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Another success story in terms of the stock that just climbs and climbs and climes is Strategy. The company bought recently one thousand and forty five more bitcoin, bringing its total supply to five hundred and eighty two thousand, worth
more than sixty billion dollars. Bloomberg News took a look at Strategy and it's seventy separate Bitcoin purchases since Michael Sailor began to invest cash from the company's balance sheet into the token in the middle of twenty twenty, and every purchase over the last four years plus is now a profitable purchase well.
And pleased to say that joining us now is Strategy Executive Chairman Michael Sailor himself. Michael, it's great to have you with us. We have a lot to talk about, and one of those things is a recent call from Jim Chenos. Of course, he's a legendary short seller. He came out recently and said basically, buy bitcoin short Strategy shares, and just to set the scene here, I'm curious what you make of that.
You know, I don't think he understands what our business model is we're actually the largest issuer of bitcoin back credit instruments in the world. So last week we just raised a billion dollars by selling a preferred stock non cumulative called Stride. That means we basically borrowed money that we never have to pay back, that we pay a dividend on, but we could suspend the dividend if we needed to. So Jim has been thinking that we somehow
needed to sell the equity. We now are in a situation where we have Strike, Stride and Strife, three publicly floating preferred stocks that are not deluded to the equity. They all meet a different market requirement. Right that one hundred and ten million dollars a bitcoin we bought last week that was acquired without issuing any common stock. So what's going on here is that we're using our sixty billion dollars a bitcoin collateral to issue credit instruments. They
never come due. There's no liquidation risk, there's not even an interest rate risk. Right, It's a noncumulative preferred and we could suspend the dividends. So at the end of the day, if he's lucky enough to short the stock below one time's nab we're going to issue the preferreds, buy back the stock and make money for our shareholders. If the stock trades at a week premium, we're just going to sell the preferreds, and if the stock rallies up, he's going to get liquidated and wiped out.
Well, let's talk about that premium, because that is the heart of his short call on Strategy, as you point out here. So he said recently on a podcast that shareholders are paying around two hundred and twenty thousand dollars for bitcoin that trades at one hundred and ten thousand dollars. But the company is doing everything it can to close that spread, which is great, there's a catalyst. So he's referring to the fact that you are selling your own
shares and buying bitcoin. But when it comes to the premium that Strategy shares enjoy over the price of bitcoin itself, do you think that that's sustainable? The fact that he points out that basically you're the value of your company is treating at twice that of bitcoin itself.
What he still doesn't understand is we're not a holding company or a closed and trust. We're an operating company. So when we issue trust, can't leverage the bitcoin. They can't issue preferred shares, they can't issue permanent shares of equity out of premium. We can. Our companies generated a BTC dollar gain equal to about eight point four billion dollars in the first two quarters of this year. That's the equivalent of earnings for a bitcoin treasury company. Our
target for the year is fifteen billion dollars. And so he's valuing the business that's generating eight point four billion dollars of shareholder of value at zero, and he's hoping
that somehow the equity will trade to NAB. But what he's what he's not paying attention to, is if we can issue preferred shares that yield ten percent and invested in bitcoin, which has been going up fifty fifty seven percent for the past four and a half years, we're capturing the forty seven percent arbitrage effectively risk free for
our common stock shareholders. And if you want to value the company, you have to value the company's ability to generate bitcoin yield or bitcoin games over and above the actual holdings of the bitcoin the company has.
So, as you said, you have about sixty billion, sixty three sixty four billion dollars orth the bitcoin your company is worth about twice that at one hundred and six hundred and seven billion dollars in market cap, and you also have obviously in enterprise analytics software business. How do you break down the value of the rest of your company x bitcoin holdings.
If the company generates ten billion dollars of bitcoin gains this year, you've got to put a ten or twenty multiple on it. Right, So the bitcoin treasury company operation is worth a multiple of ten, twenty, thirty or forty times the BTC yield we're generating. That's the number one source of value for the operating business. And then the company also has sixty billion dollars plus worth of bitcoin, and I would I would say to investors look at
it that way. A BTC dollar gain is like our earnings equivalent, and then the bitcoin nav is the assets on the balance sheet, and you should just look at the earnings equivalent and put the multiple do you think is appropriate on it. To come to an opinion about the value of entire enterprise.
Michael Nobody has to explain the rapid rise and bitcoin to me. I started buying bitcoins at eight hundred dollars. I bought one as low as six hundred, but I spent them. Unfortunately, How how do you expect the asset to continue a price increase at these levels that we've seen, I mean, can it keep that up over the next five years, over the next ten years? And at what point do we see, you know, winter coming again? Because
that's been a permanent fixture of this asset class. Right, It's gone from zero or ony to twenty and then back down to three or four, and then up to fifty, and then back down to fifteen and now up to one ten, Like, when does it drop again?
Winter is not coming back. We're past that. We're past that phase. If bitcoin's not going to zero, it's going to a million dollars, and you have all the evidence you need to determine that. Right. The President of the United States is determined he supports bitcoin, The Cabinet supports bitcoin. Scott Peasant supports bitcoin. Paul Atkins has shown himself to be an enthusiastic believer of bitcoin and digital assets. Ken Tez a CFTC feels the same ray the banks are
going to custody bitcoin. Bitcoin has gotten through its riskiest period, the accounting has been corrected. There's now only four or fifty bitcoin a day available for sale by natural sellers, that's the miners. At this level, that works out to about fifty million dollars a bitcoin available for sale every day. If that fifty million dollars is spot, then the price has got to move up to find any natural any
seller that's priced sensitive. Now, if you do the math, you'll actually see the Bitcoin Treasury companies by themselves or buying the entire natural supply. Black Rock and the ETFs are buying another measure of that. And we've got nation state actors coming into the space. So I think when bitcoin rallies, if it surges to five hundred thousand or a million dollars, then maybe we could talk about it
crashing down by two hundred thousand dollars a coin. But at the current price levels, it only takes fifty million dollars to turn the entire drive shaft of the crypto economy one turn, and you've got the Trump Media Organization announcing two and a half billion, you've got Game Stop announcing five hundred million, You've got my company that's raising billions and billions of dollars. So the writing is on the wall. Bitcoin's moving higher.
Okay, so there's a few things to dig into there. One that, in your words, Bitcoin Winter is not coming back. I'm rereading Game of Thrones right now, so that statement gives me the shivers. But I did want to go to the competitive landscape if you can freeze it that way, and you went there, naturally, you think about the ets suites out there. Bit for example, already up to seventy
two billion dollars in assets. There's a lot of bitcoin treasury companies that have come to the scene, as you mentioned. Twenty one Capital comes to mind, started by Jack Mallers, and they all have the intention of just accumulating bitcoin. That would be good for the price. Michael, as you say, but do you worry about the competition out there to buy bitcoin? It's going to become more and more expensive, and everyone's competing for a shrinking pie, if you will.
I think we're in a digital gold rush, and you've got ten years to acquire all your bitcoin before there's no bitcoin left for you. The competition is a virtuous competition. Metaplanet's the hottest company in Japan right now. They went from ten million to a billion dollar market cap to a five billion dollar market cap. They're going to raise billions of dollars. They're going they're going to pull the liquidity out of the Japanese market, so they'll be right
in capital and Tokyo and the Tokyo Stock Exchange. Obviously, none of the rest of us are trading or selling equity in the Tokyo Stock Exchange, so it's not competitive, it's cooperative. There are companies coming public in Brazil right now, like Orange BTC that'll come public in some timeframe and Meluse. They're actually supporting equity capital markets in Brazil. You know,
the game stops. They already had six billion dollars a capital and so for them to start to take some of that capital and funnel into bitcoin, it's good for all of us. Knakamoto in twenty one, they'll bring their own particular twist. Our company is a very particular business model. It's to issue bitcoin back credit instruments like bitcoin back bonds and especially bitcoin back preferred stocks. We're the only company in the world that's ever been able to issue
a preferred stock back by bitcoin. We've done three of them in the past five months. We're not competing against the bitcoin treasury companies. We're competing against ETFs like PFF that have portfolios of preferred stocks or corporate bond portfolios that are trading as ETFs in the public market, and the way we compete is we offer foreigner basis points more yield on an instrument that is much more heavily collateralized and more transparent. And that's we're not going to
saturate that market anytime soon. That's one hundred trillion dollars or more of capital in those markets.
It sounds like, you know, when you talk about what you're doing in terms of financial engineering in terms of financial markets with bitcoin, clearly it's I mean, you're doing a lot more than just holding the bitcoin. So it's I think unfair to compare you to an ETF, But it sounds like you may be inviting competition from a JP Morgan for example, which then makes me wonder, when
does this asset start to convince the naysayers? You know, Jamie Diamond has famously said it's worthless, Warren Buffett has called it probably rat poison squared. When when does it win those people over?
People called the electricity worthless and aircraft worthless too when they didn't understand them. So I welcome the competition from JP Morgan, I hope to enter the space. Our advantage is that we're one hundred percent bitcoin, so whenever we create a preferred stock, it has the Bitcoin performance, and it has a measure of Bitcoin performance and a fraction of Bitcoin volatility. That allows us to issue the most
liquid preferred stocks in the world. The highest performance Strike was up twenty nine percent when the rest of the market of preferregs was down six percent. Strife was up twenty two percent when the rest of the market was down four point six percent. It's impossible to issue bitcoin backed convertible preferreds and bitcoin backed fixed preferreds unless you're willing to make one hundred percent of your balance sheet bitcoin. So I'm not really worried about competition from JP Morgan
or Berkshire Hathway. I would love for them to enter the bitcoin space buy up a bunch of bitcoin. When they do it, they'll be paying a million dollars a bitcoin. The price will go to the moon. That will be good for the entire crypto economy and beneficial to everyone that holds any BTC backed equity or credit based instrument.
Well, I'm still thinking about you saying that you view yourself in competition, not with the bitcoin treasury companies, but with some of the ETFs that hold preferred shares, that that is the strategy that they're tracking. And when it comes to your own financing and the fact that you have been pivoting to issue more preferred stocks to fund your purchases, why is that? Why go towards preferreds rather than convertible bonds? Is it just a question of demand or is there something to it?
The convertible bond market normally is a short duration investor. They want to hold the bond three or four years, and the calls that are embedded in the bonds are capped calls capped at one hundred and thirty percent of the strike and sorry of the conversion price. And so that's a short duration call investor and a short duration credit investor. What we sold with Strike SDRK was a perpetual call option good for one hundred years or forever. And then we sold a perpetual dividend you could hold
for one hundred years and give to your grandkids. So long duration credit, long duration call, and that preferred never comes due for us, so we don't have liquidation risk. We don't have credit risk, So it's a much better instrument if you intend to invest in a volatile asset like bitcoin and hold the investment forever. Now, the other point I'll make, Katie, is if you think about what
we're competing against. There's like eighty billion dollars worth of corporate credit and preferred equity based ETFs that we identified. Most of them charge a fee of fifty to eighty basis points a year, most of them generate a yield of six or seven percent, and most of them have very heterogeneous o PAI credit, low volatility, and very low liquidity. We're offering preferred instruments that have eight to ten percent dividend yields at par ten to one hundred x higher liquidity.
They trade really really hard, very very liquid, and their homogeneous credit and they're six x over collateralized. So it's a very compelling instrument if you believe in bitcoin as a digital assets.
To finish the thought here, and I'm looking at invescos preferred ETF. The ticker there is pg X that charges in expense ratio of fifty one basis points. It has about four billion dollars in assets. When you say that you're in competition with funds such as this one. Are you referring to the fact that you're competing for investor attention with these ETFs? I just want to make sure I'm understanding your point.
Yeah. What I'm saying is you go buy that, maybe you get seven percent yield effectively, and you pay the fifty basis points, and some of that is QDI eligible, and some of that is taxable. When you buy one of our preferreds, like Stride is yielding like eleven percent pluss right now, and Strife is yielding nine nine and a half percent, you buy that, it's all QDI eligible. It's it's trading ten to fifty times more liquid on
a dollar for dollar basis. It's very homogeneous credit and you get an extra foreigner basis points of yield, better tax treatment, et cetera. So we're actually competing against that. We're offering tax efficient, zero fee fixed income yield to someone that wants to hold that in their portfolio.
Michael, I would at least in the top five most important characteristics of bitcoin is its security, right, I mean, scarcity has to be one near the top. And the Ledger obviously was a genius move by Satoshi, but it seems to be uncrackable, and I'm wondering if that will hold true far into the future with the development of quantum computing. Do you worry about that?
I don't worry about it, And I make the point. You know, Microsoft and Google market their quantum projects, but they would never sell a quantum computer that cracked cryptography because it would destroy their own companies. And there isn't a practical use case for those quantum projects they've been marketing. I think at some point a decade out, maybe ten twenty years, maybe whenever, there'll be a powerful computer it
may start to threaten modern cryptography. When it does it, it'll be a threat to Microsoft, Google, JP Morgan, the US government. It may be a threat to bitcoin. When it is a threat, all of these organizations are going to upgrade their crypto protocols to be quantum resistant. You'll
see it coming a mile away. And every other digital entity in the world is more vulnerable to that idea or that threat than Bitcoin, and so they're all going to upgrade, and we'll be talking about it while you're reviewing Microsoft stock or Apple stock exposure.
I only I don't want to go too deep into this, Michael, because it's only a half hour program. But I feel like AI could You know, everyone's worried that AI may turn on us, and this could be a way in which AI has real power. Is that not the thing that keeps you up at night.
I'll make a point here. The typical person might do ten thousand transactions in their lifetime, maybe one hundred thousand if they're very busy. The AIS are going to do one hundred thousand transactions of minutes. They're not going to suffer the existing credit systems, in the existing banking systems of the twentieth century. They're going to want to move digital money at high frequency, at the speed of light. That means digital assets like bitcoin over the Lightning network
or via Layer three protocols. The demand for digital capital which is what bitcoin is, and digital networks like Lightning, and like all of the crypto protocols that are being worked on right now, it's going to go through the roof. So I think AI is really a demand driver for bitcoin. It's going to accelerate the entire digital assets economy. And no, I'm not worried about the threat the AIS can't crack
public private key cryptography. What they can do is imitate you and talk you into doing something stupid if you're listening to them. And so they are a threat to all the other systems in the world, not to Bitcoin.
All right, Michael, we got to leave it there. It's always great to speak with you appreciate the time that is. Strategy co founder and executive chairman, Michael Saylor