Bitcoin Strategy Is 10x Better Than Anything Else

Let's bring in Michael Sailor now of micro strategy for more on his take and Michael

I know this is probably a rhetorical question, but do you have any regrets?

You know, we did a lot of a lot of back testing and I've gone back and I've looked at the numbers

and on August 10th of 2020 when we announced our 250 million dollar bitcoin buy, since then

bitcoin's up 72%, the money supplies up 17%, the Nasdaq's down 2%, goals down 9%, the

S&P is up 9%, and the only thing that looks better than the money supply expansion is

single family homes up 26%. I couldn't have bought billions of dollars of single family

homes and so that's not even practical. So the bottom line is the bitcoin strategy's 10x

better than any other alternative and so no, I don't regret it. We've got 2.8 billion dollars worth

the bitcoin on our balance sheet right now and we feel like we're positioned well for when the

markets turn around and our only other choice would be to give all the capital back to the shareholders

in which case we would have nothing and we would be struggling to get by without any assets.

Okay, how about this? Is cash still trash? Yeah, I mean the money supplies expanded by 41%

since January 1st of 2020 when we went into this kind of COVID crisis and we know that scarce

desirable assets are getting bit up in price. I mean everybody wants to buy Rolex watches,

they're buying luxury real estate, they're buying everything to get their hands on,

trading shortages. So you know we are an institution, we have to take a 10-year view and the only

thing that's for sure is if we hold cash over a decade we're going to have a negative real yield.

The only question is how much? So we have to invest in something and we've chosen as a business

strategy to focus on what we believe is the most exciting investment idea because it's a digital

commodity that's absolutely scarce and only getting technically better every year.

So are you considering buying more Bitcoin at these prices? I mean is Bitcoin on sale?

Yeah, I think it is on sale. You know the number that I look at to figure out sort of the surrogate

for the book value of Bitcoin is the four-year simple moving average because it trades billions of

dollars a day and so after 1400 days of billions of dollars a day, that number is 21,700.

Bitcoin touched that in the March 2020 crisis, it touched it around 2017, it's touching it right now,

generally it trades above there. You know our strategy is we're going to acquire Bitcoin with our

free cash flows from time to time so we're kind of dollar-cost averaging into Bitcoin and we're

going to hold the Bitcoin for the long term and so it wouldn't really matter whether the price was

10% more or 20% more or 50% more, we're just going to progressively acquire more Bitcoin because

that's our strategy. So you aren't going to be buying more. So yeah, I mean it's like not a bad price

and we will keep buying more. Okay, what if it gets below that $19,511 number which was that

top of the 2017 I believe bull run? Yeah, what you know, is that a time to panic?

We don't panic, we have a strategy, we're not traders. If your time horizon is less than four

years, you're sort of a trader. If it's in the months, you're definitely a trader. I'm not an expert

trader. I don't have a crystal ball. I don't know where the market's going to go week by week,

month by month. If your time horizon is more than four years, you're an investor and when your

time horizon is 10 years, you're kind of a saver. So we have a very long term, 10-year time horizon

and our view is over the 10 years, Bitcoin's going to be a good idea and it's just going to keep

a creating and value. You know, I can't tell you whether it'll it'll go down a bit here and there.

It's in the near term, Emily, it trades like a high beta risk asset and there's no denying that.

Over the long term, we believe it's a low risk store of value asset. There's about 10 things

that have to happen over the next decade to make it a better asset and we kind of know what those

10 things are. So we're waiting and inviting our time and we think that it's going to improve

as an asset class over time and we're not in a hurry. So what do you see in the let's talk,

take this 10-year horizon, for example, we've seen what the Fed is doing with rate hikes. There's

all of this concern. We're heading into a recession, whether it's a capital R or a lowercase R

recession, what do you see on the road ahead and how is that impacting your strategy to

you know just buy more and hold? Yeah, so let's take the 10 sources of my pain.

There's no wash trading rules so people can they can sell their Bitcoin and buy it back and

harvest the tax gain and that's not the same with Apple. So if that gets fixed by the House Ways

and Means Committee, that's a big plus for the asset. There's 520 unregistered crypto exchanges

offering 20X leverage. That's a negative for the asset class. As they get regulated and I expect

they will and as the 20X leverage disappears that'll be a positive. There's 19,000 unregistered

securities in the crypto industry cross-colateralized against Bitcoin. As those things have to

have to get eliminated or they have to convert them into publicly traded instruments that's

going to decrease the volatility to be a big shakeout. The wildcat banks like the you know the

terrors and lunas and Celsius, they actually create massive volatility and as they get regulated

and they disappear and they grow up and become institutionalized banks, the asset class so mature.

There's a lot of ignorance and fear. People think crypto is the same as Bitcoin. If they think

that means they don't understand either of those two things, we don't have a stable coin Emily.

Like USD isn't a stable coin. Tether is an opaque security, no one understands. If we ever have an

FDIC issued stable coin or something from a public entity that's endorsed by the SEC, that's going to

be very bullish for the industry. There's no spot ETF. I think it's only a matter of time before

there is one approved that'll be very bullish for the industry. The FASB accounting is detrimental.

The lack of FDIC guidance makes it difficult if not impossible for banks to hold this stuff.

We're waiting for clear SEC FTC guidance and those 10 things, they're going to get cured over the next

decade. They're just not going to get cured over the next 10 weeks. Okay so how are you looking

then more broadly at what happens to the industry after this? We're seeing Coinbase and a number of

different crypto companies having major layoffs. Do you think we'll look back on this moment as some

sort of inflection point for the industry and if so, how does it look different in the future?

We're crossing the chasm. There's about a trillion dollars in the asset class. 400 billion is Bitcoin,

the other 400 billion is 19,000 unregistered securities. We're moving from the error of the

offshore entrepreneur to the onshore public institution. It's pretty clear from Chair Gensler's

comments that he made in the last few days that they want to see all the crypto exchanges regulated.

They want to clean up this industry. The stablecoin is going to have to be cleaned up as well.

The winners are going to be the public investors in public banks and public companies.

The losers are going to be the wildcatters and the entrepreneurs that got started that are

flying by the seat of their pants. I think it's essential for us to move from a $1 trillion

industry to a $10 trillion industry. I welcome it. I think the Bitcoin has been held back by its

association with the anything goes crypto industry. As that gets regulated, then that's going to

actually create a green light for public institutions and public companies to get much more

heavily involved in Bitcoin and is going to catalyze the next leg of the bull run.

All right, Michael Saylor, who apparently has no regrets. Michael is always good to have you

here on the show, Chair and CEO of MicroStrategy.