1 00:00:00,040 --> 00:00:03,960 Bitcoin's no longer this, you know, fringe speculative asset 2 00:00:03,960 --> 00:00:06,640 anymore. You're starting to see nations 3 00:00:06,640 --> 00:00:09,920 talk about it, including the nation with the reserve currency 4 00:00:09,920 --> 00:00:12,640 of the world, right? the United States is now talking 5 00:00:12,640 --> 00:00:15,040 actively about it. They're looking at adopting this 6 00:00:15,040 --> 00:00:17,920 digital capital for themselves to strengthen the country. 7 00:00:18,080 --> 00:00:21,720 MicroStrategy is like a vacuum, just sucking up all Fiat 8 00:00:21,720 --> 00:00:24,680 liquidity and refining that dirty cash into Bitcoin. 9 00:00:24,920 --> 00:00:28,480 That sounds like an extremely profitable business model. 10 00:00:28,560 --> 00:00:31,400 MicroStrategy having to be be the leader, really the first 11 00:00:31,400 --> 00:00:35,280 company to take this step to say what if we pivot some of our 12 00:00:35,280 --> 00:00:38,280 focus away from what our core business model has been. 13 00:00:38,280 --> 00:00:41,840 What if we could take our model and we could apply leverage to 14 00:00:41,840 --> 00:00:45,280 our business to acquire more Bitcoin in excess of what we 15 00:00:45,280 --> 00:00:48,640 could get just purchasing our cash and what if we could 16 00:00:48,680 --> 00:00:53,520 engineer enhanced volatility. So I think 2025 is really going 17 00:00:53,520 --> 00:00:55,400 to be the year where we see this accelerate. 18 00:00:59,080 --> 00:01:01,720 Hey there, I want to ask you for a quick favor. 19 00:01:02,040 --> 00:01:05,120 Over the past few months I've had over 50,000 returning 20 00:01:05,120 --> 00:01:08,680 viewers and listeners to this podcast, but over 65% of you 21 00:01:08,880 --> 00:01:11,040 haven't subscribed yet. So if you enjoy. 22 00:01:11,040 --> 00:01:13,360 What I'm doing and you find my content valuable. 23 00:01:13,640 --> 00:01:16,680 Please subscribe on YouTube or follow me on your favorite 24 00:01:16,680 --> 00:01:19,280 podcasting platform. This will help me fuel the 25 00:01:19,280 --> 00:01:22,760 algorithm and spread the message on Bitcoin even further. 26 00:01:23,240 --> 00:01:24,640 I really appreciate your support. 27 00:01:24,840 --> 00:01:27,120 Now let's dive in to this episode. 28 00:01:27,440 --> 00:01:30,840 All right, Ben Workman, welcome to Bitcoin for Millennials. 29 00:01:31,720 --> 00:01:33,920 I appreciate it bro. I'm glad we're able to make this 30 00:01:33,920 --> 00:01:36,000 happen. I know we we had some struggles 31 00:01:36,000 --> 00:01:38,280 here along the way getting the schedule, but I'm glad we're 32 00:01:38,280 --> 00:01:39,440 finally here. We made it. 33 00:01:39,640 --> 00:01:41,720 Yeah, we made it. Well, you had a good excuse. 34 00:01:41,720 --> 00:01:45,800 You went to Michael Saylor's 100K Bitcoin, the New Year's 35 00:01:45,800 --> 00:01:48,360 party. So, OK, I'm I'll, I'll forgive 36 00:01:48,360 --> 00:01:50,120 you. But yeah, man, I'm super excited 37 00:01:50,120 --> 00:01:52,040 to chat. And yeah, I was thinking like 38 00:01:52,040 --> 00:01:55,240 the goal of this conversation. I was thinking, let's just take 39 00:01:55,240 --> 00:01:58,000 people along, you know, the incredible interesting 40 00:01:58,000 --> 00:02:01,400 development of Bitcoin as a corporate treasury asset, as you 41 00:02:01,400 --> 00:02:04,960 know, kind of started with micro strategy and what to look out 42 00:02:04,960 --> 00:02:08,400 for in 2025. And yeah, if you're up for it, 43 00:02:08,400 --> 00:02:10,560 let's let's let's dive into that. 44 00:02:11,280 --> 00:02:12,640 Absolutely, man. Let's dive in. 45 00:02:12,840 --> 00:02:14,680 Awesome. Well, First off, I want to thank 46 00:02:14,680 --> 00:02:18,120 you for helping you know MicroStrategy pill myself, 47 00:02:18,120 --> 00:02:21,520 myself just like orange Pilling, you know people do that to 48 00:02:21,520 --> 00:02:24,560 themselves. But you have been a huge guide 49 00:02:24,560 --> 00:02:28,280 and help for me. You know, and especially when I 50 00:02:28,280 --> 00:02:30,680 heard you on a podcast talk, you know, of course about 51 00:02:30,680 --> 00:02:33,560 MicroStrategy, the, you know, the Bitcoin strategy. 52 00:02:33,800 --> 00:02:36,840 And you mentioned, you know, this is a business model pivot. 53 00:02:36,840 --> 00:02:40,600 And when you said that, that really clicked for me because, 54 00:02:40,920 --> 00:02:43,600 you know, the, the, the story of, of MicroStrategy, and we'll 55 00:02:43,600 --> 00:02:46,080 dive into that further, is kind of, you know, it's, it's, it's 56 00:02:46,240 --> 00:02:49,680 kind of like gradually, then suddenly he, he's improving on 57 00:02:49,680 --> 00:02:52,920 his understanding and improving on his offerings, etcetera. 58 00:02:52,960 --> 00:02:56,040 But when you said, you know, business model pivot, I 59 00:02:56,040 --> 00:02:59,880 understood, OK, he's taking a company that he was basically, 60 00:02:59,880 --> 00:03:02,600 you know, at the end of, he was like thinking of quitting or, 61 00:03:02,880 --> 00:03:04,360 you know, selling or, or whatever. 62 00:03:04,360 --> 00:03:06,800 He had his problems. And now it feels like he found 63 00:03:06,800 --> 00:03:10,600 the renewed possible future for for this company. 64 00:03:10,600 --> 00:03:13,480 And that made me realize this is not just a software company 65 00:03:13,480 --> 00:03:16,240 that's buying Bitcoin as a as a treasury asset. 66 00:03:16,240 --> 00:03:20,440 Like he is starting on a path to actually become something way, 67 00:03:20,440 --> 00:03:23,080 way bigger. And I shared with you a, a tweet 68 00:03:23,080 --> 00:03:27,080 that I wrote to check, you know, do I understand what he's doing? 69 00:03:27,320 --> 00:03:29,920 And I'll read that and then let's let's dive into that. 70 00:03:29,920 --> 00:03:33,120 I, I tweeted. So MicroStrategy is like a 71 00:03:33,160 --> 00:03:36,880 vacuum just sucking up all Fiat liquidity and refining that 72 00:03:36,880 --> 00:03:40,360 dirty cash into Bitcoin. That sounds like an extremely 73 00:03:40,360 --> 00:03:43,280 profitable business model. And you replied to me. 74 00:03:43,480 --> 00:03:47,600 You got it. Is that a good summary or can we 75 00:03:47,640 --> 00:03:50,800 expand a little bit on that? It's a great summary, right? 76 00:03:50,800 --> 00:03:54,160 I mean, this really is a pretty monumental shift for a 77 00:03:54,160 --> 00:03:57,680 corporation to go through. And it's, it's a tough one to 78 00:03:57,680 --> 00:04:00,920 make the decision to do, right. MicroStrategy having to be the 79 00:04:00,920 --> 00:04:04,520 leader, the really the first company to take this step into 80 00:04:04,520 --> 00:04:07,880 not only converting into a Bitcoin treasury as a treasury 81 00:04:07,880 --> 00:04:12,800 reserve asset, but they want the extra step to say, what if we 82 00:04:12,800 --> 00:04:15,840 pivot some of our focus away from what our core business 83 00:04:15,840 --> 00:04:18,920 model has been, which is business intelligence software 84 00:04:18,920 --> 00:04:22,880 products. And instead we look at how do we 85 00:04:22,880 --> 00:04:27,960 manufacture a universally appealing asset for all investor 86 00:04:27,960 --> 00:04:30,080 types, right? How do we become, I'll call it a 87 00:04:30,080 --> 00:04:32,600 leveraged Bitcoin equity that terms been growing in 88 00:04:32,600 --> 00:04:35,000 popularity. I really like it because I think 89 00:04:35,000 --> 00:04:37,440 it actually sums it up quite well. 90 00:04:37,920 --> 00:04:40,680 You're making your equity the product for the market. 91 00:04:40,680 --> 00:04:43,920 And that's a tough shift for people to make mentally when 92 00:04:43,920 --> 00:04:47,160 they look at a company because traditionally you're always 93 00:04:47,160 --> 00:04:49,960 looking back to, well, what are the core operations of the 94 00:04:49,960 --> 00:04:52,840 business. And with MicroStrategy, when 95 00:04:52,840 --> 00:04:55,720 they go back and they look, they go well, yeah, they've got a 96 00:04:55,720 --> 00:04:58,280 software business. And for years and years and 97 00:04:58,280 --> 00:05:01,520 years, it's been a good cash flowing company, but the growth 98 00:05:01,520 --> 00:05:05,040 was gone. And for equities, typically what 99 00:05:05,040 --> 00:05:08,320 that means is your equity value, your multiple that you're going 100 00:05:08,320 --> 00:05:11,080 to get starts to compress significantly. 101 00:05:11,200 --> 00:05:14,960 The market rewards growth and they want growth at the expense 102 00:05:14,960 --> 00:05:16,760 of anything else. And it's what makes a lot of 103 00:05:16,760 --> 00:05:20,960 corporations very short sighted in nature because they're always 104 00:05:20,960 --> 00:05:24,080 focusing on the next quarter's earnings, right? 105 00:05:24,280 --> 00:05:27,000 You've got to show revenue growth, you've got to show 106 00:05:27,000 --> 00:05:29,800 margin growth, you got to show bottom line growth, right? 107 00:05:29,800 --> 00:05:33,640 That's always been the focus tradition, but Bitcoin didn't 108 00:05:33,640 --> 00:05:37,440 exist in the past. So this is a relatively new 109 00:05:37,440 --> 00:05:39,720 development here, right? I mean, we think in terms of 110 00:05:39,720 --> 00:05:43,040 something being around for 15 years as being a very long time, 111 00:05:43,040 --> 00:05:46,480 but the reality is that's a very short lifespan for an asset. 112 00:05:47,200 --> 00:05:52,280 So to see a company look at this emerging asset and go, this has 113 00:05:52,280 --> 00:05:56,120 qualities that are valuable to the capital markets. 114 00:05:56,720 --> 00:06:00,440 And that quality is, is that it's in this adoption period 115 00:06:00,960 --> 00:06:03,720 where volatility is very hot, right? 116 00:06:03,720 --> 00:06:06,360 Bitcoin was a 60 volatility asset. 117 00:06:06,760 --> 00:06:09,720 Most equities in the United States would fall into like the 118 00:06:09,720 --> 00:06:14,080 15 to 20 volatility. So it's significantly more 119 00:06:14,080 --> 00:06:16,200 volatile than traditional equities are. 120 00:06:16,200 --> 00:06:19,320 And what MicroStrategy did was they looked at that and said 121 00:06:19,320 --> 00:06:22,360 volatility is what generates returns for institutional 122 00:06:22,360 --> 00:06:24,200 capital. They need to be able to trade. 123 00:06:24,200 --> 00:06:28,000 They need an asset that moves around a lot, but they can't get 124 00:06:28,000 --> 00:06:33,080 access to Bitcoin directly. And even if they can, what if we 125 00:06:33,080 --> 00:06:36,320 could take our model and we could apply leverage to our 126 00:06:36,320 --> 00:06:40,040 business to acquire more Bitcoin in excess of what we could get 127 00:06:40,360 --> 00:06:43,760 just purchasing our cash? And what if we could engineer 128 00:06:43,760 --> 00:06:46,680 enhanced volatility for our equity? 129 00:06:47,080 --> 00:06:50,520 Well, if you can do that, you're creating a really great product 130 00:06:50,520 --> 00:06:53,440 for all kinds of traders, right? I mean, we're talking retail 131 00:06:53,440 --> 00:06:56,480 traders love this because it's moving constantly. 132 00:06:56,480 --> 00:06:59,640 You can leverage way up if you want to using the options of 133 00:06:59,640 --> 00:07:02,040 this company. If you hate Bitcoin, you can 134 00:07:02,040 --> 00:07:04,560 short the company, you can buy puts on the company. 135 00:07:05,160 --> 00:07:07,240 But now we're seeing it trickle down, right? 136 00:07:07,240 --> 00:07:11,720 It's good that the equity moves, but it also opens new doors for 137 00:07:11,720 --> 00:07:14,760 micro strategy that other companies don't have opened for 138 00:07:14,760 --> 00:07:18,040 them. And that is access to raising 139 00:07:18,040 --> 00:07:20,960 capital using the volatility that they generate. 140 00:07:20,960 --> 00:07:24,040 And they're looking at that volatility profile and going, 141 00:07:24,040 --> 00:07:27,920 how do we build a volatility profile for all the different 142 00:07:27,920 --> 00:07:31,640 types of customers that want exposure to this type of 143 00:07:31,640 --> 00:07:34,320 performance. And you're seeing them do that 144 00:07:34,320 --> 00:07:36,560 with all these new products that they're offering. 145 00:07:36,680 --> 00:07:40,080 Obviously, the main one that we've seen so far is convertible 146 00:07:40,080 --> 00:07:42,360 debt, right? The convertible bonds that 147 00:07:42,360 --> 00:07:44,920 they've been issuing out to the market and what those 148 00:07:44,920 --> 00:07:49,440 convertible bonds are a slightly step down in volatility product 149 00:07:49,720 --> 00:07:54,120 that they can offer to a pool of captive capital that cannot 150 00:07:54,120 --> 00:07:58,280 otherwise come into Bitcoin. And that's an important point in 151 00:07:58,280 --> 00:08:02,200 that those types of institutions that are starved for returns 152 00:08:02,680 --> 00:08:06,400 couldn't get access to one of these assets that could generate 153 00:08:06,400 --> 00:08:08,920 the type of volatility they need for their gamma trading 154 00:08:08,920 --> 00:08:11,840 strategies, which we've talked about quite a bit now. 155 00:08:12,440 --> 00:08:16,040 I think a lot of people got kind of an education and convertible 156 00:08:16,040 --> 00:08:19,400 bond and convertible arbitragers that they never thought they 157 00:08:19,400 --> 00:08:21,760 were going to get, unless you're following MicroStrategy. 158 00:08:21,760 --> 00:08:26,400 But they created a product that's tailor made for that pool 159 00:08:26,400 --> 00:08:29,480 of capital, right? So they're giving them 160 00:08:29,480 --> 00:08:32,400 volatility that's going to be way larger than what they're 161 00:08:32,400 --> 00:08:34,919 going to get if they go buy convertible bonds out of any 162 00:08:34,919 --> 00:08:37,960 traditional equity, right? If Alibaba issues convertible 163 00:08:37,960 --> 00:08:41,640 bonds, the bonds aren't going to move very often because the 164 00:08:41,640 --> 00:08:45,040 equity doesn't move very often. And in convertible bonds, that 165 00:08:45,040 --> 00:08:48,560 bond has that conversion. It's a call option on 166 00:08:48,560 --> 00:08:50,440 MicroStrategy embedded within it. 167 00:08:51,000 --> 00:08:54,800 So as the price moves drastically on MicroStrategy, 168 00:08:54,800 --> 00:08:58,520 and particularly when that price starts to climb, it starts to 169 00:08:58,520 --> 00:09:02,120 act more like equity, right? Those returns on the bonds 170 00:09:02,120 --> 00:09:04,480 themselves start to move. And these gamma traders are 171 00:09:04,480 --> 00:09:07,160 capturing that movement. It's really as simple as 172 00:09:07,160 --> 00:09:09,440 thinking about it as sell high, right? 173 00:09:09,720 --> 00:09:13,120 They'll short the stock when the price runs way up, and then 174 00:09:13,120 --> 00:09:15,800 they'll buy it back cheaper when it comes down and the delta 175 00:09:15,800 --> 00:09:18,280 comes down, they'll buy back those short positions. 176 00:09:18,720 --> 00:09:22,080 So throughout the length of holding that bond, they're 177 00:09:22,080 --> 00:09:24,960 constantly trading, and that's what generates returns for them. 178 00:09:25,720 --> 00:09:29,360 And it made these products really important to that market 179 00:09:29,360 --> 00:09:33,640 because not only did these perform really well, they 180 00:09:33,640 --> 00:09:37,640 outperformed Bitcoin itself, which is massive, right? 181 00:09:37,640 --> 00:09:40,160 I mean, that's a huge undertaking for a bond to 182 00:09:40,160 --> 00:09:43,720 outperform an asset like MicroStrategy or like Bitcoin. 183 00:09:44,360 --> 00:09:48,640 So it was pretty shocking to the market over the last 12 months 184 00:09:48,640 --> 00:09:51,080 to see that type of performance ramp up. 185 00:09:51,680 --> 00:09:53,840 And it hasn't always been the case, right? 186 00:09:53,840 --> 00:09:56,920 We've, we've now gotten conditioned to think that that 187 00:09:56,920 --> 00:09:59,000 performance is just what it's always been. 188 00:09:59,000 --> 00:10:01,240 But we got to remember that a lot of these bonds, like the 189 00:10:01,240 --> 00:10:07,320 2027 bonds were issued back in 2021 and they only recently 190 00:10:07,320 --> 00:10:11,280 became convertible. So they had a long period where 191 00:10:11,280 --> 00:10:14,120 they were sitting on 0% coupon payments. 192 00:10:14,120 --> 00:10:18,000 They were getting no returns on the capital back to them and the 193 00:10:18,000 --> 00:10:19,880 stock really wasn't moving all that much. 194 00:10:19,880 --> 00:10:23,920 But then this last year when we saw MicroStrategy really ratchet 195 00:10:23,920 --> 00:10:28,840 up that leverage, we started to see the performance really show 196 00:10:28,840 --> 00:10:31,280 up here. And that's been just, I think 197 00:10:31,280 --> 00:10:35,080 mind blowing for a lot of people that's causing both other 198 00:10:35,080 --> 00:10:39,300 corporations, it's causing retail investors to kind of re 199 00:10:39,300 --> 00:10:43,000 evaluate how they see these companies that are introducing 200 00:10:43,000 --> 00:10:48,280 Bitcoin into their ecosystem. Bitcoin custody is evolving and 201 00:10:48,560 --> 00:10:52,120 while self custody is important, it has its own risks and 202 00:10:52,120 --> 00:10:54,640 trade-offs. Onramp is pioneering a new 203 00:10:54,640 --> 00:10:58,720 standard multi institution custody which eliminates single 204 00:10:58,720 --> 00:11:02,240 points of failure adding fault tolerance and redundancy to your 205 00:11:02,240 --> 00:11:06,080 custody set up on ramp secures your Bitcoin in a segregated 206 00:11:06,080 --> 00:11:09,280 cold storage multi signature vault guarded by tree 207 00:11:09,280 --> 00:11:12,520 independent institutional grade custodians none of which have 208 00:11:12,520 --> 00:11:15,400 unilateral control. Your funds are fully auditable 209 00:11:15,400 --> 00:11:18,480 on chain cannot be re hypothecated and can only move 210 00:11:18,480 --> 00:11:20,760 or withdrawn at your explicit direction. 211 00:11:20,960 --> 00:11:23,880 Multi institution custody removes the technical, mental, 212 00:11:23,880 --> 00:11:27,200 and physical burdens of private key management, providing 213 00:11:27,200 --> 00:11:30,240 unparalleled Peace of Mind for you and your loved ones. 214 00:11:30,400 --> 00:11:33,160 Bitcoin is money, and as the price continues to appreciate, 215 00:11:33,160 --> 00:11:36,800 On Ramp helps you seamlessly tap into financial services like 216 00:11:36,800 --> 00:11:41,280 trading, inheritance, insurance, loans, Iras, and more, all 217 00:11:41,280 --> 00:11:44,520 without compromising on security or accessibility. 218 00:11:44,600 --> 00:11:47,720 Check out on rampbitcoin.com through the link below and 219 00:11:47,720 --> 00:11:50,440 schedule a consultation with the On Ramp team to get to know them 220 00:11:50,440 --> 00:11:52,400 and learn more about their offering. 221 00:11:52,520 --> 00:11:55,160 And that's become a very monumental shift that we're 222 00:11:55,160 --> 00:11:59,040 seeing broadly in the market as new entrants are emerging. 223 00:11:59,360 --> 00:12:02,680 And looking at, one, how do we acquire Bitcoin just for our 224 00:12:02,680 --> 00:12:05,200 treasury just to protect the value we have in our 225 00:12:05,200 --> 00:12:08,160 organization. But two, there's going to be a 226 00:12:08,160 --> 00:12:12,320 few more players that really emerge and say, we've got some 227 00:12:12,320 --> 00:12:15,160 unique characteristics here. And we're going to take the 228 00:12:15,160 --> 00:12:18,520 strength of our core business and we're going to start taking 229 00:12:18,520 --> 00:12:21,560 that to really ramp up this leverage Bitcoin equity play. 230 00:12:22,360 --> 00:12:25,520 So we're not done seeing the evolution here yet and we're not 231 00:12:25,520 --> 00:12:27,600 done seeing companies under this market. 232 00:12:28,040 --> 00:12:31,400 It's really, I think you had a lot of them waiting until FAZ be 233 00:12:31,400 --> 00:12:35,640 really came into effect and the accounting settles down. 234 00:12:35,640 --> 00:12:38,400 It becomes much more black and white on the accounting than it 235 00:12:38,400 --> 00:12:40,680 was when they had the indefinite intangibles. 236 00:12:41,160 --> 00:12:44,800 And so now it's a much more easy strategy to implement for 237 00:12:44,800 --> 00:12:47,800 companies. So I think 2025 is really going 238 00:12:47,800 --> 00:12:49,640 to be the year where we see this accelerate. 239 00:12:50,160 --> 00:12:52,320 Yeah. What I find interesting is that 240 00:12:52,320 --> 00:12:55,680 just as with Bitcoin, it's hard to understand Bitcoin if you 241 00:12:55,680 --> 00:12:58,360 look at it from a traditional perspective, right? 242 00:12:58,640 --> 00:13:01,640 And I think how you just explain it, it's the same with this. 243 00:13:01,680 --> 00:13:03,920 But there was one thing that you said that that piqued my 244 00:13:03,920 --> 00:13:06,880 interest because, you know, Sader kind of went from 245 00:13:07,200 --> 00:13:12,520 necessity to conviction to, hey, I see this opportunity to this 246 00:13:12,640 --> 00:13:16,080 business model pivot that you mentioned to now like relentless 247 00:13:16,080 --> 00:13:18,360 execution. Like he's been buying Bitcoin 248 00:13:18,360 --> 00:13:21,120 for the past 8-8 weeks on every Monday, I think. 249 00:13:21,200 --> 00:13:25,200 So he found like a new way to like rejuvenate his company 250 00:13:25,200 --> 00:13:27,560 basically. And I think the business form of 251 00:13:27,560 --> 00:13:31,880 pivot now, so offering all these diverse financial products 252 00:13:31,880 --> 00:13:35,760 basically that fit the Transfi world in order to, yeah, just 253 00:13:35,760 --> 00:13:38,960 find capital to eventually buy Bitcoin. 254 00:13:39,120 --> 00:13:43,880 I feel like that's like a a temporary part of the pivot to 255 00:13:43,880 --> 00:13:46,640 eventually move on to something bigger that that, that we'll 256 00:13:46,640 --> 00:13:49,560 talk about. But it's interesting to see that 257 00:13:49,560 --> 00:13:52,520 like he rejuvenated his company. And so and when you mention 258 00:13:52,520 --> 00:13:55,360 about like other companies adopting it, it doesn't 259 00:13:55,360 --> 00:13:58,480 necessarily mean that only companies that are in the same 260 00:13:58,480 --> 00:14:01,120 stage as micro strategy was would do this. 261 00:14:01,480 --> 00:14:04,680 Like they could do that to rejuvenate the company, but just 262 00:14:04,960 --> 00:14:09,360 companies that are operating in a way better way could actually 263 00:14:09,360 --> 00:14:12,360 strengthen just their own position by the money that they 264 00:14:12,680 --> 00:14:16,960 make, right to, I'd say just survive towards the future, just 265 00:14:16,960 --> 00:14:18,600 strengthen their own own position. 266 00:14:18,600 --> 00:14:20,800 Does that make sense? It does, yeah. 267 00:14:20,840 --> 00:14:23,920 When I look at these companies, you kind of see them in a couple 268 00:14:23,920 --> 00:14:27,040 different categories, right? First, you're going to have the 269 00:14:27,040 --> 00:14:29,000 really cautious entrance that come in. 270 00:14:29,000 --> 00:14:31,840 And really what they're looking at is they understand the 271 00:14:31,840 --> 00:14:36,080 weakness that holding Fiat currency does to the eroding the 272 00:14:36,080 --> 00:14:38,960 value of their business, right? So you'll get people that dip 273 00:14:38,960 --> 00:14:43,280 the toe in just by converting cash reserves into Bitcoin. 274 00:14:43,320 --> 00:14:45,600 And that's great. And that should be celebrated as 275 00:14:45,600 --> 00:14:48,000 well because it is a big shift for these companies to 276 00:14:48,000 --> 00:14:51,640 undertake. But what I think is really going 277 00:14:51,640 --> 00:14:55,280 to be transformative about this, and I agree with you that I 278 00:14:55,280 --> 00:14:59,040 think this is phase one of an evolving strategy over time, 279 00:14:59,160 --> 00:15:02,320 right? You get rewarded for being early 280 00:15:02,320 --> 00:15:06,200 to something like this. And what I view this as is this 281 00:15:06,200 --> 00:15:09,480 is really transforming the future capitalization of 282 00:15:09,480 --> 00:15:11,920 organizations. So if you look at what 283 00:15:11,920 --> 00:15:15,960 Microstrategy's doing, they're accumulating all this digital 284 00:15:15,960 --> 00:15:18,400 capital, right? They're bringing it inside. 285 00:15:18,640 --> 00:15:21,440 They're using whatever tools are at their disposal, whether it's 286 00:15:21,440 --> 00:15:23,760 equity, whether it's fixed income products, right? 287 00:15:23,760 --> 00:15:27,480 They're using all the tools at their disposal to accelerate 288 00:15:27,560 --> 00:15:29,800 their accumulation of digital capital. 289 00:15:30,520 --> 00:15:35,080 And we're in this adoption period where bitcoin's no longer 290 00:15:35,080 --> 00:15:38,040 this, you know, fringe speculative asset anymore. 291 00:15:38,120 --> 00:15:42,400 You're starting to see nations talk about it, including the 292 00:15:42,400 --> 00:15:44,800 nation with the reserve currency of the world, right? 293 00:15:44,800 --> 00:15:47,720 the United States is now talking actively about it. 294 00:15:47,720 --> 00:15:49,960 And we've got people in positions now to really 295 00:15:49,960 --> 00:15:53,520 influence the decisions where they're looking at adopting this 296 00:15:53,520 --> 00:15:56,560 digital capital for themselves to strengthen the country. 297 00:15:57,280 --> 00:16:01,520 So if you're a forward-looking leader like sailors, proven to 298 00:16:01,520 --> 00:16:05,360 be, right, willing to pivot, which is not easy to do, right? 299 00:16:05,360 --> 00:16:07,680 When you build a company and you're the founder of that 300 00:16:07,680 --> 00:16:11,600 company, it's very easy to get married to the initial mission 301 00:16:11,600 --> 00:16:14,520 that you set out. It's very hard to break from 302 00:16:14,520 --> 00:16:17,400 that and admit to yourself that maybe this isn't working 303 00:16:17,400 --> 00:16:20,120 anymore, right? Maybe this isn't what's going to 304 00:16:20,120 --> 00:16:22,680 drive value for our shareholders anymore. 305 00:16:23,000 --> 00:16:26,120 And we might need to look at a drastic transformation here. 306 00:16:26,640 --> 00:16:29,480 What happens for most people in that position is they just 307 00:16:29,480 --> 00:16:33,040 basically start issuing capital back to shareholders through 308 00:16:33,040 --> 00:16:36,200 dividends or or whatever. And it's basically an admission 309 00:16:36,200 --> 00:16:38,880 that we're out of ideas. So we're just going to keep 310 00:16:38,880 --> 00:16:42,800 running a good, I like that that generates cash flow, but we're 311 00:16:42,800 --> 00:16:45,160 just going to give it back to the shareholders for as long as 312 00:16:45,160 --> 00:16:47,720 we can. So you're no longer holding 313 00:16:47,720 --> 00:16:49,720 those entities. You know, people call them 314 00:16:49,720 --> 00:16:51,720 value, right? When you're paying those 315 00:16:51,720 --> 00:16:53,280 dividends, I call them value stocks. 316 00:16:53,280 --> 00:16:57,080 But you're giving up kind of any of the excitement around growth. 317 00:16:57,120 --> 00:17:00,520 The growth is gone and you're really just riding a business 318 00:17:00,520 --> 00:17:03,760 that's been good for a long time and you're just going to issue 319 00:17:03,760 --> 00:17:05,960 out all the capital back to the shareholders and you're not 320 00:17:05,960 --> 00:17:09,599 going to hoard it. Well, now instead of going out 321 00:17:09,599 --> 00:17:12,839 and generating growth on your own, a lot of these companies 322 00:17:12,839 --> 00:17:16,760 have the opportunities to basically bring in an asset that 323 00:17:16,760 --> 00:17:20,800 brings growth to you, right? You can benefit from the growth 324 00:17:20,839 --> 00:17:24,520 of just the asset alone without you having to really do all that 325 00:17:24,520 --> 00:17:28,200 much in your business model. So you're going to get some of 326 00:17:28,200 --> 00:17:32,040 these organizations that look at making that transformation and 327 00:17:32,040 --> 00:17:35,760 saying, not only do we need to get Bitcoin on our balance sheet 328 00:17:35,920 --> 00:17:39,960 to preserve value, to capitalize on the 60% growth that bitcoins 329 00:17:39,960 --> 00:17:43,920 having year over year, but we want to get as much of it as we 330 00:17:43,920 --> 00:17:47,160 possibly can. Because what it can do is it can 331 00:17:47,160 --> 00:17:50,040 give your company a second shot at life, right? 332 00:17:50,400 --> 00:17:54,680 It gives you time to capitalize your business that you're going 333 00:17:54,680 --> 00:17:56,280 to be able to use in the future, right? 334 00:17:56,280 --> 00:17:58,240 I think if anyone thinks that you're not going to be able to 335 00:17:58,240 --> 00:18:02,000 use Bitcoin to borrow against as a corporation here over the next 336 00:18:02,000 --> 00:18:03,880 10 years, I think you're out of your mind. 337 00:18:03,880 --> 00:18:05,280 It's definitely going to be there. 338 00:18:05,840 --> 00:18:09,120 So if you're capitalizing your company, you may exit in the 339 00:18:09,120 --> 00:18:13,480 next 5 to 10 years in a position of really enhanced strength 340 00:18:14,000 --> 00:18:15,560 beyond what you could have on your own. 341 00:18:15,960 --> 00:18:18,800 And that enhanced strength brings opportunity, right? 342 00:18:18,800 --> 00:18:21,880 That brings opportunity to reinvent yourself down the line 343 00:18:22,200 --> 00:18:25,280 and capitalize on whatever the emerging product is that you 344 00:18:25,280 --> 00:18:27,560 need to bring out to the market that the market's demanding. 345 00:18:28,120 --> 00:18:32,280 If you just continue to sit in a road value over the next 5 to 10 346 00:18:32,280 --> 00:18:35,040 years, you're going to cease to exist over time. 347 00:18:35,800 --> 00:18:38,560 And I think a lot of business leaders are going to really be 348 00:18:38,560 --> 00:18:42,720 faced with that reality as they watch some of these companies 349 00:18:42,720 --> 00:18:45,200 that were willing to take a risk, you know, and it's less 350 00:18:45,200 --> 00:18:48,360 risky now than it was five years ago, right? 351 00:18:48,360 --> 00:18:51,240 I mean, people are starting to acknowledge that a little bit, 352 00:18:51,240 --> 00:18:54,160 but you still hear the sound bites out there about, you know, 353 00:18:54,160 --> 00:18:55,880 how risky Bitcoin is as an asset. 354 00:18:55,880 --> 00:18:58,560 But it's significantly less risky than it was five years 355 00:18:58,560 --> 00:19:00,400 ago, right? The adoption has turned. 356 00:19:00,400 --> 00:19:03,840 We finally got tailwinds. You know, it's reaching its 357 00:19:03,840 --> 00:19:06,840 escape velocity point. So if you're one of these 358 00:19:06,840 --> 00:19:11,680 forward-looking leaders, now you're looking at an opportunity 359 00:19:12,000 --> 00:19:15,560 to change the standing of your company in relation to all your 360 00:19:15,560 --> 00:19:18,440 competitors. If you're in a small industry 361 00:19:18,440 --> 00:19:20,960 that's all competing with each other and you've got five 362 00:19:20,960 --> 00:19:24,040 companies, 5 core competitors that you're competing with, and 363 00:19:24,040 --> 00:19:25,480 you continue running your business. 364 00:19:25,480 --> 00:19:27,760 And it's a good business, but it's not a great business. 365 00:19:27,760 --> 00:19:31,480 But the only difference between you and your competitors is that 366 00:19:31,480 --> 00:19:35,720 you converted all the value you created into Bitcoin, which is 367 00:19:35,720 --> 00:19:39,240 holding its value over time. Or maybe you went a step further 368 00:19:39,240 --> 00:19:41,960 and you said we're going to take our business, which is strong, 369 00:19:41,960 --> 00:19:43,640 throws off good cash flows for us. 370 00:19:43,960 --> 00:19:46,520 We're going to leverage the tools that brings to our 371 00:19:46,520 --> 00:19:51,080 business to go out and actively acquire Bitcoin however we can, 372 00:19:51,120 --> 00:19:53,360 right, within a defined risk parameter. 373 00:19:53,480 --> 00:19:56,360 That's very important because a lot of people view this strategy 374 00:19:56,360 --> 00:19:58,800 as risky when you use leverage to acquire Bitcoin. 375 00:19:59,480 --> 00:20:03,480 But if you do that over time, you exit that five to 10 year 376 00:20:03,480 --> 00:20:06,880 period. With significantly more value on 377 00:20:06,880 --> 00:20:09,320 your balance sheet than all of your competitors, right? 378 00:20:09,560 --> 00:20:12,560 That could put some companies in a position where you ultimately 379 00:20:12,560 --> 00:20:15,080 end up owning your sector because you could buy your 380 00:20:15,080 --> 00:20:18,920 competitors at that point. So it's a transformational step 381 00:20:19,440 --> 00:20:21,600 that a lot of these companies are going to have to take. 382 00:20:21,920 --> 00:20:24,680 And for other companies, when that starts happening, if one of 383 00:20:24,680 --> 00:20:28,280 your competitors announces this type of change, you better be on 384 00:20:28,280 --> 00:20:32,320 your toes because if you don't start looking at protecting 385 00:20:32,320 --> 00:20:34,840 yourself from that type of threat, right, that's a threat 386 00:20:34,840 --> 00:20:38,600 to your business. You now probably need to look 387 00:20:38,600 --> 00:20:42,040 at, at a minimum, bringing Bitcoin onto your balance sheet 388 00:20:42,040 --> 00:20:45,080 through the conversion of cash just to maintain your standing 389 00:20:45,080 --> 00:20:49,640 relative to your peers. So I think that that journey for 390 00:20:49,640 --> 00:20:53,440 a lot of companies now as they're watching this evolve is 391 00:20:53,440 --> 00:20:57,560 going to really push corporate strategy for the next decade. 392 00:20:58,240 --> 00:21:00,720 I think that you're going to get into this digital capital, I'll 393 00:21:00,720 --> 00:21:04,040 call it a digital capital arms race, where you're trying to 394 00:21:04,040 --> 00:21:08,520 recapitalize your company into the next layer of innovation 395 00:21:08,520 --> 00:21:10,600 that we're going to see. And you're going to try to 396 00:21:10,600 --> 00:21:14,040 position yourself to be in the best position for strength, 397 00:21:14,240 --> 00:21:18,360 growth and innovation that you can be in over the next 5 to 10 398 00:21:18,360 --> 00:21:19,440 years. And I think that's going to be 399 00:21:19,440 --> 00:21:24,160 very important to corporate and corporate finance and how all of 400 00:21:24,160 --> 00:21:26,560 these finance professionals that are managing the capital of 401 00:21:26,560 --> 00:21:29,160 these businesses are going to have to change their thinking 402 00:21:29,320 --> 00:21:33,360 and at least evaluate those outcomes and whether or not they 403 00:21:33,360 --> 00:21:34,840 need to be positioned accordingly. 404 00:21:35,240 --> 00:21:38,120 Yeah, I, I was looking so forward to this conversation 405 00:21:38,120 --> 00:21:42,040 because it gives me so, so much, so much ideas like what you just 406 00:21:42,040 --> 00:21:45,040 said makes me think of it. It is going to become a 407 00:21:45,040 --> 00:21:48,800 competitive advantage because also I love also, by the way, 408 00:21:48,800 --> 00:21:50,800 the thinking around the dividend, right? 409 00:21:50,800 --> 00:21:53,000 So a lot of people are in the stock market and they're like, 410 00:21:53,040 --> 00:21:55,480 oh, I'm getting dividend, right. And it's also used as an 411 00:21:55,480 --> 00:21:57,640 argument a lot. Well, at least stocks pay 412 00:21:57,640 --> 00:22:00,960 dividend. But when I hear you say like, 413 00:22:00,960 --> 00:22:03,400 no, that's actually a bad thing because you want to reinvest in 414 00:22:03,400 --> 00:22:05,080 the business. Eventually you want to grow. 415 00:22:05,080 --> 00:22:08,920 If you want to create more value, create more value of the 416 00:22:08,920 --> 00:22:12,640 company, which eventually gives you more leverage to borrow to 417 00:22:12,640 --> 00:22:15,040 then invest to create more value, etcetera, right? 418 00:22:15,040 --> 00:22:20,840 Like it's, it's flywheel. So if you start basically giving 419 00:22:20,840 --> 00:22:25,160 back the the dividend, as you said that there's not, there's 420 00:22:25,160 --> 00:22:28,960 nothing there, there's no room for you to grow or you're giving 421 00:22:28,960 --> 00:22:31,880 away that capital that you could use to, to grow to eventually 422 00:22:31,960 --> 00:22:34,200 increase the stock market value. I love that thinking. 423 00:22:34,200 --> 00:22:37,440 I think that's very contrary as to how people just generally 424 00:22:37,440 --> 00:22:39,720 invest. But with that part of like the 425 00:22:39,720 --> 00:22:42,400 competitive advantage, eventually it's the same as with 426 00:22:42,400 --> 00:22:45,440 individuals that adopt Bitcoin. You know, I generally say like 427 00:22:45,440 --> 00:22:48,440 it lowers your uncertainty towards the future so you can 428 00:22:48,440 --> 00:22:50,320 become a builder instead of a consumer. 429 00:22:50,320 --> 00:22:53,200 I, I think it's the same for, for a company, right? 430 00:22:53,200 --> 00:22:58,960 Like you want to have a certain mechanism or a tool that creates 431 00:22:58,960 --> 00:23:02,440 maybe a prolonged runway or, you know, something like that for 432 00:23:02,440 --> 00:23:04,480 your company. So you can actually try stuff 433 00:23:04,520 --> 00:23:08,320 and actually try to innovate to see if you can reinvent yourself 434 00:23:08,320 --> 00:23:11,480 or become better or more valuable or whatever, which 435 00:23:11,840 --> 00:23:14,960 eventually is the goal of most companies. 436 00:23:14,960 --> 00:23:18,280 Because in a free market, there's always a competition in 437 00:23:18,280 --> 00:23:20,000 a sense. So you could always be 438 00:23:20,400 --> 00:23:23,160 threatened by a new entrance, you know, unless you really have 439 00:23:23,160 --> 00:23:25,400 a have a monopoly. And it also makes me think 440 00:23:25,400 --> 00:23:28,520 about, I'm going to talk with him again, but I had him on 441 00:23:28,520 --> 00:23:30,440 before. Leon Vancombe is really into 442 00:23:30,440 --> 00:23:33,600 like real estate and Bitcoin. He does real estate development 443 00:23:33,600 --> 00:23:36,560 and they basically when they have a project, they borrow like 444 00:23:36,560 --> 00:23:39,560 that's a €10 million project, they borrow 12 million, they buy 445 00:23:39,560 --> 00:23:42,920 2 million of Bitcoin for that entity of the project. 446 00:23:43,280 --> 00:23:47,840 And those are 5 plus years project like building, building 447 00:23:47,840 --> 00:23:50,320 homes or, or whatever. And in that way, they kind of 448 00:23:50,320 --> 00:23:52,320 like secure the future of that project. 449 00:23:52,320 --> 00:23:56,000 And I, you know, I think it's a similar approach here. 450 00:23:56,000 --> 00:23:59,080 So, so very interesting that you explain it like that because it 451 00:23:59,080 --> 00:24:01,200 makes so much sense. Yeah, it's, it's the same as 452 00:24:01,200 --> 00:24:03,360 with individuals. Once your competitors adopted 453 00:24:03,360 --> 00:24:06,760 like you have to do that too because you know they are more 454 00:24:07,160 --> 00:24:10,240 protected towards the future and and will have more capital, 455 00:24:10,240 --> 00:24:13,680 especially if they are able to create that leverage and perhaps 456 00:24:13,680 --> 00:24:16,520 also borrow more and they are able to invest more. 457 00:24:17,480 --> 00:24:21,320 There's even the more foundational shift in thinking 458 00:24:21,320 --> 00:24:22,520 that a lot of people have, right? 459 00:24:22,520 --> 00:24:25,760 I mean, people always talk about the risk free rate of capital, 460 00:24:25,880 --> 00:24:28,080 right? And what they're talking about 461 00:24:28,080 --> 00:24:30,360 are things like Treasury bills or Treasury bonds. 462 00:24:30,360 --> 00:24:34,400 And it's interesting when you're tying your risk free rate of 463 00:24:34,400 --> 00:24:38,480 return to something that's not even outperforming monetary 464 00:24:38,480 --> 00:24:41,400 debasement, right? Really what you end up doing in 465 00:24:41,400 --> 00:24:45,880 that arrangement is you accept the certainty of loss, Yes, 466 00:24:46,440 --> 00:24:48,720 which is something you would never do, right? 467 00:24:48,760 --> 00:24:52,000 I'm never going to give you $5 if you give me 4 back. 468 00:24:52,120 --> 00:24:54,560 Right, which is not it's. Not an arrangement I'm going to 469 00:24:54,560 --> 00:24:56,960 sign up for with. You, yeah, but it's increased 470 00:24:56,960 --> 00:24:59,800 future uncertainty that you also adopt, right? 471 00:24:59,800 --> 00:25:03,560 Correct, correct. And so it's, it's almost strange 472 00:25:03,560 --> 00:25:07,280 to me how conditioned we've become to accept that as 473 00:25:07,280 --> 00:25:11,160 stability, right. We've accepted stability as the 474 00:25:11,160 --> 00:25:14,960 certain erosion of the value we've created in the world, 475 00:25:14,960 --> 00:25:16,960 right through our efforts and time. 476 00:25:16,960 --> 00:25:19,920 And time is our most finite resource we have, right? 477 00:25:20,320 --> 00:25:23,240 I know it's almost cliche to say it, but you're spending a 478 00:25:23,240 --> 00:25:26,880 drastic amount of your life trying to bring this, you know, 479 00:25:26,880 --> 00:25:30,200 value into your life, right? Through collection of money and 480 00:25:30,200 --> 00:25:35,600 assets that makes up, you know, say you work from 20 to 60, 481 00:25:35,600 --> 00:25:37,440 right? That's 40 years of your life 482 00:25:37,440 --> 00:25:40,240 that you've spent trying to generate value that's going to 483 00:25:40,240 --> 00:25:41,800 carry you for the rest of your life. 484 00:25:42,680 --> 00:25:46,800 Well, if you're fighting into headwinds the whole way through 485 00:25:46,800 --> 00:25:49,360 there because all you're conditioned to do is, you know, 486 00:25:49,360 --> 00:25:54,160 used to hear the about people, you know, many decades ago that 487 00:25:54,160 --> 00:25:56,120 used to, you know, put their money in the mattress, right? 488 00:25:56,120 --> 00:25:59,040 They would take cash and they would squirrel it away and save 489 00:25:59,040 --> 00:26:01,040 it somewhere, you know, for safekeeping. 490 00:26:01,760 --> 00:26:04,280 And people used to think that that was a great idea. 491 00:26:04,280 --> 00:26:06,520 Just hold your cash, but keep it with you, right? 492 00:26:06,520 --> 00:26:07,880 Don't let it be in the banks, right? 493 00:26:07,880 --> 00:26:10,080 The Great Depression taught people that was a bad idea. 494 00:26:10,080 --> 00:26:13,520 Maybe you shouldn't do that. So they're really holding things 495 00:26:13,520 --> 00:26:17,160 in physical cash. And that was back during a time 496 00:26:17,160 --> 00:26:20,680 where monetary debasement wasn't as rapid as it is today. 497 00:26:21,000 --> 00:26:24,360 You have to evolve your thinking now because they've given you 498 00:26:24,360 --> 00:26:28,320 all the evidence you need to see to show that they don't have 499 00:26:28,320 --> 00:26:32,320 control over this, right? They've lost control when our 500 00:26:32,320 --> 00:26:38,320 GDP in the US is, you know what, our debts, 130% of GDP, which is 501 00:26:38,720 --> 00:26:41,960 astounding, right, that we're getting there, that starts to 502 00:26:41,960 --> 00:26:44,640 reach an escape velocity where you can't put that genie back in 503 00:26:44,640 --> 00:26:47,040 the bottle, right? You've borrowed a huge amount of 504 00:26:47,040 --> 00:26:50,440 value from your future for today, and you're not generating 505 00:26:50,440 --> 00:26:52,800 any growth on the other side of that equation that's going to 506 00:26:52,800 --> 00:26:54,360 support that debt that you're taking up. 507 00:26:54,400 --> 00:26:58,560 Yes, And that ultimately is going to mean debasement of your 508 00:26:58,560 --> 00:27:01,000 money. In real terms, also right. 509 00:27:01,000 --> 00:27:03,200 In real terms, it's been nominal, you know. 510 00:27:03,280 --> 00:27:05,200 It's. Been nominal, but it's going to 511 00:27:05,200 --> 00:27:07,040 be real. It's going to be real and it's 512 00:27:07,040 --> 00:27:10,080 going to be very real. You know, anybody, they play 513 00:27:10,080 --> 00:27:12,240 games with all the numbers that come out, right? 514 00:27:12,240 --> 00:27:14,200 When they talk about inflation, right? 515 00:27:14,200 --> 00:27:17,760 All the inflation numbers that you hear reported to you, you 516 00:27:17,760 --> 00:27:21,560 know, they basically say here's inflation, except we exclude all 517 00:27:21,560 --> 00:27:23,480 the things you need to live your life, right? 518 00:27:23,520 --> 00:27:26,680 Things like food and all these other categories, right? 519 00:27:27,040 --> 00:27:30,840 As long as you don't need food and utilities to live, here's 520 00:27:30,840 --> 00:27:33,880 what inflation was. Well, your whole life revolves 521 00:27:33,880 --> 00:27:37,200 around the areas that they exclude from the measurement. 522 00:27:37,920 --> 00:27:41,520 So you're not even getting an accurate accounting of the value 523 00:27:41,520 --> 00:27:43,880 you're losing in your day-to-day life as it goes. 524 00:27:44,400 --> 00:27:47,560 And so the thing that a lot of Bitcoiners really turn the 525 00:27:47,560 --> 00:27:52,360 corner on is they go, I'm spending an exorbitant amount of 526 00:27:52,360 --> 00:27:57,640 my life, my efforts and my thoughts into creating value for 527 00:27:57,640 --> 00:27:59,680 the world through one way or another, right? 528 00:27:59,920 --> 00:28:02,360 Whether you work for a corporation and you're just 529 00:28:02,360 --> 00:28:05,640 trying to really provide the best value to that corporation 530 00:28:06,120 --> 00:28:08,400 that you can provide, and they're rewarding you with a 531 00:28:08,400 --> 00:28:11,720 payment in one value that's coming in Fiat currency, 532 00:28:11,960 --> 00:28:15,240 Bitcoiners turn the corner a lot faster to go, well, what they're 533 00:28:15,240 --> 00:28:18,680 rewarding me with has limitations, big limitations. 534 00:28:18,680 --> 00:28:21,400 And that limitation is, if this is what I decide to pin the 535 00:28:21,400 --> 00:28:25,320 value of my life to, I'm going to be in this constant battle 536 00:28:25,680 --> 00:28:27,920 against the debasement of that asset. 537 00:28:29,040 --> 00:28:31,560 And that trickles into a lot of other assets, right? 538 00:28:31,560 --> 00:28:35,000 We all think that some assets are very stable in the returns 539 00:28:35,000 --> 00:28:37,560 that they provide. But people forget that a lot of 540 00:28:37,560 --> 00:28:41,640 the times those returns are generated by the loss of value 541 00:28:41,640 --> 00:28:43,760 of the denominator of that equation, right? 542 00:28:43,760 --> 00:28:46,520 If you're denominating it in the US dollar and the US dollar 543 00:28:46,880 --> 00:28:49,760 continues to devalue, yeah, it looks like the value of that 544 00:28:49,760 --> 00:28:53,920 assets going up. So people drastically are 545 00:28:53,920 --> 00:28:58,200 looking for what asset can I introduce to my life where I can 546 00:28:58,200 --> 00:29:01,560 actually lock that value up for the future, right? 547 00:29:01,560 --> 00:29:05,280 I want to make sure that my future standard of living is 548 00:29:05,360 --> 00:29:09,240 absolutely no worse than it is today and hopefully much better 549 00:29:09,240 --> 00:29:12,080 than it is, right? You're trying to create future 550 00:29:12,080 --> 00:29:16,200 value for yourself by getting rid of all the entities that are 551 00:29:16,200 --> 00:29:19,200 playing games with the currency you were initially conditioned 552 00:29:19,200 --> 00:29:21,440 to believe the value of your life was going to be reflected 553 00:29:21,440 --> 00:29:23,200 in. So getting away from the Fiat 554 00:29:23,200 --> 00:29:25,480 currencies and going to something that for the first 555 00:29:25,480 --> 00:29:29,920 time that's gaining adoption with no interaction from the 556 00:29:29,920 --> 00:29:33,000 central banks, Oregon, anyone actively managing it, right? 557 00:29:33,000 --> 00:29:37,680 We know the rules to Bitcoin and because it's a finite asset with 558 00:29:37,680 --> 00:29:40,880 unlimited demand into the future, you can be pretty 559 00:29:40,880 --> 00:29:43,880 certain about the trajectory of Bitcoin, right? 560 00:29:44,000 --> 00:29:47,720 We can count on everything we know about Bitcoin remaining, 561 00:29:47,800 --> 00:29:51,320 which is beautiful. And it's that foundational shift 562 00:29:51,320 --> 00:29:54,600 that once you turn that corner and you start transitioning your 563 00:29:54,600 --> 00:29:58,640 savings over to Bitcoin, you start to almost panic because 564 00:29:58,640 --> 00:30:00,560 you don't feel like you have enough, right? 565 00:30:00,840 --> 00:30:03,680 And you see what's happening in the world around you and you go, 566 00:30:03,680 --> 00:30:06,640 the value I've created and I've worked so hard to create and 567 00:30:06,640 --> 00:30:12,120 dedicated so much of my time to creating is disappearing through 568 00:30:12,120 --> 00:30:15,440 no fault of my own, right, just through mismanagement of 569 00:30:15,440 --> 00:30:18,800 programs in the country that I live in or whatever the case is. 570 00:30:19,320 --> 00:30:21,760 They're debasing it to get rid of their debt problem. 571 00:30:22,080 --> 00:30:25,000 And I'm the recipient of the outcome of it. 572 00:30:25,000 --> 00:30:28,240 And anyone grocery store knows the impact of what that looks 573 00:30:28,240 --> 00:30:28,880 like. Right now. 574 00:30:28,880 --> 00:30:30,640 It's getting bad and people are starting. 575 00:30:30,640 --> 00:30:33,920 I think that's what's starting to push so many people to 576 00:30:33,920 --> 00:30:36,040 explore alternative options here. 577 00:30:36,560 --> 00:30:39,360 And a lot of them are arriving to Bitcoin and you love to see 578 00:30:39,360 --> 00:30:42,480 that. Quick question, if you have your 579 00:30:42,480 --> 00:30:45,560 Bitcoin in self custody, where are you keeping your Bitcoin 580 00:30:45,560 --> 00:30:48,160 seed words? For me there's only one way and 581 00:30:48,160 --> 00:30:50,440 it's backing U my seed phrase with Stam seeds. 582 00:30:50,880 --> 00:30:54,520 It's a single durable plate without any parts or materials. 583 00:30:54,800 --> 00:30:57,640 Stamp your words into solid titanium which is fire 584 00:30:57,640 --> 00:31:00,200 resistant, water resistant and built to last. 585 00:31:00,320 --> 00:31:03,040 Unlike etching or engraving, stamp seats better. 586 00:31:03,040 --> 00:31:06,560 The tools help you to deeply stamp every letter for permanent 587 00:31:06,560 --> 00:31:09,960 readability, making it easy for you to protect your generational 588 00:31:09,960 --> 00:31:11,960 wealth. Don't risk losing your seat 589 00:31:11,960 --> 00:31:14,400 phrase on paper. Get a stamp seat plate for 590 00:31:14,400 --> 00:31:18,200 unmatched protection. You can use code BRUM that's BR 591 00:31:18,200 --> 00:31:23,080 AM for 15% off at stamp. Seat.com, I think you explained 592 00:31:23,080 --> 00:31:25,440 it perfectly. I think we're talking basically 593 00:31:25,440 --> 00:31:28,400 about saving, right? Just like spending your time and 594 00:31:28,400 --> 00:31:31,440 energy now getting a reward. I don't want to spend it now. 595 00:31:31,440 --> 00:31:34,920 I just want to save its words to future so I have something I can 596 00:31:34,920 --> 00:31:38,280 use to do whatever with, you know, whatever you want to 597 00:31:38,280 --> 00:31:40,680 create in the future or protect in the future. 598 00:31:40,920 --> 00:31:43,440 I think you're, yeah. I was going to say, the point 599 00:31:43,440 --> 00:31:45,880 that I'd make is that that same equation applies to 600 00:31:45,880 --> 00:31:48,800 corporations, yes, right. They're not immune from this, 601 00:31:49,120 --> 00:31:50,960 no. And the way that I like to often 602 00:31:50,960 --> 00:31:54,280 describe MicroStrategy to people so that they can kind of 603 00:31:54,280 --> 00:31:58,440 conceptualize it from their own life is you've got an income 604 00:31:58,440 --> 00:31:59,920 statement for your personal life. 605 00:31:59,920 --> 00:32:02,280 You've got a balance sheet for your personal life, right? 606 00:32:03,000 --> 00:32:05,920 Think of your income statement as your salary, right? 607 00:32:05,960 --> 00:32:09,440 Then you've got all your living expenses and the remainder would 608 00:32:09,440 --> 00:32:13,600 be your net income, right? What you're doing when you shift 609 00:32:13,600 --> 00:32:17,120 over to what MicroStrategy is doing is they're saying, well, 610 00:32:17,760 --> 00:32:22,280 instead of us fighting for this, you know, 5% raise a year right 611 00:32:22,280 --> 00:32:25,280 in our income, instead of deploying all of our efforts 612 00:32:25,280 --> 00:32:29,120 there, we've accumulated assets on the other side of the on the 613 00:32:29,120 --> 00:32:31,720 balance sheet side. What we're going to do is we're 614 00:32:31,720 --> 00:32:34,640 going to be smart about how we deploy those assets. 615 00:32:34,880 --> 00:32:39,600 And if we get 5% return on a bigger pool of capital, that's a 616 00:32:39,600 --> 00:32:43,600 more impactful outcome than getting a 5% raise on your 617 00:32:43,600 --> 00:32:45,960 salary, right? That's part of the reason why 618 00:32:45,960 --> 00:32:49,080 people need to save for retirement, right, is because as 619 00:32:49,080 --> 00:32:52,920 you build that capital base, the interest that you're, the 620 00:32:52,920 --> 00:32:55,760 returns that you're getting year over year start to become more 621 00:32:55,760 --> 00:32:58,200 material than the income you're getting from your job. 622 00:32:58,880 --> 00:33:01,240 Now MicroStrategy, that's essentially what they did. 623 00:33:01,240 --> 00:33:05,240 They shifted from saying let's focus on the income side to how 624 00:33:05,240 --> 00:33:07,080 do we better deploy our balance sheet. 625 00:33:07,200 --> 00:33:09,200 We have a very strong balance sheet. 626 00:33:09,320 --> 00:33:11,560 We're unencumbered by debt, right? 627 00:33:11,560 --> 00:33:14,520 We've got a lot of flexibility. They've got a few things that 628 00:33:14,520 --> 00:33:17,160 you don't have in your personal life, which is access to the 629 00:33:17,160 --> 00:33:19,080 capital markets. And in this way that you're 630 00:33:19,080 --> 00:33:21,080 seeing them deploy with all the different products they can 631 00:33:21,080 --> 00:33:23,520 issue. But foundationally, that's the 632 00:33:23,520 --> 00:33:26,680 change that they made. They said we've spent decades 633 00:33:26,680 --> 00:33:28,640 building the value in our balance sheet. 634 00:33:28,960 --> 00:33:32,720 Now let's take that strong balance sheet and let's utilize 635 00:33:32,720 --> 00:33:37,040 that to generate bigger returns for our shareholders than we can 636 00:33:37,040 --> 00:33:38,960 by focusing on our BI business, right? 637 00:33:38,960 --> 00:33:41,360 The growth just isn't there. They've got significant numbers 638 00:33:41,360 --> 00:33:44,720 of competitors on that side, but in what they deployed on the 639 00:33:44,720 --> 00:33:46,960 balance sheet, they didn't have that many competitors. 640 00:33:46,960 --> 00:33:50,200 So they got a huge head start and other corporations are going 641 00:33:50,200 --> 00:33:53,560 to start playing catch up. But it's a very simple shift in 642 00:33:53,560 --> 00:33:57,280 thinking, but it's not one that you traditionally see in 643 00:33:57,280 --> 00:34:00,960 corporate finance because the value of companies has always 644 00:34:00,960 --> 00:34:03,800 traditionally been tied to the outcomes of the income 645 00:34:03,800 --> 00:34:05,720 statement. So that's the foundational shift 646 00:34:05,720 --> 00:34:07,800 that they made that sets them apart. 647 00:34:07,800 --> 00:34:11,040 It's also what makes them very difficult for people to value 648 00:34:11,480 --> 00:34:14,480 because they'll value the returns that they see on the 649 00:34:14,480 --> 00:34:17,960 income statement and the growth. They're having a very hard time 650 00:34:18,040 --> 00:34:21,000 wrestling with the returns that are coming from the activities, 651 00:34:21,199 --> 00:34:23,120 actively utilizing your balance sheet. 652 00:34:23,360 --> 00:34:26,040 So it's kind of throwing people off from the traditional metrics 653 00:34:26,040 --> 00:34:27,560 they like to rely on. Yeah. 654 00:34:28,360 --> 00:34:31,120 That's a perfect bridge to the next part I wanted to talk about 655 00:34:31,120 --> 00:34:35,679 because MicroStrategy introduced a new metric Bitcoin per share. 656 00:34:35,679 --> 00:34:38,440 And yeah, it's it's really hard to compare that to traditional, 657 00:34:38,679 --> 00:34:42,159 you know, financial metrics as as you mentioned, what 658 00:34:42,159 --> 00:34:45,199 implications does this have for valuing the company? 659 00:34:45,440 --> 00:34:48,080 And maybe also take into account that you what you mentioned 660 00:34:48,080 --> 00:34:51,159 before the fast be so that's the financial accounting standard 661 00:34:51,199 --> 00:34:54,400 board, which basically creates like the the rules for 662 00:34:54,400 --> 00:34:57,160 accounting in, in in the United States. 663 00:34:57,680 --> 00:35:00,480 There are changes there. So that and they've they've come 664 00:35:00,480 --> 00:35:03,680 into effect, but they haven't really reported with these new 665 00:35:03,680 --> 00:35:06,200 changes, right? So they can report on Bitcoins 666 00:35:06,200 --> 00:35:08,600 fair value. So, so the fair value of their 667 00:35:08,600 --> 00:35:11,200 holdings instead of you mentioned that before, it was 668 00:35:11,200 --> 00:35:14,240 kind of like an intangible asset before kind of like a patent or 669 00:35:14,240 --> 00:35:16,560 something I once heard. So that's of course totally 670 00:35:16,560 --> 00:35:20,360 different than what Bitcoin is that is coming into effect. 671 00:35:20,480 --> 00:35:25,320 I think it's Q1 where they can really report on the earnings in 672 00:35:25,320 --> 00:35:29,080 Bitcoin per share denominated in dollars or are accounted for in 673 00:35:29,080 --> 00:35:31,320 dollars with the fair value of of of Bitcoin. 674 00:35:32,480 --> 00:35:35,600 Yeah. So for FAS B, so some companies 675 00:35:35,600 --> 00:35:38,880 have adopted it already, which is great, right, Companies like 676 00:35:38,880 --> 00:35:41,920 Sembler Marathon, right, But a bunch of those have adopted FAS 677 00:35:41,920 --> 00:35:45,120 B already. The change really is in the past 678 00:35:45,120 --> 00:35:50,160 micro strategies only been able to realize losses on their 679 00:35:50,160 --> 00:35:52,520 Bitcoin holdings. So if the value went down, they 680 00:35:52,520 --> 00:35:55,200 were forced to mark down the value of the Bitcoin on their 681 00:35:55,200 --> 00:35:58,720 balance sheet. And that caused a huge number of 682 00:35:58,720 --> 00:36:01,240 issues, right? One, when people were, people 683 00:36:01,240 --> 00:36:04,800 like to use automatic data sources out there to get ratios 684 00:36:04,840 --> 00:36:08,400 like leverage ratios, that was part of what started to drive 685 00:36:08,400 --> 00:36:12,920 the risky leverage narrative because the balance sheet never 686 00:36:12,920 --> 00:36:15,640 accounted for the fair market value of the Bitcoin. 687 00:36:15,720 --> 00:36:18,160 It was always this marked down value of it. 688 00:36:18,160 --> 00:36:20,960 So it made them look far more leveraged than they actually 689 00:36:20,960 --> 00:36:25,000 were. What's changing now is that at 690 00:36:25,000 --> 00:36:30,200 the end of 2024, they're going to mark their Bitcoin up to fair 691 00:36:30,200 --> 00:36:34,000 market value, right? So starting Q 12025, the balance 692 00:36:34,000 --> 00:36:36,400 sheet is going to reflect the fair market value of their 693 00:36:36,400 --> 00:36:41,800 Bitcoin as of the end of 2024. From that point forward, any 694 00:36:41,800 --> 00:36:45,880 appreciation in that Bitcoin is going to show up in the net 695 00:36:45,880 --> 00:36:48,920 income on the income statement. So it's going to show up in 696 00:36:48,920 --> 00:36:51,640 those earnings. And when you accumulate the 697 00:36:51,640 --> 00:36:55,560 amount of Bitcoin that MicroStrategy has, it doesn't 698 00:36:55,560 --> 00:36:59,440 need to move very much for that to be a really drastically large 699 00:36:59,440 --> 00:37:02,000 number. And it's going to shock a lot of 700 00:37:02,000 --> 00:37:04,840 people because you're talking potentially billions and 701 00:37:04,840 --> 00:37:08,320 billions of dollars of earnings every quarter if Bitcoin 702 00:37:08,320 --> 00:37:10,160 performs now, it goes the other way too. 703 00:37:10,640 --> 00:37:13,080 Right now, you're going to start seeing those losses going into 704 00:37:13,080 --> 00:37:15,800 the net income as well, which you saw some of that with the 705 00:37:16,200 --> 00:37:18,320 indefinite intangible accounting, but not the full 706 00:37:18,320 --> 00:37:21,040 amount because traditionally it was marked down already 707 00:37:21,040 --> 00:37:23,560 partially. But it's going to go both 708 00:37:23,560 --> 00:37:26,440 directions. And so that's going to introduce 709 00:37:26,440 --> 00:37:29,400 probably more volatility into the equity as people work to 710 00:37:29,400 --> 00:37:32,960 digest what that means. But now you're going to see the 711 00:37:32,960 --> 00:37:35,240 impact of this accumulation strategy. 712 00:37:35,240 --> 00:37:39,800 And if Bitcoin follows pretty much any of the estimates that 713 00:37:39,800 --> 00:37:41,800 you're seeing come out from people, whether you're in the 714 00:37:41,800 --> 00:37:45,120 camp that believes it's going to be 175,000 by the end of the 715 00:37:45,120 --> 00:37:49,280 year or I've seen, I think Max Keiser said 2.2 million or 716 00:37:49,280 --> 00:37:50,760 something, right? Like really high. 717 00:37:51,240 --> 00:37:54,720 So whatever that number is, right, it could be very 718 00:37:54,720 --> 00:37:57,760 impactful to that income statement and that's going to 719 00:37:57,760 --> 00:38:00,360 bring a lot of eyeballs to the strategy now that they're going 720 00:38:00,360 --> 00:38:03,920 to see the outcome of what they've accumulated and the 721 00:38:03,920 --> 00:38:06,800 creation of the value of what they've accumulated showing up 722 00:38:06,800 --> 00:38:10,320 in those income statements. So that's going to be a big deal 723 00:38:10,360 --> 00:38:13,000 for MicroStrategy. So you've got a lot of guys out 724 00:38:13,000 --> 00:38:17,080 there that are now tracking day-to-day what that gain is 725 00:38:17,080 --> 00:38:20,240 going to look like for Q1. But the first time we're really 726 00:38:20,240 --> 00:38:22,880 going to see it, it's going to be the value as of, you know, 727 00:38:22,880 --> 00:38:25,920 March 31st, but it's probably going to come out on their 728 00:38:25,920 --> 00:38:29,080 earnings at the end of April is probably my guess for when we'll 729 00:38:29,080 --> 00:38:32,560 see the 1st Q1 earnings. So, but it's important because 730 00:38:32,560 --> 00:38:37,600 those earnings will flow into the criteria for getting into 731 00:38:37,600 --> 00:38:41,760 the S&P 500. So for the S&P 500, you have to 732 00:38:41,760 --> 00:38:44,560 have a cumulative 4 quarters of positive earnings. 733 00:38:44,560 --> 00:38:47,200 Well, with the indefinite intangibles that they've had, 734 00:38:47,560 --> 00:38:50,920 they've just had huge losses for several quarters in a row. 735 00:38:51,720 --> 00:38:56,440 And now all it's probably going to take is one $2000 move in 736 00:38:56,440 --> 00:38:59,760 Bitcoin to wipe out all those negative earnings and put them 737 00:38:59,760 --> 00:39:01,800 into positive, which now at least gets them in the 738 00:39:01,800 --> 00:39:04,720 conversation. There's no guarantees that they 739 00:39:04,720 --> 00:39:07,000 get entry into the S&P 500, right? 740 00:39:07,000 --> 00:39:10,440 That one's a little more political than the NASDAQ 100 741 00:39:10,440 --> 00:39:13,280 was, which they just got into, which was a really big deal. 742 00:39:14,120 --> 00:39:18,040 But it's a really big deal to get into the S&P 500 because of 743 00:39:18,040 --> 00:39:20,720 the amount of capital, the amount of passive capital that 744 00:39:20,720 --> 00:39:23,080 comes into your equity when you get in there. 745 00:39:23,080 --> 00:39:24,800 So it might take them a couple tries. 746 00:39:24,800 --> 00:39:26,840 People are going to have to digest, you know, how do they 747 00:39:26,840 --> 00:39:31,160 evaluate MicroStrategy from the index lens for the S&P 500? 748 00:39:31,160 --> 00:39:32,960 That committee will have to decide on that. 749 00:39:33,360 --> 00:39:36,760 But it at least opens that door for them to meet the last 750 00:39:36,760 --> 00:39:40,600 criteria that they need to meet to be able to be in the 751 00:39:40,600 --> 00:39:43,480 inclusion for that. So that's going to be a really 752 00:39:43,480 --> 00:39:47,120 cool change that comes out of this fair value accounting 753 00:39:47,120 --> 00:39:50,400 because now the Bitcoin isn't treated, you know, as hostilely 754 00:39:50,400 --> 00:39:53,280 as it was before because you're going to start to see those 755 00:39:53,280 --> 00:39:55,600 returns trickling through. So that that's a big deal. 756 00:39:55,680 --> 00:39:58,200 And it's a big deal for other corporations as they're adopting 757 00:39:58,200 --> 00:39:59,880 it as well. Do you think that will happen 758 00:40:00,000 --> 00:40:04,000 this year, the S&P 500 inclusion or is that hard to predict? 759 00:40:04,600 --> 00:40:11,400 I, I'm hopeful it will and I try to remain fairly measured and 760 00:40:11,400 --> 00:40:13,200 when I think these things are going to happen. 761 00:40:13,200 --> 00:40:16,760 So I think that the first chance, which comes this summer, 762 00:40:17,800 --> 00:40:21,280 I'm not expecting it then I think that it's going to take a 763 00:40:21,280 --> 00:40:24,800 little deliberation to gain consensus on how they're going 764 00:40:24,800 --> 00:40:28,640 to treat MicroStrategy. I wouldn't be surprised to see 765 00:40:28,640 --> 00:40:30,720 it by the end of 2025 though, right? 766 00:40:30,720 --> 00:40:34,320 They'll get two more shots here and 2025 to get in there. 767 00:40:34,320 --> 00:40:37,040 So I won't be surprised to see them get in, right. 768 00:40:37,120 --> 00:40:40,240 I think they should be in. And I think that when you look 769 00:40:40,240 --> 00:40:42,720 at those indexes and they're looking at the types of returns 770 00:40:42,720 --> 00:40:45,480 and the adoption that this type of a strategy is getting, it's 771 00:40:45,480 --> 00:40:48,920 going to force them to consider their criteria and how this is 772 00:40:48,920 --> 00:40:51,480 going to factor in because they may have to answer this question 773 00:40:51,480 --> 00:40:55,520 for several other organizations. Micro strategy is the first one 774 00:40:55,920 --> 00:40:59,200 reaching enough scale to get consideration, but there will 775 00:40:59,200 --> 00:41:01,360 probably be others coming, so they're going to have to come up 776 00:41:01,360 --> 00:41:02,720 with a more standardized approach. 777 00:41:02,720 --> 00:41:07,120 So these passive inflows, I read someone's calculation, ones that 778 00:41:07,120 --> 00:41:09,280 that could be like around a billion a month. 779 00:41:09,400 --> 00:41:12,400 Well, it depends on on their spot and the and the and the 780 00:41:12,400 --> 00:41:15,760 weight of course, But let's take just, you know, the number 781 00:41:15,760 --> 00:41:17,640 doesn't really matter, but it's more about so these passive 782 00:41:17,640 --> 00:41:20,920 inflows basically by the stock, right? 783 00:41:20,920 --> 00:41:25,440 So that gives them money to buy more Bitcoin and just to add to 784 00:41:25,440 --> 00:41:27,800 the flywheel, right? So that's the whole idea of of 785 00:41:27,800 --> 00:41:28,680 getting. Yeah. 786 00:41:28,680 --> 00:41:32,080 It's one of these impact factors that are going to impact things 787 00:41:32,080 --> 00:41:34,960 like the multiple to net asset value that you see talked about 788 00:41:34,960 --> 00:41:36,800 a lot, right. So one of the questions that 789 00:41:36,800 --> 00:41:40,520 that you'd asked me before that I think I missed was around kind 790 00:41:40,520 --> 00:41:43,320 of their key metric that they report, right, which is Bitcoin 791 00:41:43,320 --> 00:41:45,640 yield. And Bitcoin yield is essentially 792 00:41:46,360 --> 00:41:51,200 the change of Bitcoin per share quarter over quarter, Yeah, so. 793 00:41:51,400 --> 00:41:54,520 What you could call earnings per share basically, right? 794 00:41:54,760 --> 00:41:56,520 Yeah, Yeah. Except for the earnings are 795 00:41:56,640 --> 00:41:59,120 cumulative based on all the Bitcoin that they hold. 796 00:41:59,120 --> 00:42:00,880 Yes, change in value there, right. 797 00:42:00,880 --> 00:42:04,960 So bigger pool actually. But what's really interesting 798 00:42:04,960 --> 00:42:08,080 about Bitcoin per share and the reason why it's important is you 799 00:42:08,080 --> 00:42:10,840 can think of it as essentially continuing to create an 800 00:42:10,840 --> 00:42:14,600 increasing intrinsic value floor for the equity, right? 801 00:42:15,280 --> 00:42:19,240 So MicroStrategy is becoming unique because the derivatives 802 00:42:19,240 --> 00:42:21,160 market is becoming so huge, right? 803 00:42:21,160 --> 00:42:23,840 The options market, I think the last time I checked, was as 804 00:42:23,840 --> 00:42:26,600 large as the market cap of the company, if not larger now. 805 00:42:26,640 --> 00:42:29,280 And when you've got a derivatives market that's that 806 00:42:29,280 --> 00:42:33,480 large, that starts to impact the equity performance because 807 00:42:33,480 --> 00:42:36,000 you've got this constant settling of all these options 808 00:42:36,000 --> 00:42:38,800 contracts and that creates a huge amount of volume in your 809 00:42:38,800 --> 00:42:41,200 equity. And what happens is you get 810 00:42:41,200 --> 00:42:44,640 these shifts, right? And where those are going to 811 00:42:44,640 --> 00:42:46,400 push your equity valuation, right? 812 00:42:46,400 --> 00:42:48,480 You've got things called gamma, right? 813 00:42:48,480 --> 00:42:50,280 And you're going to get dealers that are hedging their 814 00:42:50,280 --> 00:42:52,920 positions. And so as sentiment changes on 815 00:42:52,920 --> 00:42:54,960 Bitcoin, people are going to take different bets in the 816 00:42:54,960 --> 00:42:57,880 derivatives market. And that can force these dealers 817 00:42:57,880 --> 00:43:01,240 to hedge in different ways, which can put a lot of buying or 818 00:43:01,240 --> 00:43:03,480 selling pressure on your equity, right? 819 00:43:03,480 --> 00:43:06,440 So it starts to create these really outsized moves in the 820 00:43:06,440 --> 00:43:08,480 equity, which is what creates the volatility. 821 00:43:09,440 --> 00:43:15,280 And so Bitcoin per share, I view it as foundational to the high 822 00:43:15,280 --> 00:43:19,480 sides of the stock price and building a higher floor to the 823 00:43:19,480 --> 00:43:21,640 stock price when the sentiment changes. 824 00:43:21,640 --> 00:43:24,960 So I've always viewed multiple to net asset value as kind of a 825 00:43:24,960 --> 00:43:28,880 combination of sentiment of the market in terms of how they're 826 00:43:28,880 --> 00:43:32,480 thinking about Bitcoin in the future and it expands and 827 00:43:32,480 --> 00:43:35,640 contracts depending on how people or how institutions are 828 00:43:35,640 --> 00:43:38,960 viewing Bitcoins prospects over the next certain period of time. 829 00:43:39,560 --> 00:43:42,880 So when they're building Bitcoin per share, you can think of that 830 00:43:42,880 --> 00:43:46,360 essentially as building this intrinsic value floor behind 831 00:43:46,360 --> 00:43:49,240 each of the shares. So for instance, right now I 832 00:43:49,240 --> 00:43:52,920 think that that value floor is right around $150.00 a share. 833 00:43:53,360 --> 00:43:57,800 That's tied to the core value, the Bitcoin per share times the 834 00:43:57,800 --> 00:44:00,920 Bitcoin price, right? Yeah, which tells you each share 835 00:44:00,920 --> 00:44:04,720 on a fully diluted basis is about $150.00 in intrinsic 836 00:44:04,720 --> 00:44:06,920 value. Well, if you just assume that 837 00:44:06,920 --> 00:44:09,800 the multiple to net asset value is going to expand and contract 838 00:44:09,800 --> 00:44:13,080 within a range, right, Say you thought the high end was going 839 00:44:13,080 --> 00:44:16,200 to be 3 and the low end is going to be 1 1/2, right? 840 00:44:17,160 --> 00:44:20,920 The higher you get that intrinsic value, the more 841 00:44:20,920 --> 00:44:25,200 impactful a three times net asset value multiple becomes, 842 00:44:25,200 --> 00:44:28,480 right? If you go three times from $100, 843 00:44:28,480 --> 00:44:29,400 right? That's going to get you up to 844 00:44:29,400 --> 00:44:32,920 $300.00. If you go three times from $200, 845 00:44:32,920 --> 00:44:35,000 that gets you up to $600.00, right? 846 00:44:35,320 --> 00:44:39,600 So as that floor builds, it builds the higher end of the 847 00:44:39,600 --> 00:44:42,120 range for the stock price. And this thing's going to be 848 00:44:42,120 --> 00:44:43,960 volatile. It's the whole design, right? 849 00:44:44,600 --> 00:44:46,680 But you're going to get these periods of time where that 850 00:44:46,680 --> 00:44:49,960 valuation expands as market sentiment changes and traders 851 00:44:49,960 --> 00:44:53,000 start to place their bets and that starts pushing the hedging 852 00:44:53,000 --> 00:44:54,480 activities. So there's a lot of buying 853 00:44:54,480 --> 00:44:56,880 activity in the equity which can push the price higher. 854 00:44:57,320 --> 00:45:00,000 And then when that sentiment shifts, right, gamma goes the 855 00:45:00,000 --> 00:45:02,800 other direction as well and it brings you closer. 856 00:45:02,800 --> 00:45:05,680 But now you've got a higher floor for the valuation of the 857 00:45:05,680 --> 00:45:08,320 share than you had before. So it's probably not coming down 858 00:45:08,320 --> 00:45:10,440 as far. So you can think of it as the 859 00:45:10,440 --> 00:45:13,360 cycle of expansion and contractions. 860 00:45:13,360 --> 00:45:18,040 And we saw four of those in 2025 for we saw major run ups and 861 00:45:18,040 --> 00:45:22,680 major draw downs, right, 3040%. So that's going to be the norm 862 00:45:22,680 --> 00:45:24,440 for the stock. It's the whole design. 863 00:45:24,440 --> 00:45:28,480 It's why after you're in it for a while, you stop panicking when 864 00:45:28,480 --> 00:45:31,480 the price goes down because it needs to, right? 865 00:45:31,760 --> 00:45:35,880 That's what makes it appealing, is you need those wild blow off 866 00:45:35,880 --> 00:45:39,160 tops and you need those draw downs and yeah, they hurt every 867 00:45:39,160 --> 00:45:40,960 time, right? There's no way around that 868 00:45:40,960 --> 00:45:42,760 isn't. But there will be less, less 869 00:45:42,760 --> 00:45:45,960 drawn down, as I understand it correctly, because if you're 870 00:45:45,960 --> 00:45:48,520 building a higher stack of Bitcoin, you're basically 871 00:45:48,720 --> 00:45:53,040 building a protection against that downsides valuation, let's 872 00:45:53,040 --> 00:45:55,720 call it like that. Like it cannot go as low as it 873 00:45:55,720 --> 00:46:00,160 was before because the value of the Bitcoin is at an at a new. 874 00:46:01,000 --> 00:46:02,640 Exactly. Level basically. 875 00:46:02,680 --> 00:46:05,520 Yep, you're constantly building the floor underneath the stock. 876 00:46:05,840 --> 00:46:09,120 Yeah. So is that also why or could 877 00:46:09,120 --> 00:46:14,080 that also be why Sailor is perhaps a bit in a rush in the 878 00:46:14,080 --> 00:46:16,560 sense, well, you could say he's in a rush because he knows 879 00:46:16,560 --> 00:46:18,680 something about the strategic Bitcoin reserve. 880 00:46:18,680 --> 00:46:20,920 I think we'll we'll skip that for this conversation. 881 00:46:20,920 --> 00:46:24,120 But I mean more like, well, let's say the SPR gets there, 882 00:46:24,120 --> 00:46:25,720 price goes up, maybe crashes down. 883 00:46:25,720 --> 00:46:30,800 Like, he has to protect his own path of accumulation, right? 884 00:46:30,800 --> 00:46:33,280 And so could that also be why he's kind of in a rush? 885 00:46:34,160 --> 00:46:35,560 Absolutely. I think so. 886 00:46:35,680 --> 00:46:38,560 I mean, there's a lot of factors that are that are pushing him to 887 00:46:38,560 --> 00:46:41,480 move quickly. I think he's starting to see 888 00:46:41,480 --> 00:46:45,160 competition emerging, right? You're going to get more demand 889 00:46:45,160 --> 00:46:48,520 out there for Bitcoin as these new companies start to enter the 890 00:46:48,520 --> 00:46:50,320 markets. And we've seen some coming in 891 00:46:50,880 --> 00:46:53,080 and buying a significant amount of Bitcoin, right. 892 00:46:53,080 --> 00:46:56,960 So there's evidence to support that they're waking up, and he 893 00:46:57,000 --> 00:47:00,080 might not have the first mover advantage here for that much 894 00:47:00,080 --> 00:47:02,560 longer. So I think that he's speeding up 895 00:47:03,120 --> 00:47:05,600 his accumulation to try to get it right now. 896 00:47:05,600 --> 00:47:08,240 The market's still allowing him to acquire at relatively 897 00:47:08,240 --> 00:47:12,000 favorable prices, right? Buying in the 90,000, given what 898 00:47:12,000 --> 00:47:14,720 we know about Bitcoin, yeah, is a steal. 899 00:47:15,120 --> 00:47:16,920 Yeah. So I think he's taking advantage 900 00:47:16,920 --> 00:47:20,720 of that right now where he's going to try to get as much 901 00:47:20,720 --> 00:47:23,320 Bitcoin. Probably here, you saw it in Q4. 902 00:47:23,360 --> 00:47:25,760 I think you're going to see it again in Q1 where he's going to 903 00:47:25,760 --> 00:47:29,040 try to get as much as he can. Because with the new 904 00:47:29,040 --> 00:47:33,040 administration coming in, it really changes the dynamics of 905 00:47:33,040 --> 00:47:34,880 how you expect Bitcoin to perform. 906 00:47:35,920 --> 00:47:40,000 It's really tough to price in what could happen when one of 907 00:47:40,000 --> 00:47:43,040 the major world powers starts publicly announcing that they're 908 00:47:43,040 --> 00:47:46,080 acquiring Bitcoin. You, you can't wait for that, 909 00:47:46,440 --> 00:47:49,160 not for this type of strategy, not if you want to accumulate as 910 00:47:49,160 --> 00:47:51,000 much digital capital as possible. 911 00:47:51,680 --> 00:47:54,680 So I see him still being very aggressive, right? 912 00:47:54,680 --> 00:47:59,840 While it seems like they've used up a lot of the 2121 plan and 913 00:47:59,840 --> 00:48:02,560 for those that aren't familiar with it, they put out a plan in 914 00:48:02,560 --> 00:48:06,760 2024 that said we're going to raise $21 billion using equity 915 00:48:07,040 --> 00:48:11,680 and $21 billion using debt. They've still got 58% of that 916 00:48:11,680 --> 00:48:13,360 remaining. They still haven't even used 917 00:48:13,360 --> 00:48:17,560 half and it was painful in Q4 for a lot of people because the 918 00:48:17,560 --> 00:48:20,880 focus was equity, right? The equity side using the ATM, 919 00:48:21,320 --> 00:48:24,040 which is basically just MicroStrategy selling shares 920 00:48:24,040 --> 00:48:27,280 into the market. That one's, that one's painful, 921 00:48:27,360 --> 00:48:30,320 but it's the fastest way for them to accumulate, right? 922 00:48:30,320 --> 00:48:33,960 It's the best way that they can take advantage of moving fast. 923 00:48:34,480 --> 00:48:37,160 And they do have a risk framework that they follow, 924 00:48:37,160 --> 00:48:40,200 which is they've got an internal range, right? 925 00:48:40,200 --> 00:48:42,640 And they don't publicize what their internal range is, but we 926 00:48:42,640 --> 00:48:46,840 could speculate that it's around 20 to 40% of the fair market 927 00:48:46,840 --> 00:48:48,920 value of the Bitcoin they hold on the balance sheet. 928 00:48:48,920 --> 00:48:50,640 That's the highest that they'll borrow. 929 00:48:51,000 --> 00:48:54,760 Historically, they've stayed right around 25% of the value of 930 00:48:54,760 --> 00:48:57,200 their bit. That's how much they borrow up 931 00:48:57,200 --> 00:49:00,320 to right now. They've got really low. 932 00:49:00,720 --> 00:49:05,080 So using the ATM, what that does is it buys new Bitcoin that has 933 00:49:05,080 --> 00:49:08,800 no corresponding debt to it. So that Bitcoin goes to the 934 00:49:08,800 --> 00:49:10,920 balance sheet and IT engineers, right? 935 00:49:10,920 --> 00:49:13,960 You'll hear people say financial engineering, IT engineers 936 00:49:13,960 --> 00:49:18,640 additional space for borrowing. So what I saw them doing was 937 00:49:18,640 --> 00:49:22,920 speeding through the equity side of the plan in order to create 938 00:49:22,920 --> 00:49:28,400 additional space going into 2025 where they can now shift the 939 00:49:28,400 --> 00:49:31,600 tool that they're using and go back to the fixed income side of 940 00:49:31,600 --> 00:49:34,680 the house, whether that's preferred stock or convertible 941 00:49:34,680 --> 00:49:37,920 bonds. And now they can stay out of the 942 00:49:37,920 --> 00:49:40,320 ATM market as heavily, right? You've been seeing them do a 943 00:49:40,320 --> 00:49:42,240 little bit, but nothing material yet. 944 00:49:42,240 --> 00:49:45,560 They've got 6 1/2 billion left on the ATMI. 945 00:49:45,760 --> 00:49:49,720 Think that's probably going to be issued over maybe the next 946 00:49:49,720 --> 00:49:51,680 three quarters. I don't think we're probably 947 00:49:51,680 --> 00:49:53,720 going to see them rush through the whole thing again. 948 00:49:54,400 --> 00:49:57,640 But they've now created that space where they can now focus 949 00:49:57,640 --> 00:50:00,560 on the other side of the plan. Now they can get back to the 950 00:50:00,560 --> 00:50:04,120 fixed income side. So they've only used 3 billion 951 00:50:04,120 --> 00:50:07,680 on the fixed income side, right? So they've got 18 billion left 952 00:50:07,680 --> 00:50:11,400 right now that they can issue. They've already signaled to the 953 00:50:11,400 --> 00:50:14,400 market that they're going to do 2 billion in preferred and we 954 00:50:14,400 --> 00:50:15,960 can talk about that here in just a minute. 955 00:50:16,520 --> 00:50:20,040 So now they're down to about 16 billion that's remaining. 956 00:50:20,800 --> 00:50:23,760 What's going to be unique about the preferred is depending on 957 00:50:23,760 --> 00:50:27,320 how they structure it, that preferred offering is probably 958 00:50:27,320 --> 00:50:29,480 going to live in the equity section of the balance sheet. 959 00:50:29,520 --> 00:50:32,520 So that's not actually going to show as debt on the balance 960 00:50:32,520 --> 00:50:34,280 sheet. So it's not going to impact that 961 00:50:34,280 --> 00:50:36,120 leverage ratio. It's actually going to lower it 962 00:50:36,560 --> 00:50:39,800 even more than it is already. Right now, we're in the 17 1/2 963 00:50:39,800 --> 00:50:42,800 percent range. So when I look at them, they're 964 00:50:42,800 --> 00:50:46,360 in a strong position now to execute on the fixed income side 965 00:50:46,720 --> 00:50:50,160 because if none of the bonds that they've already issued 966 00:50:50,160 --> 00:50:53,800 convert in the near term, they've already got space for 967 00:50:53,800 --> 00:50:57,400 about 3 1/2 billion that they could issue right now to stay 968 00:50:57,400 --> 00:51:02,120 within the 25%. When they do the preferred 969 00:51:02,120 --> 00:51:04,760 offering, that's going to make it even higher. 970 00:51:04,760 --> 00:51:08,640 They're probably going to be around 5 billion that they can 971 00:51:08,640 --> 00:51:12,360 issue at that point. And with any help from Bitcoin, 972 00:51:13,200 --> 00:51:16,360 that expands drastically, right, because it's tied to the fair 973 00:51:16,360 --> 00:51:18,720 value of the Bitcoin. So if Bitcoin goes up to 974 00:51:18,760 --> 00:51:22,680 120,000, they create even more space that they can go out and 975 00:51:22,680 --> 00:51:26,040 borrow from. So they're getting into this 976 00:51:26,040 --> 00:51:30,960 really strong position now where in Q1, I'm expecting a lot of 977 00:51:30,960 --> 00:51:33,880 activity on the fixed income side for two reasons. 978 00:51:33,880 --> 00:51:37,120 One, because they've got the space and they need to keep the 979 00:51:37,120 --> 00:51:39,640 leverage high to keep the volatility and the equity, 980 00:51:39,640 --> 00:51:40,840 right? That's a core part of 981 00:51:40,840 --> 00:51:44,920 engineering that volatility. But two, there's these early 982 00:51:44,920 --> 00:51:48,200 conversion clauses that we talk about a fair amount in those 983 00:51:48,200 --> 00:51:52,240 bonds, which basically says if the bond trade or if the equity 984 00:51:52,240 --> 00:51:57,560 trades at 130% of the conversion price for 20 days out of a 30 985 00:51:57,560 --> 00:52:01,760 day period, that bond becomes eligible for conversion into 986 00:52:01,760 --> 00:52:05,680 equity. So if you're looking at 2025 and 987 00:52:05,680 --> 00:52:09,520 you subscribe to the traditional cycle theory of Bitcoin, 2025 988 00:52:09,520 --> 00:52:12,080 supposed to be the best performing year that we're going 989 00:52:12,080 --> 00:52:15,120 to see. The more bonds they get out in 990 00:52:15,120 --> 00:52:19,840 Q1 means that most of those bonds could become eligible for 991 00:52:19,840 --> 00:52:23,440 conversion as early as Q3, right? 992 00:52:23,960 --> 00:52:27,720 And if they're eligible for conversion and Microstrategy's 993 00:52:27,720 --> 00:52:31,600 price performs drastically, right, making these bonds 994 00:52:31,600 --> 00:52:34,440 basically just trading like equity where there's really no 995 00:52:34,440 --> 00:52:37,240 incentive for the bondholders to keep holding them anymore. 996 00:52:37,800 --> 00:52:40,840 You could essentially get an almost clear Ledger going into 997 00:52:40,840 --> 00:52:45,520 the end of 2025, which means if there is a cycle that 998 00:52:45,520 --> 00:52:49,600 materializes again and Bitcoins price pulls back, MicroStrategy 999 00:52:49,600 --> 00:52:52,120 might be almost entirely unleveraged by that point. 1000 00:52:52,280 --> 00:52:54,600 And then they'll be able to re leverage during the lower 1001 00:52:54,600 --> 00:52:58,040 periods, raise capital, buy more Bitcoin at the depressed prices. 1002 00:52:58,520 --> 00:53:03,280 So I do think there's urgency in the plan to execute as much as 1003 00:53:03,280 --> 00:53:07,440 they can in Q1 before it's likely that any of these 1004 00:53:07,440 --> 00:53:11,640 administration changes would result in an impact to EU s s 1005 00:53:11,640 --> 00:53:15,160 Bitcoin strategy. So there, there is some timing 1006 00:53:15,160 --> 00:53:16,640 here. And I'm sure that team, you 1007 00:53:16,640 --> 00:53:19,760 know, behind the scenes has modelled this out, you know, 20 1008 00:53:19,760 --> 00:53:22,160 different ways already. But to me, that seems to make 1009 00:53:22,160 --> 00:53:25,440 sense that you would act with some urgency on the fixed income 1010 00:53:25,440 --> 00:53:29,440 side in Q1 because you might have that possibility of getting 1011 00:53:29,440 --> 00:53:32,480 all that debt off your balance sheet going into the end of 2025 1012 00:53:32,960 --> 00:53:36,560 just in case the cycle does repeat, right? 1013 00:53:36,640 --> 00:53:38,840 I still think we see a more muted cycle. 1014 00:53:39,280 --> 00:53:43,120 It probably materializes because people believe so heavily that 1015 00:53:43,120 --> 00:53:44,520 it's going to materialize, right? 1016 00:53:44,520 --> 00:53:48,240 It's been so ingrained and so predictable over the last few 1017 00:53:48,240 --> 00:53:49,760 cycles. That I think. 1018 00:53:50,160 --> 00:53:55,080 Will almost create it, but you're fighting now against 1019 00:53:55,120 --> 00:53:57,520 institutional capital that's buying, yes. 1020 00:53:57,520 --> 00:54:01,000 So retail's not going to drive as much of that cycle. 1021 00:54:01,000 --> 00:54:07,440 So maybe we see a drawdown of 30 percent, 40%, but I'm not so 1022 00:54:07,440 --> 00:54:10,040 sold personally, and this is just a personal opinion. 1023 00:54:10,040 --> 00:54:14,120 I'm not so sold that we go back to an 80% drawdown in this 1024 00:54:14,120 --> 00:54:15,920 cycle. I think there's just too much 1025 00:54:15,920 --> 00:54:18,320 capital that's buying at any price now. 1026 00:54:19,040 --> 00:54:21,240 And they're holding it, right? They're not trading it. 1027 00:54:21,240 --> 00:54:22,720 They're holding it for the long term. 1028 00:54:22,720 --> 00:54:25,800 So I think that that's going to change the dynamics. 1029 00:54:26,120 --> 00:54:27,840 But it trades at the margins, right? 1030 00:54:27,840 --> 00:54:30,760 So it's going to be whatever's actively trading on the market 1031 00:54:30,760 --> 00:54:33,160 that's going to drive the price. So I do think we'll probably see 1032 00:54:33,160 --> 00:54:38,160 some level, but preparing for that if your micro strategy is a 1033 00:54:38,160 --> 00:54:41,440 superpower here. So if they do this right, they 1034 00:54:41,440 --> 00:54:45,400 could end 2025 in a really strong position to be able to 1035 00:54:45,400 --> 00:54:49,960 execute their strategy, rebuild their debt ladder during a bear 1036 00:54:49,960 --> 00:54:53,160 cycle and be ready for the next bull run in four years and 1037 00:54:53,160 --> 00:54:56,680 continue to build their lead in terms of the holder of digital 1038 00:54:56,680 --> 00:54:58,000 capital. Yeah, fascinating. 1039 00:54:58,000 --> 00:55:01,880 I I also believe, you know, there's now perpetual buyers, 1040 00:55:01,920 --> 00:55:06,920 especially if there will be a sovereign, you know, strategic 1041 00:55:06,920 --> 00:55:09,400 reserve. So I also think, you know, I 1042 00:55:09,400 --> 00:55:11,280 don't think we'll see the minus 80%. 1043 00:55:11,760 --> 00:55:15,320 Again, I agree with the -40 perhaps it gets extended a 1044 00:55:15,320 --> 00:55:19,520 little bit because I also think, and I love that you touched on 1045 00:55:19,520 --> 00:55:22,040 that when we talked about like inflation and prediction towards 1046 00:55:22,040 --> 00:55:24,120 the future. Like people seem to forget 1047 00:55:24,120 --> 00:55:27,280 sometimes that that parallel path is also happening. 1048 00:55:27,280 --> 00:55:29,760 And so we are not only talking about Bitcoin, like that 1049 00:55:29,760 --> 00:55:32,320 parallel path is the reason of existence of Bitcoin is the 1050 00:55:32,920 --> 00:55:37,880 accelerated debasement of Fiat money and the increasing need 1051 00:55:37,880 --> 00:55:41,000 for individuals and companies and countries to protect 1052 00:55:41,000 --> 00:55:43,360 themselves more towards the future, right? 1053 00:55:43,360 --> 00:55:46,040 So that is happening in a, in a parallel way. 1054 00:55:46,320 --> 00:55:49,200 And I do see there has to be some sort of inflection point 1055 00:55:49,200 --> 00:55:53,280 where there are enough, I'll say enough people, institutions that 1056 00:55:53,280 --> 00:55:54,720 realize they need to do something. 1057 00:55:54,720 --> 00:55:58,320 And well, if you do the research also, by the way, as a sailor 1058 00:55:58,320 --> 00:56:00,640 did, you will end up with Bitcoin being the best 1059 00:56:00,880 --> 00:56:03,360 protection and, and savings technology towards the future. 1060 00:56:03,360 --> 00:56:06,720 So I also, we talk a lot about Bitcoin in general, but I think 1061 00:56:06,720 --> 00:56:09,160 there's a combination, right? There's a reason why Bitcoin 1062 00:56:09,160 --> 00:56:10,920 exists. And you have to take that into 1063 00:56:10,920 --> 00:56:12,600 account. Like that train, as Lynn Alden 1064 00:56:12,600 --> 00:56:15,360 says, is not stopping. One thing that really struck me 1065 00:56:15,360 --> 00:56:17,600 with what you just said, and I had to think of when you said 1066 00:56:17,600 --> 00:56:20,680 intelligent leverage. It's interesting when kind of 1067 00:56:20,680 --> 00:56:23,680 like haters talk about MicroStrategy, etcetera, right? 1068 00:56:23,680 --> 00:56:26,520 They talk about, oh, they're so over leveraged and the debt and 1069 00:56:26,520 --> 00:56:29,560 the etcetera. And you said they're trying to 1070 00:56:29,560 --> 00:56:33,320 keep it between 20 and 40. And there's an example that 1071 00:56:33,320 --> 00:56:38,080 Sailor uses a lot where he says like, hey, I can borrow $2 1072 00:56:38,080 --> 00:56:43,200 billion backed by 500 million in Bitcoin. 1073 00:56:44,000 --> 00:56:47,760 And as you just explained, the entire goal is to just up that 1074 00:56:47,760 --> 00:56:51,480 stack so you can have more leverage or maybe say just 1075 00:56:51,520 --> 00:56:53,920 perpetual leverage. You can keep on having leverage 1076 00:56:54,120 --> 00:56:57,480 in order to borrow more. He just says like, OK, I use 500 1077 00:56:57,480 --> 00:56:59,320 million in Bitcoin to borrow 2 billion. 1078 00:56:59,400 --> 00:57:03,800 I buy 2 billion in Bitcoin. I reserve that half a billion in 1079 00:57:03,800 --> 00:57:07,560 Bitcoin for, you know what that loan is backed by. 1080 00:57:08,000 --> 00:57:14,160 And I just created 1 1/2 billion in shareholder value just like 1081 00:57:14,160 --> 00:57:18,000 that basically. And when he talks about that, it 1082 00:57:18,000 --> 00:57:21,840 sounds so simplistic, but when you think about these accounting 1083 00:57:21,840 --> 00:57:25,440 rules that that we talked about, that's a crazy business model 1084 00:57:26,000 --> 00:57:28,280 like that is that is insane, right? 1085 00:57:28,280 --> 00:57:31,080 Yeah, and it's important to note that they're not backing these 1086 00:57:31,080 --> 00:57:33,720 by anything, right? These are not he talks. 1087 00:57:33,720 --> 00:57:35,680 About it likely like. Yeah, but he talks. 1088 00:57:35,840 --> 00:57:38,680 About the word. Basically saying that the 1089 00:57:38,680 --> 00:57:43,640 organization has so much value beyond the borrowings, right? 1090 00:57:43,720 --> 00:57:46,360 And every time that they're accumulating more Bitcoin, their 1091 00:57:46,360 --> 00:57:48,680 position just keeps getting stronger and stronger. 1092 00:57:49,120 --> 00:57:52,440 So yeah, he's, he's basically borrowing a trivial amount 1093 00:57:52,440 --> 00:57:54,240 relative to the assets that they're holding. 1094 00:57:54,240 --> 00:57:56,160 Yes, right. That's makes it just such a good 1095 00:57:56,160 --> 00:57:58,760 play. What they're basically doing is 1096 00:57:58,760 --> 00:58:01,240 they get to buy Bitcoin now and they get to pay for it with 1097 00:58:01,240 --> 00:58:03,880 equity later, right? That's what they're doing. 1098 00:58:04,200 --> 00:58:06,680 Which is of more value because their stack is higher. 1099 00:58:07,120 --> 00:58:09,360 But exactly. So, you know, when they're 1100 00:58:09,360 --> 00:58:12,840 setting these conversion prices, it's been interesting to watch 1101 00:58:12,840 --> 00:58:15,280 that grow over time. You know, when they went from 1102 00:58:15,280 --> 00:58:19,200 being in the 30% conversion premium and then on this latest 1103 00:58:19,200 --> 00:58:22,400 offering, they got 55% on the conversion premium, right? 1104 00:58:22,600 --> 00:58:25,760 That premium is growing. So it's becoming more accretive 1105 00:58:26,240 --> 00:58:28,840 to the shareholders in terms of the Bitcoin per share and the 1106 00:58:28,840 --> 00:58:31,600 Bitcoin yield each time they're doing these. 1107 00:58:31,600 --> 00:58:34,720 And the conditions are becoming so favorable that they're 1108 00:58:34,720 --> 00:58:37,760 getting 0% on 3 billion. And I mean, that's a really 1109 00:58:37,760 --> 00:58:41,240 incredible demand to, for someone to give you $3 billion 1110 00:58:41,240 --> 00:58:44,920 at 0% coupon payments, right? That's, that's not normal. 1111 00:58:44,920 --> 00:58:48,280 But that can only be because of the performance that you're 1112 00:58:48,280 --> 00:58:50,320 getting in the equity. And they know that there's value 1113 00:58:50,320 --> 00:58:52,040 in that call option of that debt. 1114 00:58:52,040 --> 00:58:55,520 And that's what's going to make the preferreds very interesting 1115 00:58:55,600 --> 00:58:57,680 when they issue these. And I don't know whether they'll 1116 00:58:57,680 --> 00:59:00,840 do that sooner or later. I kind of thought because they 1117 00:59:00,840 --> 00:59:04,760 had 5 million shares available right now, that they might do 1118 00:59:04,760 --> 00:59:07,000 the preferred offering before the shareholder vote. 1119 00:59:07,200 --> 00:59:09,640 I'm starting to think that maybe they're going to wait and do it 1120 00:59:09,640 --> 00:59:11,920 after the shareholder vote, although I don't think that they 1121 00:59:11,920 --> 00:59:14,280 necessarily need the increased shares yet. 1122 00:59:14,280 --> 00:59:17,800 I think those shares are largely to accommodate stock splits in 1123 00:59:17,800 --> 00:59:18,680 the future. Right. 1124 00:59:18,680 --> 00:59:20,440 Exactly. People are freaking out about 1125 00:59:20,440 --> 00:59:22,960 it, but it's really about stock splits in the future. 1126 00:59:22,960 --> 00:59:25,280 It's not like they're opening up, you know, they're not ten 1127 00:59:25,280 --> 00:59:26,560 billion shares. Yeah, exactly. 1128 00:59:27,720 --> 00:59:28,920 Yeah, that's not what they're doing. 1129 00:59:29,360 --> 00:59:32,840 But the prefer, the preferred is going to be very interesting 1130 00:59:32,840 --> 00:59:36,880 because preferred is essentially going to be an even further step 1131 00:59:36,880 --> 00:59:40,120 down volatility product from what the convertible bonds are. 1132 00:59:40,760 --> 00:59:44,000 So if you think about how they're going to do that, the 1133 00:59:44,000 --> 00:59:47,320 structure of that preferred stock is going to matter a lot 1134 00:59:47,320 --> 00:59:49,880 in terms of how it trades from a volatility perspective. 1135 00:59:50,560 --> 00:59:54,040 So if you're trying to get to a volatility of 30, which is half 1136 00:59:54,040 --> 00:59:56,640 of Bitcoin, right? If you're trying to get to a 1137 00:59:56,640 --> 00:59:59,280 volatility of 30, you need to engineer the terms of that 1138 00:59:59,280 --> 01:00:01,240 offering to be conducive to that. 1139 01:00:01,240 --> 01:00:04,720 It means that you're trying to make this product act and trade 1140 01:00:04,720 --> 01:00:08,200 as fixed income for a long period of time. 1141 01:00:08,920 --> 01:00:11,760 And there's some very important things people need to pay 1142 01:00:11,760 --> 01:00:14,840 attention to when we're watching for the terms that are going to 1143 01:00:14,840 --> 01:00:18,040 come out on the preferred stock, mainly that they need to have 1144 01:00:18,040 --> 01:00:21,640 this preferred stock fully aligned to being equity, right? 1145 01:00:21,640 --> 01:00:24,560 We're really the only outcome for that preferred stock is that 1146 01:00:24,560 --> 01:00:27,800 it converts into. So they've said that they're 1147 01:00:27,800 --> 01:00:29,920 issuing perpetual preferred stock. 1148 01:00:29,920 --> 01:00:33,080 What perpetual means is that there's no end date, right? 1149 01:00:33,400 --> 01:00:36,400 There's no maturity date, right? There's no forced redemption 1150 01:00:36,400 --> 01:00:38,480 date. It's essentially perpetual in 1151 01:00:38,480 --> 01:00:39,960 nature. Now that doesn't mean it's going 1152 01:00:39,960 --> 01:00:42,920 to exist forever, right? Because there will be other 1153 01:00:42,920 --> 01:00:46,640 terms in there that allow either the holder or the issuer, which 1154 01:00:46,640 --> 01:00:50,480 will be micro strategy to force that conversion into common 1155 01:00:50,480 --> 01:00:51,840 stock. So what we're going to be 1156 01:00:51,840 --> 01:00:56,280 watching for is how they structure those terms, right? 1157 01:00:56,280 --> 01:00:58,360 So the first step is make it perpetual. 1158 01:00:58,360 --> 01:01:00,240 Don't give it an end date. That's one. 1159 01:01:00,840 --> 01:01:04,200 Second thing you got to watch for is there can be no clauses 1160 01:01:04,200 --> 01:01:07,520 that can possibly result in a cash redemption of the preferred 1161 01:01:07,520 --> 01:01:10,480 stock. If you have any type of cash 1162 01:01:10,480 --> 01:01:13,640 redemption for the preferred stock, now it's a liability to 1163 01:01:13,640 --> 01:01:16,160 your business. So now it has to live in the 1164 01:01:16,160 --> 01:01:17,880 liability section of your balance sheet. 1165 01:01:17,880 --> 01:01:21,000 And that's very important because that takes away from the 1166 01:01:21,000 --> 01:01:23,600 leverage you're able to deploy for the convertible bonds. 1167 01:01:24,200 --> 01:01:27,560 So I'm looking for them to have no cash conversion clauses in 1168 01:01:27,560 --> 01:01:30,760 there whatsoever. I think it'll be very similar in 1169 01:01:30,760 --> 01:01:34,560 structure from a convertible standpoint where you'll probably 1170 01:01:34,560 --> 01:01:38,040 see something similar like the 130% of the conversion price. 1171 01:01:38,040 --> 01:01:41,080 I think you'll see a similar term in these preferreds. 1172 01:01:41,080 --> 01:01:43,800 But what's going to be really interesting is they need to 1173 01:01:43,800 --> 01:01:47,920 create this long time frame of this product acting as fixed 1174 01:01:47,920 --> 01:01:50,600 income. So while a lot of people are 1175 01:01:50,600 --> 01:01:53,520 cheering for maybe they'll get 0% on the preferred, they're not 1176 01:01:53,520 --> 01:01:55,360 going to get 0% on the preferred, right? 1177 01:01:55,480 --> 01:01:58,080 I'll make that guess right now. I actually think it's going to 1178 01:01:58,080 --> 01:02:02,600 be a fairly strong market rate, maybe something in the 7% range 1179 01:02:02,840 --> 01:02:04,960 from a dividend perspective on the preferred. 1180 01:02:05,640 --> 01:02:10,240 So what they're going to do is probably get a really massive 1181 01:02:10,240 --> 01:02:14,320 premium for that conversion. So say the stock was trading at 1182 01:02:14,320 --> 01:02:19,360 $350.00 a share, I would guess that that conversion premium 1183 01:02:19,360 --> 01:02:23,600 might actually be like 150%, right, Which would put that at 1184 01:02:23,760 --> 01:02:26,480 875 would be the conversion price. 1185 01:02:27,200 --> 01:02:31,480 And then 130% from that would get you to what the early 1186 01:02:31,480 --> 01:02:33,920 conversion trigger is. I don't know exactly what that 1187 01:02:33,920 --> 01:02:39,120 pans out to was in, I don't know, 1030, four, 1137, 1188 01:02:39,120 --> 01:02:41,800 something in that range. Yeah, a little over 1100. 1189 01:02:42,280 --> 01:02:45,440 So that strike price is way out there, right? 1190 01:02:45,480 --> 01:02:48,640 Stock has a lot of room to move. And that's important because 1191 01:02:48,640 --> 01:02:52,040 what they're not going to want is that equity feature to kick 1192 01:02:52,040 --> 01:02:56,400 in too early on this product. They want people to want to hold 1193 01:02:56,400 --> 01:03:00,000 these for the dividend. Now, the dividend is another 1194 01:03:00,000 --> 01:03:03,640 area that they need to be very intentional in how they word it, 1195 01:03:03,640 --> 01:03:06,920 because if it's a guaranteed dividend, that's a liability, 1196 01:03:07,480 --> 01:03:09,320 right? You're guaranteeing cash payment 1197 01:03:09,320 --> 01:03:10,920 or something. If it's a discretionary 1198 01:03:10,920 --> 01:03:13,280 dividend, that's different, right? 1199 01:03:13,280 --> 01:03:16,640 So I'm expecting them to have a discretionary dividend probably 1200 01:03:16,640 --> 01:03:19,880 in the seven to 8% range that's out there. 1201 01:03:20,720 --> 01:03:24,560 They'll collect the money at 150% premium, which is highly 1202 01:03:24,560 --> 01:03:26,400 accretive to Bitcoin per share, right? 1203 01:03:26,400 --> 01:03:29,560 It'll have a fixed number of shares associated with it. 1204 01:03:29,840 --> 01:03:32,160 That's also very important to keeping it as equity. 1205 01:03:32,160 --> 01:03:35,680 Is that that conversion needs to be in a fixed amount of shares. 1206 01:03:35,680 --> 01:03:38,840 That's known at the beginning. And I think that you'll probably 1207 01:03:38,840 --> 01:03:41,960 see this in existence where MicroStrategy won't be able to 1208 01:03:41,960 --> 01:03:45,520 force a conversion for maybe five years, right? 1209 01:03:45,600 --> 01:03:47,720 They shorten the window on the convertible bonds. 1210 01:03:47,720 --> 01:03:51,160 I think they got it down to two years on the last offering was 1211 01:03:51,160 --> 01:03:53,920 kind of their no call period where MicroStrategy couldn't 1212 01:03:53,920 --> 01:03:57,120 call those bonds on this one. I think it's going to have to go 1213 01:03:57,120 --> 01:03:59,880 longer because again, you want people buying it as a fixed 1214 01:03:59,880 --> 01:04:02,920 income product where they're holding it for that dividend. 1215 01:04:02,920 --> 01:04:04,400 That's why they're holding that product. 1216 01:04:04,400 --> 01:04:07,360 So you want it to trade like it's a fixed income product. 1217 01:04:07,360 --> 01:04:11,480 So they're engineering lower volatility on this offering. 1218 01:04:12,200 --> 01:04:15,480 And then the other thing is where it stands in like a 1219 01:04:15,480 --> 01:04:18,000 liquidation scenario. So it's got to sit below the 1220 01:04:18,000 --> 01:04:21,160 debt, right, So that it can be equity, but it'll be above the 1221 01:04:21,160 --> 01:04:24,120 common stock. So that'll be another important 1222 01:04:24,200 --> 01:04:27,160 thing to watch for. So the way that they build this 1223 01:04:27,160 --> 01:04:29,920 out is going to be very interesting to see, right? 1224 01:04:29,960 --> 01:04:32,040 I'm expecting it's probably still going to come out. 1225 01:04:32,040 --> 01:04:35,680 Maybe it'll be priced at $1000 for the preferred shares, which 1226 01:04:35,680 --> 01:04:39,840 would be, you know, 2 million shares of preferred that get it 1227 01:04:39,840 --> 01:04:43,120 issued. They can change that price, but 1228 01:04:43,120 --> 01:04:46,480 I think that they're targeting institutional buyers with these. 1229 01:04:46,520 --> 01:04:50,040 I think that what they really want is going to be these 1230 01:04:50,040 --> 01:04:52,880 insurance companies, these endowments, right? 1231 01:04:52,880 --> 01:04:56,200 Those types of buyers to come and buy the preferred stock 1232 01:04:56,200 --> 01:04:59,400 because they want that fixed income exposure. 1233 01:04:59,680 --> 01:05:03,960 Watching this all play out is going to be a pretty interesting 1234 01:05:04,280 --> 01:05:06,680 revelation because it's going to set the market for everybody 1235 01:05:06,680 --> 01:05:08,360 else. And setting the market for 1236 01:05:08,360 --> 01:05:10,840 everybody else is a critical thing to do when you're the 1237 01:05:10,840 --> 01:05:12,640 leader, like MicroStrategy, right? 1238 01:05:12,640 --> 01:05:16,560 You need to give them that blueprint that allows them to 1239 01:05:16,560 --> 01:05:20,160 see what's possible here, right? How should we look at preferred 1240 01:05:20,160 --> 01:05:23,600 stock for our company? Now, one thing that a lot of 1241 01:05:23,600 --> 01:05:25,760 people are going to catch on to when they see this is they're 1242 01:05:25,760 --> 01:05:30,160 going to go, well, that's great. But if you said it's 7 to 8% 1243 01:05:30,160 --> 01:05:33,840 interest, that means that they've got to pay out 140 1244 01:05:33,840 --> 01:05:38,240 million to $160 million a year on dividend payments. 1245 01:05:38,240 --> 01:05:40,800 And that's well beyond what the company cash flows. 1246 01:05:40,840 --> 01:05:43,840 And that's going to be an interesting thing to watch 1247 01:05:43,840 --> 01:05:48,960 because it means that that can that Bitcoin per share increase 1248 01:05:49,240 --> 01:05:52,840 isn't quite as black and white as we've gotten accustomed to 1249 01:05:52,840 --> 01:05:54,440 with these other offerings, right? 1250 01:05:54,440 --> 01:05:58,200 I mean, there's nuances in terms of, you know, if MicroStrategy 1251 01:05:58,200 --> 01:06:01,640 calls a convertible bond early, they actually owe more shares 1252 01:06:01,960 --> 01:06:03,880 than what you see in the initial offering, right? 1253 01:06:03,880 --> 01:06:05,760 There's some nuance there too, but it's minimal. 1254 01:06:05,880 --> 01:06:08,200 These it's different because you're essentially going to have 1255 01:06:08,200 --> 01:06:11,920 to try to estimate out how much equity are they going to have to 1256 01:06:11,920 --> 01:06:14,880 sell to raise the capital to pay the dividends, right? 1257 01:06:14,880 --> 01:06:17,760 And that math isn't quite as black and white because you're 1258 01:06:17,760 --> 01:06:21,480 trying to raise capital at future prices on your equity, 1259 01:06:22,000 --> 01:06:23,000 right? If they have to raise the 1260 01:06:23,000 --> 01:06:27,320 capital at $300.00 a share versus $1000 a share, that's a 1261 01:06:27,360 --> 01:06:29,880 wildly different number of shares that they're going to put 1262 01:06:29,880 --> 01:06:31,920 outstanding in order to service the dividend. 1263 01:06:31,920 --> 01:06:35,600 So we're going to have to watch that a little bit to see how 1264 01:06:35,600 --> 01:06:38,200 they message that math out to the market. 1265 01:06:38,680 --> 01:06:41,160 But that's kind of the important part of getting that massive 1266 01:06:41,160 --> 01:06:45,760 premium on the preferred is now you've got room where you can 1267 01:06:45,760 --> 01:06:48,160 issue equity and still keep it more accretive than the 1268 01:06:48,160 --> 01:06:51,120 convertible bonds are. So those are some of the things 1269 01:06:51,120 --> 01:06:53,280 that I'm watching for as they structure these out. 1270 01:06:53,280 --> 01:06:56,400 And I've been trying to model, you know, how would I structure 1271 01:06:56,400 --> 01:06:59,800 a preferred offering to keep it as equity so I don't impact my 1272 01:06:59,800 --> 01:07:03,520 leverage ratio and give myself enough room where if I need to 1273 01:07:03,520 --> 01:07:07,560 use equity as a way to pay the dividend, how do I allow for 1274 01:07:07,560 --> 01:07:11,320 that to still keep this as a massively accretive transaction 1275 01:07:11,320 --> 01:07:14,080 for my shareholders? What I'm thinking is that it's, 1276 01:07:14,080 --> 01:07:18,160 it's interesting how they are trying to offer something in, I 1277 01:07:18,800 --> 01:07:21,040 don't want to say short term, but you have to offer something 1278 01:07:21,040 --> 01:07:24,120 in the now. But their entire thesis is built 1279 01:07:24,120 --> 01:07:27,680 upon a very long term outlook, which I think you know, the the 1280 01:07:27,680 --> 01:07:33,600 general haters or critics don't really see and thus understand 1281 01:07:33,600 --> 01:07:36,720 why they are doing it right. So Sater says, you know, by my 1282 01:07:36,720 --> 01:07:39,760 calculation or by his calculations, Bitcoins kegger 1283 01:07:39,760 --> 01:07:44,480 will be 29% average over the next 21 years. 1284 01:07:44,960 --> 01:07:47,880 And that, as I've come to understand it is basically the 1285 01:07:47,880 --> 01:07:51,160 underlying thesis as to why he's doing it right. 1286 01:07:51,160 --> 01:07:55,200 So it's an interesting dynamic between watching the current 1287 01:07:55,200 --> 01:07:57,800 financially engineered, you know, products that they're 1288 01:07:57,800 --> 01:08:00,600 offering, but at the same time also understanding, yeah, what 1289 01:08:00,600 --> 01:08:04,600 it what is the end goal? And also taking into account 1290 01:08:04,600 --> 01:08:07,800 these, you know, the possible continuation of the cycles where 1291 01:08:07,800 --> 01:08:10,880 eventually the price goes down. I mean, they they, they know 1292 01:08:10,960 --> 01:08:13,840 that that has been the history of of Bitcoin. 1293 01:08:13,840 --> 01:08:17,000 And I find it so fascinating that just as with Bitcoin, it's 1294 01:08:17,000 --> 01:08:23,200 so hard for people to, yeah, just take someone's thesis and, 1295 01:08:23,279 --> 01:08:27,000 and then kind of like run with that or judge that, right? 1296 01:08:27,000 --> 01:08:29,960 Like people are projecting their own understanding of Bitcoin or 1297 01:08:29,960 --> 01:08:33,680 financial markets or dividends or productive assets and stuff 1298 01:08:33,680 --> 01:08:35,319 like that. I find it really interesting to 1299 01:08:35,319 --> 01:08:38,359 see that a lot of haters and, and they have very bad blog 1300 01:08:38,359 --> 01:08:42,120 posts that you, you share the bits today that yeah, they, they 1301 01:08:42,120 --> 01:08:47,920 just stick with kind of like overly simplistic arguments 1302 01:08:47,920 --> 01:08:51,040 perhaps. And they don't really take into 1303 01:08:51,040 --> 01:08:55,080 account, hey, there's this guy who has a 21 year thesis and 1304 01:08:55,080 --> 01:08:58,439 that is what he's playing. So let's look at it like that. 1305 01:08:58,439 --> 01:09:01,000 How do, how do you look at that? And, and do you find that 1306 01:09:01,000 --> 01:09:03,160 difficult as well? Like, you know who can predict 1307 01:09:03,160 --> 01:09:05,479 21 years? It is, yeah. 1308 01:09:05,720 --> 01:09:10,359 I mean, for most people, we live in a very short term nature when 1309 01:09:10,359 --> 01:09:12,479 we're thinking about possibilities, right? 1310 01:09:12,720 --> 01:09:15,399 Our time frames have become very narrow. 1311 01:09:15,399 --> 01:09:17,880 And part of that's probably, you know, social media and the way 1312 01:09:17,880 --> 01:09:20,000 that we're fed content. And no, it's the reason why 1313 01:09:20,000 --> 01:09:22,680 people are so upset with micro strategy when it doesn't move is 1314 01:09:22,680 --> 01:09:25,240 because we're expecting massive movements in one month time 1315 01:09:25,240 --> 01:09:27,840 frames, right? Whereas when you embark on a 1316 01:09:27,840 --> 01:09:31,160 strategy like this as a corporation, you're playing the 1317 01:09:31,160 --> 01:09:33,840 strategy out over decades, right? 1318 01:09:34,359 --> 01:09:37,960 So the evolution we see at the beginning isn't going to be what 1319 01:09:37,960 --> 01:09:40,560 it looks like probably even in five years from now. 1320 01:09:41,359 --> 01:09:44,800 This is when you put out a KPI for your company, what you're 1321 01:09:44,800 --> 01:09:48,160 really doing is you're trying to align the market and your 1322 01:09:48,160 --> 01:09:51,560 management to the direction you're trying to go in the near 1323 01:09:51,560 --> 01:09:54,640 and moderate term, right? You're guiding towards the next 1324 01:09:54,640 --> 01:09:58,000 outcome of your strategy. And so we may see an evolution 1325 01:09:58,000 --> 01:10:01,640 of the KPIs that they're focusing on in five years, it 1326 01:10:01,640 --> 01:10:03,560 might be different. Maybe it's not Bitcoin yield 1327 01:10:03,560 --> 01:10:04,960 anymore. There might be something that's 1328 01:10:04,960 --> 01:10:07,400 better for shareholders that they'll shift and focus on at 1329 01:10:07,400 --> 01:10:09,800 that point. But right now, they want their 1330 01:10:09,800 --> 01:10:13,560 management team focused on effectively and efficiently 1331 01:10:13,560 --> 01:10:17,520 accumulating as much Bitcoin as they possibly can for the next 5 1332 01:10:17,520 --> 01:10:22,480 years to set that organization up for the next iteration of 1333 01:10:22,480 --> 01:10:24,480 what they're going to be in their strategy, right? 1334 01:10:24,480 --> 01:10:26,520 These are constant transformations. 1335 01:10:26,800 --> 01:10:30,200 If you're a company and you stay idle and you stick with one 1336 01:10:30,200 --> 01:10:34,120 strategy and you never evolve that strategy, eventually 1337 01:10:34,120 --> 01:10:36,080 somebody else innovates you away, right? 1338 01:10:36,120 --> 01:10:38,440 That's just what happens. You've got to continue to be 1339 01:10:38,440 --> 01:10:42,520 thinking about the future and Sailor and all of his messaging 1340 01:10:42,840 --> 01:10:46,400 has shown that MicroStrategy is aligning itself with a long term 1341 01:10:46,400 --> 01:10:49,960 vision that's going to set them up for continued success well 1342 01:10:49,960 --> 01:10:52,880 into the future, right? That guy thinks in terms of 1000 1343 01:10:52,880 --> 01:10:55,160 years, right? He doesn't think even about 10 1344 01:10:55,160 --> 01:10:57,840 or 20 years. He likes to talk about the deep 1345 01:10:57,840 --> 01:11:00,560 future and the value you're bringing to humanity over that 1346 01:11:00,560 --> 01:11:03,720 time period. So he's a pretty unique leader 1347 01:11:03,720 --> 01:11:06,360 in that sense. And I think he's doing everyone 1348 01:11:06,360 --> 01:11:10,240 a great service by trying to communicate out to people that, 1349 01:11:10,240 --> 01:11:13,480 you know, Bitcoin's not a now asset, Bitcoin's a forever 1350 01:11:13,480 --> 01:11:15,560 asset, right? This is something that we're 1351 01:11:15,560 --> 01:11:19,160 going to constantly be building. It's this next evolution and 1352 01:11:19,160 --> 01:11:23,080 digital capital for the world. And he views that as a very, 1353 01:11:23,080 --> 01:11:27,160 very deep guiding mission for himself and for the company that 1354 01:11:27,160 --> 01:11:29,960 he control. And when you look at it through 1355 01:11:29,960 --> 01:11:33,080 that lens, it helps you to be a little more comfortable in the 1356 01:11:33,080 --> 01:11:36,720 way that they're executing here, knowing that this isn't just 1357 01:11:36,720 --> 01:11:39,240 some knee jerk strategy that's happening, right? 1358 01:11:40,000 --> 01:11:43,680 That's a guy that's put in the effort to understand what 1359 01:11:43,680 --> 01:11:47,000 Bitcoin is, what it means to humanity, what it's going to 1360 01:11:47,000 --> 01:11:50,880 mean for his own company, and how he can generate the value 1361 01:11:50,880 --> 01:11:54,760 for his shareholders over an extended period of time, right? 1362 01:11:54,760 --> 01:11:58,560 Not this year, not next year. He's looking 10 years, 20 years, 1363 01:11:58,560 --> 01:12:01,000 30 years. And I bet they have a view 1364 01:12:01,080 --> 01:12:03,120 internally of what that future looks like. 1365 01:12:03,120 --> 01:12:05,600 And obviously they're going to be getting far more calls 1366 01:12:05,600 --> 01:12:09,160 discussing all the developments in Bitcoin well beyond what you 1367 01:12:09,160 --> 01:12:13,120 or I are going to see. But I think that they see how 1368 01:12:13,120 --> 01:12:16,520 bright the future is here and they wanna be one of the largest 1369 01:12:16,520 --> 01:12:19,320 holders of digital capital so that they're ready and in 1370 01:12:19,320 --> 01:12:22,720 position to take advantage of what that future looks like. 1371 01:12:23,280 --> 01:12:25,120 All right. Maybe to wrap it up, let's see 1372 01:12:25,120 --> 01:12:28,320 if we could have some short answers to my final questions. 1373 01:12:29,040 --> 01:12:32,680 How much do you think you can reasonably acquired this year? 1374 01:12:32,680 --> 01:12:35,440 I mean we've we've talked about you know, the competitors 1375 01:12:35,440 --> 01:12:37,360 etcetera. I'm not sure where we are 1376 01:12:37,360 --> 01:12:40,200 exactly at that time of recording, but yeah, he's in a 1377 01:12:40,200 --> 01:12:42,280 rush. What What are your thoughts 1378 01:12:42,280 --> 01:12:43,280 there? Yeah. 1379 01:12:43,280 --> 01:12:46,200 So he's got 450,000 as of this morning, right? 1380 01:12:46,200 --> 01:12:51,000 That was with their latest by my estimates shows them getting to 1381 01:12:51,000 --> 01:12:55,960 about another 210,000 this year, which is a significant amount of 1382 01:12:55,960 --> 01:12:58,800 Bitcoin. But when I look at what they've 1383 01:12:58,800 --> 01:13:02,760 got available to them left in the 2121 plan, I think that 1384 01:13:02,760 --> 01:13:05,240 they're going to work pretty hard to exhaust that plan in 1385 01:13:05,240 --> 01:13:10,160 2024 or in 2025 so that they can announce what the next iteration 1386 01:13:10,160 --> 01:13:12,640 of that plan is probably in Q4 this year. 1387 01:13:12,640 --> 01:13:16,360 So I think that with the capital they have available in those 1388 01:13:16,360 --> 01:13:19,560 plans and with a little help from Bitcoin here, I think 1389 01:13:19,560 --> 01:13:22,360 they'll get to another 210,000 this year is my guess. 1390 01:13:22,360 --> 01:13:24,600 Yeah. And we also talked before, also 1391 01:13:24,600 --> 01:13:27,080 before this conversation about like, you know, the end goal. 1392 01:13:27,080 --> 01:13:30,360 I call it like Sailor wants to become like the world's first 1393 01:13:30,360 --> 01:13:32,200 Bitcoin bank. How long do you think that'll 1394 01:13:32,200 --> 01:13:33,520 take? Like, how much Bitcoin do you 1395 01:13:33,520 --> 01:13:37,080 need in order to do that? And perhaps even more like when 1396 01:13:37,080 --> 01:13:40,320 would the market even be ready for something like that? 1397 01:13:41,120 --> 01:13:43,080 Yeah, I think it's going to take some time, right? 1398 01:13:43,080 --> 01:13:46,400 But when I say time, I'm not talking decades, I'm talking 1399 01:13:46,600 --> 01:13:51,520 five years probably before we start to see more financial 1400 01:13:51,520 --> 01:13:54,040 institutions getting ingrained in Bitcoin and we're going to 1401 01:13:54,040 --> 01:13:56,400 start seeing what those financial products look like. 1402 01:13:57,080 --> 01:14:02,120 So if I'm MicroStrategy right now, you know, for 20/25/2020 1403 01:14:02,120 --> 01:14:06,320 six, 2027, I'm focusing on accumulation and they're 1404 01:14:06,320 --> 01:14:09,360 probably targeting getting to 1,000,000 Bitcoin, right? 1405 01:14:10,080 --> 01:14:11,760 And they might be able to get there. 1406 01:14:11,760 --> 01:14:14,320 I think as the adoption picks up, it keeps getting harder and 1407 01:14:14,320 --> 01:14:17,840 harder to get there. But that's a significant amount 1408 01:14:17,840 --> 01:14:19,800 of capital for an entity to control. 1409 01:14:19,800 --> 01:14:23,280 And I think it puts them in a great position to become this 1410 01:14:23,280 --> 01:14:24,840 digital capital bank to the world. 1411 01:14:24,840 --> 01:14:27,240 And I don't know exactly what those products are going to look 1412 01:14:27,240 --> 01:14:28,800 like yet. I got to spend some time, you 1413 01:14:28,800 --> 01:14:32,120 know, thinking about the evolution of that, but I think 1414 01:14:32,120 --> 01:14:34,720 it's going to be a very exciting future for a company like 1415 01:14:34,720 --> 01:14:36,320 MicroStrategy. And I think that they're going 1416 01:14:36,320 --> 01:14:38,720 to have a ton of options in terms of how they reinvent 1417 01:14:38,720 --> 01:14:40,600 themselves over the next 5 to 10 years. 1418 01:14:41,200 --> 01:14:43,280 Yeah. Do you think there there will be 1419 01:14:43,280 --> 01:14:46,480 a moment where MicroStrategy is like too big to feel like? 1420 01:14:46,480 --> 01:14:49,760 Are there are there any risks that you see this year in, in 1421 01:14:49,760 --> 01:14:52,080 like their approach and their current strategy? 1422 01:14:53,000 --> 01:14:55,360 Yeah, I don't, I don't know about the too big to fail side 1423 01:14:55,360 --> 01:14:57,720 of things, right. I mean, it becomes very 1424 01:14:57,720 --> 01:15:00,720 difficult to fail with the scale that they've had, particularly 1425 01:15:00,720 --> 01:15:04,640 if over time once they start evolving out of this leveraged 1426 01:15:04,640 --> 01:15:07,000 acquisition strategy. If they evolve out of this 1427 01:15:07,000 --> 01:15:09,800 leveraged acquisition strategy and you start seeing the 1428 01:15:09,800 --> 01:15:13,600 leverage of the company come down, they just get stronger and 1429 01:15:13,600 --> 01:15:16,720 stronger because they have this massive war chest of capital 1430 01:15:17,280 --> 01:15:20,640 that can absorb huge fluctuations in value with no 1431 01:15:20,640 --> 01:15:22,680 risk to the organization overall, right. 1432 01:15:22,880 --> 01:15:25,800 There's no, there's like that article I put out today that was 1433 01:15:25,800 --> 01:15:28,240 talking about the financial debt covenants that they were going 1434 01:15:28,240 --> 01:15:29,600 to trip, right? Those don't exist. 1435 01:15:29,600 --> 01:15:32,800 So you know, it's, it's just a silly article for someone to 1436 01:15:32,800 --> 01:15:35,880 even put out because these bonds are non recourse. 1437 01:15:35,880 --> 01:15:38,400 There's no cash flow triggers tied to them. 1438 01:15:38,800 --> 01:15:41,480 There's no collateral where you have any loan to value 1439 01:15:41,480 --> 01:15:43,320 provisions on it. The same will be with the 1440 01:15:43,320 --> 01:15:46,800 preferred stock. So they're not putting 1441 01:15:46,800 --> 01:15:48,920 themselves in a position of weakness, right? 1442 01:15:49,240 --> 01:15:51,440 And just with the Bitcoin that they're holding, because they 1443 01:15:51,440 --> 01:15:56,200 only tend to lever up to 25, the reason for the 40% upper range 1444 01:15:56,200 --> 01:16:00,320 is that allows them to absorb volatility in Bitcoins price, 1445 01:16:00,360 --> 01:16:02,120 right? But they're probably only 1446 01:16:02,120 --> 01:16:06,680 actively going up to 25%, which means they can sustain a huge 1447 01:16:06,680 --> 01:16:09,800 drawdown in Bitcoin and it's really not going to impact them, 1448 01:16:09,840 --> 01:16:11,360 right? It'll be painful for the equity, 1449 01:16:11,360 --> 01:16:15,280 of course, but it's not an existential threat to the 1450 01:16:15,280 --> 01:16:17,960 underlying business, right? For that, you're really looking 1451 01:16:17,960 --> 01:16:21,800 at very point in time maturity risk, right? 1452 01:16:21,880 --> 01:16:24,400 At the exact time that a bond's maturing. 1453 01:16:24,640 --> 01:16:28,120 If you get a Black Swan event, it still doesn't even, it's not 1454 01:16:28,120 --> 01:16:29,680 going to sink MicroStrategy, right? 1455 01:16:29,680 --> 01:16:31,840 The risk is to the common stockholders, right? 1456 01:16:31,840 --> 01:16:34,720 That much should be known by now where they're going to sell 1457 01:16:34,720 --> 01:16:36,720 equity to pay off that bond if they need to. 1458 01:16:36,720 --> 01:16:39,680 So that would become a dilutive event if that happened, Black 1459 01:16:39,680 --> 01:16:43,120 Swan, direct point maturity. But that's why they've got these 1460 01:16:43,120 --> 01:16:45,680 early conversion triggers and they're pushing that ladder out 1461 01:16:45,680 --> 01:16:48,760 into the future over time. And eventually, if they evolve 1462 01:16:48,760 --> 01:16:51,520 and they become this bank, their strategy may change and they may 1463 01:16:51,520 --> 01:16:53,160 be out of the leverage side of things. 1464 01:16:53,680 --> 01:16:56,840 And now they're just this holder of this massive war chest of 1465 01:16:56,840 --> 01:16:58,960 digital capital. They're in an incredible 1466 01:16:58,960 --> 01:17:01,320 position of strength to innovate and do whatever they want. 1467 01:17:01,360 --> 01:17:04,240 Well, Black Swan is basically with with any investment. 1468 01:17:04,440 --> 01:17:07,320 Exactly how it is, yeah. Nothing's without risks, right? 1469 01:17:07,320 --> 01:17:08,920 I mean, I'm not going to pretend that, but. 1470 01:17:09,040 --> 01:17:12,200 Yeah, on the other side, maybe a fun thought, let's say, you 1471 01:17:12,200 --> 01:17:14,840 know, because there's so much volatility, you mentioned before 1472 01:17:14,840 --> 01:17:17,520 there's a lot of short sellers, people who are like super short 1473 01:17:17,520 --> 01:17:20,040 on the stock. Could we get like, you know, if 1474 01:17:20,040 --> 01:17:23,760 you think about we get like a GameStop ask squeeze for micro 1475 01:17:23,760 --> 01:17:26,800 strategy, which kind of like leads to trading getting halted 1476 01:17:26,800 --> 01:17:31,280 while that Bitcoin blasts towards the stratosphere like 1477 01:17:31,520 --> 01:17:35,320 that would be the best day ever. Could that ever happen, you 1478 01:17:35,320 --> 01:17:37,120 think? When kind of like the 1479 01:17:37,120 --> 01:17:42,000 traditional finance part grinds to a halt and Bitcoin is just 1480 01:17:42,000 --> 01:17:44,920 like, see ya. Yeah, I think it's going to be 1481 01:17:44,920 --> 01:17:48,040 eventually you get someone caught short on Bitcoin directly 1482 01:17:48,080 --> 01:17:51,160 versus MicroStrategy, right? MicroStrategy is a little unique 1483 01:17:51,160 --> 01:17:54,080 because while it looks like they have a lot of short interest, 1484 01:17:54,560 --> 01:17:58,000 it's pretty much all tied. You know, probably 75% of the 1485 01:17:58,000 --> 01:18:01,640 short interest you see is hedges on the convertible bonds. 1486 01:18:01,640 --> 01:18:03,840 So there's no squeeze there, right? 1487 01:18:03,840 --> 01:18:06,320 You can squeeze that price to. But they're. 1488 01:18:07,280 --> 01:18:10,200 Fully hedged, right. So you're not if they don't ever 1489 01:18:10,200 --> 01:18:13,720 have to close that short. So, you know, there's no like 1490 01:18:13,720 --> 01:18:15,360 short squeeze that comes out of that. 1491 01:18:15,360 --> 01:18:18,640 So I don't look for a lot of short squeezes on MicroStrategy. 1492 01:18:18,640 --> 01:18:21,680 I think you'll get a ton of gamma squeezes on MicroStrategy. 1493 01:18:21,680 --> 01:18:23,960 So that'll be a different thing. But I think yeah. 1494 01:18:23,960 --> 01:18:24,760 Oh yeah. Up and down. 1495 01:18:24,760 --> 01:18:27,080 Yep, yeah, yeah. But I actually think that 1496 01:18:27,080 --> 01:18:29,880 eventually you'll get someone that gets too comfortable and 1497 01:18:29,880 --> 01:18:33,240 decides to take some big short position on Bitcoin itself. 1498 01:18:33,880 --> 01:18:35,960 And maybe it's through ETFs. I don't know what it'll be 1499 01:18:35,960 --> 01:18:38,920 through, but you know, there's no stopping a short squeeze in 1500 01:18:38,920 --> 01:18:41,040 Bitcoin, right? There's no circuit Breakers 1501 01:18:41,040 --> 01:18:43,360 there. No trading desk is coming to 1502 01:18:43,360 --> 01:18:45,000 save you, right? You're in trouble. 1503 01:18:45,400 --> 01:18:49,520 So while I think most people now stay out of positioning 1504 01:18:49,520 --> 01:18:54,520 themselves that way because of that risk, I think it also does 1505 01:18:54,520 --> 01:18:57,200 improve the position of a lot of these equities that are putting 1506 01:18:57,200 --> 01:19:00,960 Bitcoin on the balance sheet. Because it makes traders have to 1507 01:19:00,960 --> 01:19:03,840 think about whether they really want to short your business 1508 01:19:04,360 --> 01:19:08,560 Because now you've got this asset that they don't have any 1509 01:19:08,560 --> 01:19:11,120 control over. And if that starts going crazy 1510 01:19:11,120 --> 01:19:13,280 and they're short against your equity, they're in a world of 1511 01:19:13,280 --> 01:19:16,480 hurt Because while your equity can jump and trigger these 1512 01:19:16,480 --> 01:19:19,160 circuit Breakers, Bitcoin can keep going. 1513 01:19:19,160 --> 01:19:22,240 So every time that those circuit Breakers flip back on, it's 1514 01:19:22,240 --> 01:19:23,600 going to be more painful for you. 1515 01:19:23,600 --> 01:19:27,640 So it's really risky to short businesses that have this as a 1516 01:19:27,640 --> 01:19:30,440 part of their strategy. So I think that you'll probably 1517 01:19:30,440 --> 01:19:33,120 actually see a little less shorting on these types of 1518 01:19:33,120 --> 01:19:34,880 equities than you would see on traditional. 1519 01:19:35,680 --> 01:19:37,760 That's a good point because you also really have to understand 1520 01:19:37,760 --> 01:19:41,320 Bitcoin in order to substantiate the argument to to short. 1521 01:19:41,320 --> 01:19:43,680 And if you don't understand Bitcoin enough, then the short 1522 01:19:43,680 --> 01:19:44,760 is a very bad idea. Yep. 1523 01:19:45,040 --> 01:19:47,480 All right man, I think this was a great conversation and an 1524 01:19:47,480 --> 01:19:49,760 outlook for 2025. I want to ask you my last 1525 01:19:49,760 --> 01:19:53,000 question because I ask everyone the same question, which is what 1526 01:19:53,000 --> 01:19:55,000 is a core belief that you will never let go. 1527 01:19:55,000 --> 01:19:56,760 Core belief that I'll never let go. 1528 01:19:56,760 --> 01:20:00,360 I put a huge amount of importance on allowing yourself 1529 01:20:00,360 --> 01:20:03,200 to think differently. Than everybody else's and it 1530 01:20:03,200 --> 01:20:06,400 took me a long time to get there and it took me evaluating a lot 1531 01:20:06,400 --> 01:20:09,840 of my own beliefs to get there both personal beliefs and not 1532 01:20:09,840 --> 01:20:13,200 just even talking about Bitcoin. But I think one of the biggest 1533 01:20:13,200 --> 01:20:17,000 strengths you can carry forward as an individual is that ability 1534 01:20:17,000 --> 01:20:20,840 to allow yourself to think freely and think differently 1535 01:20:21,200 --> 01:20:22,840 from what the rest of people are doing. 1536 01:20:22,840 --> 01:20:25,360 And it's the only way that you're going to create different 1537 01:20:25,360 --> 01:20:27,120 outcomes than everybody else gets. 1538 01:20:27,120 --> 01:20:31,720 So I believe wholeheartedly that you need to free your mind and 1539 01:20:31,720 --> 01:20:34,000 let yourself think differently. I love that, man. 1540 01:20:34,000 --> 01:20:37,760 That ties into going all in on Bitcoin, I think so. 1541 01:20:37,760 --> 01:20:39,480 Absolutely. Thank you so much for sharing 1542 01:20:39,480 --> 01:20:40,880 that. Thank you so much for your time. 1543 01:20:41,360 --> 01:20:43,040 I hope this is valuable to people. 1544 01:20:43,040 --> 01:20:44,920 And yeah, man, let's do it again sometime. 1545 01:20:44,920 --> 01:20:46,160 Thank you. Absolutely. 1546 01:20:46,160 --> 01:20:48,520 Thanks, Brown. I hope you enjoyed this episode. 1547 01:20:48,600 --> 01:20:51,800 If you did, you can click here to find more just like it and 1548 01:20:51,800 --> 01:20:54,720 click here to find all Bitcoin for millennials podcast 1549 01:20:54,800 --> 01:20:57,720 episodes. Also, please like this video if 1550 01:20:57,720 --> 01:21:00,360 you want to help shine a light on the message of Bitcoin and 1551 01:21:00,360 --> 01:21:02,600 subscribe to my channel to stay connected. 1552 01:21:02,800 --> 01:21:04,520 I hope to see you for our next episode. 1553 01:21:04,960 --> 01:21:05,120 Bye.