Joining us now, please, is say we have strategy, executive chairman, Michael,
sailor, Michael, great to have you with us. This is Bloomberg Television. So we're going to go into all the financing strategies.
But let's talk a little bit first about Micro Strategies Premium to its underlying Bitcoin holdings, the MNAV, if you will.
So it's interesting. If you take a look at the past few months, Micro Strategy or Strategy shares have actually been underperforming Bitcoin.
It has taken your premium down to about 1.4 times. And I would love to hear your perspective on why that dynamic exists.
Is it something about the market? Is it the fact that you have all these digital asset Treasury companies coming to the fore?
Is it something else?
You know, the market's still working to digest a new business model.
The Bitcoin Treasury company is an idea that's only come to the forefront in the past year or so.
For 300 years or so, the world revolved around gold-backed credit instruments. People issued bonds and credit based on gold.
We've discovered the killer app in the Bitcoin world is Bitcoin-backed credit. I'll call it digital credit.
In the 20th century, we had bank credit, we had mortgage credit, we got commercial corporate credit, you got sovereign credit.
Well, digital credit is a new creature and Bitcoin Treasury companies exist to issue digital credit.
So the reason there's a premium in the equity is because we can create digital credit instruments.
If we were just an ETF, we wouldn't be able to create credit instruments.
The credit itself is an extraordinary new asset class.
Well, when we talk about the premium and it's been at lower levels, but you think about the premium coming down.
I think it was closer to two a couple of months ago. Is that something that concerns you as you look at these different types of financing vehicles that you have?
No, I'm not really concerned.
What happens is the premium will expand as our leverage increases and as the volatility in Bitcoin increases.
When the volatility falls and our leverage falls, sometimes the premium contracts.
But the real key here is the digital credit we're issuing like stretch.
That represents us stripping away the volatility and the risk from a commodity, from Bitcoin, the digital capital instrument.
And then distilling out a particular currency, USD, a particular yield, say 10% on stretch, and then a certain duration for that yield.
And we offer those to the credit markets.
So we don't really need a premium to issue digital credit. Our business model works fine whether or not the equity trades at a premium or a discount to the underlying Bitcoin.
The equity will have value because people understand the value of the credit instruments.
And we've launched four credit instruments this year, four billion dollar product lines and the years not even over yet.
So that's a lot for the world to digest since they didn't see a new class of credit for a hundred years before us.
Are you concerned at all, Michael, though, about some of the newer entrants into this space and whether that maybe not necessarily usurps what you're doing.
I guess augment it in a way that your next fundraising and your next efforts might not get the same attention and buy-in as you did in the past.
No, I see it as a positive thing. There's been an explosion of Bitcoin Treasury companies and digital asset Treasury companies in general.
I think we were the first. There's 250 now. There are tens of billions of dollars of capital flowing in the space.
We're the first company to show that we could create Treasury preferred stock like stretch.
We were the first ones to issue any kind of Bitcoin back credit like a stride or stride for strike.
We're going to be differentiated based upon the quality of the credit instruments we bring to the market, the degree of collateralization, the degree of liquidity, and of course the risk.
And because we're the largest player in the space, we can offer the most liquidity, the most collateral, the strongest brand, and the deepest markets in those instruments.
How do you respond to some of the concerns out there, if not just direct criticism, about the potential sales of any of your holdings and what that could do to the market?
We're so way over collateralized. It's hardly a concern. I think we've got $74 billion of Bitcoin. We've got $6 billion of these preferred credit instruments outstanding right now.
That I may come do. I think it takes one or two percent of our annual equity issuance to cover our dividends. So not a big concern.
It's interesting. I mean, you think about the position that you hold when it comes to Bitcoin, which is basically never sell. You hold forever.
And then I was listening to a conversation this morning with Tim Draper on BTV with Matt Miller, who was saying that Bitcoin is the currency of the future.
You're going to have a day where you have US retailers using Bitcoin instead of US currency. And it falls into basically the store value versus currency debate.
And I wonder, Michael, whether those two viewpoints can coexist together, or is it going to be one or the other?
I think that the digital asset economy is exploding. And the winning digital currency is the tokenized dollar in the form of tether and circle.
And that entire asset class is exploded about $250 billion. I mean, so if people want to circulating medium of exchange on crypto rails, they're using stable coins in the form of tokenized dollars.
And so Bitcoin is emerged as digital capital. What you want is a commodity that's also scarce and decentralized as long-term capital asset.
So the killer application of Bitcoin is digital credit issued against digital capital, whereas the killer application for medium of exchange is a digital currency in the form of a stable coin.
And I think the people of the world understand it. If you talk to anybody and ask them how they're going to pay for their cup of coffee, they're going to send a stable coin from their mobile phone app.
And if you ask them what do you give to your granddaughter, they're going to say give them a Bitcoin.
There you go. Michael, before we let you go, we talked about some of the different types of financing that you have when it comes to perverts, when it comes to convertible debt, and of course, when it comes to common stock.
Are you considering any new type of debt or are you happy with the categories that you have right now?
Well, if we look at these perverts, first of all, they're leverage, but they're not debt because the principal never comes due.
Stretch, I think, represents kerosene. It's like extracting jet fuel from a barrel of crude oil.
And so we're very excited about that. And we think that there's an opportunity to create stretch type instruments in euros or yen or Canadian currency or pounds.
In essence, everybody in the world would love to have a high yield bank account that yielded 10% or more, or they'd love to have a money market that gave them double or triple their normal money market.
So we have shown that you can extract that sort of instrument from raw Bitcoin if you have enough Bitcoin.
So I think that we will continue to grow the AUM of stretch, and then we'll look at opportunities to transform it into different currencies around the world.
Michael really appreciated it. Michael Sailor there.