Strategy's $150k Year-End Target for Bitcoin

Hello and welcome to Market Over Time. I'm Sam Bartus. Our next guest is an MIT graduate

and Air Force Reserve member and an inventor with close to 50 patents under his name.

All impressive titles but you probably know him as the pioneer in Bitcoin. I'm very

pleased to introduce now Michael Sala Executive Chairman of Strategy Welcome to Market Over

Time here on the Schwab Network.

Thank you for hosting me.

First and foremost congratulations on becoming the first Bitcoin Treasury company to be rated

by S&P. How does it feel and what does it mean?

Well I think it's a very legitimizing step. It's all species for the industry. This year

we launched four digital credit instruments. Strike, strife, stride and stretch. They were

all IPOs. They all publicly trade. Those are backed by Bitcoin and they've been very successful

but they've been unrated. Many, many fixed income investors and insurance companies and

large pools of capital. They would like to buy them because they have superior yields.

They're really cool instruments but they can't without a rating. Part of the maturation

of the entire asset class is getting their traditional credit rating agencies to begin

to acknowledge digital credit. This was the first credit rating of a Bitcoin Treasury

company ever in the industry and we've been out for five years so I think it's a big milestone.

It certainly is a significant step and I just want to talk about what you do because you mentioned

some of your product offerings and we will dig into that then just a little while but what is

the best way to understand what you do and how? Well it all starts with Bitcoin and digital

commodity. Bitcoin is digital gold. It turns out that it's also a global asset. It trades 24,

7,365. You can sell it short with 20X leverage on a Sunday morning and then you can reverse and

go long 40X a few hours later from Singapore, cross trading with someone in Europe and that makes

it very volatile but very desirable and for a conventional investor makes it a little bit scary.

The history of Bitcoin for the past five years is it's been appreciating about 50 to 55% a year

and it's been about 50 vol. So three times as volatile as the S&P index. If what you wanted was 50%

ARR and 50 vol then you would just buy the raw commodity but it turns out that if you walked

down the street and you ask people would you like to generate 50% returns a year but you might

wake up and lose 25% of your capital in one week most people don't want that. So they don't like

the volatility. What our company does is we buy Bitcoin and then we issue credit instruments

against Bitcoin. So for example some people would like to have 75% of the upside, 5% of the downside

and an 8% dividend while they wait. That's a convertible preferred and that's what strike

STRK is. It's it's most of the upside of Bitcoin very little downside. It's like six, seven times

over collateralized and it's a dividend. Other people they don't want that. They just want for example

10% dividends forever. I don't care about anything more than that but if you pay me 10% dividends

forever that's interesting. So we just take an asset that's very volatile that we expect Bitcoin to go

up 30% a year for the next 20 years. We expect it to go up more than 20% forever. So it's not a problem

for us to give 10% dividends because that's our business model. But for the investor the investor

would like to see that we're 5X or 10X over collateralized right. So for every 10 billion dollars

of Bitcoin we own we might sell a billion dollars of that credit with that 100 million dollar

a year dividend stream. And so you're the credit investor you're just getting that pure yield.

And from our point of view we're paying 10 and we're getting back 20 or 30. So it makes sense for us.

And then there are other flavors like we created this product stretch STRC which is a treasury

credit instrument. The idea of that is it's just to hire you a bank account like we'll give you a

bank account or we'll give you a money market type instrument that pays 10% yield and the idea is

for it to be a one month duration. So we strip all the volatility away. We target a hundred dollar

par value. You take cash that you don't need for six months but you want to earn 10% instead of

earning 4% and you buy that instrument. Now you don't want the upside of Bitcoin. You don't want to buy

a lot of people don't want a 20 year bond. What they want is they want a money market right. And so

you don't want infinite interest rate duration. You don't want Delta. You don't want volatility.

Just give me pure yield. That's probably the most refined digital credit instrument. So

what our company is doing is we have a lot of capital. We have about 70 to 75 billion dollars

worth of Bitcoin on any given day. We sell those credit instruments and we have about six billion

dollars of those credit instruments outstanding. They're so way over-clotterized. Then we generate

various types of dividend streams or upside with them. As it turns out we expect Bitcoin to

appreciate 30% a year but we don't pay more than 10% to 12% dividend streams. So our common

stock shareholders get the excess. So what happens is we take that volatility in performance of

Bitcoin and we strip the volatility, the risk and the performance off and we sell you 10%, 12%,

8% as a credit investor. And then the extra performance and volatility goes to the equity. So

MSTR which is our common stock is more volatile higher performance than Bitcoin. And what you have

is some people want more Bitcoin performance and they want to be on a roller coaster and they buy

the common stock and some people want less and they just want the pure dividend stream. And of course

the people that just love Bitcoin and they don't want any counterparty risk, they don't want

on a security. They just buy the commodity Bitcoin and so that's how we sit in this ecosystem.

Right so it's almost like a levied bet. I mean it's a way to be exposed to Bitcoin without having

to actually buy the actual commodity itself. There is so much to unpack bear Michael. I mean you just

talked about how much Bitcoin you have $75 billion. Just talk to us about how much that actually

represents and what's your end game here. Well we own about 640,000 Bitcoin and that's about

3.1% of the network. 3.1% of all the Bitcoin that will ever exist we have acquired. Most of that

we've acquired with equity capital. About 50 billion dollars plus of common equity, about 6 billion

dollars worth of preferred equity. And so the company is substantially equity and our primary

business line is to issue this credit instrument and every year we sell a bit more equity and we

sell a bit more preferred equity and we buy more Bitcoin. So like this week we bought like 390

Bitcoin every week we'll acquire a bit more and we just continue to grind up and as we do that

Bitcoin becomes more scarce and because we're buying so much of it that means the price over time

has to appreciate because all the natural sellers get taken out of the market and no one wants to

sell unless you raise the price for it. Right so you are really a pioneer in what you do

with regards to Bitcoin Treasuries. I mean how many companies around there now doing what you do

and do you welcome that? Yeah and in August of 2020 we were the first public company to make any

meaningful commitment to crypto assets or to Bitcoin specifically and we bought 250 million

dollars worth of Bitcoin in August and then we followed up with another 175 million dollars a

few weeks later. We were the first then it came block then came Tesla then came half a dozen or

a dozen other Bitcoin miners and by about a year ago there were maybe 60 companies that owned

Bitcoin and then it doubled and now I think there's probably 180 companies that own some amount of

Bitcoin on their balance sheet that are publicly traded. We're 10X larger than the next largest one

in terms of holding so we're the 800 pound grill in the space. I think probably 1.1 million

Bitcoin are held by public companies and we own about two-thirds of it so we're the largest

player. We're the first ones to actually issue digital credit instruments like these

preferries that are trading in the public market but I expect that others will follow. There'll

probably be about half a dozen companies over the next 12 months to 24 months that will follow an

issue of those kind of credit instruments. We welcome those companies. I mean the truth is every

single company that capitalizes on Bitcoin takes more supply. There's only 21 million Bitcoin ever.

So if Microsoft turned around tomorrow and bought a hundred billion dollars of Bitcoin that would be

great for us. The more companies that buy Bitcoin the better. Most are just capitalizing on it. They're

just buying it in lieu of holding treasuries or holding cash. It's like a company can own real estate,

a company can own any other asset, a company can own Bitcoin. So most do that. There'll be a few

pure play treasury companies that will also issue digital credit against their underlying Bitcoin

but you need to have more like ten billion dollars of capital before you can get to critical mass

where you could do five hundred million and billion dollar IPOs of credit instruments that would

be liquid in the market. Okay. Let's just take a step back. Obviously you founded strategy in 1989.

I just want to get a sense of what Bitcoin is to you. I mean you've called it digital gold but you've

also talked about how the fact that it's evolving faster that people can digest but also the fact

that there's a lot of criticism out there and it will continue to be misunderstood. How do you

speak to that? I mean how do you reassure the markets about what you're doing out there?

The best way to think about Bitcoin is it's the world's first example of a technology that

allows individuals or corporations to tightly bind economic energy to their person.

If you know you have a hundred families and they all have some money but they don't trust each

other they don't trust their bank they don't trust their government they don't trust any company

but they want to keep their money. So they come up with the idea of a digital bank. You write

it in software and the digital bank has 21 million coins and and anybody can buy any amount of the

coins in the bank and that becomes their bank in cyberspace. Now the question is who runs the

software? Well I might trust you but I won't trust your great great granddaughter. So we all run

the software. Everybody runs the software and then the software continually cross checks everybody

else and so it's a very elegant decentralized way to create a property network or a decentralized

banking network. It's a protocol for economic prosperity right? So it's like you speak English I

speak English we can communicate you use Arabic numerals I use Arabic numerals we could do math

together when you offer me nine bananas I know what nine is right because we both use the same

numbers in the same language well what if we want to trade together and we don't want to rely

upon any government or any bank and we want to do it for a thousand years. So Bitcoin represents

that breakthrough it's the first time in human history that an individual can own anything without

asking the permission of someone more powerful than them. If you have a thousand Bitcoin and you

up the private key nobody can take it away from you you can carry it with you you can send it

anywhere on earth you can take it with you to the grave you solve the problem with the pharaohs

in Egypt couldn't solve how do you take your money with you right? So that's a big idea let's just

call it a bank in cyberspace where you put your money in no one can steal it and it's currency in

the sense that there's never going to be more than 21 million so when you buy a Bitcoin you're buying

21 million of all the money in the world forever that's the idea what do we call that I call it the

world's reserve capital network right it is capital what is capital long-term store of value

you're a rich person where do you save your money for the next hundred years? Not in the currency

you don't buy pesos you don't buy euros you don't buy the US dollar you don't buy the end if you're

a rich person you want to save your money for a hundred years you're buying equity private equity

public equity maybe you're buying scarce desirable art maybe you're buying real estate commercial

real estate so the capital assets of the 20th century were like the S&P 500 index or New York or

London real estate or maybe sports teams if you're walking if you're lucky enough to be a little buy one

but um but what Bitcoin represents is digital capital right if I have a bank and it's a network

a bank I can move the money I can move a billion dollars from here to Tokyo in a few minutes so

then that way it's a network but it's also capital itself if if I gave you 10 million dollars and

I dropped you in the middle of Africa and I said buy anything you want buy any equity buy any land

buy anything buy any bond buy anything and but you got to keep it for 30 years in Africa or I said

or you could buy 10 million dollars a Bitcoin and by the way you can send it to Singapore or London

or Paris or New York in two minutes from your phone I would submit to you there's not a single

thing you would buy in Africa there isn't the capital asset that you want to give to your

family you're a great grandchildren the same is true if you actually talk to people in China

they don't want to keep their money in China there's a law against removing it from China in

Russia and Ukraine if you talk to Europeans they don't want to have their money locked down in any

country in Europe right they they want to have their money where do people want their money they

want at the US right how about Brazilians Argentinian's Venezuelans most of the world doesn't want

to take all of their families wealth and store it locally in real estate local stocks local currency

local banks that's why there are laws against them removing their money and the problem with gold

is if you have all your money in gold in Africa you can't take it through the airport you can't take

you know if you have all your money in gold in Argentina you can't bring it out of the country

so the value of Bitcoin is it's digital gold so if you have your family's assets in Bitcoin you can

take it anywhere you want no one can stop you from removing it from the jurisdiction and the more

insecure you are about the country you live in the bank you do business with the nation state

you rely on or your economic future the more desirable it becomes so in a nutshell Bitcoin

represents property rights for the human race it represents economic prosperity you know and

we'll call it colloquial digital gold but it's 100 times better than gold you cannot teleport

gold from here to Tokyo with the blink of an eye right and if you have gold I can shoot you

and take your gold if you have Bitcoin I can kill you but I don't get the Bitcoin and so it is

it is a state change difference in the economic vitality of an individual a company a family a

nation state the human race and and so that's why all of us in the in the crypto community we you

know we really um we revere Satoshi and we think about the world before Satoshi and after

Satoshi because before Satoshi everything you owned was subject to the permission of someone

more powerful than you and after Satoshi after January 3rd 2009 you could own something for yourself

that no one can take away from you and that is what caused the entire 750 million person crypto

movement and it certainly has been gaining traction I mean crypto has got so many tailwinds this

year I mean more regulatory clarity and support more corporate adoption institutional appetite and

also legislative wins I mean which one has been the biggest tailwind for the space and what

continues to drive it higher you know there's been about half a dozen massive milestones in the

past 24 months the first one was the approval of spot Bitcoin ETFs in January of 24 and that sparked

the explosion and the explosive stress of ibit which is went from zero to a hundred billion dollars

in less than two years and it's the most successful ETF in the history of Wall Street so that was a

big deal the endorsement of the SEC the second big deal was the red sweep in November when you had

a pro crypto pro Bitcoin administration we went from one supporter in the cabinet Gary Gensler

was a Bitcoin believer one out of 12 to all 12 cabinet members the president the vice president

the head of the SEC the head of the CFTC the head of the treasury the head of commerce the head of

you know RFK the head of you know the head of uh you know of the home the housing authority bill

Poulty you know Kelly Lawflar and Howard Lutnik so you all of a sudden have 12 positive cabinet

members from one and that was a big deal the third big milestone was uh Fazbe's adoption of

fair value accounting for crypto assets before that point and that took place the beginning of this

year beginning of 2025 before that point if you're a public company you could mark down your losses

on Bitcoin but you could never realize the gains right it's literally an asset where you could only

lose you could never win right so the entire accounting role was a deck stacked against you

and so fair value accounting meant that our equity for example went from three billion to 50 plus

billion in 12 months right but if it wasn't offer fair value accounting we would still have three

billion dollars instead of 50 billion so so that was very prejudicial on hostile accounting and

that flipped in January I think the fourth big milestone is all of the pro crypto and pro bitcoin

guidance that came out of treasury the OCC the FDIC and the Federal Reserve and and the key point

there is most banks in the United States and the rest of the world were afraid to custody Bitcoin

they were afraid to lend against it they were afraid to do business with it uh under the previous

administration and I think the guidance that came out of the current administration delivered a

message which is not only is it safe for you to custody and extend credit against these assets

it's really imperative because the United States wants to be the crypto capital of the world

and we want to lead in digital assets and that means our banks need to lead in digital assets

so that that you can attribute to the president and to the secretary of the treasury

bessent I think the next thing was the passage of the the genius act uh championing by senator

haggardy and that created a stablecoin um environment in the United States and the idea there is

why can't we tokenize the US dollar and ship a trillion of it to the rest of the world or maybe

10 trillion dollars of it to the rest of the world because money wants to move at the speed of light

and this is uh this is the the critical part of the crypto ecosystem so so peep the the last two

banks that that moved crypto dollars around were silvergate and signature bank and they were

assassinated by the previous administration they were they they were shut down on a weekend

for no good reason they were perfectly well capitalized and they were they were literally murdered

by regulators so you can imagine that the banks were afraid to get involved with crypto

under the previous administration you know getting a supportive white house a supportive

cabinet a supportive head of the treasury and then a law that says that it is legal for you to do

this I think was pretty important then that has resulted in an avalanche of institutional adoption

and now you have companies like jp morgan right and bank of america and wells fargo and b and y

melon and pnc bank and city that are all announcing their support for this asset class and if the

trillion dollar banks are willing to custody and they're willing to extend credit and they're

willing to handle the asset class and the willing to bank the crypto industry that's really the

necessary condition to ten x from here like bitcoin got to a hundred thousand without their help

but getting to a million requires the banks to to bank the asset and so the next four-year period

is really about banking bitcoin and and the support for digital assets in general by the major

establishment of bankers in the united states and everybody else in the world right you can

imagine the bankers in australia canada singapore the middle east and europe

mexico south they all follow the u.s banking standard and so what you have is an avalanche or

a sea change here and the tail the headwinds have become tailwinds okay so that's what got us here

uh... let's just talk about the short term uh... twenty twenty five year end where does it end up

because i've heard everything from one hundred to two hundred thousand yeah well the consensus

of all the equity analyst there's like a dozen of them the cover our stock is north of one

fifty one hundred fifty thousand our corporate guidance is targeted at a hundred and fifty

thousand dollars by the end of the year right okay and sort of looking at further out if you

got a sort of a twenty thirty target uh... i don't have specific target but in the four to eight

year time frame i think uh... bitcoin goes to a million dollars a coin my twenty twenty one year

expectation is bitcoin appreciates about twenty nine percent a year for twenty one years and that

leaves it at twenty one million dollars twenty one years from now so i i think the big coin will

appreciate in the range of twenty nine to thirty percent a year for twenty years from this point

okay you seem to like that number twenty one i'm just in fire as far as what we have to work with

through the end of the year now i mean you know is there a favorable macro environment to support

that as well i think the drivers right now will be fed fed decisions with regarding uh... monetary

policy clearly uh... that drives every asset class and we've had a fairly uh... tight monetary

policy right now and and if that policy loosens that'll be a driver i think other than that uh...

the industry's volatile in the in the primary actors in this case with the banks and every time

a bank makes a major announcement about bitcoin acceptance or crypto adoption those are all very

positive for the asset class and those should come progressively you know it's interesting just

as far as the more recent price action that we've seen uh... off the back over october the tenth i

mean we did certainly see a risk on for equities but it feels like bitcoins kind of been stuck and

sort of lost the momentum why is that i think it's a two and a half trillion dollar asset class that's

been unbanked so imagine that you started a company in video and you gave ninety percent of the

stock to the employees and they went from a dollar to being worth three trillion dollars but no

bank would give them a loan against it so your employee got you've got trillions of dollars of

capital gains but no one will give you a nickel loan against you cannot get a loan you could post

it you know you have ten billion dollars of bitcoin you can't get a thousand dollar loan from

a major bank right now so what happens is the uh... the o g crypto holders the ones that actually

had to capital gain the only what path they have the liquidity is to either re-hypothicate the

bitcoin and it gets shorted in the market or to sell the bitcoin so i think we're working through

a period where ten percent of the supply or it wouldn't what percentage of the equity in you

know in your big tech company would be sold by employees you know when they all got insanely rich

probably ten twenty percent right they would sell at least so we're waiting for that to boil off

and um... we're at the point where everybody knows the bitcoin is is digital gold and it's got

institutional acceptance but banks are are very careful bureaucratic and processed driven creatures

and they should be right i mean you know it banks get out of control right there's there's

health to pay so i think it'll take four years for the conventional traditional banking establishment

to get spun up where they're custody the asset and their extending credit against the asset

and and it's worked its way into systems right i mean bill poltie has directed fannie may and

freddie mack to start to recognize this is good collateral but how long will it be before you can

post your bitcoin as part of your conforming loan collateral and it's a government quasi government

type agency and the credit rating agencies they're starting to cover us like we just got covered by

s and p but how long how long before they acknowledge bitcoin as collateral or capital that's just

as good as holding a share of in bidia stock or apple stock and i think reasonably speaking that's

a two to four year adoption curve so between twenty five and twenty eight the traditional finance

infrastructure do bank and collateralize an issue credit against this will come online when that

happens if you think about every asset class it if you can't get a loan to buy a car and if you

can't get a loan to buy a house what happens to car prices and house prices right at the point

that the credit market forms over the asset class the prices move up so what you see right now are

the bank credit markets the corporate credit markets right and the public credit markets are forming

on top of bitcoin and as they form that's going to be very positive for the asset itself it's about

those believers isn't it as you say and you actually have previously said that each quarter you

gain more believers can you give us a sort of sense of what you've seen in the most recent quarter?

Well I think that we started with the early shareholders of strategy they were bitcoin and crypto

believers who were prohibited from buying bitcoin due to regulations in the various markets

so you're a bitcoin believer in your retiree and you live in the UK and you have all your money tied up

in your UK retirement plan it's illegal impossible to buy bitcoin with that money but you could buy a

stock so you'd buy a MSTR same in Australia actually everywhere in the world there are large

pools of capital that are tied up in in these tax advantage to counts IRAs 401ks etc where you

might be able to buy security but you can't necessarily buy you can't just say I want to buy a

bunch of my favorite artist paintings that are you know at artbozl so the early believers were the

crypto enthusiast that had capital tied up and and mainstream investors big investors that actively

manage funds at capital group or Morgan Stanley that they believed in the bitcoin thesis but

but they had pools of billions of dollars that were mandated to make equity capital investments

99% of the professionally managed money is mandated to equity or credit they can't invest in a

commodity so so we offered the first equity to the equity capital investors and what we followed

on next was a set of convertible bonds we became the the biggest convertible bond issuer in the

world and they were the most successful convertible bonds and there was a lot of money or mark to

convertible bonds so after we became a substantial part of that market we outgrew it and then we went

on to preferred and in the preferred market we started creating these publicly traded digital credit

instruments they were targeted at different user base I mean the person that wants to collect a

10% dividend forever but they don't want the bitcoin upside it's like okay I hear you when you say

you expect 30% a year for the next 20 years but just guarantee me the first 10 and you can have

the next 20 but take the volatility away and then take the risk like right there's a lot of people

that would rather have 10% after tax with 1 100 the risk right and so that's a different class of

investors so we have rotated from the true believers to to the hedge funds that light you know the

Millenniums and Soros and Citadels that wanted to trade and hedge the convertible bonds

to the credit investors that want long durations sophisticated credit and then with stretch it's

just money market investors I have some money I just want more than zero but I don't really want to

risk the principal so much and so that last set of investors are you know retirees mainstream

retail I think we had $600 million of retail demand for our stretch IPO in two days so in 48

hours we had $600 million of demand and that was an order of magnitude larger than the retail

demand for our other you know instruments so right now this is migrating to family offices you know

retail investors high-not-worth individuals and and of course fixed income investors like you know

pff which is like black rocks preferred fund I think like three and a half to four percent of

that fund is invested in our credit instruments which didn't exist 12 months ago so we're we're now

starting to move into credit indexes of course you're a credit investor you have to buy credit you're

an equity investor you have to buy equity we're also an equity indexes for example our biggest

shareholders are Vanguard and black rock through their passive equity index funds so there's a

lot of polls cap though in the world some of them if you lived in Africa and you needed to

flee the country and you didn't trust your bank I would say buy bitcoin put it on your own hardware

wallet because you can't trust the bank right but but that's one class of Bitcoin investors but if

you're an investor in and the United States and you have pulls a capital earmarked to equity or

credit then you probably want something created by a company like ours there had been a view out

there that crypto was uninvestable without the regulatory framework and guard rails in place but

we have seen these sort of legislative wins as you mentioned and we still got to 100,000 to your point

without that I'm just wondering you know talk us through strategies involvement in the latest

legislative efforts now to really regulate and create those guard rails and construct the

infrastructure for everyday people to understand and access and have that exposure to crypto if you

look at the digital assets industry today you could divide it broadly into two segments one segment

is digital capital and that is bitcoin it's dominated by proof of work networks bitcoin is 99% of

all the energy and all the capital on that side of the industry and digital capital means digital gold

and that means oh I want to buy something without counterparty risk and hold it for 100 years

and what do you do on top of gold you wish you credit for 300 years the western world ran on

gold back credit all of our currencies all sovereign debt all corporate debt was in essence a form of

gold back credit so so the part of the industry which is which is most traditional and conventional

is digital capital digital credit all basically centered on bitcoin and bitcoin treasury companies

and that's what our company strategy does the other half of the industry is digital finance

and that is all about tokenizing currencies tokenizing security stocks and bonds tokenizing real

world assets tokenizing brands right it's Joe Rogan token right it's a meme coin but it's also the

dollar it's also a stable coin so that opportunity is why don't we create 10 trillion dollars worth

of stable coin and export our currency to the world and move the money at the speed of light and

let the computers trade with themselves a million times a second why not and that's also about

capital formation like what there's 40 million companies in the United States why can't they all

just issue their own token to raise capital right tokenize your country club membership tokenize

your restaurant tokenize your hotel chain whatever you know Katy Perry token Joe Rogan token

everybody token right now you want to go public it's 40 million dollars in four years and an

army of lawyers well what if I just wanted to spend the weekend or four hours or four days and I

wanted to raise money from my two million dollar company or twenty million dollar company so

capital formation is another killer application of digital finance the third killer application is

I tokenize a share of Apple stock okay why can't I just send Apple stock between India and

Pakistan on Saturday afternoon on Android phone okay what are you doing what you're you're you're

basically moving the securities market at the speed of light everybody wants 24 7 365 trading

and if I can self-custody my Bitcoin why can't I self-custody a million dollars with Apple stock

and if I can self-custody maybe I can actually you know get bids from the highest bidder and I

can send a million dollars of Apple stock to Singapore and get paid for it so this entire

real area of digital finance this is very entrepreneurial it's all about innovation it's it's it's it's

much more sophisticated and and that is the other half of the crypto market now the first half of

the market digital capital digital credit that's got regulatory clarity now right Bitcoin is digital

capital the president of the United States has said it you know it's been in it's been the

sector of treasury they've all clarified that so that's pretty much just about issuing traditional

conventional credit instruments taking them public on capital markets and if there's any hoops

to jump through it's like how do I sell stretch in euros in Switzerland and get the sign off from the

the European Union the Swiss regulator they exchange right but it's not new law it's traditional

finance law the other part of the equation requires clarity I mean literally the act clarity and

so the next big crypto bill is the bill that defines and and creates the bright lines and and empowers

what can you do with digital currency what can you do with the digital token how do I tokenize my

share of stock how do I tokenize you know strc and let it trade at the speed of light in Singapore

on the weekend on a crypto exchange right it's not clear how to do that yet is there demand yeah

there's hundred trillion dollars of demand but I think that there's bipartisan consensus that we need

that bill that bill will get passed we don't know what the final bright lines in the bill will be

and once the bill is passed then it'll be clear you know what you can do what you can't do and so

I think that if you're an institutional investor or conservative investor right you can buy bitcoin hold

it as a store of value you can buy digital equity or digital credit instruments back by bitcoin

that's all fairly straightforward I think in the other part of the industry the digital fines

part of the industry it's it's very driven by technology it's very regulatory intensive and then

it's unclear you know how will every jurisdiction you know view every regulation so it'll be a bit

more complicated but you know we're talking about extraordinarily exciting new ideas you know an

artist a celebrity that could own their own brand and you know and you know a membership they

can be tokenized a ticket that can be transferred so there are a lot of things that'll happen and

they'll be transformational innovative but you know they'll require more legislation before before

you're going to find your favorite celebrity do it they're going to make sure they're not getting sued

by the SEC okay and speaking of these new ideas I mean why should the US government have a bitcoin

reserve I think the key to understand bitcoin is it is like owning a piece of cyberspace it is the

world reserve capital network so if you're looking at a world that's going to have hundreds of

trillions of dollars of capital on this network and if we're looking at a world where you're

going to see trillions and maybe tens or hundreds of trillions of dollars of credits on top of the

capital and the network right you might want to own a piece of it right what I say is the United

States purchased 79% of the landmass of the country 79% of the United States America was purchased

for 40 million dollars that's all of the Louisiana territory that's all of Texas it's all a

California that's all of Alaska we purchased it before we knew there was going to be a Hollywood

before we knew there was going to be a Silicon Valley before we knew that it would want oil right

we purchased Alaska 1867 it would sew its folly he was a fool for doing it it's got trillions of

dollars of oil underneath the right now so if you can actually purchase the future if you can

own cyberspace you ought to right what you know the the Dutch I think they purchased Manhattan for

like a few guilders and glass beads or something right so it's very valuable real estate you know in

the same way that you want to you want to control the world's reserve currency network

though I mean the correlate as why should the US actually sell 10 trillion dollars of stablecoins

because money wants to move at the speed of light and if we sell the 10 trillion of stablecoins

and if our companies run that network we will control currency for the next hundred years and so

I think the United States ought to dominate the world reserve currency and it ought to dominate

the world reserve capital network where the biggest holder of gold you know and if I said to you

would you like to own the majority of the oil in the world John D. Rockefeller thought yes and we

were the biggest the biggest generator of energy you know due to standard oil you know at the

turn of the century and that's why we won were one and were a war two because we were the energy

dominant leader Bitcoin is digital energy right either you own it and control it or somebody else

does and so I would just make one more point if the US doesn't they should encourage US banks

US investors US corporations and taxpayers to own it right it's not necessary for the US to

own it out right but it's very very critical that US banks US investors US corporations own it

and control it in the same way that it wasn't necessary for the US to own all the oil but it's

pretty necessary for a US corporation to own the oil what about the energy side of it I mean so

many Bitcoin mining companies now pivoting to focus on AI data centers I've been talking to a

number of them I mean you've got Iran you've got clean spark you've got hive what are your thoughts

on this I think that it's been an extraordinary hundred and eighty degree turn for the better by

the nation I think maybe the most profound development of technology in the 20th century was nuclear

power nuclear energy unlimited clean scalable energy and we shut down the programs for 50 years

and in 2020 if you talk to energy companies they were going to decommission all those nuclear reactors

and we were asking the question how do we get this nation to embrace the importance of electricity

and and if you want to generate infinite clean electricity you know the the most efficient way to

do it is with nuclear technology so I I think there there are two things you want to do with energy

one thing is you want to create digital intelligence right and that's what AI is and we we

discovered the way you create digital intelligence is you feed it extreme amount of energy you feed

gigawatts of energy through very customized silicon chips and video chips you know GPUs

and then outcomes digital intelligence well you know what the bitcoin industry discovered is

the way you create digital money digital capital is you take gigawatts of electricity and you feed

it through custom silicon a6 and you generate a wall of encrypted energy to defend the network and

that's what bitcoin is so the so what happened in the last four years was was the bitcoin miners were

under pressure for using too much electricity by the environmentalist and we were defending that

we were saying but you know we're actually going to create a new banking world order and it's

going to be worth hundreds of trillions of dollars and so it's a good use of electricity but we

had a hard time winning that battle then all the sudden we have the chat gpt moment and people

discover that they also need power in order to create digital intelligence and that turned apple

amazon facebook google right microsoft and hundreds of millions of americans into true believers

and that entire debate about whether electricity good or electricity bad just went away and the

entire debate over nuclear power went away and all of those ai data centers they desperately needed

high power data centers and you know who owned them the bitcoin miners and so as the bitcoin miners

were struggling with the economics of the industry because the way the bitcoin works is it gets

exponentially more efficient to mine bitcoin and so the margins of bitcoin mining are decreasing

at the point they were struggling along came a new buyer for those power rights and they were

able to pivot and monetize those power rights so ai and digital intelligence saved you know

the bitcoin miners and what are they they're digital power providers right and ultimately the entire

industry is the market is starting to realize the future is digital capital digital money digital

intelligence right that that's the future and the way you created it is with silicon and electricity

and so if you want your nation to dominate in the 21st century you better have digital power

you better have digital money you better have digital intelligence right just like you want air

power or see power or land power 100 years ago and of course I think what everybody is realizing is

now it's a mad scramble to harness hydro and natural gas but ultimately the solution is nuclear

mm-hmm I mean we could keep talking about energy forever I find this part of the story just super

fascinating but I just want to know what is your message out there to the skeptics

to the bitcoin skeptics or to the what skeptics to the skeptics the bitcoin and also just broadly crypto

my message is is um if you live in Argentina and you've watched the currency collapse completely

every 20 years for the past 100 years and if your family was in povrished five times in the century

and an engineer named Satoshi came along with a way for you not to be poor

and destitute then and he said well it's no more difficult than just put this wallet on your

iPhone and now you don't have to be poor then you would be utterly captivated by that vision

and that is the plight of everyone if if we go on my hand and say how many people have lived in

societies where they had their property rights and their wealth stripped away from it's everybody

in Africa everybody in South America Brazil's currency collapse Argentinian's currency collapse Cuba's

got no currency Venezuela collapse everybody in the Middle East people in Turkey right now

Russia collapsed 30 years ago Russia's collapsing now every in Ukraine

everybody in China doesn't trust their currency right everybody in Europe doesn't trust their currency

so if you're a skeptic you must be an upper east side trust fund baby and you're lucky enough to be

born rich and the only country in the world where the currency didn't collapse in the last 100

years and and you know your currency your currency's lost 99.9% of its value over 100 years the US

dollar has debased 7% a year on average for 100 years so you're you're probably smart enough if

you're wealthy an a skeptic to know that you shouldn't store your family's assets and cash

dollar bills you're probably smart enough you're privileged enough to be able to invest in US real

estate and US equities because you know that wouldn't work in any African real estate or any African

equity right or any North Korean equity or etc. any Chinese equity wouldn't work in Japanese

equities either right in fact I could go on and on and on so you're a privileged person that happens

to be rich or happens to have money that's invested in the world's most secure assets in the US

but Bitcoin is digital capital and it's for everybody else in the world it wasn't as privileged as you

for them it's the difference between 7 billion people living in destitution and 7 billion people

having hope and so so Bitcoin is an idea whose time has come if you're one of those people right

you're going to cling to it like a like a diabetic would cling to insulin right before Bitcoin

every company in the world every in the world is a type one diabetic they cannot store economic

energy right so if you're in that situation that is life affirming for you it's not a laughing

matter that's why people are so passionate about it but let's say it's not you're not one of those

people you happen to be one of the 500 million or a billion elite that lives in a very comfortable

environment it just happens to be the the best idea for you it's it's the ultimate alternative

investment it's an it's an asset uncorrelated to a currency uncorrelated to any nation state it's

not an equity it doesn't have counterparty risk so the reason you want to look at it it's the

most valuable real estate property it's basically buying a piece of cyberspace and if you would

if you had a chance to buy an acre of Manhattan and the year 1700 you would have been paying

top dollar for it and then every decade for the next 300 years someone would pay more and at

what point did buying land in Manhattan never become a bad idea it's still a good idea and Bitcoin

is cyber Manhattan it's one day eight billion people want to put their money there and there's

only 21 million blocks that's 276 by 276 by 276 you can't make any more of it so our view is it's

just a good idea it's the best idea for a conventional investor but it's a life-saving idea for

the rest of the world I like that cyber Manhattan it's almost like a monopoly board bit for crypto

just an aliternoat Michael who are your role models in the financial world yeah I think that

the people that are inspirational are the industrialist that took a technology and they commercialized

the product and gave it to the world so you know you got John D Rockefeller came along looked at

crude oil and extracted kerosene and eventually extracted gasoline and diesel right and and we

first we heated our homes and lit our houses but eventually we ran our cars and our jets and our

rockets kerosene is rocket fuel and jet fuel and then you know take Henry Ford right he took a

fire and an explosion explosives in a fire put it into an engine wrapped it onto a carriage and

gave everybody an automobile and and he basically gave everybody the ability to travel a hundred

times as fast and safely and you know history books are full of people that died because they had

to walk a hundred miles in order to get from here to there and they caught pneumonia so so Ford gave

mobility to the world you know I think I think I could go on with Boeing and you could go you know

you could look at the iPhone and the radio and the telegraph and you can look at the you know

development of penicillin and antibiotics and the like but I think that yeah and if you look at

Bitcoin right now right so Bitcoin is this scary explosive crypto thing people are afraid it's

going to blow them up or or it's going to hurt them right what we're doing right now the thing I'm

most excited about our iPhone moment is stretch STRC because stretch is it's a high yield bank account

you know I want my money to get generate 10% tax-deferred income forever where all the moving parts

there's no moving parts what's the product comfortable retirement well what's the alternative

well two or three percent so you're just going to give me five times more money what do I

got to do well I just what do you got to do to drive a car well believe in the engine what do you

got to do to you you know to find an airplane believe in the plane and the pilot what do you

got to do to get five times more than your banks offering believe in Bitcoin and then this

issuer strategy so our job is to get people to trust us and then give them a comfortable

retirement or just give them money right we're in essence selling money by using digital technology

to double or triple someone's yields we've covered a lot of ground you want to leave us with

the final full it 2025 is the first year of institutional adoption of digital assets so

if everything that I'm saying sounds new or scary or novel you never heard it before

that's because 12 months ago Donald Trump hadn't won the election and 12 months ago your bank

would have been shut down had they even tried to suggest this to you so so we are living at a very

special period where where it's just like in 1902 every learned person would have given you 100

reasons why human beings will never fly and in 1904 it was obvious that we were going to fly

because we flew in 1903 right and so we're like 1904 for digital assets it's pretty obvious right

the president's told you it's a commodity the cabinet's told you the head of the treasuries

told you all the banks are moving but the way it works is the traditional finance world's

going to take 10 years you know like vanguard's going to tell you well we're afraid of crypto assets

don't buy it but you know vanguard's my biggest investor my passively but actively right even

though they're the biggest investor in my company actively they haven't quite got around to

processing the fact that I guess the digital form of everything is 100 times better than the

analog form digital photos you know you'd co-acting you'd apple right digital books digital gold digital

video digital whatever we're living through the digital transformation of the capital markets and

people weren't sure that was going to happen a year ago but now they're happening and you've got a 10

year digital gold rush and so the beauty is you can make a lot of money if you're willing to do

the work if you're willing to do the research and spend 10 hours thinking about this or 100 hours

well you can buy Bitcoin for 99% discount if you wait until the year 2035 your bank's going to

tell you yeah it's easy we all supported it's good well La Barra gets it then you're going to

pay 10x more and if you wait until the conventional wisdom is this is the world's greatest asset class

well it's going to be 10 million dollars coin and you're going to pay 100 times more and so you're

living through a technology transformation where you get a massive discount and you get paid a lot

if you think for yourself and if you do the research and you come to a conviction over this issue

and I couldn't have said that two years ago two years ago or six years ago you know

we need the president of united states to endorse it but if we don't get that then you've got a

different future so this is a special year and there are special opportunities and I would

encourage everybody to focus on it and come to their own conclusions because it's the most

auspicious development in the capital markets in my lifetime and there's some irony in there I

like it exciting times Michael say it's been an absolute pleasure thank you so much for joining me

yeah thank you that is the executive chairman of the strategy joining me there for all your

market news bitcoin news and more be sure to subscribe to Schwab networks youtube page and follow

us on social media i'm sam viders and thanks for tuning in

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