The Success Of MicroStrategy, Global Adoption Of Bitcoin And Lightning

joining us now to discuss micro strategy co-founder and executive chairman Michael sailor Michael

Gory to have you back on the show. Yeah thanks for having me Martin. All right so we're also coming

off the heels of micro strategies earnings after the valley yesterday. I do want to start there.

You did report a loss which was a surprise to the street but it's tied to it was this digital

asset impairment losses tied to the way that Bitcoin and losses and Bitcoin are are accounted for.

Walk me through with paper losses now hitting something like $1.3 billion. Does this change

your strategy around Bitcoin and Bitcoin acquisition? No it doesn't change our strategy. I mean the

losses are a function of the indefinite and tangible accounting treatment and of course an

auspicious development the industry as it fasties taken a position that they're going to move toward

fair value accounting so eventually we'll be able to mark our Bitcoin assets to market where

enthusiasm about that. Micro strategy is a way to invest in the digital transformation of money

and where a gateway to the macro and crypto economy allowing investors to either go short, go

long or trade the volatility. So our strategy is to buy and hold Bitcoin and the key for us is to be

consistent, transparent and responsible and pursue to that strategy and we're unique in that regard.

Yeah that being said you did sell some Bitcoin. I realized tax loss harvesting at the end of last

year would you plan to sell more if need be? Well we're always considering ways that we can take

advantage of this multi-billion dollar asset and as you know there's volatility and there's some

unique tax treatment so in that case we were able to generate a like a 34 million dollar tax loss

and we were able to carry it back against taxable gains. You know we look forward and from time to time

we may see opportunities but we're fairly prudent and responsible in considering those things.

Let's talk a little bit about tech because micro strategy is really essentially two companies in one

holding the Bitcoin which we'll talk more about in just a moment but also business intelligent

enterprise software company as well continuing to see some resilience in that part of the

business. One of the things we've discussed in the past is how the Bitcoin part of the business

has helped to feed or even strengthen the business case for the software part of the business.

Does that continue given the fact that Bitcoin and I realized we've had this rally in the last

couple of weeks but it's down so dramatically from the highs just less than a year and a half ago.

Well it's been great for our company, our employee turnovers in an all time low. So I think it's good

it's good for our shareholders. They've enjoyed great returns. It's great for the employees.

It's great for the customers. Ultimately the big idea here is that money is technology that

allows us to transfer economic energy through time and space and we're seeing and living through a

digital transformation of money. Everybody wants to move assets at the speed of light friction free 24

7365. Micro strategies, Bitcoin strategy is just a way to invest in that and the enthusiasm over

Bitcoin is really billions of people on the planet that want to move their money faster and more

frequently and they're they're they're chafing at the restrictions of the 20th century analog

finance economy. So how are you continuing to propel that argument and potentially monetize it at

micro strategy and I asked that because I know you you stepped aside as CEO last year and part of

the reason was to be able to focus more on this type of integration and on this type of new concept.

The most exciting thing going on right now in the in the digital monetary world is lightning.

Lightning is a layer to open protocol for moving Bitcoin transactions in a split second for a

fraction of a penny and essence lightning is money over IP and if you think about the world as

it changed after TCP IP and moving data over IP and then voice over IP. Lightning promises to allow

millions of companies to provide transactions and real time with billions of consumers. Micro

strategies actually developing micro strategy lightning our own enterprise lightning offering and

we're going to allow CMOs to offer lightning rewards or Bitcoin rewards like a universal frequent

flyer program to hundreds of thousands or millions of their customers all of their employees all of

their prospects at the speed of light off of a website and so we're very enthusiastic about that.

And you're betting there's demand for this. Yeah you know like right now a company spend billions

of dollars on digital marketing they give it to Google they give it to Facebook and they spend

that money on ads in order to get people to come to their website. What if you could just give the

billions of dollars in money directly to your customers and your prospects and you cut out the

advertising it might create a much less toxic much more constructive environment. To do it you need

micro payments you need to be able to move money at the speed of light friction free you can't do

it with a 20th century credit cards they're too expensive they're too slow they're too clueless

there's too much friction. So what Bitcoin offers is micro transactions that can fundamentally change

the way you market change the way you build your products and of course you know if you live in Africa

or South America and it's Saturday afternoon you know the banking system is not working for you

right Bitcoin enlightening is is a monetary system that works for the entire world and never gets

turned off. Yeah so what do you say when Charlie Munger from Berkshire Hathaway early this week

publishes an op-ed in the Wall Street Journal and says quote unquote cryptocurrency is not a currency

not a commodity not a security instead it's a gambling contract with a nearly 100% edge for the

house entered into a country where gambling contracts are traditionally regulated only by states

that complete compete in laxity and obviously the US should now enact a new federal law that

prevents this from happening. Well his criticisms of crypto aren't totally off there are 10,000

crypto tokens which are gambling and I sympathize with them on that matter but Charlie and the other

critics their members of the Western elite and they're continually prodded for an opinion on Bitcoin

and they haven't had the time to study it. If if he was a business leader in South America or Africa

or Asia and he spent a hundred hours studying the problem he would be more bullish on Bitcoin than I am

Lebanon Argentina Sri Lanka Nigeria Venezuela they all illustrate the pipe of the common man

and there's no solution better than Bitcoin so I really think that you know the Western elites they

haven't had the time to study it but I've never really met someone with an incentive living in

the rest of the world that spent some time to think about it it wasn't enthusiastic about Bitcoin.

That being said it certainly seems like everyone's taking the time right now to study the

implosion of the cryptocurrency space overall in general that we've seen over the past year and

certainly marked by the situation with San Benchman Fried and FTX and Alameda just a couple of

months ago it's been a black eye on the on the industry more broadly I want to get your thoughts on

that and what it means in terms of potential regulation at least here in the US and whether you

now see that painted with a very broad brush broad broad brush that will include Bitcoin.

You know the crypto meltdown was it's painful in the short term but it's necessary over the long

term for the industry to grow up this industry has some good ideas like digital currencies and assets

moving at the speed of light that are unstoppable and a digital commodity that can't be debased

and it also has a lot of entrepreneurs that implemented those good ideas in an irresponsible

fashion. What it needs is adult supervision it needs the Goldman Sachs and the Morgan Stanlies

and the Black Rocks to come in the industry it needs it needs clear guidelines from Congress it needs

clear rules of the road from the SEC this the crypto meltdown has punctuated the problem has

educated everybody on it but also it's it's underscored the idea that it's time for the world to

provide a constructive transparent framework for digital assets so that we can move the

financial system out of the 20th century into the 21st century. Now you you do work with silver gate

bank it's issued loans to macro strategy which is your subsidiary that focuses on Bitcoin collateralized

by Bitcoin to buy more Bitcoin. We continue to do business with the bank given the fact that in

addition to the headlines today that it is in the midst of a US fraud probe over the FTX

Alameda dealings we have seen what was essentially based on filings a run on that bank.

I think they've handled themselves admirably given the stress of the situation and and yes we

will continue to do business with silver gate that you know the institutions that were that were

improperly constructed collapse the Alameda's the FTX's the the voyagers the block fives of the

world but in fact silver gate was a responsible bank they were able to meet their redemptions

and if you consider the loan terms we have with them you know we're we're nearly 4x over collateralized

by you know 25% loan to value you know and you know the irresponsible crypto banks we're doing

under collateralized loans so I think they do banking the right way in a responsible fashion

and they're a good citizen for the ecosystem. Michael Seller always appreciate you coming on

in your insights thank you for joining us. Yeah thanks for having me.