Chapter 1: What recent Bitcoin purchase did Strategy make?
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Podcasts. Radio. News. But let's talk about Bitcoin because gold, it's outpacing Bitcoin so far this year with, as we discussed, the U.S. Treasury's gold reserves reaching a staggering $1 trillion during that record run. But of course, that hasn't stopped Strategy, the world's largest corporate holder of Bitcoin, from going bankrupt.
full steam ahead into derivatives products such as Bitcoin-backed digital credit instruments, including the first Treasury-preferred Bitcoin-backed stock. And joining us now, I'm pleased to say we have Strategy Executive Chairman Michael Saylor. Michael, great to have you with us. This is Bloomberg Television, so we're going to go into all the financing strategies.
But let's talk a little bit first about MicroStrategy's premium to its underlying Bitcoin holdings, the MNAV, if you will. So it's interesting, if you take a look at the past few months, MicroStrategy or strategy shares have actually been underperforming Bitcoin. That has taken your premium down to about 1.4 times. And I would love to hear your perspective on why that dynamic exists.
Is it something about the market? Is it the fact that you have all these digital asset treasury companies coming to the fore? Or is it something else?
You know, the market's still working to digest a new business model. The Bitcoin treasury company is an idea that's only come to the forefront in the past year or so. For 300 years or so, the world revolved around gold-backed credit instruments. People issued bonds and credit based on gold. We've discovered the killer app in the Bitcoin world is Bitcoin-backed credit. I'll call it digital credit.
In the 20th century, we had bank credit, we had mortgage credit, we've got commercial corporate credit, you've got sovereign credit. Well, digital credit is a new creature and Bitcoin treasury companies exist to issue digital credit. So the reason there's a premium in the equity is because we can create digital credit instruments.
If we were just an ETF, we wouldn't be able to create credit instruments. The credit itself is an extraordinary new asset class.
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Chapter 2: How does Michael Saylor view the future of Bitcoin-backed credit?
Not a big concern. It's interesting. I mean, you think about the position that you hold when it comes to Bitcoin, which is basically never sell. You hold forever. And then I was listening to a conversation this morning with Tim Draper on BTV with Matt Miller, who was saying that Bitcoin is the currency of the future.
You're going to have a day where you have US retailers using Bitcoin instead of US currency. And it falls into basically the store of value versus currency debate. And I wonder, Michael, whether those two viewpoints can coexist together or is it going to be one or the other?
No, I think that the digital asset economy is exploding. And the winning digital currency is the tokenized dollar in the form of Tether and Circle. And that entire asset class has exploded to about $250 billion. I mean, so if people want a circulating medium of exchange on crypto rails, they're using stable coins in the form of tokenized dollars. Bitcoin has emerged as digital capital.
What you want is a commodity that's also scarce and decentralized as a long-term capital asset. So the killer application of Bitcoin is digital credit issued against digital capital, whereas the killer application for medium of exchange is a digital currency in the form of a stable coin. I think the crypto industry understands this. And I think the people of the world understand it.
If you talk to anybody and ask them how they're going to pay for their cup of coffee, they're going to send a stable coin from their mobile phone app. And if you ask them what do you give to your granddaughter, they're going to say give them a Bitcoin coin.
There you go. Michael, before we let you go, we talked about some of the different types of financing that you have when it comes to perverts, when it comes to convertible debt. And of course, when it comes to common stock, are you considering any new type of debt or are you happy with the categories that you have right now?
Well, if we look at these preferreds, first of all, they're leveraged, but they're not debt because the principal number comes due. Stretch, I think, represents kerosene. It's like extracting jet fuel from a barrel of crude oil. And so we're very excited about that. And we think that there's an opportunity to create... stretch-type instruments in euros or yen or Canadian currency or pounds.
In essence, everybody in the world would love to have a high-yield bank account that yielded 10% or more, or they'd love to have a money market that gave them double or triple their normal money market. We have shown that you can extract that sort of instrument from raw Bitcoin if you have enough Bitcoin.
So I think that we will continue to grow the AUM of Stretch and then we'll look at opportunities to transform it into different currencies around the world.
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Chapter 3: What are the implications of digital credit instruments in the Bitcoin market?
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