Michael Saylor: Bitcoin is Transforming Global Capital Markets | MSTR & BTC Outlook

So, Michael Sailor, ladies and

gentlemen, executive chairman of

strategy.

Nice to see you all today. Um,

I'm uh I'm grateful to be invited uh to

speak. It's a lovely hotel.

I woke up this morning, the waves were

lapping on the shore. It was a Palm

Beach experience. Um I'm going to speak

about the digital transformation of our

capital markets and specifically um

three things. Uh the formation of

digital capital, the uh formation of a

new asset class, digital credit,

and then a new business model, a new

type of company, the digital treasury

company. And I think that um we're in

year one of this digital transformation

because we didn't have global consensus

on digital capital until March of this

year. Uh no one had seen digital credit

instruments before January and February

of this year. And uh and even in the

area of of the business model digital

treasuries, it wasn't wasn't even clear

in our mind

exactly what the business model was long

term until just a few months ago. But

but just in the past few months, I think

it's all clicking and I'm delighted to

share it with you. So let's start with

uh digital capital.

Well, you know, for those who didn't

guess, Bitcoin is digital capital. uh

capital, economic wealth, long-term

store of value. People talk about a

store of value asset. It's capital. What

is 20th century capital? Um 20th century

capital is equity. We call them the

equity capital markets. Uh equity,

private equity, public equity, real

estate, sometimes art held as a store of

value. Could be capital, maybe a sports

team, gold.

Um capital is uh is the left hand of

money. The right hand of money is

currency. Medium of exchange, the

dollar, the peso, the yen, the euro.

Stable coins are currency. Bitcoin is

capital. A lot of times people come to

erroneous conclusions because they think

about money and they think money is

currency as opposed to money is capital.

But of course, money could be used, the

phrase could be used to refer to

currency or to capital. It just happens

that a lot of people are lazy thinkers

and they insist upon interpreting it as

currency when it should be capital or

interpreting it as capital when it

should be currency. And I well Bitcoin

must be awful because I can't buy coffee

with it. But of course Apple stock isn't

awful because I can't buy coffee with

it. But Apple is capital. And so if you

define Apple as currency, then Apple is

an awful currency. And Apple will never

be the world reserve currency. And

therefore I must not value Apple. But of

course that's stupid. Of course, Apple

isn't currency. Apple is capital just as

Nvidia, just as a sports team is, just

as gold is. Um, you know, people never

really used gold as a medium of

exchange. It's always been backing some

credit instrument for thousands of

years. So, it's a myth to say, "Oh,

yeah, we used gold as currency and c and

as a store of value."

Generally, you do one or the other. So,

this capital idea, store of value

capital, um, wouldn't it be great if I

somehow came up with a digital way to

store my economic wealth for all of

eternity? Satoshi figured it out. People

for 17 years couldn't agree on it. They

fought over it. And the battle was

decided by this administration after

November 5th. On March of this year,

David Sax said, "Bitcoin is digital

gold. We recognize it as special." And

um as you can see, JD Vance thinks it's

digital gold. Donald Trump thinks it's

digital gold. I think you heard from

Eric Trump this morning who agrees it's

a digital gold. The head of the SEC,

Paul Atkins, thinks it's digital gold,

but so does the head of uh the national

intelligence director. I mean, Tulsi

Gabbard or Kelly Laughler or Bill Py or

Robert F. Kennedy or Howard Lutnik or

Cash Patel. Now, those are people you

wouldn't expect to have an opinion on uh

the distinction between currency and

capital and media exchange and store of

value, right? I by the way, if I if I

took a hundred uh PhD economists that

are classically trained, they probably

wouldn't get it right because they tend

to wrote uh wrote recite things that

they learned 40 or 50 years ago out of a

textbook without thinking much about it.

And of course the phrase that everyone

everyone recites without thinking much

about it is uh money is a store of value

medium exchange and unit of account

there and they stop and they don't

really say any much more about it. But

of course if it's very obvious to every

member of the cabinet Bitcoin is digital

gold and it was obvious to the president

of the United States you know then um

that's a pretty big step forward. 12

months ago we had one member of the

cabinet. Well, 13 months ago, one member

of the cabinet, Gary Gendler, who was a

Bitcoin maximalist,

you know, people, you could tell if you

were sophisticated. Gary Gendler was a

Bitcoin maximist for four years. Um, the

only people that couldn't tell were the

altcoiners, but but maybe they could

tell, too, which is why they didn't care

for him that much. Uh, but Gendler's

view was Bitcoin is a commodity. It's a

it's it's a a digital asset. It is sort

of a digital gold. uh he didn't care for

anything else and no one else in the

Biden administration had any opinion

whatsoever other than a negative

skeptical one. So the November election

was important.

This decision to embrace Bitcoin was a

very important move because that rippled

everywhere in the world. Um

what's the idea of digital gold? gold an

a bearer non-s sovereign bearer

instrument store of value asset that I

can teleport from here to there on a

digital rail okay straightforward idea

you need a network to do it the question

is which network and which protocol and

for 15 years we all fought about which

network which protocol and uh and the

matter is decided by political power

it's decided by financial support the

banks have embraced crypto, but

specifically they've embraced Bitcoin as

digital capital. Um, in the next six

months, you'll see a ton of banks start

to custody Bitcoin and extend credit

against it. Uh, in the past six months,

we've had about half of the major banks

in the United States start to extend

credit against IBIT, which is wrap

Bitcoin. So, all that's happening this

year as we speak.

Money determines the winner, right? So,

Wall Street embraced um embraced

Bitcoin. The IBIT ETF is the most

successful ETF in the history of Wall

Street. I've often times said um you

know

the war to determine the future of the

money is going to be fought and won with

money, right? It's so it's a question of

how much money is going to go onto which

network. Are we going to designate

Dogecoin or Yoyocoin as digital capital?

are we going to designate Bitcoin? And

of course, that's 140 billion from the

ETFs.

Um companies, 200 of them capitalize on

Bitcoin and they put about 100 billion

in. Um our companies spent a decent

amount of that, but we're not the only

ones. And if you were to say,

okay, what's the big idea? The big idea

is a bunch of rich people want to keep

their money and they don't trust the

bank. They don't trust the government.

They don't trust each other. They don't

trust anybody and they'd like to keep

their money forever. So we created

digital bank. We put it in cyberspace

and since we don't trust each other, we

all run a copy of the software and

that's a decentralized network. Okay.

Well, that's not a bad idea. this idea

that we're going to put our money at a

bank in cyerspace and we're going to run

a decentralized protocol and once you've

decided that the question is well can a

human being engineer that well yeah they

tried 50 times eventually Satoshi did it

with Bitcoin it worked it caught

and the second idea is well you know is

that the winning network or is there

another protocol that's going to

supplant it and that took about a decade

to settle that that question there was

the block size wars there was um there

was a lot of struggle

But people often times they they make

the mistake of thinking this is an

asset. It's not an asset. It's a

protocol. It's a protocol that uh that

actually inspires a network. The network

is hardware and software run by people.

There's an asset circulating on that

network. But the big idea is an economic

protocol for digital capital. And people

all worry well what you know what if

that gets hacked. And and the point that

I make is English is a protocol. Why are

we speaking English? Because a bunch of

smart powerful people fought over this

matter and the people that spoke English

won. If Napoleon had won, we'd be

speaking French. If Hitler had won, we'd

be speaking Germany. It turns out that

the English speakers won the wars. We

speak English. Why do we speak English?

Because all the rich, powerful people

speak English. Are there other

languages? Of course there are. Can you

imagine a better language? Of course you

can. Are there more beautiful languages?

Of course there are. But the point is

the rich powerful people don't speak

that. The rich powerful people speak

English. You have kids, you want them to

be rich and powerful, teach them

English. Same is true with Arabic

numerals. It's not the first system of

numbers. The Babylonians have a

different system, right? 360°

60 minutes base 60 type system. Okay,

the Greeks had a different system. The

Romans had a different system and then

the Arab the Arabic system was a force

system. There's probably who knows how

many other systems of math, right? I

mean computers spoke base 2 binary

system. So people people that use the

protocol that won that didn't fight the

war over the protocol forget that it was

a decision made and why do we use 0 1 2

3 4 5 6 7 8 9 because all the rich

powerful people settled upon it but by

the way not just because they settle on

it was better if you actually try to do

math and or or build computers with

Roman numerals versus computers with

Arabic numerals you know or work it just

Arabic just works

better, right? So, sometimes a protocol

has an advantage and that advantage

manifests itself. And if you look at

this picture, what is this telling you?

This is saying that the most Bitcoin is

the winner because it's the most

powerful electrically. It's got 24 gab

watts of electricity. It's the most

powerful computationally. It's got 1100

xahash. That's more computer power than

Microsoft and Amazon and Apple can

muster to attack the network right now.

So it was the most powerful

computationally,

it's the most powerful commercially,

right? What what you got a security or a

stock? How many of your stocks trade on

a thousand exchanges simultaneously

everywhere in the world 24/7, 365?

That's a simple question for me to

answer because the answer is none,

right? It's like I just I just listed a

stock in Europe. We listed ST we listed

on the Europe on the Luxembourg stock

exchange. That's one of 27 capital

markets in Europe. One of 27.

Um, I tried to actually list a uh euro

stock on the NASDAQ. NASDAQ doesn't

support euros. You can't have a

euro-based stock on the NASDAQ. So, what

you find is that is that for the most

part, a lot of assets don't trade 247

globally. They trade very locally in the

local nation, the local language, the

local time zone.

Bitcoin trades everywhere. So what what

other kind of power does it have? Well,

it has hundreds of millions of holders,

has 700 million crypto believers, has a

lot of political power. The crypto lobby

tipped the election in November. They're

very powerful. So what do you want? You

want political power. You want

electrical power. You want computational

power. You want commercial power. And

then the other thing it has is economic

power. There's 1.2 2 trillion dollar of

actual dollars that have been invested

in that network. My company alone put $

48 billion of actual cash in that

network. Um that's probably on the order

of if not 10 somewhere between 10 and

100 times more than any other network.

So um the battle to determine the

world's reserve capital network was

determined by what? by smart smart

people with money and it's been never

ending. It's been going on and what you

see today is this manifestation. A lot

of smart money made a decision. A lot of

smart people you you know decided to

like Google or they decided they like

Apple or they decided they like Amazon

and and you could say well I can copy

Amazon or my my favorite is well why New

York City? I can you know I can create a

city. Yeah, you can create a city.

It's not that complicated to create a

city. You create another city. There's a

lot of port cities. There's one New York

City because all the smart people with

money decided that was the one that was

best for a lot of reasons. If you go to

San Francisco and you look, you can see

that's a pretty good natural port, too.

Well, what about some other port? Well,

the point is all the people with money

and power pick that one. That's the

network that wins the war. And so, so

once you understand that you got a

digital capital network, 21 million

coins, there's never going to be more

than 21 million coins. Then the question

is, is it better than gold? Yeah, a lot

better. How much better? Infinitely

better. Gold has an inflation rate of

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

2% means you got a halfife of 36 years

for your money. Means you live a 100

years. 0% means you have a half life of

a of a billion trillion infinite years,

which means you're going to live

infinity.

Okay, one of them is immortal, one of

them is immortal, right? You're godlike

or you're just a person, right? When

someone tells you 2% inflation doesn't

matter, it matters. It's like, I'm going

to I'm going to build a machine and I'm

going to remove 2% of the energy every

cycle on the machine, does it matter? Of

course, it matters, right? Every

engineer knows you can't have 2%

friction on every turn of the wheel. And

yet, that's what 2% inflation is.

So gold, gold is metallic capital.

Bitcoin is digital capital. Digital

capital is this idea that I think I just

like to keep my money forever, right?

What's the product? 121 millionth of all

the money in the world forever. That's

the product. Okay, good product. Can you

design it? Yeah, but there, you know,

but is that the winning protocol? Well,

I think so. Beat everybody else. Why?

Because there needs to be a winner.

There needs to be. I mean, because of

you're smart and you have a lot. If you

got a hundred families with a billion

dollars each and they want to keep their

money and their choice is pick a winner

or lose all their money, the shelling

point is why don't we just pick the

winner? We'll all use the winning

network and we get to keep our money.

What's the alternative?

We lose our money. We go poor, right?

So, so it's not a complicated uh idea.

The game theory is pretty

straightforward. The world's full of

people that would like to keep their

money. And who do they trust? They don't

trust the French. They don't trust the

Brits. They don't trust the Italians.

They don't trust the Germans. They don't

trust anybody in the Middle East. They

don't trust anybody in Africa. They

don't trust any South American company.

They don't trust the Canadians. They

don't trust the Australians.

The Chinese don't trust the Chinese.

It's illegal to take money out of China.

Wonder why? Because everybody wants to

do it. Okay. The the Europeans don't

trust the euro. They want the dollar.

All the billionaire families I know live

in Stad.

All the billionaires I know that that

have a villa in France, they have an

apartment in Monaco.

Why? Think hard about it. Okay. So, who

are you going to trust? Right? This is

this is a tricky thing. Uh generally the

view of the world is everybody wants to

move themsel and their money to the

safest network, the most secure network.

So where is that? That's the United

States. I want United States property. I

want my kids to have United States

citizenship. I want to use the US

dollar. I want US equities. But the

problem is, you know, the United States

is not always welcoming to foreigners,

right? Certainly the Russian oligarchs

don't get to move here,

right? The the world is full of people

that that they would love to have

economic security the US. But then

again, maybe maybe your life is in

Europe or your life is in Brazil and

maybe your life is in Mexico.

You know, I I live in Miami Beach and um

I look across Indian Creek and I see

like these big condos and they're like

95% empty. It's all the Latin Americans.

They come, they buy a condo, they keep

it, that's where they, you know, that

was their Bitcoin. They were like

putting their their property into a

piece of foreign real estate, you know,

and then their daughters get pregnant

and they send them to Miami to have the

child so their kid has citizenship,

whether it's Venezuelan or Mexican or

Brazilian or whatever. And it's not unre

it's not irrational. It's very rational.

You could see it going on. Um, but what

does Bitcoin represent? It represents

that that hyper the most secure property

network in the world for people that

don't get to move their person or their

money to the United States. By the way,

if you live in the United States,

there's this blue state, red state thing

and a lot of people worry in the blue

state that maybe their property is not

so secure and they move to the red

states and that's what's driving

immigration into Florida right now. Um,

so that's the first big idea, digital

capital. The second big idea,

digital treasuries, a treasury company.

What happens if you capitalize on

digital capital? So, we capitalized on

Bitcoin. We bought it bought it about 87

times. I want you to understand what

we're doing. Bitcoin, I believe

Bitcoin's going up 30% a year for the

next 20 years. Um, it's been going up

50% for the last 5 years. It was going

up 80% for eight years. Okay? So 30%

represents a deceleration from 50% all

the way down to 20 or 15% over 20 years.

Every time we buy it, we're buying a

digital monopoly, the world's dominant

digital monetary network,

growing 30% a year at one times revenue.

Okay? Ask any CEO, if you could buy a

monopoly growing 30% a year for the next

20 years at one times revenue, would you

do it? And the answer is, of course you

would. I mean, everyone would kill to be

able to buy a company growing 30% a year

at one times revenue. Okay. Well, we

just did the same roll up 87 times.

We're just rolling up the digital

monopoly on money. And of course, once

you've done it once,

you're like, well, what's the risk?

Well, the risk is bit is you're wrong on

Bitcoin. If I'm wrong on Bitcoin, that's

the risk, right? The existential risk is

Bitcoin. It's like, I bet on New York

City. Well, what if Bitcoin sinks

beneath the waves? I'm going to lose my

bet. The risk is thermonuclear warhead

goes off in New York Harbor and I and my

real estate is not that valuable or it

sinks underneath the waves. Um, the risk

here is Bitcoin fails. So, let's say you

assume that risk. So, what is the

incremental risk on transactions one two

through 87?

Nothing. So in fact the risk-free rate

for us is 30%. Once you've assumed the

existential risk of of u capitalizing on

Bitcoin then you're basically buying

something at one times revenue growing

30% a year with no additional risk. It's

the same risk. Okay? And you might not

agree with me if you hate Bitcoin. But

what matters is that the 1% of people in

the world that agree with me own the

equity and that's their view. They think

Bitcoin is going up 30% a year. So once

you get that off, it's like, you know,

some people don't like New York City,

but the ones that live in New York City,

you know, you will pry their apartment

from their cold dead fingers. They think

the world is New York and everything

else is downhill from there and they're

going to live there. And you can give

them a million excuses or a million

reasons why it's risky to live there.

What if this and what if that and what

if the other thing and their view is,

well, it's New York. You don't get it.

It's New York, right? So, uh, in this

particular case,

you buy into the risk of Bitcoin. Now,

you do 87 acquisitions. And we ended up

acquiring 649,000 Bitcoin, about 3.1% of

the network. Um, that's not unlike

buying 3.1% of the real estate in New

York City.

It's just big REIT, right? We decided we

believed in, you know, Howard Hughes

bought up a lot more of Vegas, right? He

came into Vegas, he bought up all of

Vegas. right? Summerland, all the strip

made insane amounts of money because he

believed in Vegas. So, you just buy up

the real estate underlying the thing you

believe in. Um,

we're about the fifth largest treasury

in the S&P 500.

What's the big idea here? Uh, the only

company on this list that actually keeps

their capital is Berkshire Hathway.

The conventional corporate finance

strategy is to uh return capital to the

shareholders or surrender the capital or

decapitalize.

And that's because those companies are

capitalized on on sovereign debt or in

this case shortdated treasuries.

They're negatively polarized to capital.

So the big idea I have here is that if

you're negatively polarized to capital,

you have to get rid of your capital

because it's toxic. If you're positively

polarized to capital,

then the more capital you raise, the

more money you make. Once you understand

that, for for example, the the

Venezuelan boloulevard could be viewed

as capital. And if you were capitalized

on the boulevard before it lost 99.9% of

its value, I think you can see via

common sense that you're negatively

polarized to capital. You have to get

rid of it. You really want to, if you

want to be rich in a hyperinflating

economy, the way to do it is go into

debt, borrow a billion dollars when it's

worth a billion, and pay it off when

it's worth a million. Right? So you you

need negative working capital if you're

negatively polarized to capital. So a

rational CFO, they would just go to

negative working capital. That's why you

do LBOS. You borrow 10, 20, 30, 50

billion because the cost of capital is

lower than the monetary inflation rate

and you don't want to carry the capital.

If you capitalized on Bitcoin, then it's

the opposite. Then you're outperforming

the cost of capital. And this chart

illustrates it.

You see, over the last five years, um,

the cost of capital is 14%. It's set by

the S&P. Guess what else is yielding

14%. It turns out, lo and behold, the

gold is yielding 14%. How do you like

that? So 14% is your hurdle rate.

The normal capital asset is shortdated

treasury. That's the money chart. Money

markets, it's 3%. Blended. Okay. So,

you're investing at three. Your hurdle

is 14. you're minus 11. You're

destroying 11% of your treasury every

year. You're negatively polarized

capital.

If you could capitalize on um the S&P,

you could keep all your capital, meet

the hurdle rate. The problem with that

is it's illegal. The Investment Company

Act of 1940 made it illegal for a public

company to capitalize on a portfolio of

securities.

Not something you might Not everybody

knows this. I didn't know this. I never

had reason to think it. it was so

ingrained that you just wouldn't do it.

It never occurred to me why, but it's

it's uh it's written into the Investment

Company Act of 1940. So, if you can't

invest in the S&P, then you probably

can't capitalize on MAG7 stocks either.

They're also securities.

There's only one MAG7 stock that Nvidia

can buy. It's its own stock. There's

only one SA stock that Apple can buy,

Apple. So, why do we have buybacks?

because it's the only stock that

companies can buy per the SEC 40 act.

But look at Bitcoin. Bitcoin is 48%.

Bitcoin is actually outperforming the

cost of capital by a 34% margin.

So this big idea is not that

complicated. It's if I have something if

I have digital gold and it's it's

deflationary, the difference between 2%

and 0% is going to give you the 48%

instead of the 14%. So if I have a

deflationary digital gold like Bitcoin,

then I can capitalize and I can even

leverage the company on it.

What else could you capitalize on? You

could capitalize on actual gold or real

estate. People tried to capitalize on

gold. didn't work so well for a bunch of

reasons. But, you know, you can see at

the end of the day, there's not enough

juice in it to make it worth the

trouble. And real estate underperforms

the S&P.

Bonds don't work.

Art not going to work. You need a

commodity or a property to capitalize

company.

So, uh, Bitcoin is a breakthrough

because it's a commodity, but it's also

a scarcity. You can design a commodity

that inflates 10% a year. is still a

commodity. It's an asset without an

issuer.

But but Satoshi's genius is designing a

commodity that's an asset without an

issuer that inflates 0% a year and the

limit is t goes to infinity,

right? Dogecoin is inflationary, by the

way. If you guys like Dogecoin, they add

like five million or 5% a year or

something like that. It's not quite a

percent, but it's it's inflationary over

time. So this chart tells you everything

you need to know. In fact, this chart is

pretty much the macroeconomic

map for the last five years. And what it

tells you is if you're capitalized on

bonds, you're in deep trouble. That's

why Silicon Valley Bank went bankrupt.

That's why all the banks were

technically insolvent because they're

just awful investments. And you can see

that the secret to MSTR's performance is

we fund at the cost of credit or the

cost of equity which is somewhere

between six and 14% and then we invest

at 48%

and then our equity then is able to

outperform Bitcoin.

Um we've grown through a number of

cycles.

You know, first we used cash flows, then

we used senior debt, then we used

convertible debt. At one point we use

some asset back debt. And eventually we

realized that the best sort of

amplification for the equity was

preferred shares that are perpetual to

never come due because that strips all

the credit risk. You know, senior debt

doesn't work because you have EVA

covenants. Asset back debt doesn't work

because you get margin called. uh

convertible bonds worked to the you

know10 billion dollars worth of it but

at some point you outstripped the

convertible bond market and uh all of

those are examples of using credit as a

tactic

to support the equity. So the first four

years of our company the equity was the

product and the credit was the tactic.

When you're issuing 144A debt

instruments that's a tactic to juice

your equity. What happened in 2025 is we

realized that we should create a credit

product and the credit became the

product not the equity. The equity

became the byproduct of selling the

credit. We inverted the entire business

model and strife stretch stream strike

and stride at the bottom. Those are

products. They're credit products sold

to the general public that then that in

themsel have the value and the equity uh

is imbued with value because of the

credit instruments.

And this picture helps a little bit more

than this that what is the treasury

business model? It's it's simple. I

raise capital. I buy digital capital. I

strip the risk, the volatility, the

delta and the duration off the capital.

I transform it into the currency of your

choice and I give you the pure yield.

I give you a credit spread above the

risk-free rate. So what you can see here

is the Bitcoin is about a 48% annualized

yield.

It was a rolling 38 V, but call it call

it like a 40% yield, 40% AR, 40 V type

instrument. If you walk down the street

and you ask the average person, do you

want to put your life savings into that

instrument? The answer is generally no.

If they spend a 100 hours or a thousand

hours, they get convicted.

And if they don't need the money for

four years, then that money they don't

need for four years after they spend a h

100red hours, they might put some of

that into Bitcoin or all of that. That's

the Bitcoin community. But as you can

imagine,

you're not going to sell a product to a

billion people if it takes a 100 hours

to understand it. And if they can't use

it for four years, right? I have a

beautiful car. You can't drive it for

four years. There's a 100 hour course

before you can buy it. But after four

years, it's going to be the best car

ever. That is not a consumer product,

right? That that's something different.

It's almost like a religious product.

But and if you go to Bitcoin

conferences, right, we're pretty f

fervent. We're pretty passionate. Um but

you can see what strategy is doing is

we're taking the capital and we're

stripping the risk in the va, extracting

the yield and selling it as a credit

instrument.

The first one was strike. It was

convertible preferred. And we gave you a

portion of the upside and we give you a

liquidation preference and we give you a

fat dividend. So it's like it's like a

Bitcoin fellowship, right? You'll get

some upside, you'll get paid a living

stipen while you wait and you get way

over collateralized and it's for someone

that kind of wants to have their cake

and eat it too, but doesn't want the

roller coaster. And uh so we did that

and that was a billion dollar idea. And

then we did Strife, STRF, and that was

10% dividend at par. And that was um I'm

just going to pay you 10% forever,

you know, and here's the other

interesting observation. You know, we

would like to have paid 5% instead of

10%, but we realized we'd have to pay

10% to sell the preferred. And then it

occurred to me that it's a lot better to

pay 10% forever than 5% on a 5-year

note. If you pay 5% on a 5year note,

you're like any of 50,000 other

corporate issuers. When you pay 10%

forever, you're the best. If the person

wanted to buy fixed income, so what

turned out to be the bug inverted to be

the feature. And that's actually the

theme of my entire presentation, which

is the bug of Bitcoin becomes the

feature. the bug of of uh digital credit

becomes the feature over and over again.

The bug of the business model becomes

the feature and that's the innovation

here. So

we um we did a few other deals. We did

stride where we stripped the cumulative

rate off of the instrument and it adds

about a 400 to 500 basis point credit

spread. So, you either get the 10% in

the investment grade bond-like

instrument or you get the 15% in the

equity-like instrument. And the truth is

the people that want the former don't

want the latter. And the people that

want the latter prefer the latter over

the former. And so we just tapped into

two different pools of capital there.

And um while we were working through

this,

we uh we tried to go do a deal in Europe

and we got styied by a regulator and we

were in a and we couldn't do something.

So I in the summer I thought what can we

sell in the US and and uh we thought

about selling a euro instrument on the

NASDAQ but the NASDAQ wouldn't list it

because they can't support foreign

currencies and then we thought about a

yen and we couldn't do that. So we

thought well what can we do in dollars

and we'd already done the long end of

the yield curve. We'd sold a 10-year

duration instrument. So I thought what

about a one-mon duration instrument and

we started thinking about an adjustable

var variable rate monthly preferred

stock and partly it was what could we do

or what we haven't done and then partly

it was people just want to get their

principle back and partly is they want

cash dividends.

So we started thinking about this

product stretch and and stretch became

the biggest piece of financial

engineering. stretches like kerosene

distilled from a barrel of crude oil.

It's just pure liquid energy. And um as

you can see the way the tower is working

right now is we've stripped the 38 to 28

to 21 to 16 in a 9vt. There is a

conservation of energy. There is no such

thing as a free lunch. That's the law of

thermodynamics. So if I make the

volatility go away from the credit, it

has to go somewhere. And so what it does

is it floats up to the equity and so

does the excess performance. So we end

up creating a highly volatile high

performance equity

by creating lower volatility lower

performance less risky credit

instruments. And the entire company's

reason for being is to actually take an

asset Bitcoin which is call it a 10-year

duration

instrument with 50 vol and 50 AR

and we carve out of that a one month

duration or one-year duration and we

carve out of that 10% ARR and we carve

out of that we strip 90% of the

volatility off or 90% of the risk off

and We offer that to a credit investor.

In the process of doing that, we

actually create Bitcoin per share. So,

we're creating BTC yield. We're adding

Bitcoin Satoshi's per share every single

time period

because when I sell a billion dollars

worth of credit and buy back a billion

of Bitcoin, I've issued no common stock,

but I have actually bought a billion of

Bitcoin. So, the equity gets uh gets

amplified.

And uh you can see here a snapshot of

the capital structure. In essence, with

$61 billion of Bitcoin uh value, we have

a bit of debt, 8.2 billion of

convertible debt from our fir our last

four year year period. We will equitize

that over time, but that's about 13% of

our hard assets. That means that Bitcoin

could fall 85%. We're still covered over

collateralized on the debt. But the more

interesting thing is that

the dividend payments represent 1.3% of

the net assets. So that means Bitcoin

has to appreciate 130 basis points a

year to cover the dividends forever.

There's perception that somehow this is

risky. But the bet that we're making is

we think Bitcoin will go up 1.3% a year

and if we're wrong in 77 years we have

to come up with a different idea, right?

I mean that's if we're wrong like

assuming Bitcoin goes up zero. Look, if

Bitcoin goes to zero tomorrow

immediately forever, then of course

that's that this is not going to work.

But but um the way the way the math

works is

you create shareholder value and you pay

the dividends forever if you get 130

basis points of BTC gain or or

appreciation. If Bitcoin appreciates

faster than the blended dividend rate,

the 10% or so, then you actually

outperform Bitcoin and with the equity.

So your two numbers are your minimum is

your creating value. The you know the

the 10% hurdle is you're outperforming

Bitcoin and at 0% in 77 years you run

out of money.

Um we just managed to get a credit

rating from the S&P. This is challenging

given the the Bosle accords Basel

framework valued Bitcoin is zero but as

Basil gets updated and it looks like

it'll get updated I think we'll move our

way up this credit stack.

Um the advantage of getting the credit

rating is it tripled the addressable

market for our credit instruments

overnight. So that was good. There's a

lot of people that that like digital

assets and believe in Bitcoin but they

couldn't buy without a credit rating.

And so this was very important to them.

And so now we get to the third part uh

digital credit.

Well, these are the products, right? Uh

what is what is strike? Well, it's got

an equity component. It's got an

effective yield and it's forex

overcolateralized.

What is stride? It's uh it's a long

duration high yield instrument. So it

has an effective yield of 14%

tax equivalent yield of 22. Why is it

tax equivalent yield of 22%. Because

it's a return of capital dividend, a

rock dividend. It means that it's tax

deferred until you've reduced your basis

to zero. So, one of the one of the

elegant things about digital credit is

they're all rock dividends if they're

issued by a treasury company.

Um, you can see what you're competing

against, but I think you guys know what

you can get in the market. Normal junk

bonds or private credit are half of

that.

Strife uh pays 9 9 and a half% even 10%

the tax equivalent yield is 15. It's the

most highly over collateralized. It's

the longest duration instrument

and stretch is treasury credit. So if

you think about if you were to say what

I think is the perfect product, the

perfect product is 600 to 800 basis

points of pure yield over the risk-free

rate in the currency of your liabilities

in a stable instrument. Like that's what

it's a high yield bank account. Uh who

wants that? Everybody wants that, right?

The only question is what's the catch?

And the catch is you have to believe in

Bitcoin. That's your first risk. And

then you have to trust the issuer.

Right? If you trust the issuer, you

believe in Bitcoin, then you're probably

going to ask, well, what is the V and

what is the liquidity to decide, can you

get 20 million in and out of it or is it

2 million in and out or 200,000 in and

out? But the idea of treasury credit is

a is just a fortunate serendipitous

discovery. We tripped over it. Uh nobody

in the history of the capital markets

has uh created a monthly variable rate

preferred stock. It's not that it's

illegal. It's not that you can't. The

security law let you do it. You can do

just about anything with a preferred

stock. It's just that no well-run

company ever thought to do it or had a

motive to do it or a reason to do it.

And so when you put together

digital capital with AI

with um a publicly listed preferred with

a shelf registration with an ATM.

Now you we blended all the best elements

of crypto and ETFs and public companies

and ATMs all of them together with a

digital distribution channel. And now it

seems like an a pretty obvious idea, but

um I can even say I don't think this was

developed over the weekend uh by me out

of uh frustration of not being able to

do anything else using an AI and if I

had not had an AI

and I hadn't had the other experiences

of having done strike and strife and

stride and done the and done the $30

billion of ATM revenue

and if I hadn't, you know, If it hadn't

all come together at the same time, we

never would have found this. So, it's a

it's it's a simple thing to do in the

year 2025 with all the right technology,

but in the year 2022

or 2019, it wouldn't never happen.

Uh, stream is the deal we did just two

weeks ago. It's basically a version of

Strife that's in euros, 100 euro par

value, uh, pays 10% at par. Um,

it turns out that that we were like one

of the first issuers of preferred stock

in Europe because most of the time fixed

income in Europe is hybrids. They're

bond instruments and they're bond

instruments because the companies that

issue them want to be able to deduct the

dividend or deduct the dividends as

interest because it's to their

advantage.

And here you stumble on a very another

theme which is most credit instruments

are issued to the benefit of the issuer

or they're crippled

because the credit is issued tactically

to fund a project, an automobile, a

building, a service, a stock buyback.

People are issuing credit

to uh to benefit the equity or the

product or the service.

Let me invert your worldview. What if

you issued the credit as the product?

What if the goal was I want to create

the best credit instrument for someone

to buy?

Well, for what purpose? Well, just to do

it. What are you going to do with the

money? I'm going to buy Bitcoin. Dean,

you've done that before. Yeah, 100 times

before. So, so what's the unique

project? There's no unique project. So,

what are you trying to do? I'm trying to

create the credit which is the best in

the world. So, now you invert. you're

like, I'm not going to the

credit. I'm actually going to make the

credit fly. I want to empower it.

So with Stretch, we created it. It came

out at 90 and it's it's on this path,

you know, to stabilize at 100, you know,

and we have a lot of tools to do it.

Partly time does it, partly as the AUM

grows, it gets stable, partly it's

marketing, partly we adjust the dividend

up. if it's weak and if it trades above

100, we can exercise the ATM to trim the

ball off the side. So, there's a lot of

things going on here as it approaches

par and stabilizes. But that's the first

uh four months.

So, this is our digital credit line and

what you can see is we kind of went from

a Z business to $7.6 billion business in

10 months.

Um, and I joke with people, you know, it

took me um, it took me a decade to come

up with a billion-dollar idea. I took

the company public. Then I spent 20

years trying to come up with the second

billion-dollar idea. I could not find

it. I tried 20 things. They all didn't

work.

And then the COVID lockdowns came and we

discovered digital capital and that was

the second billion dollar idea. And then

converts were the third billion dollar

idea. And then the ATMs were the fourth

billion dollar idea.

And that all happened over the next four

years. And then in 2025, we combined AI

with preferred with credit. And we came

up with Strike, Strife, Stride, Stretch,

and Stream. And it was literally a

billion dollar idea every eight weeks. A

billion dollar business, right? And so

and and so why we're combining digital

capital, digital intelligence to create

digital credit.

And what market are you targeting?

You're you're targeting the $300

trillion credit market. Um so what's

special about these things? Well,

they're the most liquid uh preferred

stocks in the history of the world,

right? You can see the liquidity which

started at 70 million and we're up to

like 387 million a week. And so they're

starting to trade insane volumes. The

normal preferred stock trades $100,000 a

day over the counter. The public listed

hybrid or preferred trades a million

dollars a day.

The first tries we had uh were trading

20 million or 30 million, 20 to 30x

that. And then stretch traded 100x that

and now it's moving to 200x that and

it's first year. So, we really have line

of sight to something that trades a

billion dollars a day.

And if you ask the average the average

salesperson in finance, what do you

think about preps? They think, well,

these these things are all kind of dogs.

They're boring.

They're complicated. I mean, it's it's

all kind of garbage. Like I I mean, I

think it's garbage. It's like you're

yielding 6% and it's issued by one in