Strategy CEO Mike Saylor Talks Buying Bitcoin
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What recent Bitcoin purchase did Strategy make?
Hello and welcome. This is The Michelle Hussein Show. I'm Michelle Hussein. I speak with people like Elon Musk. I think I've done enough. And Shonda Rhimes. That's so cute. This will be a place where every weekend you can count on one essential conversation to help make sense of the world. So please join me, listen and subscribe to The Michelle Hussein Show from Bloomberg Weekend, wherever you get your podcasts. You certainly ask interesting questions. Bloomberg Audio Studios.
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.
Well, when we talk about the premium, and it's been at lower levels, but you think about the premium coming down, I think it was closer to two a couple of months ago. Is that something that concerns you as you look at these different types of financing vehicles that you have?
No, I'm not really concerned. What happens is the premium will expand as our leverage increases and as the volatility in Bitcoin increases. When the volatility falls and our leverage falls, sometimes the premium contracts. But the real key... key here is the digital credit we're issuing, like Stretch, that represents us stripping away the volatility and the risk from a commodity, from Bitcoin, the digital capital instrument, and then distilling out a particular currency, USD, a particular yield from say 10% on stretch, and then a certain duration for that yield. And we offer those to the credit markets. So we don't really need a premium to issue digital credit. Our business model works fine whether or not the equity trades at a premium or a discount to the underlying Bitcoin.
The equity will have value because people understand the value of the credit instruments. And we've launched four credit instruments this year, four billion dollar product lines, and the year's not even over yet. So that's a lot for the world to digest since they didn't see a new class of credit for 100 years before us.
Are you concerned at all, Michael, though, about some of the newer entrants into this space and whether that maybe not necessarily usurps what you're doing, but I guess augments it in a way that your next fundraising and your next efforts might not get the same attention and buy-in as you did in the past?
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