There are 180 public companies in the world now with Bitcoin on their balance sheet.
That's according to BitcoinTreasuries.net.
Strategy is the largest, the most prominent of these so-called Bitcoin strategies.
Really sort of coins the concept.
The company was one of a number of industry leaders in DC last week as well, pushing for
the strategic Bitcoin reserve bill.
So joining us now is Michael Seller, Strategies Executive Chairman.
Michael, it's great to speak with you.
Yeah, thanks for having me, Morgan.
OK, there's a lot to get to.
But first, I do want to start with the fact that there are reports that you were in Washington last week meeting with policy makers about this strategic Bitcoin reserve bill.
How are you advising lawmakers right now and why is the case there to create a strategic reserve?
Well, I think Bitcoin's good for the nation and the country would benefit.
We did buy something like 78% of the entire United States for about $40 million over the past 100 years or so.
So I think the United States ought to own a large part of cyberspace and Bitcoin is the next frontier.
What is it due to prices, especially as they've been chopping sideways even coming off a little bit recently?
You know, I think the real story in Bitcoin right now is corporate adoption.
We've got a consistent acquisition of Bitcoin by the big ETFs like BlackRock and that's taking up all the natural supply and they're doing that on behalf of institutional investors.
But these 180 companies that are capitalizing on Bitcoin are buying even more than a natural supply being created by the miners and they're putting upward pressure on the price.
And I think that as we work through the resistance of late and some macro headwinds, we'll actually see Bitcoin start to move up smartly again toward the end of the year.
At the beginning of this year, you and I in January sat down had an hour plus conversation at the ICR conference about this very idea, Bitcoin Treasury, what you were doing at strategy and where it made sense for others to potentially adopt a similar concept as well.
What are the types of companies that you're seeing lean into this and at what point do you think it starts to accelerate if it does?
Well, I think you've got two types of companies. You've got operating companies that would otherwise be returning their capital by dividends and buybacks or they would just be holding low yielding money markets.
And they're choosing Bitcoin as a treasury reserve asset. So that actually improves their capital structure. It strengthens those companies.
There's a lot of those. And then there's the second sort of company, the true treasury companies. They're capitalizing on Bitcoin, Bitcoin is digital gold.
The world ran on goal back credit for 300 years. The world's going to run on digital gold back credit for the next 300 years.
So treasury companies in essence are holding digital capital and creating digital credit instruments on top of that digital capital.
And there's of course a huge demand for equity and credit instruments and traditional capital markets and and Bitcoin is emerging as the ideal form of digital capital to back those instruments.
Yeah, and I want to dig into that a little, a little deeper here, Michael. But first, I mean, gold's having a huge run right now, too. It's a $3,800 announced.
It's basically trading at at record after record this year, but Bitcoin hasn't sort of moved lockstep. So how to think about that analogy in this environment?
JP Morgan said gold is money. Everything else is credit this morning. I said Bitcoin is money. Everything else is credit.
The success of gold is indicative of the demand of mainstream investors to have a bearer instrument that's a long term store of value.
That's not a currency derivative and doesn't have counterparty risk to a corporation.
Gold fits that bill. Bitcoin fits that bill even better and it's sort of got the digital upside.
You know, you can't teleport gold and you can't program gold,
devibrated a million times a second on a computer.
So Bitcoin is the technology version of gold, this digital gold that's going to be in my opinion 10X bigger than gold, but they're the same idea.
How do you compare that to Ethereum, which investors seem to be very hot on and we're starting to see ether treasuries built out company, holding companies built out as well, like Bitcoin.
And then you've got stable coins as well, which seem to be surging just a few minutes ago headlines at tether seeking between 15 billion and $20 billion in exchange for roughly 3% stake through a private placement, for example.
You know, Bitcoin has emerged as digital gold. There's consensus. What do you want to do with gold? You want to issue credit?
You issue credit against the underlying capital asset. It's going to be the primary monetary crypto.
Ethereum, Solana, the other tokens they're emerging as sources of digital finance, their use cases is networks to circulates and tokenize stable coins, tokenize currencies, tokenize securities, tokenize real world assets and implement DeFi.
And so the future of those networks is going to be determined by technology, by regulation, by competition, and of course by by the execution of those management teams.
How should investors think about navigating an investment in strategy specifically, which I know you've described as a levered bet on Bitcoin versus the other BTC backed fixed income instruments that you've launched in recent months.
Yeah. The credit instruments were offering like stretch are meant to compete with short term money market funds or other or other sorts of fixed income instruments.
So if you're a fixed income investor and you believe in Bitcoin and you're interested in something that has higher yield or perhaps longer duration, then you would look at one of our credit instruments.
If on the other hand, if you're a Bitcoin maximalist and you actually want more Bitcoin, then our equity is actually got credit amplification in it. So the equity is amplified Bitcoin.
So so people that want more volatility more upside than Bitcoin will go for the equity people that.
People that are interested in having the volatility and the risk stripped away will look at the credit.
OK, how do you ensure you're not over your skis with any of these instruments if Bitcoin plunges again?
Well, we've got about 70 to 75 billion dollars of Bitcoin. We've only got about 6 billion dollars of these these preferred credit instruments outstanding.
So it's not even 10% and of course the preferred's never come due. And so they're not really leverage.
I could say that we've got a PhD in leverage at strategy. We live through the crypto winter. So we've constructed a balance sheet that could handle any conceivable draw down and continue to perform.
So how do you respond to some of the critics out there? Jim chain knows a couple days ago saying that your tactics to boost returns are quote unquote financial gibberish.
As I would say for 300 years, the entire Western world ran on gold back bonds. What we're doing is distilling yield duration.
And we're offering those in digital credit instruments. We're stripping away the volatility. We're stripping away the risk.
And there's a huge number of people in the world that want some sort of digital credit instrument. The ones we're offering are higher yielding. They may be more liquid.
And they may be longer duration than all the comparable credit instruments out there. The only way to create them is using digital capital and Bitcoin is digital capital.
I think the short sellers don't understand the use case of digital credit built on digital capital because they've never seen it before in the history of the capital markets.
We appreciate you coming on to talk about it. Michael sailor of strategy. Great to have you.
Thank you.