dramatic escalation in geopolitical risk

and uncertainty

and all the currency winds that were

blowing one direction below the other

direction

and on top and that's just uh breaking

things and so in the main market it

breaks ideas like peloton

like oh i can put you know i put a

screen on an exercise bike and it's it's

worth

20x revenues

and now people are thinking well maybe

it's just a modern exercise bicycle

company and the stock is way down so i

think a lot of mainstream ideas are

melting down and then we just saw this

ust meltdown

and it's like

you know uh

i

think

you know gary guenzler's pointed out he

said that a lot of these uh a lot of

these tokens are securities

and the thing that makes them a security

is a small team of people that have

control over the protocol

so the small team of people can make

more or the small team of people are

actually able to move the reserves

around

then you've got investors relying on the

efforts of others in order to make money

and that's the howie test and so when

you have investors

relying on the efforts of others you

know to protect their investment of

money then you become a security and

there's nothing uh inappropriate about

being a security as long as you make the

fair disclosure so

if you look at microstrategy we have

like an army of lawyers and an army of

accountants and we have

thousands of pages

of uh of uh sec filings and

nobody in the crypto world reads them

sometimes

you tweet in crypto and you think

they're not gonna read to the 280th

character and if you put a a thread and

there's a second part to the tweet

10 of the people read the second tweet

and the likelihood that they'll go to

page 98 of your 10k and read the table

that tells you

tells you all the details that's not

very likely

i think the crypto community is is

having a reckoning i think they're

realizing there's a difference between

crypto and bitcoin

there's

the reason that bitcoin doesn't need to

have an army of lawyers and issue 10 000

pages of disclose disclosures is because

there's no small group of people doing

anything that could do anything

right and and uh on the other hand

the rest of the crypto economy is is

either producing the stable coins or

they're producing other tokens

and

we can see that there's now massive

uncertainty around all that stuff

you know in a in a way this is really an

educational event for everybody i i

think a lot of people in the crypto

community that didn't understand the

issue like what is the risk of getting

paid 20 yield or pay getting paid eight

percent yield on a token now they

understand a lot of people when we said

you know bitcoins property and the

others are securities and they don't

understand why like ah they're all just

crypto tokens

now they understand that when when

four people can get together and do

something that

may work and it may crash the entire

thing to zero

now they understand that that means it's

a security

because you can do something

and if you can do something you have

responsibility

and you and if you have responsibility

you have to go very carefully you at

least you have to communicate what

you're doing and be thoughtful about it

so i

i i'm not uh

i'm i'm not so bothered by the situation

we're in right now i mean other people

have a lot of anxiety and i suppose

i'm empathetic to anybody that does have

anxiety but

you know what i said this morning on

twitter i still believe which is

you know

in the near term the market price is set

by people with large amounts of money a

very short attention span that don't

really understand

uh bitcoin

as well as you do

right so in the near term people with

more money and less knowledge set the

price over the long term they get the

knowledge you get the money

you just you just have to wait

at some point people will understand the

difference between bitcoin and another

crypto token

they will understand the difference

between bitcoin and gold or they're just

between bitcoin and and property

until they do there's a market of buyers

and sellers

some people want to go short some want

to go long

yeah i think it's it's great that you

said that this is a lesson because i

think this is us watching a cleansing of

the system which doesn't exist in fiat

because that would be bailed out right

and there is no bailout for a token like

this that goes sideways and doesn't have

the reserves so

i want to come back i have a couple

questions about luna and tara but first

just going back to the macro picture do

you think that a new regime has taken

cold that's just determined to tighten

until maybe something breaks because

bitcoin has pretty much only existed in

a qe environment we've been in the

secular bull market so much money is

flooded into equities and in the 13

years that bitcoin's existed we've

basically been in qe so

you know we want to call it an inflation

hedge but as we tighten bitcoins falling

so what's your take on that

um i i think that this is second first

order second derivative type stuff

um we're still in inflationary

environment and they're not really

tightening uh to the extent they need to

to stop that

like the theoretical interest rate you

would tighten to to stop eight and a

half percent true inflation is

nine percent

right so if this was paul volcker he

would have raised interest rates

overnight to nine percent

and what we did is we raised interest

rates 25 basis points or to 2.75

and talked about maybe moving it up

another one or two percent so in a year

and a half when the interest rate is two

and a half percent it will still be less

than eight and a half percent

and eight and a half percent is a

hedonically adjusted number and i think

i saw some calculations they said if

they used the 1980 methodology it would

have been 15

it would have been double or something

so the uh the neutral interest rate if

you actually had a conservative uh bank

would be 16 interest rate in the us

dollar

we're not there we're not getting there

we're not going anywhere near there

uh and every prescription i've seen is

is inflationary

i think that uh they're they're making a

lot of noise

uh it means the traders are trading

but let's uh and and uh you know like

minute by minute

hour by hour

day by day you have you kind of have to

reduce your iq by 50 points

but you can't be too smart because you

have to kind of you know dumb yourself

down to trade with traders this is why i

don't trade with traders because

because the opposite of the rational is

the profitable or you have to do the

double opposite of the rational to trade

with traders so

i don't think that makes sense but let's

get let's go back to october of 2020. in

october of 2020

bitcoin was like uh

12

000.

nasdaq was i love i think bitcoin is

twelve thousand eight hundred or

something or maybe eleven thousand eight

hundred and nasdaq was like eleven

thousand and change

and gold was higher than it is now

and uh if you roll the clock forward 24

months bitcoin is up by not quite

a factor of three but

factor of 2.75 gold is down

nasdaq is sideways

and uh and the rest is sound and fury if

you look back four years you see the

same pattern you look back eight years

you see the same pattern

so if you're a trader

you know you're

you go through this perverse thing of oh

they're going to raise interest rates 75

basis points or 50 basis points or they

did they said they wouldn't raise it

when they weren't going to raise the

interest rate 75 basis points the market

rallies

when inflation is worse than you

expected the market tanks

but

if inflation is worse than you expected

you really ought to be buying the

inflation hedge which is bitcoin

but you're not and that's because

people that don't really understand how

bitcoin works are just trading it based

upon a back-tested model

so the back-tested model says it's it's

correlated to risk assets with higher

volatility so therefore

if i think risk is going to trade off i

should trade it

um

again they're traders the the traders

are a tug of war with the technocrats

the technocrats are uh are bearish

they're afraid uh the traders are

mercenary right they'll just make a buck

the maximalist already all in we're

dollar cost averaging

so we're kind of along for the ride

and uh the fed's going to control the

mood of the traders and the technocrats

in the near term

and the fed's jerking everybody around

but in time uh

you know like

if the economy actually truly compresses

the summon will come back and they'll

lighten up

some of the monetary policy we'll go the

other direction

i don't

i don't really uh try to figure it out

that much because i'm not sure you can

figure it out

like a like if you look at the

at the way bitcoin traded in the one

hour

after um

the cpi numbers came out this morning

yeah

inflation's a problem we sell bitcoin

aggressively oops now we buy bitcoin

aggressively

oops

now we're not sure what we do what's

nasdaq doing

it's it's like uh

it's a fool's errand to try to

figure it out in the near term

so i wouldn't even worry about it

you know that's really interesting i

mean you bring up a great point that if

they wanted to raise interest rates in

order to actually fight inflation they

would have to exceed what they did

probably even in the 80s but we can't

because of the amount of debt and the

fact that none of these companies or our

government would be able to service the

debt so they're sort of stuck between a

rock and a hard place and i think a lot

of people were expecting volatility but

it's almost as if you know they ca i

feel like everyone expects expects the

fed put to happen once again but every

time it's happened before we haven't had

inflation that's been this hot that's

actually affecting people's grocery and

gas bills to the extent that it is right

now and so

you know politically i think that this

is

just developed into the last 10 years

growing more and more polarized people

are looking for

a place to to blame because they feel

left behind they feel like the system's

rigged there's so much distrust in the

system i think this is a big reason why

millennials love the idea of bitcoin

because they're you know they're

passionate about technology maybe

changing some of these things but with

the fed they're very limited in the

levers they they can pull and in order

to take inflation seriously they have to

allow the market to continue to to sell

off right so i think

most people should explain expect more

pain don't you think

i think the currency will continue to

expand right the supply of currency will

continue to expand regardless of the fed

policy there's no policy to decrease the

money supply it's just a question about

what rate do we grow the money supply it

will keep expanding

and i think that um

the most critical issue to understand is

regardless of what the fed does

the currency supply in the us will

expand

but regardless of what the fed does the

currency supply and the rest of the

world will expand faster

right the japanese current the japanese

have a yield curve pegged to 25 basis

points which means they're buying

every bond

right in order to keep the 10-year rate

at 25 basis points and they will pump

infinite yen into the system in order to

keep their interest rates effectively at

zero

so that's the third biggest currency in

the world

right so that the chinese are expanding

their currency they the japanese are

expanding their currency the currencies

in south america are collapsing you know

argentina is is staring at a currency

crisis

right so the argentine currency

collapses what's the solution

get a 40 billion dollar loan in u.s

dollars okay where'd that money come

from

okay we printed 40 billion dollars we

sent it to argentina

okay that's just created out of nothing

right so

so um i think that the currencies are

going to continue to expand the

currencies are going to continue to weak

weaken against the dollar the dollar is

going to continue to weaken against

scarce desirable assets

in the near term they're going to be

lots of gyrations

and the other elephant in the room here

the big point is

and this is something that i think most

economists don't understand even most

even most conventional

financial thinkers even a lot of people

the crypto community don't understand

the inflation is not only a monetary

phenomena the inflation is not being

driven only because of currency collapse

inflation is is a policy phenomena so

the federal reserve in addition to not

being able to stop the policies of other

central banks they also can't stop the

they can't stop the

and what is the war they can't stop the

war in the ukraine they can't stop the

they can't stop the trade wars we have

trade wars right now we have massive

tariffs they can't un-snarl the supply

chain they can't stop the war in covid

and they can't stop the war on carbon

okay so there are massive inflationary

things

if i tell you you can't use carbon and

80 of the energy in the world comes from

carbon fuel fossil fuels

it is you know you're just driving that

up right

if i tell you you can't import

fertilizer from russia

you know and the war stops you from

importing it from ukraine

right then you're driving up the price

of everything

and if i tell you you know you have to

stand six feet from everybody else and

and none of your workers want to show up

to work because they're afraid to be in

the office because

they're afraid to stand next to other

people

right the medical policy the commercial

policy if i tell you you can't buy cheap

semiconductors from the far east or from

taiwan but you got to manufacture them

at 2 or 3x the price in the u.s

all of these things are inflationary and

then if i tell you that the way i'm

going to solve the problem is giving

away free money or get give away money

i'm going to subsidize fuel i'm going to

subsidize food

i'm going to give tax subsidies

that's inflationary so

the the monetary policy is really one of

ten policies that create inflation

right uh all of these other policies

you know are outside the control of the

central bankers

and you've got the policies that are

outside to control the u.s government

right the policies of russia and china

are outside of our control so the

chinese just recently locked down right

okay so if the chinese want to wage war

with covid and they're going to lock

down their economy

they're going to their

production and that's inflationary

so all you know pretty much every every

policy you read about in the paper in

the past 24 months

is inflationary what policy is not

inflationary um

driving on the right side of the road

is a policy which is not inflation like

stopping at a red light and going at a

green light right these are

non-inflationary policies

uh people agreeing to speak the same

language when we all learn english we

all use math when we adopt the same

protocol when we use the internet

right useful technologies that create

productivity are not inflationary so any

policy that encourages rational

spread of efficient technology

is not inflationary but but all the

other interventions

of which

pretty much that's all that's all you

see in the paper they're all

inflationary they're not stopping

if you check the interest rates to 15

percent tomorrow you couldn't stop the

other inflationary policies the currency

will continue to weaken

and as the currency continues to weaken

uh the real question is just what do you

want to own

and i think the answer at the end of the

day is you want to own things that

affluent intelligent people will want to

buy from you in a decade

what's been the biggest surprise for you

over the last two years

just with everything in the markets it

could be bitcoin but what's something

that you really didn't expect

i expected it all

[Laughter]

i you know like i

i i would have expected bitcoin will be

stronger than it is right now so i'll

give you that

but uh but you know the chaos and the

inefficiency i think is all predictable

well for people i mean there are folks

out there who are getting nervous maybe

they're new to bitcoin and they see a

company like yours that's taken on a lot

of leverage a lot of risk and i know you

put out a tweet i'll i'll read what you

tweeted earlier this week microstrategy

has a 205 million term loan and needs to

maintain 410 million as collateral

microstrategy has 115 000 bitcoin that

it can pledge if the price of btc falls

below

3562 the company could post some other

collateral see slides 11 through 12 and

q1 2022 presentation and this followed i

think an article maybe a week prior that

microstrategy could be margin called at

21 000. so can you maybe clarify that

because there's a lot of people who

tweet about you who are wondering is

there a price at which you know

microstrategy has to sell

yeah um

our company had about five billion

dollars worth of unpledged uh bitcoin

just just an asset

and we thought it would be reasonable to

take a 200 million dollar loan so we

basically borrowed four percent uh four

percent loan to value against the

bitcoin

uh in order to create more bitcoin i

think it would be uh

too much if we'd done 10x that much that

would be

that would be aggressive leverage but if

you had a

a million dollars and you borrowed forty

thousand dollars against your collateral

i think that's very reasonable

i think a lot of people don't really

understand what we did because they

don't really have the patience to read

all our financial statements so they

don't sit through our presentation so i

put out that tweet just to clarify

because some of the trolls on twitter

were kind of first they implied we'd

have some margin call it 30 000. then

they implied we'd have some margin call

or some liquidation have been at 21 000

and the truth of the matter is

we have enough collateral to we get to

about 3 500 and some change and then we

just have to post some other type of

collateral and we figure it out then i i

don't think bitcoin's uh going to

decrease by a factor of like 90 95

percent

uh i think that if you are borrowing

against bitcoin and you plan for an 80

drawdown you still can you still can

cover the loan then you're fine

right based on what we're seeing right

now i don't expect an 80 drawdown in the

market

but um

i did that to clarify for

shareholders who might have anxiety

because some people just read what they

read in the in the tweets and the trolls

will just always

say something negative if they can come

up with something negative to say what's

behind your decision to take on so much

leverage and actually take out debt to

buy bitcoin why the risk

i wouldn't call it so much leverage when

people when you say so much leverage

people think oh well i had a billion

dollars and so i borrowed two billion

more against it you know levered up

three to one

but you know and so you can take 20 tax

leverage in the markets and that means

like you started with a million dollars

and you borrowed 20 million right that's

leverage if you start with a million

dollars and you borrow 40 000

you see the difference between borrowing

40 000 and borrowing 20 million right

so 20x leverage is borrowing 20 million

dollars against a million and what we

did was borrow 40 000 against a million

the company has some debt uh different

types of debt we've got 2.2 billion

dollars worth of debt 500 million

dollars of a senior note like a junk

bond

and 1.7 billion in uh

convertible debt

but the 1.7 million in converts are

really unsecured

you know sort of equity linked financing

so we don't pledge any assets against

those things and they're

they're basically five six years in

duration to pay no interest

so it's a bit more like issuing equity

than issuing debt and the reason we did

that is

if you could borrow a billion dollars at

zero percent interest in order to buy

bitcoin it seems like a rational thing

to do i mean i think pretty much anybody

else in the world if i offered you a

billion dollars for free for

five years and said do you want it

probably to do anything

if you look you know almost if you're in

any business at all

cosmetics you know technology mobile

phones aviation fill it out if if you

could borrow a billion dollars at zero

percent interest and invest in your

business you would if you if you're not

willing to invest in your business then

it's the only reason not to would be uh

i don't have a use of the capital

i can't use the money or i don't believe

in the business

for the longest time we didn't really

have a use of capital like if you're in

a if you're in a non-capital intensive

business where you can't get any more

output from

money doesn't helped up the billion

dollars

uh but

but uh bitcoin is a capital intensive

business right our strategy is to

acquire and hold bitcoin so

if you offered me a hundred billion

dollars instead of a billion i could

acquire 100x more bitcoin so

so we have a use of proceeds so we

raised capital

we've raised uh

quite a bit of capital i guess now

we bought four billion dollars almost

four billion dollars of bitcoin 3.97

billion and if you trace what we did

natalie we

we took 250 million dollars in cash

and we bought bitcoin with the treasury

then we did a dutch auction

and in a dutch auction it's on it's like

you're doing a share of buyback we

offered to buy back our stock for 140 a

share

and the proceeds after the buyback were

accessed then we bought bitcoin with the

proceeds

so that was a that was the second

transaction the third transaction was a

650 million dollar convert

when we did that we trade we paid 75

basis points so the reason we did that

is we thought paying 75 basis points was

cheap cheap money

we're kind of effectively short the

dollar and we're long bitcoin we expect

bitcoin to go up more than one percent a

year

right

and then the fourth deal was a billion

fifty million and we borrowed that at

zero percent interest

and i think the conversion price was

fourteen hundred thirty two dollars a

share so it wasn't really dilutive to

our common stock shareholders

and we felt that bitcoin would go up

more than zero percent a year

and it helps us drive our strategy which

is to acquire and hold more bitcoin

so when bitcoin went down after china

exodus

we uh our stock traded down bitcoin

traded down it wouldn't have been a

creative to issue equity and it wouldn't

have been a creative to do a convertible

debt financing

we we had a company generating a lot of

cash flow

we had not actually leveraged it or

mortgaged it

so we went we did this junk bond

offering 500 million dollars and that we

pay six and eight percent interest

so in essence we're mortgaging the

future cash flows of the company

to buy bitcoin

and uh our view there is

if you have a set of cash flows for the

next decade

and if the money supply expands at

percent a year then you have to discount

the cash flows fifteen percent

so if you discount the ca at eighteen

percent growth that means your cash

flows are worth half as much in four

years

and they're worth twenty five percent as

much in eight years so

the money expansion rate is the discount

rate and if you're operating a cash cow

the rational thing to do is to forward

finance all the cash flows and convert

it into scarce desirable property so we

in essence mortgage the company because

we could borrow cheap

the cost of it would be almost

impossible to raise that money now

so it's kind of like asking a question

like

would you mortgage your house and pay

two and a half percent interest for 30

or would you wait until the cost of the

mortgage is five percent

and the answer is like why why wouldn't

i actually borrow the money at two and a

half percent right get the cheap money

and then buy something that i think is

uh going to appreciate in value more

so that all of those bonds

when you add it all up it's like 2.2

billion dollars with a 1.8 percent

interest rate

and they don't come due until late 2025

or 26 or 27 and either we either convert

them to equity or we refinance them at

that time

that's why we did that because i think

any rational person that could borrow

2.2 billion dollars at 1.8 interest

would probably borrow the money

you know will bitcoin go up more than

1.8 a year i think certainly it will

go up more than one point eight percent

a year

when the market changed um

changed direction after that junk bond

um our stock traded way up so we sold a

billion dollars of equity

that was actually a d leveraging

so if you look at what we did

you know we we bought a billion we

bought 250 million of bitcoin and then

we de-levered with the dutch auction

then we partially levered with two

converts then we levered with the junk

bond then we de-levered a billion

dollars of equity

then the market traded down so then we

levered up 200 million but the 200

million was again against a fairly small

a large collateral base so it's like a

a small degree of leverage and the

reason we do these is because every

single transaction we did keeps creating

our bitcoin right

a macro point of view the whole the only

thing that really matters is how much

bitcoin do you have at the end of the

day you're buying 121 millionth of all

the energy in the network forever and so

if you keep accreting your bitcoin then

you're getting a greater share of the

energy in the network forever and and

the network is getting more powerful as

learn more

so the macroeconomic strategy is

straightforward

the corporate strategy is also

straightforward which is we're a

publicly traded company with a security

someone buying our security is buying it

because they want to be long bitcoin

exposure

so if i had a million dollars and i

wanted to buy bitcoin but i can't buy

the bitcoin like a lot of people can't

buy the underlying property either for

legal reasons

or tax reasons or technical reasons or

charter reasons there are a lot of

reasons why they can't buy bitcoin

directly

so they have to buy a security

so when they buy a security their choice

is to buy an etf

either by beto or they buy

gbtc

or they buy a bitcoin miner or they buy

microstrategy and

and they all have different

characteristics but microstrategy looks

more like

a levered

spot bitcoin

holder and and we're paying yield

instead of charging you a fee

right like if you were to put a billion

dollars in a fund that charge you two

and a half percent fee you pay 25

million a year

if you put it into

a futures product that has a 10 or 12

percent rollover cost you're going to

pay 125 million a year to have the

billion dollars invested

if you put it in microstrategy we're not

charging you a fee

we're not rolling over futures

and we're levered to the upside

and you're getting a yield and it's

tax-free because we're not actually

paying it as a dividend we're rolling it

into more bitcoin so the day before our

silvergate loan we had 125 000 bitcoin

and then after we did the loan we ended

up creating up to 129 000 bitcoin so you

get more bitcoin and we didn't issue any

more equity so it's not dilution it's

not dilutive to our shareholders

now you're back to this very interesting

question which is so you're an investor

bitcoin goes to zero and you invest a

million dollars you lose a million

but with microstrategy you can't lose

more than a million dollars you can only

lose the million dollars if you invest

in a straight spot etf

one to one then you lose the million and

if it doubles you make a million but you

have to pay a one percent fee

but if you buy something like

microstrategy it goes to zero if it goes

to zero you lose your million but if it

doubles you'll probably get more than a

million because we've got leverage on

the upside and there's no fee

so now

we're we're providing an instrument

a security instrument that meets a need

for a public investor that wants bitcoin

exposure that needs to buy security

so that's why we've constructed the

company the way we have

not to mention let's just state the

obvious because we could

right would you rather own sixty

thousand bitcoin or a hundred and thirty

thousand bitcoin

i'd rather own a hundred thirty thousand

bitcoin that's better than sixty

thousand but one number is better than

the other number

and if um

if the way you're going to buy the extra

bitcoin is with extremely cheap debt

that's good

and the last point i make is that

if the currency is collapsing

then you need negative working capital

you need negative net working capital so

uh if you have a billion dollars in

pesos and that peso is losing 50 of its

value a year then it's costing you 500

million dollars to hold a billion

dollars in peso working capital

when you flip the billion dollars into

usd you're losing 200 million a year to

hold

that as working capital because that's

the m2 money expansion rate

if you didn't have bitcoin i mean the

ideal thing is buy a billion in bitcoin

and hold it but if you couldn't do that

what you would do is you would buy back

your stock with the billion dollars

or you would borrow two or three billion

right you don't want to be plus a

billion you want to be you want to owe 2

billion so you would borrow 2 billion

and or 3 billion in pesos

and so instead of actually losing 500

million a year by having positive

working capital you would make the

equivalent of 500 million a year by

having negative working capital

so leverage for a retail trader means

maybe you're going to get force

liquidated when when the

the asset trades up or down that's a bad

idea but um

debt for a corporation

is almost essential

it's almost essential

if you're in a um in a inflationary

currency

regime and if you look at all the

companies in the world pretty much every

company is running with zero working

capital or negative working capital if

they can

even the ones that look like they have

cash they'll have like 30 billion in

cash and 60 billion in debt

or something like that and so

that that's just kind of basic

shareholder

uh wisdom

for that reason is there a scenario

where you know wall street can use

futures to essentially bet against a

company like microstrategy that has a

lot of leverage when it comes to bitcoin

and basically draw the price down and

bet against you and pull pull bitcoin

you know in the other direction i i

don't think we move the bitcoin price

bitcoin's much bigger than us if you

look at the total spot volume and the

futures volume of bitcoin we're just a

small part of it i think that certainly

people on wall street do shorter stock

but uh it works the other way too when

bitcoin moves up they unwind the shorts

if you look at the the volume of trading

uh

it's it's excessive and what you're

doing is you're arbitraging i'm sure

people are arbitraging our stock our

equities versus our debt versus other

people's equities versus other etfs

versus bitcoin versus bitcoin futures

all the time

and that's fine they can do what they

like at some point uh the problem is if

they

if they push too far they'll get caught

short naked naked short and then they'll

get squeezed

right and that would be a dangerous

thing for them right because on one end

you can say well you know someone on