Bitcoin Is Winning

Joining me now, strategy founder and executive chairman, Michael Sailor.

Michael, welcome back to the show.

Yeah, thanks for having me.

Can I first just get your gut answer as to whether we are in the first stages

of another extended crypto winter?

We are in a crypto winter.

This is the fifth major drawdown of Bitcoin in the five years since I've been

in the marketplace.

This is a much milder winter than previous winters.

It'll be shorter than previous winters.

It's going to be followed by a spring and then a glorious summer.

So don't fear.

Why do you feel so confident saying that?

The banking sector is supporting Bitcoin much more strongly today than we were

four years ago.

We've got the formation of digital credit networks, banking credit networks.

We've got the support of the administration.

We've got a Bitcoin president.

We've got 12 cabinet members that are pro digital assets and pro innovation.

And every single month, you see a new advances in the digital asset space,

which you're bringing extraordinary productivity to the economy and a lot of

capital to the asset class.

You know, you're absolutely right when it comes to the banks who have finally

started accepting and embracing it.

I mean, you could go back, of course, to BlackRock putting not a bank, but

BlackRock, the world's largest asset manager finally pushing hard to get a

spot Bitcoin ETF in play, I bet.

And the rest have done depending on what Bitcoin is doing up, down all around.

But let's get to strategy because your, your company's average acquisition price

for all those Bitcoin is around what 76,000 can you just clarify that and make

sure that I'm right on that?

Yeah, and that range.

Okay.

That is materially above current market levels.

And that has created unrealized, albeit unrealized losses on paper.

But at what point Michael, does this disconnect between cost basis, what you

paid and the current market price become a problem for you and your shareholders?

Yeah.

So one of the misconceptions people have is that that number really matters.

The most important thing to understand is that we bought most of that Bitcoin

with equity, not with debt.

So if we had borrowed money to buy the Bitcoin, it might be an issue.

But we were the largest issuer of equity in 2024 in the entire capital market.

We were the largest issuer of equity in 2025 in the entire capital market.

I think the company raised $55 billion of capital, but only eight of the 55 billion

was debt.

So if we did buy the Bitcoin a little bit higher than the current level, we sold

equity that it was a massive premium to the Bitcoin at the time that we bought it.

So the company's balance sheets of fortress were fairly indestructible.

You know, Bitcoin can fall to any level.

It won't make much difference to us.

We will equitize the debt we have over the next three to six years.

We will buy Bitcoin.

If not every week, we'll definitely be buying Bitcoin every quarter going forward.

Makes no difference if Bitcoin goes all the way down.

And yet your whole strategy at strategy is very much based on

on Bitcoin.

I mean, you mentioned your premium.

Historically, your stock had traded at a much higher premium than what Bitcoin was at.

That is no longer the case.

So do you have a framework, Michael, for reclaiming that, I guess that premium

absent any rally in the next, I don't know how long a crypto winter less.

You said that it would be shorter, but absent any rally in Bitcoin back to 126,000.

Well, our equity is trading at a premium to our net asset value right now.

So we've already reclaimed that premium.

We've got enough capital for the next 50 to 60 years.

So unlike investors that need the market to be the next month.

Capital like 60, 60 years.

We have 60 years of capital is we can wait out any short term down turn in the market.

A week, a month, a year doesn't matter to us.

We're like the company that owns 3.4% of Manhattan with enough capital to hold out to the end

of this century.

And you're telling me that it's been a bad week or a bad month in Manhattan real estate market.

We believe in the future of the network and we built the balance sheet accordingly.

That's an interesting analogy.

I like it.

I think it's it.

It certainly works for people who might not be understanding what's going on.

But when you say capital for the next 60 years in what form?

We have $2.25 billion worth of just cash.

And we have Bitcoin about 717,000 Bitcoin, which is equal to about 55 years worth of dividends.

Okay.

All right.

That is if they hold up given the dividend obligations on preferred interest

on convertible debt.

There's all of that and you're operating costs.

What is the pathway through which you would generate actual cash flow independent of Bitcoin?

Yeah.

The thing to keep in mind is the Bitcoin is is outperforming the S&B by a factor of two to three.

And so if you can hold out through a four year cycle, then you can expect to outperform the S&P index.

We have the option to simply hold the Bitcoin and return the Bitcoin or capital from the Bitcoin to our investors.

Or we can sell the equity that's backed by the Bitcoin in order to pay the dividend.

Or we can pay we can sell derivatives based upon our Bitcoin holdings in order to pay our dividends.

Let's talk about STRC.

So that to me is an interesting one because this is your digital concept for credit.

Explain to people what that is because it is paying off what 11% dividend to shareholders.

That is a very rich dividend.

How are you able to do that?

Imagine you take a company public that holds a bunch of Manhattan real estate.

You expect to go up 7% a year.

Then you sell a preferred stock that pays a three and a half percent dividend each year.

You're just returning the first half of the capital appreciation of the real estate back to the credit

investors in the form of a dividend.

If you were holding the same amount in gold and you thought gold would go up 10% a year,

you could pay a five percent dividend in a preferred stock.

We are holding Bitcoin, which we expect to go up more than 20% a year.

So we offer 11% dividend yield on the preferred stock backed by the Bitcoin that we hold.

And so the credit investors are getting the first 11% return on Bitcoin

in the form of a credit instrument.

The equity investors are getting the return and excess of the 11%.

So what we've done with STRC is created a digital credit instrument that can pay double

digit dividends like 11% in a return of capital dividend.

So it's tax deferred.

And then we over collateralize that credit instrument with four to five dollars worth of Bitcoin whenever we sell a dollar of stretch.

Michael, isn't that based though on a blue sky scenario?

You began the sentence by saying, imagine if you were in real estate and you expect real estate to go up 10%.

Well, in 2005, 6.7, everybody thought real estate was going to continue to go up and it did not.

It imploded.

There are moments in time where these, these black swan events happen.

And I think that that it's important for people to understand what is the backup plan?

Well, that's why we have two and a half years worth of cash on the balance sheet.

So if the market seized up for the next two and a half years, we just pay cash.

That's why we have the 55 years worth of over collateralization in the Bitcoin.

So you're right.

If you needed to be perfect in the next week or the next month, there might be risk.

We just need to be right over the next decade for the equity to pay off.

And we need to be right, you know, sometime in the next 40 or 50 years,

in order for the credit to be workable.

You know, let me shift the discussion to the Federal Reserve because President Trump has

nominated Kevin Warsh to be the next Fed chair.

There is a question as to whether he will be in a position to cut interest rates.

We know President Trump really wants them to, but the economy is holding up at least for the moment.

So, you know, if he holds off on cutting interest rates, which could hurt riskier investments,

give me a sense of what you expect to see in that case.

You know, Bitcoin is global digital capital.

It's above my pay grade to speculate about where the interest rates will go.

But what I'll say is there are three primary drivers of the Bitcoin price that are all bullish.

There are those that believe the Bitcoin is a better gold and gold because it's scarce

and it's teleportable. And so people that believe in in debatement trade or they want a

non sovereign store of value will buy Bitcoin for the long term for that reason.

There are other people that believe in the digital transformation of finance and they think

of Bitcoin is amplified big tech. And then there's a third set of people that want global property.

And they simply want the highest best property in the world that they can move to any country,

anytime they want. And so, Bitcoin is driven by all three of those dynamics, sometimes at different

on different days of the week. And so, it defies putting into a simple bucket.

But it's going to win for one of those three reasons, regardless of what the macro environment

works out to be.

It truly is interesting now that I hear more than a few people saying that to diversify their portfolios

and they're not necessarily Bitcoin believers, they are putting a little corner of their

money into cryptocurrency just so that they are diversified. You guys have come a long way.

Good to see you, Michael. Thank you for coming on.

Yeah, thanks for having me anytime. Michael's sailor.