Thank you.
here we go all right episode
We are back.
The crew is back.
We are back from a week off.
Actually, a week off.
We were a week on.
We were at the Bitwise event.
And we are cooking with gas now.
Let me get this off the screen.
We are broadcasting only from the MSDR True North channel.
We are trying to focus all of the chat into one location.
So hopefully, everybody is now on the same page, on the same chat platform, and we can get it cooking.
All right.
We've got a fun one today.
we're going to try to keep it to an hour. We've got a few things that we're working on. Obviously,
we've got MSTR True North World coming up on Monday next week, which is going to be super
exciting, a ton of fun, a part of the strategy world event. There's going to be a lot of excitement,
putting out some new content that we've never really talked about before,
and releasing some information that we haven't talked about before. So it's going to be a really
good time. So welcome to MSTR True North. For those that haven't been here before,
This is a group of people that gets together. We talk about MSTR. We talk about Bitcoin treasuries.
We talk about Bitcoin and capital and the future frontier of digital capital.
This is a group of people that have been at the front of this trade for an incredibly long time
and are heavily invested in MSTR and other Bitcoin proxies.
And the goal is to talk about the cutting edge of what's going on in the market.
So today we're going to talk about MSTR stat update.
we're going to get into strategy world and true north world what's going on on that front we've
got a recap on the bitwise event last week which was a ton of fun very uh very intimate event small
and sailor gave a kick-ass presentation which i don't think is live yet so we could talk about
that a little bit mstr earnings is tomorrow twas the night before earnings it's going to be an
interesting one i think there will be a lot of bewilderment a lot of things to prepare for on
that front maybe we'll get into 21 uh the the new uh mstr playbook that is coming to the scene and
we'll see where we go so without further ado maybe i'll kick it over to tim for our not financial
advice ladies and gentlemen what you're about to hear tonight and this coming monday it may be
amazing but it's not financial advice back to you jeff bingo exactly no this is financial advice but
we love talking about this stuff and we can't help ourselves so we have to get on the microphone and
chat about it and the next uh most important and exciting topic is that we have a uh new
chief investment officer on the team right below me ben workman congratulations uh to ben appreciate
it a long time coming i know they've uh they're gonna buy a ton of bitcoin that's gonna be fun to
to watch. Yeah, yeah, it is going to be fun. And it was it was a long road. I mean, I've been working
with Swan for about the last six months. I've been doing a lot of consulting work for them,
getting to know the team. And, you know, eventually it just came to the point where
we were getting fully aligned on everything we wanted to do. Right. One of the things that
I always look for was if I was ever going back into the corporate world,
it had to be for Bitcoin. Right. That was going to be the only reason
that you go back into the corporate world.
Because quite frankly, we were having a lot of fun, you know, on our own out here.
So we are.
I had to find something.
No, no, no.
I know we are.
Yes.
Yeah.
Good call.
But so when I was looking and when I was talking to all these other companies as well, you know,
I needed to find one that was going to be 100% Bitcoin with a management team that's fully on board with all of our future plans here.
because when you get into this space, you hit the gas and you go.
And this team here, you go through the internet
and you got a lot of things that happen over time.
And you got to meet people, talk to them, get to know the team,
find out that they're the right type of people
that you want to be in business with.
And luckily for me, that all aligned
and I found a good landing spot here.
So the good news is they're also highly supportive
of what we're doing here at True North.
So, you know, it's even in my contract.
I'm still here.
I'm not going anywhere.
We're going to keep doing a bunch of killer stuff and we're going to crush it.
So it's going to be a lot of fun.
I'm going to really enjoy being able to, you know, be inside the Bitcoin industry more,
learn how all those inner workings work.
And I think it's going to be a blast.
So I'm glad that they would have me and it just made sense and it was the perfect timing.
So we're going to make it happen and we're going to get going.
Awesome.
congratulations to you ben man a lot of hard work going uh i mean there's a lot of excitement on the
horizon with these bitcoin treasury companies i mean so so much work has gone into um all of
those components so bravo hats off to you um and good work and maybe we'll and and ben since you've
been waking up at four o'clock in the morning every like the last couple of mornings in a row maybe
if you want to is there anything you want to say before you drop off no no i was just going to say
that you know when it comes to this space and particularly when it comes to everything that
we cover i mean the pace at which these companies are showing up right now i got to imagine everyone's
picking up on just how many leveraged bitcoin equities are showing up in the market i mean
it seems like every time you get back on twitter there's a new announcement right now so it is just
absolutely incredible where we're at in the cycle and it's shocking to me that bitcoin's still below
a hundred thousand but at this pace that is not going to last logs so it's it's going to be exciting
and we're going to have a ton of stuff to cover here for the rest of the year
couldn't have said it better yeah absolutely right all right well uh no need to stay on uh
we've got a big big week next week with mstr world and i know you probably have to
prepare for your keynote so uh feel free to i do i do yeah i've been burning it at both ends here
So this is one of those few nights where I'm not going to dwell in the darkness too long and I'm going to go get to bed.
So there you go.
Hope you guys have a good show.
I'll talk to you all later.
All right.
Thanks, man.
See ya.
All right.
Beautiful.
And before we get into MSDR stats, maybe we'll kick it over to Grain and do an update on True North World and, you know, what we've got on the horizon there.
And then I'll jump into the website and we'll go through what we've got up going on that front.
Sure.
So can you guys, can you folks hear me?
Yes, absolutely.
Great.
So MSDR True North in Orlando is going full speed ahead.
Looking forward to meeting everybody.
Please check the agenda.
You do have to check in in order to get your wristband.
So everybody needs to check in, whether you're an attendee or a VIP.
So please come and check in.
The room is listed.
And then from there, we have a full set of content.
We're going to start on time.
It's going to go from 12 to 4.
We've been working on that.
you do have to have a strategy pass
in order to go to the strategy party,
which will be first.
And then our party,
that'll be from five to seven.
And our party is from seven to nine.
I would say that the conference,
our conference is business casual.
And the party,
which will be outdoors
at the Aquamarine pool and bar,
it's in Florida.
So we're probably wearing shorts, right?
Everybody wearing shorts?
Absolutely.
Casual for the party in the evening.
Definitely wearing shorts.
Green, you've got to wear Bermuda shorts with the Bermuda socks.
That's the only thing I'll accept from you.
Then we can point it out.
I'll go shopping for that this week on here.
All right.
Excellent.
Thanks for the update on that, Green.
And maybe I'll do a quick shout out to our sponsors.
We had quite a few sponsors come through the door and help support us for our inaugural event.
So big shout out to all the people that are helping support where we're going with MSDR True North.
I think we've got a really bright future ahead of us. So shout out to UTXO, Swan Bitcoin, Deloitte.
Yes, the Deloitte. Perkins Coie, Strive Asset Management, Anchor Watch, Arch Lending, NextLayer
Capital, StrategyTracker.com, Zonaris, Medici Roasting, which is a coffee company, Tax Alchemy,
Lightwheel Recruitment Advisors, Jackson Control, and Resil Your Health. And we've got about five
others as well that haven't sent in their logos yet. So please send in your logos if you're
watching this. Appreciate the support. Thanks for helping us get off the ground. And yeah,
a lot of excitement on the horizon. And while we're on this front, we do have Medici Roasting.
We have a partnership with Medici Roasting, and you can now get True North Blend Coffee,
our official caffeine sponsor of MSTR True North. So you can hop in and get some freshly roasted
coffee from Medici Roasting, which is down in Austin, Texas, which I think is quite fitting
within the ethos of MSDR True North.
We've got, you know, we're not sponsoring like some energy drink.
It's, you know, high-end specialty coffee roasting.
Hey, Jeff, I'm going to chime in real quick.
I actually went and ordered my first coffee today.
So I actually paid for it and did it.
The integration that Cholstein did was great.
It worked really super slick to actually order it and get it shipped to the house.
So I'm looking forward to getting it.
It was really a great integration.
Yeah, easy stuff, easy stuff.
We got some sponsors on the horizon, which is so fun.
I mean, it's just a, you know, a group of guys getting together.
This started in October and, you know, now we're on episode 25.
We just keep it rolling and we're going to be on stage with the MSDR, the strategy team next week.
And we've got our own programming and our own event.
And I think this will be the first of many.
So maybe keep an eye out for a future golf tournament, maybe, or, you know, some other fun events on the horizon.
I think we can swing some cool things.
Fun fact, a lot of local Scottsdale businesses are aware of what I do in True North and they
want to buy the coffee.
I've been getting the end to buy it today.
So it's kind of funny that it's kind of taken off like that.
So we'll see what happens with that.
This is all just kind of nuts, the way it's been going.
So I'm really excited for everything.
Yeah.
That's awesome.
Yeah.
And I mean, the programming is going to be fun too.
I mean, we've got an hour of keynote speeches.
We've got some presentations on options and derivatives and volatility.
Uh, we've got an ask me anything session, and then there's also going to be a panel.
We're effectively doing like a four hour live true north session in Orlando and you can
hang out and meet and hang out with us afterwards, network and grab a drink at the party.
So I think we'll have some special guests and a lot of people, uh, I think a lot of
people will be recognizable in the audience.
So yeah, a lot of fun.
Cool.
else have anything else to add on strategy world before i shift gears into some statistics the
nerdy stuff uh maybe i'll just mention uh 10 a.m monday morning if somebody wants to arrive at 10
a.m that's when registration starts so that's just a nice opportunity to network and not be
worried about you know getting there at the last minute you know get there at 10 10 30 11. we're
We're going to start at 12 sharp.
Cool.
Yeah.
And we won't have like lunch or anything.
I think we'll have, you know, there might be some light bites.
I think there'll be coffee and some drinks and stuff.
But I would prepare for, you know, maybe not having food for a decent amount of time.
And the programming will start officially at noon, 12 noon.
Yep.
Cool.
All right.
Let's shift gears.
Yeah, go ahead, Gray.
So Bitcoin Las Vegas 2025, we have a time slot for some of us on May 29th.
We also have a 30% off code for people that would like to go there and to also to see us in Las Vegas.
So that's a new addition.
We'll talk more about this in the next week or so.
But if you wanted to go to Las Vegas for the Bitcoin conference, it's on our page already.
We'll be presenting on May 29th.
We'll put on the actual time slot.
Tim, you're speaking.
Jeff is speaking also in separate panels.
So if you would like to meet us and you can't come to Orlando, I recommend coming to Vegas.
Vegas will be a bit crazy.
Yeah, I think that's a much bigger event.
I would anticipate probably 40,000 people.
I don't know, 20 to 40,000 people, which is a big delta.
But it's just going to be a lot of people compared to Strategy World, I think is about maybe 250.
And I know our event's got about 150 people.
So it's just going to be a completely different vibe.
But exciting nonetheless, there's going to be all of the Bitcoin companies there, all
of the Bitcoin influencers, the people on X that everybody follows, they're all going
to be there.
I believe the code, Grain, is it MSTRTRTRUENORTH, just all caps?
Is that it?
Yes, that's it.
And Cholstein just did the post in the chat so you can see it right there.
30% off and we look forward to seeing everybody in Las Vegas.
Awesome.
Excellent.
All right.
I think that's enough for housekeeping.
shall we get to nerdy stuff yeah let's go cool all right uh okay so we've been showing this
every single week for the majority of the time here this is a leverage ratio update so this is
mstr's financial leverage over time uh so this is april 30th 2025 which is today so mstr holds 553
555 bitcoin uh the price when i did this analysis was 94 682 for bitcoin price so mstr is holding
$52.4 billion of Bitcoin, $8.2 billion of debt, $1.6 billion of preferred stock. So the net capital
held on balance sheet is $42.5 billion. I think this would be somewhere around the 250th largest
company if we just took the net capital that they held on balance sheet. That would be around the
250th largest company in the US. Total liability asset, so leverage ratio is 18.9%. And the Bitcoin
price needed for the assets to be less than the liabilities is 14,857. So low leverage, right?
Continues to be lower leverage. And some interesting statistics over here on the right,
this column AS here. So the percent change to year end 2024. So since the year ended 2024,
the Bitcoin held on balance sheet has increased 24%. So we've gone from 446,000 to 553,000.
So we've increased or MSDR has increased their Bitcoin held by over a hundred that over 110,000 Bitcoin and the assets have increased 26%.
So we've gone from 41.7 billion to 52.4 billion of assets held on balance sheet while the debt has only increased 9%.
So you can see that there's efficiency here, right?
The assets are increasing while the debt is increasing at a slower pace So so Jack yeah Can I chime in on that point Yeah absolutely Yeah So so what interesting for this for me looking at the chart here you can see on January 1st of 2024 189 Bitcoin
And then you have as of now, and then one year later,
more than doubled to 446,000 and now it's 553,000.
What I'm looking at as an investor is in this cycle that's happening,
When the price runs up, if we look at the price multiple of the 50-day moving average,
and we know that it was 2.37 in the first part of 2024,
and then now in Q4, it only went to 2.15 times the 50-day moving average.
What I'm looking for is to see if diminishing returns set in.
If that price goes above 2.5 or three times the 50-day moving average,
what happens is because there's more Bitcoin on the balance sheet and more Bitcoin per share,
It has more of the volatile asset. So in theory, it should drive the price higher because there's more Bitcoin. But if that multiple goes lower and the 50-day moving average right now is 300, then two times that only gets to a price of 600. And I had already posted about this earlier today.
So if it goes to three times the 50-day moving average, it goes up a little bit.
It goes a little bit above $900 for that price.
And the question I get from people is, what date is that?
I don't know what the date is.
We'll have to see what happens.
But for anybody that buys options, they have to pick an expiration date.
So that's what I'm looking at is what's the multiple of the 50-day moving average.
But that's indicative of what Jeff did in this chart right here is that, in theory,
it should go higher because there's more Bitcoin on the balance sheet.
I think you make a good point, Grant. And it's something that's really interesting. Like, had you told us on the 1st of January 2024, that Bitcoin would have more than doubled in a year, you would have said no way, right? At that point in our investing history in MSTR, I was very, very new, so I can't speak to it that well.
But you would have already thought, oh, like diminishing BTC yield and acquisition is setting in.
They won't reach 300K Bitcoins for another couple of years.
That was what I was telling myself at that time.
Now, looking back, that seems complete nonsense.
They've been able to scale their Bitcoin acquisition in a way that we hadn't thought possible, which will have a delayed impact on the Bitcoin price.
And we'll see that moving forward.
Now, looking forward, I have a mental block that says strategy won't get to more than a million Bitcoin. For some reason, I catch myself saying that in my head. That seems ridiculous. But let's look back a year at 189, you know, K bitcoins, you wouldn't have believed they would have gotten to 500,000 in Amir's year time.
So I think that same sort of unit bias, you could call it, applies here. And we really need to look
at the activities they're doing and the demand in the bond market for strategy preferreds and
strategy equity. And as long as that demand's there, the one thing you can't bet on is some
sort of cap to the number of Bitcoin they own. If something's going to give, and that's the Bitcoin
price or the demand for their products. Right now, Strike is only ramping up its ATM. I mean,
sailors slamming the atm right now and the price of the equity is going up so there's demand it's
going to be crazy to see what happens here with bitcoin around yeah just to oh go ahead sorry yeah
quick thing just just to put in some context january 1st 2024 the popular narrative going around
was that the the the etfs were going to make micro strategy strategy now obsolete obsolete
And the market actually, for a brief time, it went under one MNAV, right?
So it traded at a discount because of this narrative.
So I think you're exactly right that time and time again throughout this entire trade,
people's expectations of what is going to happen in the future have just been absolutely crushed.
It's defined all expectations.
Yeah.
Dan, to your point, I think unit bias is a good term, but I think perhaps maybe scale bias is more appropriate.
Yeah.
Because looking back on it, you're right.
We wouldn't have thought that they would have hit over a half million Bitcoin by now, right?
Because it just seems kind of ridiculous.
But the reason why I'm using scale bias is because kind of like to my point about I think Saylor's trying to scale this thing until it becomes systemically important.
what he what he wants to do is he wants to get so much bitcoin on the balance sheet that when
when something gives like you just said either the demand for their product or the price of bitcoin
i personally think it's going to be the price of bitcoin before it's the demand in their products
they have so much bitcoin on their balance sheet that they now i don't want to say overnight but
they in the span of 18 to 24 months could become a major player on the stock market in a way that
we can't even conceive of now i'm not just talking about like open interest and things like that right
i'm talking about when they cross a trillion market cap that's going to with people's minds
yeah yeah for sure from august 2020 being up being what was it jeff 600 million in cash
or 600 million or and a billion market cap yeah yeah about yeah to a trillion that's a thousand x
when when that when that moment happens it's really going to with people's minds and i think that
But at that point, it only becomes bigger.
Because when NVIDIA hit a billion market cap, when Tesla touched a trillion market cap,
when Meta and all these companies started touching a trillion market cap,
people thought that they were just going to slam down.
But in reality, they just got bigger.
So strategy is only going to get bigger.
And you have this passive flow, the architecture of the market.
This has been part of my thesis from the very beginning.
You have this passive flow that just continues to push it higher and higher.
And I think that was shown really well today when you look at Microsoft, right?
Microsoft had earnings today and they beat earnings by 7%.
And the stock went up $252 billion in market cap.
That's two and a half strategies on an earnings beat by 7%.
And that's just like this nominal bias.
like once these companies get you know large enough where they're they're kind of stuck at
the top because they have these huge moats which you know strategy is building around itself right
now um it just it stays up there because of the way that the the equity market is designed
and strategies mode is completely unique and no one's going to catch them as we've discussed
but it's not as if they have a mode based on you know in the case of nvidia they've got the gpu
moat they've got the the you know first movers advantage when it comes to a lot of their ai
development tesla has a lead with a lot of different things microsoft has leave other things
strategies moat is a little bit different because it's going to be the base layer for finance or a
new financial system and that's not something you can easily quantify right there's so many different
products that can exist on top of that that putting a number on it i think is premature
and we're really only going to see the impact of this. I personally think we're going to have
certain inflection points. We already had Bitcoin over 100K. I think when Bitcoin goes to 250,
500K, then eventually a million one day, it's going to be a really disruptive event in terms
of what the impact strategy is going to have in the market. Because if we just project forward,
I mean, I said they're going to have like 600 or 650, whatever I said, they can be at 800K
in the next two years at this pace. They can be at 800K in the next three years at this pace.
it's it's wild to think about when you when you put that in perspective and then you put it in
perspective what bitcoin could be at what their market cap can be at and just how much interest
there is going to be in the stock this this is only the beginning right now i agree and i think
it it serves to illustrate an interesting point and to what ben said at the beginning of the stream
there's all these companies announcing leverage bitcoin equity strategies right and you everyone
watching the show me mason grange f tim adrian we're gonna have to make the decision do you sell
strategy and do you buy the other other bitcoin treasury company do you add to your stack by the
other bitcoin treasury company do you buy the other bitcoin treasury company instead of buying
more strategy what do you do how do you navigate this market and so people are going to have to
answer this for themselves like do i want to bet on a less trustworthy company with more potential
of btc yield in the near term and hope that that goes well they execute properly or will i bet on
strategy because they have a trap proven aggressive bitcoin acquisition strategy and maybe you know
you're being again scale biased by buying these smaller caps so everyone's gonna have to decide
that for themselves and i think it's gonna be like the hardest question we all as investors are gonna
have to ask ourselves as more of this stuff comes out you know you know it's hilarious if you would
have if you would have told anyone a year ago that strategy like was the conservative bet
like that narrative would just be like people would laugh at you right and now now we're sitting
here talking well strategy is the conservative bet right like it's the conservative but uh but i
mean your your point outlines a very and we'll get into it later we'll talk about like this risk
return framework but i think you nailed it right like every one of these companies is going to
operate under a different framework in order to accumulate future Bitcoin. And it may have
different risk associated with it, different leverage ratios, different ways of achieving
capital, whether doing acquisitions or doing things differently. And everybody's going to have to
try to figure out and wrap your head around, how do I put this risk return framework into
work for my entire portfolio? And Jeff, we talked about this the other day.
And it's this idea that, you know, Bitcoin's a permissionless decentralized network.
It doesn't require trust.
Traditional finance, equities, any of this, this is all based on trust.
We trust that the executive team at Strategy, we're investing in them to continue executing on this playbook, right?
The trust is inherent.
And so that's something Bitcoiners aren't used to, and they're going to have to start looking at when evaluating these sorts of companies.
And some may not trust the entire system, cold storage Bitcoin, all the way, right?
So that's a game.
You know, one of the things that I've seen, and last week when we were all,
and we'll talk about what happened last week at Bitwise,
but in August of this year, Saylor will have been doing this now for five years.
And so when you have a new company, 21, that comes out,
all the other Bitcoin treasury companies, I hope that they are very, very successful.
But what you're betting on is that this is the catch.
Is Saylor's track record in a five-year head start in 553,000 Bitcoins, right?
That's his head start in his track record.
A new company comes in, whatever, 30,000 Bitcoins, right?
They have to more than almost 20x what they have, right, in order to get there.
And think about it.
If strategy slows down, which I don't think they are, the more they begin to buy more Bitcoins and the price goes up, it becomes harder for them to acquire more coins.
That's the problem is that the competitors, as the price goes up, it makes it more difficult for them to acquire more.
And you're betting against do the competitors have a greater percentage change in their spot price versus strategy.
but strategy has got a five-year lead and a five-year relationship with all the investors
that they go to for the converts. So I think that's the comparison right there. And if you
have large positions and you like to trade like I do, then from that perspective, I need the
liquidity from a bigger player. The smaller ones are interesting and I hope they're successful.
But for me, I'm more inclined to continuing with the larger players, even though I may have some
small positions in the smaller ones. Get Adrian in there. Adrian, you've been holding it. Go for it.
Yeah. I think what's the most likely outcome is that this is going to be a decision around the
new portfolio, the new 60-40, right? Instead of us thinking in terms of what is the best bet,
we could be thinking in terms of for leverage Bitcoin equities, we would have a portfolio
allocation and maybe strategy is just our largest allocation and then we have a little bit of similar
a little bit of gme a little bit of metal planet whatever and this is not me endorsing anything
this is just me saying that that that's kind of what could happen this is not financial advice
yeah this is not financial advice i see the i see this being the the basis for a new understanding of
portfolio management you're going to have the leverage bitcoin equities you're going to have
the bitcoin plays and people are going to have an entire portfolio dedicated just to that just
many just like bitcoiners have their bitcoin cold storage i can see people kind of partitioning or
having that kind of compartmentalization of their understanding of what equity should be and leverage
bitcoin equities would exist in their own in their own universe in their own category as this thing
scales which is why i um what grain has been saying what dan's gonna say what you've been saying
when this becomes systemically important the moat that strategy has is not going to be
overcome. Even if they stopped today and didn't buy Bitcoin for another five, 10 years, I would
be shocked if anyone caught them besides like a Mag 7 company. And that would take a Mag 7 company
going like balls deep in it, right? And just saying, fuck everything else. We're only going
to go with a Bitcoin strategy right now. We're going to try to beat strategy with regards to
the amount of Bitcoin they have in a balance sheet. I just don't see that happening. So their lead
right now, in my mind, gives them the biggest moat. It gives them almost, I don't want to say
an insurmountable mode, but kind of. And I think that we will be assessing the other plays as part
of a larger leveraged Bitcoin equity portfolio. I want to add something. So from an institutional
standpoint, strategy is the biggest, has the most liquidity, but it's also, and it's going back to
what Green said, it's the most trustworthy. That's the moat that it has right now is the switching
costs right it has a five-year head start a five-year reputation of doing what it said it's
going to do we are going to buy bitcoin and increase bitcoin for share right and we had some
we had some conversations with sailor at the conference and it was very apparent that he wants
to be a trustworthy partner to everyone in the ecosystem around strategy all the derivatives if
if you're buying the convertible debt if you're buying the the preferreds all of it he wants he
wants you to know that he can be trusted and from from an investing standpoint and i think like the
best example of this recently is gme right imagine if you just yolo'd your entire strategy bag into gme
maybe they're going to buy bitcoin right but if you did like initially off of the uh off of the
the rip off the announcement well you'd be standing here you'd be like where's the bitcoin
where's the bitcoin whereas with sailor if they're doing convertible debt next day you know that
that they're buying the Bitcoin and it's added to the balance sheet.
And that the trust that can just be fabricated overnight Yeah If you a trillion if you want to issue a trillion dollars of debt right We throw around big numbers all the time but really sit back and think about a trillion
dollars, right?
A trillion dollars is a thousand billion, or a thousand billions, right?
Jeff, have you ever seen the visual of a trillion dollars?
Oh yeah.
It's just like, if you just keep scrolling on the thing.
Yeah.
A trillion dollars is just an absolute shitload of capital, right?
want to issue a trillion dollars and and you actually think you can do it you have to be the
most trustworthy party in the entire market um people have to trust you more than they're trusting
you know other counterparties like the us government right like you have to be as trustworthy
as the existing sources for the least risky uh debt on the planet like that and and you know maybe
maybe it's time to you know work our way into what we saw at the bitwise event because i think this is
is getting us directionally there.
That was a good segue.
Really good segue.
Yeah.
Maybe Dan, we'll kick it over to you
and just any background or insight on the Bitwise event
and maybe we'll just pass it around real quick
and just kind of jump into it.
Yeah, I'll give my 30 seconds here.
I think the thing that hit everyone was sailor speech
was fantastic the entire way through.
And then you have these two slides at the end
that talked about the credit worthiness of strategy
and how over collateralized all of their preferreds and convertible debt are.
And he gave certain multiple figures.
It's like, oh, so it ranged from the preferreds, the strife was over collateralized by 44,
at the 44 times the outstanding, and then it ranged all the way to like, you know,
10x the convertible debt is collateralized by their Bitcoin stack,
and then based on their, you know, their position in the capital structure.
So those aren't the exact numbers.
But the point being is he had a really good framework to explain to big institutional players how they should be valuing the debt and how safe it is.
And the point he brought up was that the debt itself and the preferred stock is trading like a distressed emerging markets bond and preferred shares, which are essentially a perpetual bond, just because of how high the yield is compared to the yield of a risk-free U.S. Treasury.
So again, the yield's so high on strategies, convertible debt and preferred stock. So preferred
stock being the bonds, convertible debt's different, that it's trading like distressed,
high risk emerging markets debt. And that's really important, I think, to, well, if you're
a fixed income investor, there's massive opportunity there if you recognize how credit worthy strategy
is based on a Bitcoin framework. Okay. So I'm going to repeat this very simply.
strike and strife are incredibly undervalued if you think that strategy is not risky,
or if you have an understanding of their leverage ratio and how they manage their business.
And I put together just a quick and dirty on this, and I tried to make it as simple as possible.
So I pulled the risk-free rate, right? So this is the 10-year treasury as of today was 4.19%.
Strife, the perpetual strife, which is basically micro strategy debt,
has a yield of 10.91% today. The spread on the risk-free rate is 672 basis points. And I know
Saylor did this a different way. So this is just a basic framework here. So the spread on that,
so the asset, you could say the excess risk over and above the risk-free rate is 672 basis points.
Now you look at what else is in the market, right? So you've got Boeing preferred stock is paying a
yield of 4.76. So it's got a 57 basis point spread. AT&T is at 6%. So you've got 181 basis
points. And you've got PG&E. And this is the one that really slapped me over the head was PG&E.
Because so PG&E pays a 6.86% yield. So 267 basis point spread. All right. For those that don't
know, PG&E provides electricity for two thirds of California. Okay, absolutely enormous utility
provider. They in 2018, they were deemed liable for the Paradise Wildfire event, which was a 12
billion loss on the entire industry. And I think PG&E paid claims of roughly... PG&E was deemed
liable for the event. So they had faulty wires, faulty infrastructure. I think they paid $12
billion or no, they paid around $4 billion of loss in that event out to insurance companies that paid
out all of these claims. So PG&E has about a $36 billion market cap, and they've got just an
enormous risk profile, right? Like they were deemed liable for this event in California.
The way the law is written in California, like inverse condemnation, basically utility companies
are liable for damn near everything. So when you compare just the general risk profile here to
a company that's got digital capital managing a leverage ratio with a 20% leverage ratio
compared to PG&E in California, which is incredibly risky. They can't even get reinsurance on their
portfolio because they are so risky. There's not a single reinsurance market that's out there
that will provide reinsurance capital for them. And so it's relied on the California state
government in order to create this backstop that sits behind PG&E in a case of a wildfire event.
So you think about the risk framework here.
And when I compare the two, just PG&E to Strife, I look at Strife as incredibly undervalued.
So you're getting just the relative marginal risk that you're getting for the product relative
to these alternative products that are in the market.
You're just so wildly underpriced.
Basically, it yields way too high.
And I think Saylor was, he's just like trying to pound the table, like tell all these people
at these rating agencies, hey, this isn't that risky. And I think they're really struggling to
comprehend the risk profile of these types of products. So a lot of evolution happening in
this space, and it'll be really interesting to follow. Jeff, can I offer an idea for some people?
So I think there's a Bitcoin maxi sort of ideology that since strategy doesn't provide
proof of reserves for their Bitcoin, then you can't be sure. And so this doesn't feel as risk
off as it may sound, which I'm not of that belief. But there was an interesting post and I forget who,
I think it was Joe Burnett. He said, if you're worried about strategy, not having the Bitcoin,
what you can do is you can buy the Strife preferred stock and then buy a one year put option
at like $50 a share for class A, it costs nothing, nothing. So in the case that strategy doesn't own
any Bitcoin, you are completely collateralized. You're completely protected because the class A
shares would be worthless. So you can get this, it's so crazy how you can get that sort of
protected yield in that manner. I think it's kind of a cool way to do it.
Well, that's a really interesting thought. Yeah, because your put option that you buy
is effectively insurance to the downside. You can lock in a 200 basis point, probably 500 basis
point credit spread if you bought a put and held strife relative.
Put costs like 1%. Yeah. So you're getting a 10% yield instead of an 11% yield effectively.
With insurance.
Yeah, it's insane.
With insurance that if they didn't actually have the Bitcoin, which that's just wild.
You know, it's insane.
Yeah.
I'll go back to what Saylor says all the time.
If you have land and you build a building in Manhattan, and he talked about that, whatever
it was, five, six months ago with the New Zealand person, that interviewer, I always
forget her name.
And what he said was, is that when he gets the money, he deploys it.
If you're going to go build something, right, if PGE wants to go do upgrades or any of these
companies or Boeing wants to go build more planes, it takes physical infrastructure to
go do that.
By the time they build a new factory or plant and hire people, that could be one, two, three,
four years out there.
And if you have a real estate person that wants to go do a building and you give them
a billion dollars, it takes them three years to build it.
Saylor can deploy this in one week, a billion dollars into cyberspace, deploy it and buy
the Bitcoin.
and Bitcoin trades 24 by 7.
It doesn't get depreciated.
It doesn't need to have maintenance on it.
It doesn't need a new roof or a new factory or whatever.
And then the storage costs are virtually zero.
So from that perspective is eventually these companies will wake up to this.
And these credit spreads that you're seeing here, it's like,
why would I do this if I could just buy the strategy stock?
And then what I can do is I could sell it anytime I want to.
If I don't like it, then I sell it. I'm not tied into it just by owning Strike and Strife.
And I think that part is really, that's really interesting for the folks that own that, for the companies that own that.
They don't have to wait a five-year term. They could just do it for a year or two.
Like, oh, we got these great returns on it. Now we're going to sell it.
That would probably trigger a taxable event, not giving financial advice for those companies, but they could hold it long term.
And I think that's why he built them.
Completely. That's a good point.
The liquidity of those products is incredible.
And that's what he talked to us about a bit at strategy or at the New York conference was that these are fully liquid.
It only ups the efficiency of the converts, right?
There's a slight bit of inefficiency with the converts because they're private placement.
Now you've got these fully liquid convertible notes that pay a coupon to fixed income investors.
Like that is incredible.
It's only it's that much more efficient.
Yeah, your algos get that much more efficient, too.
They just have more places that they can trade and move it. And it's just another product with
another deep, future deep pool of liquidity. It's so funny. Where are the algos now?
Look at this. This is an arbitrage, guys.
This is an arbitrage.
You buy Strife and then you buy the floor put option. I mean, just do that. You just do that.
I wouldn't tell someone to YOLO all into MicroStrategy necessarily. I'd tell them to YOLO
all into Strife and then buy the put, buy the deepest out of the money put. There you go.
there's your 10%. You're locking it in. Yeah. Go ahead, Green. Yeah. So I'm happy that you built
this chart. I think this is great. Just to give the folks, people on the call, context for what's
happening is that at the Bitwise event, it was approximately five hours. Saylor did a great
masterclass on his presentation. Everybody should watch that. I think he had new content. The end
of it was great where he talked about these credit spreads. And I think that's what we're
talking about right now. But what happened was, and I can't stress enough, this is advice.
If this is your biggest investment that you have, or you have a decent amount of money in this,
you should go to an event and you should go meet Michael Saylor. I highly recommend that.
He is a very outgoing person. You can meet him. That is possible. We had about 30 minutes with him
after this. And we talked about this in detail. And there was, initially it started, there was
three people. Jeff and I were there and a couple other friends. And then after a few minutes,
the crowd formed. And we talked about this in great detail. And this is a very esoteric area
to talk about, but he was very specific about what he thought was going on in this marketplace.
And so my takeaway for that is that if you have not been to an event where Michael Saylor is,
my recommendation is to go to that event and then to go introduce yourself and meet the person. I
you get a much different experience uh doing something in person than online so that's my
recommendation and yes father that person said that was my bedtime reminder so it is well i am
on the east coast it is it is 10 45 people i love it you know some of the some of the commentary in
in the x community right now is like where's the demand for the converts or like why isn't he
issued more converts and i think you know after after speaking with him that there's a lot of
a lot of focus on strife and strike because they're they're kick-ass products like everybody
should be eating these up and i think there's a decent amount of energy being pushed towards
the marketing of these products and the understanding of these products right there
they're a little bit foreign right we're talking about them all the time and dan i mean just last
week or two weeks ago you had your like aha moment on strike right now you've been obsessed with it
And like, when was it launched in February?
Right?
Yeah.
It took me a while.
And you were thinking about the stock like 24 seven all the time.
And now in order to get the rest of the world's mind around this, the other different capital
pools, you got to go market the product, get out there, talk about what's going on.
And a podcast like this, other people talking about it in traditional financial framework,
just take some time. And I think there's desire to push more capital into strike as a convertible
bond option because it is this fully liquid product and it is a convertible bond. It's just
in a different wrapper, fully liquid wrapper. I think one thing that's interesting is you could,
in theory, convert ARB hedge strike, but I don't think it's trading that way right now because of
the yield. That's the thing is the yield so high relative to the value of strike. You can't take
the bond. You can't take the preferred and then do your delta hedging on it. Right. So I'm moving
that it's not moving. It's not moving. Right. Once it's once it's real high, right. Once strategy
at a thousand plus a share and that yield is 2%, then you can go nuts with delta hedging and have
no time decay. Not that the converts really have that much time decay, but regardless, I think it'll
be more like a convert as the price of class a starts to go higher and we'll see more of that
convert our market move into the preferred market oh yeah until then i think there's some converts
hopefully in the works or yeah yeah it's like that uh that image dan i think you had it maybe
you're showing it um next week at our at our um conference but that image where you look at the
convertible bond pricing curve relative to like where it converts into equity and once it starts
moving, then it's like, that's where a lot of the Delta hedging can happen. But like when it's
super low, it's just, it's kind of, it's the yield product. It's like the yield product hedge
downside. Exactly. And the converts have zero yield too, right? Which adds to its,
like it will start moving even quicker than the preferred.
Right. Right. And the existing convertible bonds that have a 0% yield are moving more
just because they're just way more sensitive to the equity.
Right.
Okay.
And the strike is so close, right?
They're only 50% out of the money.
Right.
Some of them are more or less now, but they're only set 50% out of the money.
Whereas these things are whatever, 300% out of the money as of now.
Yeah.
Way out of the money.
Interesting though.
Like if there was an options market on strike, I mean, you'd be buying calls, right?
Because as this thing move into the money, the volatility is just going to go nuts.
It's going to move like equity as a guess.
There we go.
I went call options on strike and option on the option.
It's the third derivative.
The third derivative.
Speaking about that, the market has matured systemically since fourth quarter.
There were no options even on IBIT until November 20th And so what happened is as Strike and Strife came out and the market he acquired a lot more Bitcoin in the balance sheet there a lot of other
products that came out. Misty had already been available. IMST with Bitwise just was just launched
approximately, I guess, about a month ago. And so what now happens is that you have your choice
and Saylor always puts up that chart about how do you refine oil that comes out of the ground.
to make all these different products out of it. And that's what he's been talking about
for maybe six months. I don't know. He originally showed that slide or maybe he showed it a year
ago. And now as the market has matured, they have all these different products with different risk
profiles and different return profiles, whether it just pays a fixed coupon on it or it's the
micro strategies, sorry, strategy stock that just goes up and down, has more volatility.
you have all these different choices. So again, not financial advice. I think about this.
I like strategy stock. And if it's volatile, I want more strategy stock. I want options on it.
If the market goes sideways, now I have the option to go into something like
IMST with Bitwise, because then it will probably pay its dividend payment or strike or strife.
And then when the market runs up, switch back and forth. So now I have something what I call
the trading pair between these two things and I'm able to switch back and forth between them.
That's something that I look at and that was not available six months ago. The market has
matured significantly. So that's the difference that I see and that takes time for this to all
get built. So I think we're heading in the right direction. And to that point, can you imagine,
I know Jeff and Mason, you guys have been talking about Metaplanet a lot recently or in the past
couple days. I mean, I can't even, I don't have enough time to follow all this stuff and think
about all the different products you can create in your own portfolio, whatever there be hedging,
strife with puts, buying calls on MSTR, buying calls on the, it's, I mean, that's a full-time
gig just looking at MSTR's derivatives. And Adrian, to your point, this is an ecosystem,
right? Like if one, a group of analysts can full-time and not have enough time to focus on
just MSTR's related products, right? On strategies related products. I mean, that in itself is an
ecosystem. Yeah. And how do you expect like a traditional financial analyst to be in front of
this stuff? Like they just, they can't, right? Time is limited. It just takes too long.
Especially, especially with something like MetaPlanet, which I believe was the best performing
stock in the world last year, right? For a traditional Wall Street analyst,
wrapping their head around strategy is is mind-numbing for them but learning Japanese
securities law and all these different securities that Dylan's putting out there like I I don't
understand I I don't have enough time to to really look into it and I was talking to Dylan I was like
you you must have gotten like a PhD in Japanese securities law in like a year right he's he's had
to he's had to keep up with all this in the same way that we've had to keep up with all of this so
it kind of reminds me going back to the sailor quote of like focus your energy right there's
you only have so much bandwidth and as this as this market gets more complicated as there's more
opportunities more shiny objects really make sure that you know what you are doing and and you have
but you kind of have a fundamental understanding
of what's going on in whatever it is you're investing.
Not financial advice, but I think that's good life advice.
And the thing with it is, is that to understand all this,
you have to understand Bitcoin first, right?
That has a steep learning curve.
And then to understand strategy on top of it,
that's another steep learning curve.
And now you gotta throw in Metaplan and Sembler and Cooler
and all these other, and GME and all these other plays.
This is very much ecosystem.
is very much an economy and it's going to some people are going to burn out some people are going
to find opportunities but it's going to require an entirely different way of thinking because you
know jeff and dan was just walking through all the different ways you can play this thing
and i think sailor's doing that deliberately he wants to create an economy an ecosystem that
becomes self-sustaining and gives you adversarial and complementary plays that you can do to cover
your own losses and to cover your own upside and to make sure that you have as many opportunities
as possible to make money essentially. And I think that the more companies that copy that,
so if similar copies of GME copies it and tries to do the same thing, it's only going to get more
and more confusing for the traditional finance markets as we know it right now. So this is very,
very early. I know it sounds corny to say it, but it's very, very early. And when the market
cap gets larger and larger and the other players come into the fray it's only going to grow and
it's going to become its own thing that's an entirely different way of thinking about finance
so yeah i think that the future's bright yeah right this is this is the bitcoin portfolio
theory right and the fact that sailor has created these products and they he's many the team is
managing their leverage ratio very safely provides space for people to live on a Bitcoin standard
with these products. And that's how you grow the Bitcoin ecosystem, right? Like what I'm doing
right now, I'm living on a Bitcoin standard in the Bitcoin equity ecosystem. And if the price
moves 100% from here, it goes to $600 back to a new all time high, there's going to be dozens,
hundreds of other people that are going to be doing the same thing and they're going to be
focusing their time and their energy on continuing to build the ecosystem i don't think that's priced
in it's reflexive it's reflexive like like the whole thing's reflexive right because everybody's
going to be like oh yeah you know got a brand new car new house and you know what whatever it is and
that you know you start talking to your neighbor like what do you do well i'm uh i run a bitcoin
company i think and we're going to hear more and more stories that's the thing that a lot of bitcoin
Bitcoiners are missing, and I think we talked about this either last week or the week before.
What strategy is doing, what all these other leveraged Bitcoin equities are doing is creating
a market where a lot of players are essentially passive Bitcoin buyers.
They're passive Bitcoin investors, and they're living passively on a Bitcoin standard.
If you are someone that owns Bitcoin and you own strategy and you're playing options and
you're living off of the income where you're getting misty and you're living off the dividend
or so on and so on and so forth, you are passively living on a Bitcoin standard whether you realize
or not because all the volatility is coming from bitcoin which is driving the volatility of the
stock which then makes the options market grow which then makes misty get more dividend paid
and so on and so on and so forth um i i i really i'm looking forward to the day where a lot of the
dogmatic opinions about bitcoin start to advance a little bit and we realize that the
financialization of bitcoin was not only inevitable but it's also mutually beneficial
and I think that's what
Saylor's doing and he's
effectively snuck into TradFi
right now and I think people are
still a little bit under the radar
even though they've gone from 1 billion to 100 billion
and it sounds crazy to say that
he's still under the radar right now and there's still
a lot of people that are going to get caught with their pants down
with what I like to call the oh shit
moment when this thing becomes so large
and they're just like where did this thing come
from? How did we miss it? And it's
only going to grow from there as well
and yeah
Yeah. Yeah. Yeah. I want to, sorry. Yeah. So one of the things that happened at the Bitwise event was,
we met a lot of people there and it was known that the MSCR2 North people were there.
And so what happened is I spoke to a couple of people and they're like, you actually do this
full time. I'm like, oh yeah, we're talking 10, 20, 30 hours a week of research. And we are all
focused on this particular area. This whole ecosystem comment that we're talking about,
strike, strife, the stock itself, the converts, any traditional analyst will probably be reviewing
10, 20, 30, 40 different stocks. And they don't have that laser focus what's going on.
So as Jeff always say, this will be the most hated rally on Wall Street. And for us, it's the
most loved rally because we've been tracking this for two years, three years, four years,
five years, however long you've been in it. And we made these enormous gains and we're helping
this whole community. And so I think the craziest thing is that when I continue to talk to people,
either the ones that are not in this at all, and they're like, how much time do you spend on this?
As much as I can. This is it. This is what's propelled us forward. And I think that's where
it is. And I think that if people saw the gains in their own accounts, they would spend also that
much time on it. If you can't make, if you don't see the return, you won't do it. So we all put in,
as adrian said you have to understand bitcoin first and once you understand that you apply to
a bitcoin treasury company and now we're on the cutting edge of this of seeing how it happens
so for us to be honest with you i'm just waiting for the next for the run-up to happen as it's
happening right now i just i wait what do i do i have to wait and i'm okay with that
there's a if you listen closely there's a there's a sucking sound and the sucking sound is capital
going into Bitcoin, right? It's going into Bitcoin. And how is this happening? Well,
slowly at first, and then faster and faster and faster. And Sailor made a great point about,
we're talking about marketing. I think Justin, Justin does some work for us behind the scenes.
He manages the chat. Hi, Justin. He asked him, do you have any plans for marketing?
and we're at this bitwise event it was beautiful right there's you know free drinks it was great
right on the water perfect day in front of you know 200 uh wall street executives analysts people
in the broader crypto space retail people and sailor gives this i mean it was amazing we were
all there. I hope Bitwise posts it because it was an amazing speech. And he hammered it. He murdered
it. Right. And he has it so concise at this point where it's kind of, you can't dispute it. You can't
dispute it. It's like, there's Bitcoin and then there's everything else. And if you're not in
Bitcoin, well, good luck. And he radiates confidence because look at what he's done. And he already
knows what's going to happen, right? He's like, like, Bitcoin's going to 10 million, right? He's
been very open about this. He's telling his secret. He's saying, there's more companies
doing this. Welcome. You're helping me. You're helping the ecosystem because it's not zero sum,
right? And what he specifically said about marketing was, I didn't pay for any of this.
I'm here today, right? I'm talking to all these big names on Wall Street, and I didn't pay for any of this. This is because of the ecosystem, Bitwise, which has multiple ETFs, IMST, which is, you know, covered calls. And what's their other one? OwnB?
which is the larger bitcoin treasury company uh etf he said i didn't pay for this
so what's happening here is people once they join the ecosystem suddenly have a self-interest
and they're welcoming more people with open arms and and how does this happen well slowly
and then faster and faster and faster as as people oh you bought the boat you bought the car or
whatever it's not even that it's oh you you feel you seem relaxed or you seem happy or you seem
hopeful or you know you're not you're not miserable or nihilistic right and and it it kind of radiates
out so how is this going to happen slowly and then all at once and it's incredibly reflexive
That's what I keep coming back to is Bitcoin is this perfectly scarce thing that is entering TradFi, and that's never happened before.
It's never, this is an event that we were witnessing for the first time, and it's really profound that we get to be here at this moment to see it grow.
I agree. And I add something the way I'd say it. He said something very keen in his speech to what you're saying. It's why are people listening? Why do I why do people let me do this? Why do they create products off my stock? It's because people are making money. Right. And he looks at any kind of squints. He's like, yeah, because people are making money, guys. Like, yeah, don't forget that's, you know, he's like, what are these Wall Street guys want? They want to make money. What are the convert arm guys want to do? They want to make money. I mean, you can trust greed. And that's one thing. I think you can kind of trust greed.
And he's very clear in that he's creating a trading device, an ecosystem, products that do exactly what his investors are looking for because they want to make money off this thing.
And so the incentives are aligned.
I just think the incentives are aligned.
Everyone wants to make money.
And I'd want to be in a stock, in an equity, where people want to enter it because they believe they can make money.
Well, the thing about it is, is that not only are the incentives aligned, but I think people
miss the point that Bitcoin is actually a very cooperative system. The more people that
participate, the more the participants benefit, right? In a fiat-driven mindset, more participants
leads to more dilution, which leads to more competition. And I think that's part of the
challenge that traditional companies are having, why more people haven't just followed Sailor.
Because to us, common sense, we're looking at a billion to a hundred billion, and we're like,
what's the holdup, right?
But I think traditional finance is looking at it
and still in a very, very competitive stance.
They don't want to get into something they can't dominate.
They don't want to get into something
where they can have a cooperative system
that everyone benefits from.
Bitcoin goes up, strategy wins.
Bitcoin goes up, you win.
You know, they don't want that.
And I think it's a very, very different kind of thinking.
And I also think that that is something
that's going to leave a lot of companies in the dust if they cannot reconcile a new cooperative
paradigm in a new cooperative economy in a new cooperative ecosystem they're going to be very
very swiftly left behind in the fiat world where they're still playing the same games doing stock
buybacks playing the same kind of leverage arbitrage games that they play without getting
on this bandwagon and to mason's point the oh shit moment's going to happen and then everyone's going
going to kind of flood it, right? And I think that's when we see scary runups in price. And I
don't mean like literally scary. What I mean is I envision a year where we see Bitcoin start off
with a certain number of zeros and then end that year with one or two more zeros within the same
year. And that becomes a new price point. And then we go from that price point onwards. Because
again, to Mason's point, it's a vacuum cleaner, right? It's sucking in all the capital. Bitcoin
can do that by default it can siphon away capital from all these markets and if you look at the
global market there's anywhere between one and two quadrillion when you look at derivatives we
look at bonds we look at real estate there's there's a lot of room to grow i think right when
just real quick last thing to add um in a recent interview sailor said you know the latest pushback
he he said people used to say oh it won't work the latest pushback was oh you've done it too well
you've already won, right?
And that's, this is where Bitcoin's an ego test.
you have to accept you or you have to you have to exactly what you said adrian is you have to accept
that joining it isn't an it or joining it late isn't an indictment of you right it's you're doing
it because you're you're benefiting from it and that's what's beautiful about it is that you get
to you get to be a part of it and you get to benefit from it and it's again it's not zero sum
every single person who's ever bought bitcoin has missed the first 100x
because it started off at you know effectively zero like if you take that limit every single
person who's bought bitcoin has missed the first 100x yeah the ego test you have to pass the ego
test yeah when you look at that realistically assume that bitcoin started at a dollar i missed
the first 2000x and i've been in it for eight years i missed the first not even at zero i already
i already missed the first 2000x so i thought i was late back then i i who knows where this is
going to be in one or two or three years down the road think about what you just said at the very
beginning part of this call um approximately what 190 000 bitcoins and now there's 550 in january of
2024 and now we have 500 strategy has 553 000 bitcoins on the balance sheet where is it going
to be in two years if it goes to a million bitcoins there people get gravitated when you switch over
from a six digit to a seven digit number and we saw this in 2017. in 2017 it was can bitcoin break
ten thousand dollars per coin it started a thousand and eventually it almost hit twenty
thousand that year so people attach that number so i think a seven digit number for it to switch over
i think that can happen sooner than people think and once it breaks that barrier as uh dan said
about unit bias or or scale bias as adrian said once you hit that number then it's like oh i guess
it can go bigger same thing with a company where it's a trillion dollar market cap it's got to slow
down no it didn't seem to for the top three companies for microsoft apple and uh nvidia
put on the gas over to you tim you got something yeah i was i was listening to mason talking about
that sucking sound right of capital out of these uh pools these martin you can hear it right i can
i can hear it but the the sucking sound is not going into game stop right i have a little
i don't know it just doesn't make me feel great that we keep bringing up this name that yes it's
a meme stock yes they have made this announcement but as of public announcements as of today
they don't have any bitcoin so we can stop talking about it like join the ecosystem right i i just
think i don't know the whole it doesn't fit the vibe of the messaging in the bitcoin treasury space
That's just my opinion.
Yeah.
Everybody that's bought Bitcoin has been super transparent about it.
And they're excited to talk to you about it.
Yeah.
So I did think it was super cool.
And everybody probably knows it because I retweeted it.
But Bitwise had a little clip today where they asked Eric Semler, Tom Lee, and Stephanie
Lemmerman, how many companies are going to be on this Bitcoin treasury, this Bitcoin standard,
have a Bitcoin treasury strategy? And you can go listen to the clip. I think two of them said
there's going to be thousands, right? Eric Summers saying thousands. And one of the people said
closer to 20%. And I went back to the clip that's literally the cover clip for the Treasuries
podcast. And I think it was December of last year, I said, and it's still floating out there,
I think at least one out of every 10 companies. Now, I don't know. Nobody knows the future,
but that was kind of my guess when I started that project. And I just think it's really
interesting that now you have arguably the most knowledgeable people in the space,
right similar scientific fun strat fold kraken saying like it's going to be thousands of companies
it could be closer to 20 that's super interesting from like december to april um so yeah i thought
that was interesting and what are there like 50 55 000 companies in america something like that
just some like absolutely absurd number most of them are private but uh and yeah and and that
That's just continuing to evolve.
It's like, as Saylor says, right now it's on a need to know basis, but in hindsight, it's going to be obvious.
I'm super intrigued, whoever wants to take this, but Jeff, how did it hit you when you first saw the stat that 55 million retail investors directly or indirectly hold strategy stock, MSTR?
I mean, that's a big number.
well huge number well it's qqq right i mean anybody that holds qqq and some sort some form
of qqq or um you know target date fund that follows qqq to some regard like is how it sneaks
in there and i i bet you 80 of probably more 90 of them probably don't even know that they hold it
yeah the other thing that so and it just becomes like more more and more popular right the other
thing i think uh adrian or someone referenced uh maybe dan did jeff uh joe burnett's uh one post
today it the part that struck me um is he was saying what you hear a lot these days which is
corporates institutional nation state but he said and of course also still individuals
which brings me to my vacay treasury company in the wild story.
So I snuck away literally the morning after the Bitwise event to Turks.
Hadn't been there before.
Super cool place.
If you ever want to go on vacation and not have anyone else at the pool,
do it two weeks after spring break.
So we got lucky with that.
But I'm sitting at this restaurant and I say to Elizabeth,
with, hey, that guy over there has a Bitcoin logo on his Yeti Tumblr.
And I said, don't worry, I'm not going to say anything.
You guys know that's false.
So they get up to leave, and the guy's walking towards me to walk past me.
I go, hey, I really like that Bitcoin logo.
He goes, if you know, you know.
And I said I don know what I said to him but his wife said to my my girlfriend she goes we got a business And she goes we got a podcast
And I looked at him and he's kind of anonymous.
Right. So I don't want to say too much.
But I say, can I ask you a personal question?
He said, sure.
I said, do you have any Bitcoin in your corporate treasury?
He said, I mean, almost entirely.
I was like, all right, well, here's my info if you ever want to chat.
So like the individuals are still out there, right?
All these Anons just lurking, just stacking.
So I just wanted to highlight that for a second.
It's happening behind closed doors, right?
All these sailor interviews are not going on deaf ears.
People are taking action.
Yeah.
Exciting times.
Should we get into earnings or just talk about what prep for earnings?
Can I just say one last thing about the Bitwise?
event it was just uh for me that was kind of the the first event that i've been to um
since true north right since true north has only been around since september october and it was
just incredible to have the the retail people there come up and say hi and it was it felt really
powerful to me that we're affecting change and people are listening to us and um i just want to
say thank you to the to the people that came up and said hi it was really really cool and uh made
me feel really motivated and enthusiastic about continuing this and continuing doing work and
continuing educating and spreading the word about uh bitcoin strategy and uh bitcoin treasury companies
Mason's just focusing that he's a rock star now.
He's like, people recognize me.
He's like, whoa.
Yeah, it was weird, but yeah.
Yeah, it's really cool.
And big shout out to Bitwise for hosting the event and inviting us out there.
I mean, it was an incredible event.
And shout out to everybody that came up and said hi.
Yeah, we love having conversations.
And it's great to meet people in a small environment like that.
Good point.
Shift to earnings.
Earnings is tomorrow.
And where should we start?
So throughout Q1,
strategy had,
so MSTR will be adopting FASB fair value accounting
at the end for this Q1 earnings.
It will be announced tomorrow at close
when they talk about it.
Now with FASB fair value accounting,
MSTR has to mark their Bitcoin to market
at the end of Q1.
So it starts from day one on Q1,
January 1st and ends March 30th. Yeah, ends March 30th. So any gain or loss during that period is
applied to every single Bitcoin that they own. So Bitcoin started the quarter at, I want to say
93,600. And I think it ended the quarter around 83,000, something like that, maybe 84,000. This
is right around Josh's prophecy. And so strategy is going to have or announce around a $5.1 billion
dollar net loss on the Bitcoin held on balance sheet. And this will be reflected in a very
negative earnings per share. I think it'll be somewhere, I don't know, around between negative
$12 and negative $19 per share. There's a little nuance with how tax is accounted for
and the software business and other business stuff that happens in between, but it's likely going to
be a very negative number. This is on the back of adopting FASB fair value accounting. They also
had a $12.7 billion gain in 2024 that's being added to retained earnings at the beginning of
the period. So this will reflect that MSTR actually had a $12.7 billion gain last year in 2024,
but it's going to come out of a very negative earnings here in Q1 2025, which is hilarious
because if you go, you look at what the analyst reports estimated earnings per share for strategy
are, they're negative two cents per share. That's like analyst consensus. And we're talking about
something that might be like negative $15 a share. It's just a complete blowout, right, from what
analysts expect to expect to happen, which I think really just emphasizes how far behind some of the
traditional financial markets may be on this. I mean, the algos in the system may understand what's
going on. But the people that are running the analysis on this stock have no idea what's going
on. They have no idea mark to market value. They have no idea of the accounting nuance.
There will be significant posts about this tomorrow and Friday. It's probably going to be
from Peter Schiff. It's going to be from Jason Calacanis. It's going to be from all the typical
people seeking alpha, probably Citadel are going to come out and say, strategy at a $5 billion loss,
it's the worst company ever how is it you know price so high but they actually have no idea
that that entire loss in q1 has actually already been made up here in q2 and the price of the price
of bitcoin's at 95 000 and strategies already made money on their bitcoin held on balance sheet in q2
so there's this like traditional quarter over quarter framework that that most of the traditional
market operates on, but you've got this new system that's 24, seven, 365 with significant volatility.
And I think there will be this continued like one more quarter of additional bewilderment
where there's significant FUD that's going to be thrown at MSTR, which in my opinion,
I think is incredibly good because it's really like pulling the slingshot of where this thing
could go back even further. Because at some point, part of my thesis is that there will be this
really large earning per share gain in a single quarter, and it's going to surprise so many people.
It's going to hit headline news. It's going to be on the news. It's going to be on Bloomberg.
For every $10,000 that the price of Bitcoin goes up, strategy makes $555 billion.
dollars. So, right, if the price of Bitcoin goes to 150,000 by the end of Q2, you're looking at a
25 billion dollar gain in a single quarter, which is just an absolutely astronomical number. And I
want to put this in perspective, and I've got this sheet here. This is the top 10 publicly traded
company's net capital comparison just over this last year, 2024. So I wanted to point out the
10th largest company in the entire US stock market is Eli Lilly Eli Lilly has a billion market cap and they made billion last year over the entire year That was their net earnings Strategy made billion in 2024
So they're chomping on the heels, right? And you've got Tesla right here. They had a $8 billion
earnings last year. So Strategy had larger earnings than Tesla did last year in 2024.
Now, if you're looking at a situation where Bitcoin rips to $150,000 in that scenario,
they're going to make $25, $30 billion in a single quarter. You're talking about at least
a top 10 publicly traded stock, assuming that Bitcoin just continues to move on a positive
format into perpetuity. So the relativity here, I think, is incredibly important. You think about
the power of Bitcoin and this being compared to other equities as earnings. What is a stock worth?
How do you value any stock? Is every single dollar, marginal dollar of earnings equivalent?
All of these companies that you see on the screen, they have different financial structures.
They have different leverage ratios. You look at Apple. Apple's got an 81% leverage ratio.
So granted, that's an incredibly stable product and you've got revenue coming in the door.
That's very consistent, but they don't have any ability to leverage up their balance sheet
anymore.
And you look at some of these other companies and in comparing all of these metrics, right?
Strategy looks really powerful and poised for significant amount of growth.
You've got a 19% leverage ratio.
So you've got ability to leverage up.
You got a debt coverage ratio.
So you can cover your debt by five times.
That's kind of like the inverse of the leverage ratio.
The multiple on net capital held, basically the market is relative to other equities in the market
is underpricing their growth potential on their net capital, basically their financial strength.
You've got earnings that competes with the top eight to 10 companies in the US stock market.
And the revenue per employee just absolutely obliterates every other company in the entire
market. And the PE ratio, so the trading 12 month PE ratio for strategy is eight. And you look at
this relative to the rest of the market, right? The top 10 companies, the average PE ratio is 37.
So it really begs the question is like, what is a stock? How do you value any stock? And what is
the price for a marginal dollar of earnings? So I think we're going higher, right? That's it.
You know, Jeff, I totally agree. If you look at what you have here, if you look at the number of
employees that Strategy has, they have 1,500. I mean, think about how efficient that is versus
all the other column end there. The other thing about this is that I just think that
they're just not getting it. It's really just that simple. And whatever stats you put here,
after a while, they just look at it like, yeah, we're not getting it. I don't know how else they
like it said.
And then the last part is that when you watch news,
you'll see this on the news.
It's like, oh, housing prices go up.
Oh, that's terrible.
People can't buy houses.
Housing prices go down.
Oh, that's terrible because now people are underwater.
Their house is now worth less than they bought it.
Like, wait a second.
Why are both those scenarios, if it goes up or down,
the price is bad?
So what you're going to hear is the narrative is, oh,
strategy has to take this, it shows this,
as they mark the Bitcoins, it's going to show this so-called loss, right? That's terrible.
But in the quarter where it goes up by $5 billion or $10 billion, they're going to say,
oh my God, that's terrible because they're not making that earnings per share income from their
operating business. You'll be like, wait a second, the number is negative, it's bad. And if it's
positive, it's bad also. You're like, how is that the case? And you'll just always hear them always
take the flip side because people love bad news even if it's not they always love that negative
narrative and after a while you're like i'm just not going to pay attention yeah i absolutely and
where where this gets even more reflexive right if strategy qualifies for the s p 500 right the s p
500 is uh you know 10 times larger in terms of assets under you know assets that follow the s p
500 is 10 times larger than qqq so we saw what happened in qqq with the front running and the
run-up that we saw in november strategy raised 17 billion dollars of capital by selling atm
there's a significant increase of energy that was coming into the strategy stock and now we're
talking about strategy potentially getting included in the s p 500 with a market cap as like one of
the top 100 companies this is this is a monumental potential inclusion in the s p 500 prior to
So when Tesla was added to the S&P 500, when they first qualified, they were a $300 billion company.
And then when they got added, they were a $600 billion company.
And that was like two quarters.
In two quarters, Tesla went from $300 billion to $600 billion from when they first qualified by having positive earnings for four quarters in a row to when they were actually added.
And then from there, it went from $6 billion to like $1.3 trillion, just an absolute monster tear in a year.
and it's largely due to significant front running of the S&P 500. When everybody knows that they
qualify for the S&P 500, it gets pretty hard to exclude them from the S&P 500. The narrative
continues to build and they've got to get past the committee. But I think this is a very similar
situation where it's going to be really hard to ignore a company that has a monumental earnings
blowout period. Jeff, can you pull up the chart that you opened the video with?
Oh, yeah. The trading view.
Yeah.
There it is.
Very simply put, the S&P 500 needs strategy more than strategy needs the S&P 500.
Yeah. Yeah, absolutely.
So what this is showing, and this is year to date, this is MSTR is up 26.7%.
And this is Mag7, Microsoft, Meta, Apple, Google, Amazon, NVIDIA, Tesla, all down 5% to 25%.
So yeah, it's one of these things that S&P 500 needs strategy.
Strategy doesn't need the S&P 500.
It's one of the things that it could just continue to run without it.
Yep.
Well I think we aimed for an hour and we sitting in an hour and a half We should probably say final thoughts and rip out of here I know we got a lot of work to do We got to prepare for our keynotes and get things going But no MSDR True North next week We are obviously going to be at Strategy World We have a lot
of content and information to talk about. So we'll catch you back two weeks from now for MSDR True
North episode 26. And I'm sure we'll have plenty to talk about. And we will also, in the meantime,
at some point talk about 21 uh the new entrance in the market and um and maybe we should start doing
multiple podcasts a week i mean it might make sense to do it at some point
i don't know next week we'll see yeah let's get through next week we'll uh we'll get some
market feedback and we'll go with that uh all right uh final thoughts maybe i'll kick it over
to you adrian uh final thoughts final thoughts pump for orlando oh i know i said this last week
jeff but if i had i would have never thought that posting a dream on green meme would lead to all
this when we first started talking about um strategy so seeing where we where we what were
and where we are and think about where we can go i have nothing but excitement looking forward to
next week i'm looking forward to strategy world looking forward to true north world um debating
on what days of the week i'm going to wear orange tie that's that's something i gotta consider um
I don't know if I'm going to wear shorts to the event.
I might.
I might not.
We'll see how it's going to work.
But, yeah, I think that it's going to be great.
I think that the fact that we are just guys that are actual investors, we're not some big hedge fund, we're not some corporate entity that has come into this space and just made a name for themselves.
We actually did this organically, speaks volumes for everything that we've done.
So this is really exciting.
I'm really looking forward to the event next week.
awesome thanks adrian over to you dan yeah thanks for supporting us guys uh looking forward to
meeting everyone who shows up next week and uh see you all in the future if not next week at vegas
and some other event in the future
bingo mason over to you um watch the earnings call tomorrow i think
everyone yeah everyone has gone progressively better and it's kind of like a sailor podcast so
So don't miss it.
And if you have questions, ask a question on X.
Start a dialogue.
And don't – no, go ahead, Dan.
I'm sorry, Mason.
I interrupted.
Go ahead.
No, it's good.
No, I'm just – I'm excited for Orlando.
Final thought, MSTR True North, we'd make a killer basketball team.
We have some hype, man.
We have some hype.
And I know Grain would be a great coach.
He'd be all about fundamentals, right?
We'd have maybe.
We'd be drawn to play.
Yeah.
I appreciate that.
I'll be on the sidelines.
Yeah.
Come on, move on.
I played hockey, so I'm going to be the water boy.
But maybe a good three-on-three team.
Yeah, we got some hype for sure.
Over to you, Grain.
Yeah.
look, if somebody would have said to me six months ago that this would happen,
I would be like, yeah, I guess that's possible.
So even for me, as Mason said, also,
when you go to these events and meet people firsthand, it is really,
it's really awesome. I really appreciate that.
So I'm looking forward to meeting everybody on,
we're going to get there on Sunday to do set up. So we'll be pretty busy.
But from that perspective, I'm looking forward to meeting everybody.
We're going to be ready to go first thing on Monday.
If you have any questions, just shoot it into Twitter.
We'll do the best we can answer that.
the people that are there, you will be able to track us down and find us.
I will not be wearing a helmet.
So you'll have to see if you can track me down by my voice and hear me speak.
But I really can't wait for Monday.
I think it's really going to be something special.
And we keep on getting, whether it's our sponsors or the attendees that are talking about it,
I think it would be a great event.
Thanks, Green.
Over to you, Tim.
yeah i don't think i can say enough how excited i am and all of us are for next week um if you
have any doubt in your mind about whether you should wear like you know but come as you are
be comfortable right but if uh you're looking at it from like a professional standpoint if you're
looking to network if you're looking to you know really represent yourself the way you want to
represent yourself. There's going to be a lot of people in the room that you've probably heard of
and not just people related to strategy, like people in the industry. There's going to be a
lot of industry people there. So I would say dress to impress and just dress the way that
you would want to represent yourself if you're going to meet the CEO of Bitcoin Inc or whatever,
right all these people um you know whoever you you know think is like someone that you would
think is interesting to meet um and please come up and say hi to us right we're in this weird
position where like i don't know who joe is but like i want to meet everybody like you guys are
the reason that we're doing this like it's about the community so super excited and uh thanks
everybody for all the support, sponsors, attendees, everybody, everybody in the chat, right? Really,
really appreciate it. Yeah. Thanks, Tim. You said it. Everybody's nailed it. And, you know,
a big shout out to everybody in the community. The world of investing and, you know, group think
is completely changing in front of our eyes. And this is the future of stock investing. It's going
be decentralized information and education and we're at the forefront. I think we are materially
early. So yeah, thank you to all the sponsors. Looking forward to meeting a bunch of people at
MSTR True North World and Strategy World and it's going to be a lot of fun. Don't be shy
and we will see you in a couple of weeks. Watch the earnings call tomorrow. A lot of education
happens in the earnings calls. And we're watching Michael Jordan in his prime here. This is sailor
at his total peak, just raising capital. This is a financial icon that everybody's going to look
back on. It's like watching Steve Jobs at the beginning of his career, just continue to tear
it up in the financial market. So thank you everyone. 32,359 viewers. Whoa. Appreciate
the time. And we'll see you in a couple of weeks, if not next week. Take it easy.