The Case For Digital Credit $MSTR

Let's talk digital credit and crypto prices join us Mike sailor Michael sailor strategy

Executive chairman and founder and at my first question was orange you're gonna ask me about

Why you wear orange ties?

You you got how many?

I got a few dozen you do actually a few dozen and that is a

I guess a salute to what you do for a living in the cool everyday is a good day for an orange tie Joe

Do you

Overall have a have a feeling about whether this would you call this a crypto winner or crypto

pseudo winner that we've been through for a while is that are we near closer to the end or yeah, I think I think so I mean I think we we were

At the top in October about 125. I think we bought them to 60. I think we're moving into the spring phase

We've got decent support here in these levels. I think we'll rally from here

We're just working against a few macro headwinds right now. What macro tailwinds are possible. What about congress?

Well, I think the passage of the clarity act will be a big deal

I think even in the absence of that the release of

In guidance that let you tokenize

Securities and and sports digital assets out of the SEC the innovation of invention

Innovation exemption that would be a big deal as well

It for people that don't follow that close. I mean there are

I haveings that haven't then gets harder and harder to mine at some point it even though we're getting

close to

Maximum number but where are we out of the hundred and twenty one million oh yeah, I mean the next having in two years

And we're at what right now

Like we're never we it's like asymptotic we get towards the end it gets harder and harder to mine any

We can it'll be a couple hundred years before we get to a hundred and twenty one

Not much bitcoin left because at this point all of the organic supply bitcoin being produced by the miners is being taken up by the big

You bought more than was mine this year for for strategy. Yeah, we have yeah

The formation of digital credit means that the credit market itself is absorbing all of the

Organic supply of bitcoin from now to forever with our company

We'll probably buy all of the bitcoin gets produced by the miners between here in the year 2140

There's no more bitcoin 2140

Yeah, you have to leave that theoretically in your for your successors to

To do orchestras so talk to orchestrate talk talk talk about the credit

Side of things and and you've talked about it here before and my eyes kind of glaze over but I'm getting it a little bit

But you know wall street firms have been creating structured products forever

They take a big stack of S&P securities and they strip the downside they give you part of the upside

They sell it to high net worth individuals that would like upside with downside protection

What we've done is taken a capital asset bitcoin and we're taking those we're converting that capital or those capital gains in the credit dividends

So we think bitcoin's going up more than the S&P index over time we expect 30% but it doesn't matter if it's 10 or 20 percent

We can pay 11 and a half percent dividend on a preferred stock a credit dividend because that represents a fraction

Of the long-term capital gain that we're expecting and so if you're disciplined about the way that you convert a capital gain into a credit dividend

The capital gains unrealized the credit dividend becomes return of capital and it's tax deferred

So digital credit is really synthetic yield where we're extracting the first 11 and a half percent of our expected capital appreciation of bitcoin

We're remitting it to the credit investors via an over collateralized preferred stock

If you've got money you don't need or you need it in the next four years you either put in the money market

You get three and a half percent taxable or you put it in digital credit you get 11 and a half percent tax deferred

So if you're a crypto believer and you are working capital you want to buy digital credit because you get paid four times as much after tax

It it's a preferred

It is a preferred stock convertible

It is it is just a premium

I'm sorry is there

Would you have even more upside than the 11 and a half percent?

No

The real breakthrough with STRC it's the biggest preferred stock in the world

It's the fastest growing preferred stock in the world. It's the most what it generates 11 and a half percent you keep the rest if there's a reason

The reason it works is because we target one hundred dollars and then we use a variable

dividend rate in order to keep it in a hundred and we attach a shelf registration to it

So if it trades at a hundred dollars at a penny we sell it and so it has become

The lowest volatility credit instrument and the most liquid credit instrument because in essence

It's a bank account the pays you 11 and a half percent tax deferred tax deferred and and

It if there are additional gains in Bitcoin

Then you're if it is the 30 percent instead of that you could do it with 10 you said but it's so what if it is 30 who get who gets the

The common stock investor so what we've done is we've created a way for for common stock investors to create amplified Bitcoin

MSTR has outperformed Bitcoin over the past six you have to use that to

To base the prefer that's the credit that the preferred is based on the common stock absorbs the risk the volatility

And the upside and the credit gets the first 11 and a half percent and so you get the common stock is a vol of 70 Joe

And the credit has evolved like three and Bitcoin has evolved of 40

So what we're doing is financial engineering where we strip the upside and the volatility give it to the common equity investors

That's a rocket

Bitcoin is a fighter jet

Stretch is a passenger jet for people that want a very comfortable ride

But they want to get double you know other credit side of this

Of whatever it is the you're doing right now. How much is is it's gone from zero to ten and a half billion dollars in ten months

We sold two billion dollars last month. It's growing at a 24 billion dollar year run rate

And then for your company

What you keep doing this is this is going to be one of your main vehicles and and how will that benefit strategy

Well obviously to keep buying but if if the company the company has has about 65 billion dollars of Bitcoin

If we did nothing we're just holding 65 billion of Bitcoin we look like an ETF

But if I sell the credit and I buy the Bitcoin and Bitcoin and appreciate 20% a year

This is screamingly profitable for the common equity and the the company will outperform Bitcoin

And that means that

Bitcoin is up maybe 40% in the last six years our company is up close to 60% a year annualized

There are you know Bitcoin bears and non-believers that will never be converted and some of them are pretty smart and pretty wealthy

I think

I don't think they've taken zero off the table for

For where they think Bitcoin is headed. Have you taken that do you think any

Rational person has taken that off the table at this point that the you know the tool up

Beanie baby

There's always going to be skeptics but there's 900 million people that have a crypto account or they're buying it and and products like strc

Are democratizing this because Matt we've got a viral action spreading through

Retail accounts through retirees

There are a lot of people they're living on a fixed income and their view is they don't want to bet their kids tuition

Or they don't want to bet their capital on the Bitcoin roller coaster

But they would like to get paid four times the money market

And they don't think it's going to zero right just you remember and say let's say that all the fears about quantum computing come through

Bitcoin goes to zero

What happens to retirees that have all their money in the 11 and a half percent credit is when consensus forms about a quantum

threat existing then we will upgrade the entire network in a matter of months

And it it'll happen it'll happen as fast as your apple network apple software and google software and jp

Watching all of the tokenization and all everything that we're seeing happen

It just sort of bolsters the case that this is not a

A tool of bulb phenomena. Isn't it? Let's hear to stay it the real power of tokenization is it make it creates a free market and credit formation and yield

For asset owners and so if you can tokenize a bunch of securities then you can shop for the best credit terms and the highest yield and

And in the 20th century tradfly economy your bank decides you just won't get credit

You just won't get yield and there's not a single thing you can do about it

And so tokenization is is a free market in capital and it's uh it creates just a higher velocity

And a higher productivity for capital assets. So it people that have a million dollar

Have had a million dollar chart in Bitcoin. You think it's just a matter of time. Oh absolutely Bitcoin's going up forever Joe and and

If he finally was completely stable and reflected what

121 million the end result

What would it reach and and I assume it just stay there what what what price are we talking about if you've done the math on well

I think 21 years out. I don't know why it wouldn't be 21 million coin

21 million coin okay. Oh, we got to go Michael

Orange you glad you came in today. I certainly am. Yeah, I think you glad I didn't say banana orange you glad I didn't say that

Thank you