EXCLUSIVE: Michael Saylor Masterclass On Bitcoin

good morning everyone welcome back to

the best business show i'm super excited

today we have a very special episode

myself and michael saylor sitting down

for a two-hour in-person conversation

michael and i recorded a podcast episode

about a year ago

right after he announced that he was

going to put a very material portion of

his company's balance sheet into bitcoin

and so maybe michael we can start with

kind of a one-year update from when you

actually decided to make that uh

decision and how things have been going

so far with uh microstrategy

sure um

well if you roll the clock back

to july

we had 500 million dollars of capital in

our treasury

we were holding short dated treasury

securities and generating effectively

like 20 basis points of yield on it

we've seen a k-shape recovery

wall street came back with the vengeance

main street was

was flat on its back

and

it was clear there's monetary inflation

so we decided that we

were going to lose a large portion of

the 500 million in purchasing power if

we didn't do something my forecast then

was probably like 25

inflation like and you could have got

there just by looking at the s p index

so i thought you know 500 million minus

25 like losing

125 million dollars in 12 months

is kind of like losing money at 2 to 3 x

the rate that the 2000 people in the

company were making money

so

we either needed to give the money back

to the shareholders or we needed to

invest in something

you know the thought was well

if we're a company straw a main street

company struggling against all the

lockdowns with all the uncertainty and

we

are doing it minus 500 million dollars

yeah it feels like a university giving

up its endowment as it goes into a

crisis right so

decapitalizing the company

it it was a way to give the 500 million

of shareholders they would have put in

the s p 500 and they would have got 34

percent on it

if we had done that

but we would have in essence left our

ourselves defenseless without any

capital so

that was one strategy the second was

invested all

um

i would have bought 500 million worth of

bitcoin if

if i was a private company i just would

have walked out

bought all 500 million i would have done

it at whatever 10 000 a coin

but as a public company you got to think

about your outside shareholders

and you can't it's not like there's 10

you can't just go to the tent of mask

them what they want to do and get their

buy-in when you're public

you've got a shifting set of outside

shareholders that are changing every

minute of the day when the stock market

is open

so the way that you actually handle this

is a bit more

more um sophisticated what we did is we

transparently

we telegraphed that we were looking at

this our first press release was an

announcement that we were going to

buy back 250 million dollars worth of

our stock over the course of 12 months

and we were going to invest 250 million

dollars of our capital in hard assets

and we said we're looking at everything

under the sun and bitcoin was one of the

things

so i

my first love of the bitcoin community

was the way that i knew i liked all the

bitcoiners was was one day later some

cyber hornet some bitcoiner goes

microstrategy is considering buying

bitcoin with 250 million dollars

now as bitcoin merged in there with gold

silver commodities equity property real

estate anything you could have imagined

but the bitcoin community immediately

picked up on that i don't know how they

do that right they must be scanning for

this

nobody else picked up on it the stock

was trading 120 a share

a week goes by

literally you announce you're going to

spend 250 million dollars and buy your

stock like you think it would move nope

crickets

um

but the market had a week of notice and

then a week later we stepped it up into

the next gear which is

okay

we're gonna buy 250 million dollars

worth of bitcoin we made the decision

we're not splitting it across six assets

right

and it's a good thing we did right

because uh bitcoin's up 332 in 12 months

gold is down

7

if we'd split it 50 50 125 million of

gold 125 million of bitcoin

right it would have cost us billions

if we'd gone all gold it would have cost

us many many many billion billions we'll

come back to that in a second

so so we had to do something but the

question is what so we just picked

bitcoin we made the decision but we

thought this is going to be jarring for

some people

stock is around 122 at the time

right to put this in perspective the

company's 500 million dollar revenue

generator generating cash flow

and um we have more than 500 million in

cash

and about 10 million shares so the

company's trading one times revenue plus

we give back all the cash the company

trades at one times revenue the stock

goes to 60 bucks a share

right so we're like 122 no one's really

paying attention but we said well maybe

people think this is offensive they're

not gonna like this or it's too risky

how do you actually orange pill

every one of your outside shareholders

at the same time

well you can't

so

the next best thing is we just offered

to buy them out

so the idea is if you don't like this

we're going to buy buy you out we're

going to post 250 million dollars to buy

back shares at a premium

so we offered to do the buy back at up

to 140 a share

which is you know

buyout premium if you don't like it then

you sell your shares back to us at a

profit

we wait 20 days

so the market trades for 20 days and you

know in the first week the market's

trading on 135

like people so they're not even they're

not even quite sure about the bio then

after after a while they start thinking

they're like well if i can put it back

to the company at 140

then presumably

maybe it's worth more so the stock

trades up a bit past the 140.

and at the end of the tender period we

have uh

about 60 million dollars worth of shares

tendered

everyone that didn't like the strategy

had 20 days of selling to the open

market and if you sold in the open

market above 140 then why wouldn't you

and if you're still holding the shares

at the end of the tender period and you

don't like the strategy you sell under

the tender

so the result of the dutch auction is we

had 175 million dollars of extra capital

you know

we thought about it we put another press

release

okay this is our primary treasury

reserve asset

so the the first notch was this is a

treasury reserve asset

the second step is this is the primary

treasury reserve asset then we bought

175 million more bitcoin so that point

we're up to 425

million uh the first tranche is in the

11

500 range

uh that was that was a little bit

difficult it was more difficult to do

the second tranche because bitcoin

traded down we had a loss it traded down

to like you know into the tens and even

yeah you remember that so the second

tranche we bought at nine at 10 000

something

uh because we're committed right and and

you know if you go pull the twitter

stream there's all sorts of interesting

commentary on our our you know

strategy so you basically had done let's

call it up to that point 425 million of

a 500 million dollar balance sheet and

you had rotated your shareholder base to

people who were aligned with the

strategy and you had also planted the

flag in the ground as the first publicly

traded business in the united states to

identify uh a treasury strategy that

would leverage bitcoin as the primary

currency or the primary asset that you

would use in your treasury when you do

all that

i know that there's been a whole bunch

of conversations in the uh kind of

behind the curtain i don't need names

but what are other fellow publicly

traded companies other finance

executives people on wall street at that

point are they saying you're crazy are

they oh wait this is really interesting

tell me more about it trying to learn

like what was the reaction after the

first 425 million dollars i think it was

largely ignored by every other publicly

traded company i i don't think there's a

lot of awareness or

to it when we did our due diligence

checks

we found overstock two or three years

ago had a few million dollars of bitcoin

on his balance sheet

and that's it right we couldn't find

anybody else um

and uh and so this is off the beaten

path but it seemed like so rational to

me like it seems so obvious bitcoin is

is digital gold

it's basically engineered to be digital

gold what do you need in

a inflationary environment you need

something that's like gold but better

than gold

you have to make a choice

uh it was obvious that

the institutions were coming right i

mean you had

you had companies like fidelity getting

into the space

just you know six months earlier or

whatever but the fact that we're

institutional custodians was a big check

box grayscale was doing good business at

that time so

so

it struck me as being a rational thing

to do but no other public companies had

done it and it wasn't

it wasn't

totally clear to me why although at this

point now it becomes clear right in

hindsight

so

we went through that we did the 425

million uh the stock traded up bitcoin

started trading up

at that point i started speaking in

public and you know you were the first

person i spoke to

i remember right

and and you know i learned most of what

i knew about bitcoin by by uh scouring

the internet and looking at your podcast

looking at reading all of the stuff that

was posted right and i tripped through

all these different things

and uh one thing i knew from your

podcast was

you always ask the question

right

you know at the end right you're like

you can ask me a question remember

correct now you get to ask me the one

question so what i remembered about pomp

was he wants to know a book and he wants

uh and he wants

a question or he gives me a question so

i'm like gosh what question am i going

to ask pomp

and

you know how do you learn bitcoin you

study twitter and you study youtube and

you surf the web so here's what i know

i know i get to ask you a question and i

know jack dorsey has bitcoin in his bio

so the question is how do we how do we

get jack dorsey to buy bitcoin next

correct right correct

and uh you know at that point

we're all alone is a publicly traded

company and people aren't quite sure if

we're crazy but what happens next is

some bullish things right i mean

i thought that um

when square bought

bitcoin

that was a seminal event

right because one data point is a

question mark but when you had the

second data point you can draw a line

and so that was a big day

um when uh paypal

announced support for bitcoin

and they started uh sort of moving it

that was a big day that was a data point

right those were the data points

that moved us from 10 000 to 12 000 a

coin

and uh

at some point you know somebody some uh

citron research studied uh you know

discovered my stock and

andrew left i guess said something

positive and uh the stock started

trading up and then it traded into the

high 100s and then it

it traded into the 200s and and bitcoin

started trading up and when we got into

the teens

people thought well there's something

interesting here

so the next step in our journey was like

in addition to me starting to

communicate why we had done what we done

the next step in the journey was to go

out and buy more bitcoin so we started

buying more bitcoin as part of the

treasury reserve strategy and that got

people's attention

then um

when the stock got to the 300 range

that was the highest it's been in a

decade

300. so

we started thinking well maybe we can

raise more money and so we went back to

the convert market and we had

we were trying to raise 400 million

dollars in a convertible debt offering

but it was extremely popular

and we were oversubscribed so we upsized

the deal to

650 million dollars so that was a

screaming home run we

we had uh we had proposed a 32

to 37 premium we priced it at the 37.5

premium the high end of the spread

we proposed

like

1.25 to 0.75 percent interest we priced

at the low end of the

of the interest rate so we raised 650

million dollars at 75 basis points

with a strike price of 398. the stock

had not traded at 398 in a decade so it

seemed like reasonable if you could sell

650 million dollars of stock at 398

dollars a share seemed like a reasonable

thing to do at the time

so then we took that we bought bitcoin

with that so that was

we started out with um

with we're going to raise the money for

general corporate purposes and

along the way the discussion was what

are you going to do with it i said well

you know i want to be able to buy

bitcoin with it and they said well we

should put that you know into the

disclosure i said yeah we should

disclose that

and then they said well are you sure

you're going to buy it i said yeah so

eventually it flipped and it became

we're doing it to buy the bitcoin so

that became

in the history of first right we're the

first public company to buy bitcoin on

the balance sheet where the first public

company the declarative treasury reserve

asset we became the first public company

to do a dutch auction which is in

essence like an equity issuance to buy

bitcoin right it's like i'm either

buying my equity back or i'm uh or or

issuing the equity so with the first

dutch auction

you know where the proceeds eventually

became bitcoin then the first

convertible bond to buy bitcoin

and uh i think that all of those things

rotated the shareholder base right

i think um

the most important thing was to be long

bitcoin right so in essence the first

publicly traded company where the

shareholder bases is long bitcoin

and it started out my aspiration was

it'd be great if half of our

enterprise value is based upon

enterprise software

and half is based upon the assets

because before we did this

we got substantially no credit for the

assets

like people are basically taking the 500

million and they're like okay well

that's going to be worth zero

right or negative because you were one

times revenue plus uh just the cash on

the balance sheet yeah

yeah so

um if you've got a low growth cash cow

right that that's like being a dentist

where you're going to make a lot of

money every year for a decade and maybe

you'll make five percent more each year

for a decade if you've got a low growth

cash cow but the money supply is

debasing at 25 a year

it kills you right

it's like the road to serfdom is working

exponentially harder for a currency

getting exponentially weaker

what i saw was 2 000 people

doing a hundred thousand things right

every year

to make 50 million dollars

and then watching the enterprise lose

a hundred million dollars a year

due to a political decision so in

essence we're running as hard as we can

we're falling backwards and the

situation was literally hopeless right

like people

wonder where the bitcoin is hope come

from

well it just was hopeless right i mean

the operating business is hopeless and

and

you know okay you know you're going to

work yourself to death for a decade and

do a million things right with 2 000

people and you're going to be worse off

in a decade than you are today

that's operationally hopeless right

that's

and then on the balance sheet

if somebody says we're not even thinking

about thinking about raising interest

rates

it means for the next four years you're

going to get zero percent on your money

and is going to be worth

half as much

in 36 months as it is worth today

the balance sheet is hopeless

and this is all before we even see the

persistently high inflation that we're

seeing now right this was just from a

market structure standpoint of uh this

had been going on

pre-kovid

got accelerated during covet you started

to recognize this again last year if you

go back and look at the inflation

numbers in q3 q4 i mean it was obvious

that we were in uh increasing or

accelerating but we weren't at five

percent cpi for three four five months

right now's a much much different

situation

so at what point do you switch from this

as purely a defensive like treasury

strategy of we want to take the cash on

our balance sheet and put it in an asset

that uh we can protect ourselves protect

our purchasing power

to then it feels like you made the

switch to go offensive that first bond

offering was an offensive i think you

called it right there i think that it's

a defensive strategy uh through the

dutch auction we had to do the dutch

auction to provide a graceful transition

for our shareholders to get long bitcoin

right you're either long bitcoin or

you're selling out to us at a premium

one or the other

and then from that point bitcoin started

moving up and

our stocks started moving up and then we

realize that we

like the conservative thing to do is

just stop there

and if we stopped there i mean we would

be

all equity 475 million dollars invested

at a

thousand dollars a coin or something and

that's not a bad result right we would

have made six extra money

but um what we realized is we could

borrow money at 75 basis points

and we and

you know bitcoins up 171 a year every

year for a decade right

if you can borrow money at one percent

and invested 171 percent your arbitrage

is 170 on how much well how how much do

you want right like where are you going

to stop that when you borrowed at the 75

basis points i was impressed but then

you followed it up and you borrowed even

more at a zero percent interest rate if

i remember correctly

what was the second offering

because the first offering came out the

strike was 398 bitcoin kept moving up

our stock kept moving up

eventually that bond was the best

performing bond of the entire year

right anthony what i'm saying is of

every single corporate bond sold in the

year 2020 every convert

every junk bond everything sold every

municipal bond whatever you could

imagine the single best performing bond

was microstrategy convertible bond which

where you would have you could have

doubled your money you know at some

point is trading insane amounts like

triple

you know your money on a bond okay so we

had good success there and of course

bitcoin kept moving up

and our stock up moving up and

we realized by february that we could do

another offering the next offering uh

was we came in the market offering 600

million dollars the first one we started

with 400 million this time we started

600 million but again it was

oversubscribed we upsized it exercised

the green shoe it became a 1 billion 50

million offering

and the range was 50 basis points to

zero so we struck it as zero

and uh

you know uh up 50 37 i forget the number

but we ended up having a 50 premium

or 47

i forget exactly it was a high premium

it was a low coupon the strike price was

fourteen hundred thirty two dollars a

share so now put this in perspective

this is ten times

the price of the dutch auction

[Music]

you know some number of months earlier

now um

so why'd we do that well because if you

could borrow a billion dollars at zero

percent interest and invested in

something going up 170 percent a year

pretty good trading why wouldn't you do

it right uh like every single business

on earth that's debt financed presumably

is borrowing money to invest in

something which is going to return a

higher yield than the cost of the debt

now this i want to pause here and make

one point

the reason that i was sensitive to

inflation

like

was

i immediately saw the inflation in march

and april in the stock market

right because my inflation bogey wasn't

if i were to go to all my uh investors

and say i got 500 million dollars i'm

investing in a 2 interest and inflation

rates 1 percent

they wouldn't have given me a pat on the

back they would have said the s p index

is moving up ten percent a year your bur

your hurdle rate your cost of capital is

not one percent or two percent it's ten

percent

and maybe you're getting five percent

yield on uh on a piece of debt then i

don't hold my nose but you're losing

five percent a year

half-life of the money is 12 years

okay fine but like you shouldn't be

holding you should be you should be

buying your stock back or buying another

company with that sitting on that cash

is

it doesn't make any sense

safety says

the dollar weighted

monetary inflation rate across you know

all all currencies for the last 30 years

is 14

interesting number he comes up with 14

is the inflation rate of

the currencies now that would be the

inflation rate on scarce desirable

assets or any portfolio of assets and if

i look at my screen right now over the

last 10 years the s p 500 is showing

14.15 percent interest a 14.15 percent

compounded annual growth rate

nasdaq's up you know whatever 19

you know uh gold is up

20 basis points

nothing

bitcoin is up 170 base

170 right and long bonds give you like

two and a half percent

so the monetary inflation rate equals

the s p index well yeah that the

traditional way you'd value um

a stock

is

you would put a risk premium on it and

you would say

well your cost of capital is the return

plus the risk premium so

it used to be we think well there's a

three percent risk premium and the

inflation rate then would be 11

but i think that if you buy the s p

index you're kind of in theory stripping

out the risk because you're buying 500

companies

so the s p index can be viewed as a

proxy for monetary inflation

and

the question of inflation is what's your

inflation rate well what do you need to

buy

if you're a consumer

then your inflation rate might be cpi if

you agree to buy what the federal

reserve tells you you should want

right and and the market basket of

things in the cpi is what the government

says you should want in your life but

they never included a picasso or a jet

or a yacht or a house in miami beach

in that market basket a step even

further than that is the number 14 uh

percent is very interesting because my

understanding is uh if you go back

obviously uh cpi used to represent a

cost of goods index so what is literally

the change of price of individual goods

year over year over year and that's how

inflation was measured now obviously we

have a cost of living index which is

what you're talking about in terms of

well here's the things that we think you

should want here's the general

weightings of these specific assets or

consumables inside of this basket and

then that's kind of our moving target

for this measurement of inflation but if

you were to go back um and look at the

cost of goods index based on how it used

to be calculated

for cpi and apply it to today's numbers

you get about 14

and so not only is the s p not only is

that monetary inflation but also that

cost of goods index based on the

original calculation of inflation is

around 14 as well which is uh you know

there's coincidences in life but it

seems to keep coming back to somewhere

in that kind of mid uh teen

number when we're trying to understand

what is that inflation isn't it

interesting you know the hedonic

adjustments kill you but

on the other hand

you know and and i say this oftentimes

inflation is a vector and what i mean is

you got to use you got to use

multi-dimensional arrays

and and linear algebra to even start

multi-n-dimensional linear algebra to

even start

to deal with the issue another way to

say it is you can calculate a different

inflation rate for any person in any

jurisdiction based upon their mix of

product services and assets they want to

acquire

and so common sense says a person that

wants to acquire a set of manufactured

goods and wants to watch streaming

youtube has a lower inflation rate than

someone that wants to buy picassos now

what if you want to be rich if you want

to be rich your inflation rate is very

high

because you have to acquire assets if

you want to be middle class your

inflation rate is different

so

back to why why i did what i did

if you're the ceo of a publicly traded

company your inflation rate is the cost

to capital

and the cost to cap because your

shareholders hold you to that cost of

capital if i go to a public a public

investor and i tell them my goal is two

percent

and they're saying well the s p is up 14

then i'm undershooting their goal their

their index is is the s p index right so

so the inflation rate for an investor

is the index

now of course different investors have

different impact decisions if you go

back to the strategy if you're a fixed

income investor

you're you've got like a a sovereign you

know or corporate uh fixed income rate

you know you've got the junk bond index

you've got the corporate

you know investment grade index you've

got the sovereign debt index

you have capital structures in the world

that have different indexes someone that

wants to send their kids to an ivy

league school

and wants to have a house in the

hamptons

right they have a different index

someone

and someone that wants to be obscenely

wealthy has a different index right so

that's why you could everybody talking

past each other because

all

and of course if you keep changing the

indexes

the s p 500 index changes right they

rebalance it

the pci the pce indexes they get

rebalanced so so the indexes are

changing

and if you allow someone else to feed

you the index they want you to focus on

you can

you can see it right now right the

official inflation rate in canada is

four percent but the housing price is up

fifteen percent the official inflation

rate in the us is five percent but the

case shiller index is up 27

okay and uh

and uh of course

it all comes down to deciding what you

want in life now in the last 12 months

the s p is up 34 percent if you're

sitting on a 100 billion dollars worth

of cash

and you put it in the s p index you got

34 billion dollars back you have 134

billion right now

if you if you held it in conventional

treasuries you're short 34 billion

if you convince yourself that the

inflation rate was five percent or if

you convince yourself that you're you

could say look my treasury index is is

just the short dated sovereign debt

index and so as long as i'm beating the

20 basis points

i'm good

and you know and and and uh by the way

like

if i have a bunch of money sitting in a

bank my bankers come to me i've

literally had

bankers from the big wire houses they

came to me when i'm sitting on 100

million or 200 million in cash and they

go

you know

we can get you into one of our money

market funds that'll yield 22 basis

points

and that's much better than the nine

basis points and they're selling this to

me there are people in suits

that make a lot of money

and they're selling it to me and you

read the prospectus and the prospectus

is

they're gonna do something and they're

gonna charge you a 27 basis point fee to

generate 22 basis point yield to you

you're literally they're making more

money than you are you're giving 60

of the yield to someone in a suit that's

getting that's giving you a service to

get your five basis points more but

there are

there are people that convince

themselves

this is a good idea right and

we come back to that second it is a it's

an important truism in the market why is

it that everybody hasn't bought bitcoin

people ask that right all the bitcoiners

wonder why don't all these investors buy

bitcoin and the answer is because

there's trillions of dollars of capital

locked up in capital structures that are

chasing a different index

right there's trillions of dollars of

money sitting with people that think

that inflation is cpi

there's trillions of dollars sitting in

real estate funds and they're trying to

beat cpi if

i got rents and i'm raising them at the

cpi rate and i'm happy with it

there's trillions of dollars invested in

fixed income funds where they have to

beat the trunk bond index or beat the

corporate index or beat the sovereign

index and if they beat the sovereign

index

if i have if i have 20 billion dollars

and all i got to do is beat you know the

junk bond index or or i get paid then

i'm getting paid to invest 20 billion

dollars to get 50 basis points more

what happens to those people

let's say that inflation isn't 5.1 or

5.4 wherever it comes in on a monthly

basis now uh and we all agree it's

something that is higher but there's

disagreement on how much higher is it

six percent or is it 14

um in terms of uh the actual inflation

number what happens to all the people

who are using cpi as the benchmark do

they just succumb to the inflation over

time and continue to lose money until

they wake up or something else i think a

lot of people have a hybrid situation

like um for example

let's say i run a real estate trust or i

run a real estate company and i have

a hundred million dollars

a year worth of rental income

it's capped at cpi

does the leases are assigned 10 years 20

years 30 years duration five years

duration and then you've got

all the trade relationships like i can't

go to i can't go to the people that rent

my

building and tell them that the

inflation rate's 14

right i mean would you pay a 14 increase

in your rent here no no no so there's a

certain inertia in

in parts of the economy where they're

going to move up at cpi or they're going

to be flat or maybe they can do double

cpi but at the same time maybe you're

the person running that real estate

company you're thinking well i'm going

to take my cash flows and i'm going to

invest them in would you invest them in

a stock that you thought would go up at

cpi or would you invest them in the s p

index if you thought you would get cpi

not really

so what you have is you have people that

are sweeping their cash flows from an

operating business

that's low growth

and they're putting in the s p index

if you know they're looking for the

growth to come from the investment okay

the s p is up 34

how many companies in the world

generated 34 more cash flow or raised

their prices by 34

or grew their revenues 34 in the last 12

months

not many right 98

99

they're in a they're in a a fiat

operating system where

they're going to raise their prices or

generate cash flows at a rate slower

than

the rate of monetary inflation

but

those same people will turn around and

they'll buy bitcoin

or they'll buy property or that you may

buy property that you is going up faster

right

there's not a single commercial rent

there's not a single commercial lease i

think in the world where they raised the

price of the rent 27 in the last 12

months right

at least

i can't imagine if you had a lease no

one's got it capped at the case shiller

index

so on one hand residential property or

other types of property could actually

be accreting at a much higher rate while

your rents don't accrete at a higher

rate so

you're taking duration risk

so i

i guess the more important point is

there's a lot of capital when we think

about capital structure

it's like 500 trillion dollars to 900

trillion dollars of capital floating

around there it's locked up in

structures

some of it is in currencies and and it

can move rapidly some of it is invested

in companies that can't

right move rapidly some of it is tied up

in in uh equity some of it is tied up in

in debt

some of it's tied up in a trust i have a

trust my trust gave 10 million dollars

to a financial

advisor or or to a company whose

strategy is investing in

mid-duration corporate debt and every

year i review their performance versus

their index and over the course of a

decade i might start to

shift small amounts out

but i think that the capital is

structured in such a way there's enough

inertia in the system it could take

30 years

yeah for the for the capital to get

reallocated right like we're we're

waging a war on the 60 40 portfolio

right

how long will it take before people

allocate that as 65 35 or 70 30. right

it takes a long time there are people

still invested in gold you and i joke

about that

gold's been failing for 12 years or

something like that right gold's the

same price as it was when bitcoin was

invented and yet

an aggressive move would be a macro

investor allocating from 50

gold to 45

gold and 5 bitcoin and that's a bit

that's a year's work yeah let me ask

this question um retail investors or

individuals i think uh over the last 12

years or so um took bitcoin and as a

generalized group it went from a

contrarian idea or contrarian trade to a

consensus trade there's now you know 100

plus million people around the world

that have decided hey this is good

enough for me to go ahead and store some

of my value uh or economic wealth here

um and so you can argue that that

contrarianism became more of a consensus

we now over the last maybe 18 months

have seen in the financial or

institutional uh finance world more

people jumping into the game and so

definitely some shift from pure

contrarianism to now a little bit more

of a consensus everyone has to have some

sort of bitcoin strategy you can't

simply just say oh it's just for drug

dealers it's just for criminals you at

least have to have had a conversation

now because fidelity paul tudor jones

stanley druckenmiller many others have

all now started to participate

what does it take for public companies

where i basically break down there's two

groups right there's yourself tesla and

square as the three major publicly

traded businesses that are multi-billion

dollar companies that have pursued a

treasury strategy that includes bitcoin

and then there are all of the publicly

traded crypto native companies whether

they're miners whether places like

coinbase etc

it's still contrarian in the public

markets to have bitcoin on your balance

sheet what does it take to get the shift

that we've seen in those other two

cohorts to now get it to a consensus

type uh you know movement or idea

i mean i think there's some

you could check off catalyst

that are impediments that will become

accelerators

um

first of all uh regulatory clarity

right uh

if you're hearing if you're seeing

support for

let's start with the most basic issue is

bitcoin an asset or a currency

okay

the word cryptocurrency has is a very

politically charged world word because

if bitcoin was a currency it's an

opposition to the us dollar okay

and if it's an asset it's an opposition

to gold

okay so um just resolving the fact it's

a digital asset not a digital currency

most people's how many public uh

speakers how many how many well-regarded

investors have made negative comments

about bitcoin over the past 12 months

because they're mistaken they mistakenly

think it's a currency and they think

they're sticking up for the dollar right

many

like i prefer the dollar so if you

understand it's a digital asset

a a scarce store of value

speculative digital asset that's how

politically correct people would refer

to it

right and

anybody else would say it's just it's

just a digital asset or a store of value

asset the first uh the first impediment

is just understanding that and educating

the market that it's a digital asset i

think the second impediment is

getting over the issue of uh is it a

threat

to the powers that being will be banned

so first what is it it's an asset second

will it be banned okay well no we're not

going to ban cryptocurrency we're not

going to ban bitcoin it's going to be

around here so those two check boxes are

huge

i think the third uh

check box is can i actually buy it via

my existing bank every publicly traded

company's been doing business with

probably the same bank for 30 years pomp

some have been doing this with the same

bank for 50 years

some for 100 years

okay if you trace it to to have adopted

a new banking relationship is not a one

in a decade thing but public companies

don't change in a decade right

so

if i could if i could buy this directly

through bank of america or jpmorgan or

city group etc i think that makes a big

difference if i have to go

to a you know

an institutional-grade bitcoin exchange

that's a one-year exercise in due

diligence

right friction to doing it

there's two issues right one is

is before you give a billion dollars

to a counterparty

you know you have to you have to inspect

their accountants their legal teams

their licensing their executive team

would you give a billion dollars to a

private company

that's new right it's like that's a huge

hurdle um and the second is they're not

fdic insured right they're not the

the in primitive being backed by the us