I see a red door and I want it into black
No colors anymore, I want them to turn black
I see those girls walk by dressed in their summer clothes
I have to turn my head until my darkness goes
I see a line of cars in their art into black
With flowers and my love won't never to come back
I see people turn their heads and quickly look away
Like a new phone, baby, it just happens every day
I look inside myself and see my heart is black
I see my red door, I just have it into black
Maybe then I'll fade away and I'll have to face the facts
It's not easy to ease it up when your whole world is black
And more will my green circle turn a deeper blue
Woo! Here we go!
Alright, episode 47. We are back.
The Capital Fortress.
We're going to talk about the abandoned baby breakout, maybe a little bit.
But we've got a lot to talk about in a short amount of time.
We're going to try to do this in an hour.
We have got a crew here.
I think there is a poly market on whether or not we get done in an hour.
We'll see how fast we do this.
Okay, I'll stop sharing my screen.
Thank you, everybody.
Welcome to episode 47 of True North, the investment-grade Bitcoin podcast.
We are here.
We are talking about Bitcoin.
We are talking about financialization of Bitcoin.
We're talking about securitization of Bitcoin and everything in between.
We focus primarily on MSDR, but everything in the space.
but MSDR is the clear leader here with 650,000 Bitcoin and they are pioneering the path and
creating the digital credit vehicle of the future. So tonight we've got myself, Mason,
Adrian. Adrian hasn't been on a while. Mason haven't been on a while. So thanks. Thanks for
coming guys. And then we've got Dan and Grain of Salt. And let's just jump right into it. Actually
real quick. Let's hit this. Ladies and gentlemen, what you're about to hear may be amazing,
but it is not financial advice. It's for informational and educational purposes only.
Jeff, back to you. All right, Tim, crushing it. This is not financial advice. We are here having
fun and talking about all of these things. So first of all, actually, I'm going to share my
screen one more time. There are a couple exciting events on the horizon. The first one being
Strategy World. This is in February of 2026. It's coming up very fast, February 23rd
through February 26th. If you want to go to Strategy World, I went last year. I know many
people on the screen went two years ago as well. And it is an incredible event. There's a lot of
electricity there. You can hear, you know, you could be at the front end of what's happening in
Bitcoin finance. It's like taking one of the Bitcoin conferences and just really focusing it
on financialization of Bitcoin. They also have the side event, or not side event, it's really the
AI business as well, that they've got tons of different panels and people talking about those
things too. So if you want to learn more about the AI business and you want to learn more about
the Bitcoin. It's a really interesting event. We do have a code. The code is TrueNorth with a capital
T and a capital N that'll get you 20% off at checkout. There you go. You can see it right there.
And additionally, similar to last year, we are going to have a side event, an inside event at
TrueNorth or TrueNorthWorld. And it's going to be inside StrategyWorld. It will be on Monday,
February 23rd. There will be 150 tickets. This will be very interactive, a little bit different
than last year. We want this to be a chance for everybody to interact with all the folks of True
North, the retail people, hoping to get a couple of guests as well. And last year, the strategy
execs at Fong stopped by and had a quick talk as well. So a great chance to meet other people,
talk about MSTR, really focused on MSTR and Bitcoin treasuries and everything happening in
the space. So if you are interested in attending, please check it out. We will send the link in the
chat. We will also post it after this. It is on Luma True North Inside Event at Strategy World.
We are going to have a really fun after party after this. So on Monday night, we are going to
host drinks and food similar to what we did last year. And you do not have to have a ticket to
strategy world to attend true north world this year and i think that's pretty much it anything
else to add there guys you guys want to add some color on strategy world event
oh no just like the last oh go ahead yeah i mean after last year like last year's was i thought a
smashing success and we got a lot of time with everybody perspectives and share opinions i think
across the board and i think this year is going to be even an even more flat format so like i'm
really excited to talk and discuss kind of how the last year's been for everyone. And especially
considering we're not kind of going into price strength by any means this February, I think it'll
be really interesting to see who's there and kind of who's weathering the storm and build some strong
relationships out of it. Yeah, zero tourists. Yeah, there's no tourists here.
the first 50 tickets cost uh two uh two shares of stretch 2.1 shares of stretch uh the second
50 tickets cost 3.2 shares of stretch and the last 50 tickets cost 4.4 shares of stretch you
can think of it that way uh or if you're on the preferred equities maybe that makes sense
yeah this um the last stretch well i was almost at the last true north world the first time we
the true north world it was a it was a huge um success like dan said for me it was actually rather
shocking um meeting a lot of people that were so interested in actually meeting us and wanting to
get to know us and whatnot and all the conversations um so i think it will be interesting to see what
depending on the price action where we're going to be at um in february and the kind of people
that we have showing up there like angston said no tourists so we should have more um of a dedicated
investor base, but I'm excited for it regardless. I think it should be really, really fun.
Cool. All right. It'll be a good time. We don't make money off this. We may make a little bit of
money in sponsorships or something like that, but we're going to run this very thin. We want this
to be a good time and exciting for everybody joining. So come hang out. It was really fun
last year. It's great talking to people and not feeling like the crazy one, talking to my friends
about Bitcoin and MSDR all the time. So cool. All right, let's jump into it. I will stop screen
share here and we will shift gears. Okay. USD Reserve. Big deal. Strategy just recently over
the last 8.75 days, sold $1.44 billion of common stock equity, and have now built a cash USD
reserve to effectively be there in case of emergency to pay dividends into the future.
And they've dubbed this the battery for the digital credit vehicle. And a few things are
really fascinating here. To me, the things that jump out is instantly this reduces the risk profile
of the preferreds drastically. Just psychologically, it may not have changed the dynamics, but
psychologically, that's a significant buffer there. They're going to have nearly two years of
cash buffer to pay the dividends and can continue to operate this vehicle into perpetuity.
with this cash buffer. They've got 71 years of payment based on the current price of Bitcoin.
That's stable. That's incredibly stable. And the rating agencies will also start to see this
cash reserve. They now have to give credit for the cash because it's real cash. It's not just
Bitcoin. Previously, the credit rating agencies gave zero credit for the Bitcoin. Now they've got
1.44 billion of cash. So you can compare that to the liabilities or the obligations on the horizon.
And I've also, you know, near the end, if we've got some time, I've got some credit framework thinking about CET bank scores in comparison to large, too big to fail banks.
And we can compare like what what a credit rating would look like if you gave, you know, Bitcoin 30 percent credit or 20 percent credit.
We can compare. So I'm going to kick it over to you guys.
What do you guys think? I mean, this is big, right?
There's a lot of noise, bears and bulls, both directions.
And some people hate it. Some people love it.
The Bitcoin Maxis hate it, but the Bitcoin Maxis generally didn't know what was going on to begin with.
And then there's the small cohort of people that can see both sides of the thing.
Yeah, I think the USD reserve is a pretty big deal.
So kind of like what you said, the preferreds being able to scale is a confidence game.
I think a lot of investors are going to want to know that the dividends would be paid.
and the fact that strategy took the step to establish that the reserve says that they're
being very, very serious and very, very mindful of ensuring the dividends at least for the next
18, 12 to 24 months. And some people have even said that it somehow undermines the Bitcoin
thesis because there is fiat and so on and so on and so forth. But I don't think it undermines
the thesis. I think, in fact, it underwrites it is the way I would frame it. Being able to
guarantee the preferred dividends for the next two or so years gives investors confidence to say
that I bought into stretch, I bought into strikes, I bought into strife, I bought into stride.
They might even do one for stream for all we know. And I know that my dividends are going to come to
me for the next 12 to 24 months. That allows them to get to steady state, I think a lot quicker.
I think the market perception of them will change a lot quicker. I think that the reality of it is
is that a lot of Bitcoin maxis, as you say, hate this because everything is fiat, fiat is trash,
so on and so on and so forth. But strategy doesn't represent the securitization of Bitcoin. It
doesn't represent the Bitcoinization of security. Strategy needs to exist in a market, in a capital
market, and needs to be able to function in capital markets. And I think they're taking
steps in order to make that happen with this USE reserve. And I think this would be good for
forward-looking valuations. I think this would be good for credit ratings. I think this would be good
for everything that they're trying to do, especially if we weather a downturn and they
are able to still be paying out the dividends and they're able to maintain the dividend structure
even in a bear market. Because that was one of the biggest criticisms, right? If you have a
big Bitcoin downturn, how are they going to pay for the dividends? I think they kind of just knock
that out immediately. And in my view, I think they should be building a cash reserve in perpetuity.
everything that they do going forward should be seen kind of holistically in my view it's not just
about acquiring bitcoin it's about maintaining the capital structure and in all market conditions
and i think that a usd reserve helps that and given the fact that they've had something like
they've had over 1.17 trillion dollars in trading volume year to date i think that they have a lot
of legway to be able to accumulate a cash position even in a market downturn and maintain
the stability of the overall capital structure.
Because I really do think that strategy represents an economy and people need to start seeing
it that way versus just a smattering of offerings and equities.
So I think it's good overall.
That's just my view.
Yeah, if you look at the risk model that they published on their website, I'm just going
to share it real quick.
And this is based on the presentation.
We can kind of roll through this a little bit with you guys.
one thing that this risk model doesn't take into consideration is the cash reserve.
So this is assuming a 45% BTC volatility and a 10% BTC ARR, but it doesn't assume
utilizing the cash reserve before the Bitcoin kicks in, before having to sell the Bitcoin to
kick in. So it's missing this component of stability of having the cash reserve buffer
for two years. So it pushes out the, it reduces the risk and pushes the credit spread even wider
across the board. And you can take even more conservative figures. You could take 60% BTC
volatility and 10% BTC ARR. And I think these would still look really attractive relative to
other things in the market. Go ahead. Go ahead, Dan.
Yeah, I think you're right, Jeff. And I think there is some sort of efficient frontier of the USD reserve relative to the Bitcoin reserve. Because if you take it to an extreme, if you were all USD, right, we get full credit for the USD on the balance sheet, but we wouldn't be growing the balance sheet at 30 ARR as is laid out by the Bitcoin growth rate.
So like, I think they've probably done a lot of work behind the scenes to determine that, in fact, two years with the dividend payments is kind of the optimal one's perspective as to strength of dividend payments to weather a bear market.
But then also two, to maintain enough BTC on the balance sheet to have the volatility and potential returns to outpace the preferreds for the common holder.
So they've probably spent a lot of times behind the scenes trying to figure out kind of what the optimal amount of USD reserve is, I think.
Funny enough, I almost disagree with you. I'm sure they've done it. I'm sure they've done a ton of work.
You think they flubbered it?
No, no, no, no, no, no. Not what I'm going for.
Sailor probably felt comfortable with the existing business model.
And they raised $1.44 billion in cash in eight days, like eight trading days.
It proved the business model works.
like when when when bitcoin was down when strategy stock price was down everything was hammered
sentiment was horrible the stock didn't even really move in those eight days and it was over
a holiday like and they raised i agree i think something changed in the last what i heard was
that two weeks ago this was not a consideration yeah for strategy interesting but then in the
last two weeks something changed yeah i think it's i think it's also important to put 1.4 billion
perspective strategies market cap or microstrategy market cap was 5 billion in in the bottom of of
2022 yeah it might even be lower than i think it was like four or five billion right so that it's
it's absurd the the amount of capital that they raise and i think from my perspective i think
they're doing it for the skeptics, right? I think it's exactly right. Like, Sailor was definitely
happy with the business model, but I think institutional capital is skeptical. And what
they're trying to do is season the asset, right? This is brand new. All these are brand new. These
didn't exist this time last year, right? So that combined with the four-year cycle FUD, which is
definitely in the mind of institutions as well, right? Three years up, one year down,
then having two years of dividends. In their mind, if the four-year cycle continues,
and if strategy falls below 1MNAV, they're going to be able to pay regardless. And that's kind of
the sentiment that I heard from Fong in his interview with the What Bitcoin Did channel was,
He said, we're going to pay the dividends. We're going to continue to do it.
We're being tested right now and we're going to show the market.
We are going to come out of this stronger.
Really good points.
Yeah.
So kind of like what Jeff was saying about approves the business model with the fact that they were able to able to raise the capital so quickly in the last in those eight days or eight and a half days when sentiment was in the shitter.
that that in my mind was one of the most telling things for me because you know the atm has been
something that people belabored for a long time and i've done you know a lot of analysis on the
atm to see if it actually is driving price and the fact that they were able to do that
get the usd reserve established get this out to the market bring the signaling to the market
change the overall perspective of the preferred offerings i think is a major win that people are
of underestimating because it shows that strategy the demand for it persists even in these in this
downturn cycle and the demand for these preferred offerings i think has been somewhat validated
because they must have seen the impetus to do it right if they thought this was something that was
going to um be something that they're going to have to kind of trot along to make work i don't
know if they would have pulled the trigger on this at this point especially with the market being
where it's at. I believe that internally they probably are seeing that there is persistent
demand for the preferred offerings. I think the volume bears that out. And I think they see this
as a major turning point for the preferreds, given the fact that even the oldest one is what,
Strike? And it's not even a year yet. I think it'll be a year in February 1st. So
it really validates the model. And I think that this is going to be more
more respected and more be seen as a more effective form of capital allocation that
they're doing as this goes on. So for, I don't, I still don't get the people that are funding the
fact that they have a USD reserve. I don't get that angle because they have to pay out the
dividends in USD. So why wouldn't they have a USD reserve? But I think the market's just going
to come around to it the more time goes on. And as the months go on and as we go into year one and
then year two and then year three and so on and so forth of the preferreds i think that they're
really going to scale so i've become more excited about the perspective of the prefers given the
fact that they've taken this step you know the foot the foot has been just eviscerated
it has been i do have to say if you're a complete bitcoin maxi then in fact the usd reserve
technically decreases your edge in in the arbitrage in the kegger between bdc and usd
So I do understand why some people may be a little bit hesitant to adopt it.
But from the perspective of it increases adoption of the preferreds because the credit rating agencies and institutions are much more confident in strategy's balance sheet now, I do think in the long term it is the best move.
But I do also understand the Bitcoin maxi perspective of like, why are you ATMing to buy USD?
So I'll take the opposite end of that just for conversation's sake.
I've been in Bitcoin since 2012.
I'm about, I have been as toxic a maxi as possible for many, many years until I would say the last three.
Bitcoin, you buy Bitcoin using fiat.
Bitcoin is priced in fiat.
You are growing your nominal wealth in Bitcoin terms, but you're still pricing it in fiat.
So people that are saying that the maximalist stance of we don't get why you're ATMing to get USD,
I think that it's more of a philosophical stance than a practical one.
So I understand that many think that cash is trash, fiat is trash, so on and so on and so forth.
But having this absolutist stance, even as someone that's been in Bitcoin for so long,
it doesn't even make sense to me anymore.
So I am of the mindset that I think people are just saying this to say it.
They don't like what Saylor is doing, so therefore they're finding flaws in it no matter what he does.
so so i think that can be true yeah chris mentioned something here that i was literally
about to say uh increase the torque so i'm sure that they had a buyer that came to them and said
hey if you guys had u.s dollars on your balance sheet two billion dollars worth two years of
reserve we're gonna buy you know five billion dollars you know and it's like i like this but
I'm a little sketched out. You're raising capital via the ATM. And if you had a bunch of dollars
and you could pay the dividends for a couple of years, maybe I'd be willing to take that risk.
So while this was a short-term change in Bitcoin per share or exposure per share by bringing in
dollars in the door, there was an opportunity cost of not doing this. And if they wouldn't
have done this, maybe that buyer would never buy. And so not only does it help with the ratings,
not only does it help with the risk it helps with bringing it opens capital doors And I sure that this kicks open capital doors Yeah Right The question
I think you're completely right.
The question of how are you going to pay the dividends? And you say,
well, I'm going to use the common stock ATM. It just sounds uncomfortable to most people.
This is a new model, right? They can raise capital because their stock trades $3.6 billion a day.
they only need to raise $2.2 billion a day on their common stock ATM.
I loved the presentation, how he walked through it.
Six bips of the daily trading volume.
That's insane, right?
They tapped the ATM for 4.5% of the daily trading volume for eight and a half days
and raised $1.44 billion.
And all they need to do is raise $2.2 million a day.
I think they're going to be able to do it
because you've got all these algorithms that are running back and forth
and trading the stock back and forth day to day.
There's so much liquidity in the stock
because it's powered by Bitcoin.
That's one of the elements here
of why you put Bitcoin on your balance sheet.
It makes your stock attractive to all of these algorithms
and everything that could go in between
all of these instruments.
Yeah, Jeff, I think a big part of this
was just a proof of concept, right?
let's raise
a billion and a half dollars
and stick in cash.
Let's demonstrate that to the market.
Let's make them feel safe that we have
the capital. And like you said,
it's going to kick open doors for capital.
If you're not,
if you don't see the value
in this, I'm not sure
what else they could do.
Look at how commercial real estate is.
That's what I'm saying. Some people just don't like it
and they're not going to like it, no matter what they do.
and i think that's what we're seeing with a lot of the criticism um so and to just one of the
volume honestly we're gonna get past the criticism in like two days like the fud has disappeared
like if you don't like it you're gone anyway like you're probably you probably don't even hold the
stock and you know if if you didn't like it and you sold that day like the stocks already turned
back around and of course we've hit the uh what is it called the uh baby baby breakout so you know
I'm just going to YOLO my life savings on that.
I'm just kidding.
I want to chime in real quick.
We're back.
Yeah.
I think they're going to go to closer to $3 billion.
I think they're going to – because Fong said – I re-listened to his short clip that came out,
and then I said it was like a 331, the clip that came out earlier today.
And it says, hey, we may go to two to three years of having a cash reserve.
And so I think that if they're going to start doing a lot of preps, then I think that they're going to let this run.
They're going to hit that.
And so, look, folks, the math is really simple.
Just use simple round numbers.
If Bitcoin's 100,000 and they have 650,000 Bitcoin, that's $65 billion.
2% of $65 billion is $1.3 billion, right?
What does that mean?
$1.3 billion is pretty close to 1.44, which ended up being 21 months.
So they only have to dilute the stock 2%.
This year, they diluted the stock at 13%.
And so what's going to happen is next year, they really don't have to hit the MSCR ATM
unless the MNAV goes up and goes higher.
And that's when they can arbitrate, when Saylor says he can arbitrage that difference,
the delta between 1.0 and 1.25 or 1.5 or 2.0. So I think what they've done here is I think they're
going to expand this out to two and a half, three years. And as they increase the prefs that are
outstanding, of course, the amount of months will drop down because they'll do more prefs next year.
So I think that's what they just, so they have these different levers. The key term back in,
there's always with CEOs, there's always like the flywheel effect or levers. Now they have
multiple levers to pull. The MCR ATM, they have the cash balance, they have the preps.
Did they say what they're going to do with that cash? Are they going to park it in treasuries?
I'm sure they're going to ladder it. I'm sure we will find out.
Sure.
And I'm sure that they will ladder it into different duration treasuries,
just as an insurance company would. If I don't need this, I'm going to park it in a certain place
and let it sit there.
I would assume.
And I think, Gray, your point's really well taken
because think about it.
We talked a lot about,
and I don't think we've talked about it enough,
the effects of amplification on the balance sheet.
And so initially when they came out the press,
I think the most exciting thing for me
and a lot of investors was like,
okay, they can go from having a 20% debt to equity ratio
to upping that to 30, 40, even 50%
because this is permanent capital
that doesn't have to get refinanced or paid back.
Okay.
okay so based on that and now with the usd cash reserve i think you could get institutional
investors especially high yield bond investors who may be interested in stride or maybe convertible
investors interested in a product like strike structure bitcoin they may be comfortable with
a higher leverage ratio maybe 40. and if you believe in bitcoin's keger over the next 10 years
this is where the stock gets interesting if you enter at around a 1m nav and they're able to
maintain a sustainable 30, 40, 50% debt to equity ratio via the prefs, your outperformance
relative to Bitcoin is extremely substantial, like very, very substantial.
So that leverage ratio, in my opinion, and that's what I've said from the beginning,
I feel like is like the leverage ratio is everything for Bitcoin treasury.
And if this enables them a higher leverage ratio, this is the kind of the golden goose
in terms of Bitcoin outperformance over the next 10 years.
Yeah, 100%.
And the crazy thing is the math works.
If you have two to three years of dividend reserve, you can crank the leverage ratio higher.
I've been running several simulations on the back end using Monte Carlo Sims and different models and different price paths, etc.
And it's crazy. If you don't have to sell any of the Bitcoin, you could probably go at like 100% leverage or 100% amplification and the math still works.
Which is insane.
You look at 100% amplification, you're like, well, actually the math still works.
Well, and that's like the insurance company model, right?
Or like what they've been saying about now is like, you know, we could lend out our reserves.
And that's what I was so interested about strategy from the beginning is like right now, the way they're structuring their Bitcoin yield, right?
Via ATM issuance at a premium, arbitrage on the MNAV, and then plus the leverage while Bitcoin increases, which increases their Bitcoin per share over time as the leverage melts or as the prepped events melt relative to the Bitcoin carrier.
That is all diminishing Bitcoin yield over time.
Unfortunately, that's just the nature of the math.
But if you were able to lend out the Bitcoin at four or 5% through a hold bracket bank in sort of a safe manner, that's exponential Bitcoin yield. And now you can put real price to earnings ratios on the amount of Bitcoin yield that they're creating inside their capital structure. So I think in terms of the argument for higher and higher MNAS, they can get to that exponential Bitcoin yield like games over, they've won.
Yeah. One of the things I think the emperor said this as well, and I completely agree with it is I think the likelihood that they touch this cash reserve is very low.
I think that there's a high likelihood that it's business as usual unless we see, you know, like catastrophic movement in equity market and Bitcoin market all at once in a correlated fashion.
Otherwise, I wouldn't be surprised if they actually don't use the common stock ATM very much anymore for capital because they've got plenty of capital and they use it just to pay the dividends and they've got the USD cash reserve.
And then they just sell the absolute shit out of the preferreds.
And, you know, all of the business models, you go to insurance companies, you go everywhere and you try to you really push on the rating agencies to give you something.
something greater than B minus and rate each individual product.
Like they've got an issue of credit rating, which is great,
but each product itself isn't rated.
So once the products themselves get rated, that's another, you know,
kick the door open. There's capital coming in the door.
Yeah, I think, yeah, I think, I think you're right.
I think that they're going to get to, like I said,
I think it's going to be a two to three year cash buffer and they're going to
just be able to ATM in order to pay that. Because like I said,
If we get some help from Bitcoin at $100,000, that's $65 billion, at 2% to raise $1.3 billion,
which they don't need because it's only $800 million per year right now.
The number is going to grow, but they only need so much each quarter.
So you divide 2% out by each quarter, right?
And then it ends up being 0.5% of what they have to sell, which is a small number.
So you did the calculation.
What was your calculation, Jeff, on how many Bitcoins you think they're going to add next year?
I had a number.
Oh, should we go back to our guesses from earlier this year?
Because I think Dan has nailed it on the head.
I think I nailed it.
I think he nailed it on the head.
I think I got it on the T, unfortunately.
Unless they come out with a crazy preferred between the Canadian preferred between now and the end of the year.
Yeah, I'll have to find it.
What do you guys think it's going to be for next year, though?
You think they're going to add 100,000 Bitcoins next year?
I think they will, Grant.
I think they will.
I think they'll add 100,000 Bitcoin.
Yeah.
I don't think they'll add more than that, but I think they will.
Because I think Bitcoin will be higher by the end of the 26th.
My simulation came in between 85,000 and 100,000.
And it really depended upon how much help they get from Bitcoin itself.
If Bitcoin trades sideways, it'd be 85,000.
If Bitcoin went up, then I think that – and if it goes up, you assume that there'd be volatility with it.
My simulations came in 85 on the low side, 100,000 on the high side.
Yeah, that makes a lot of sense.
It's just a monster war chest of Bitcoin.
Just absolutely enormous.
I think it could be higher, like 150K.
Like 25% BTC yield would be 150K.
And that would be just pure yield over and above.
Yield, not addition, not treasury assets, but per share.
Right.
I think they have to come up with somehow to explain,
like we were saying in the beginning of the call,
that if they have this cash buffer,
how does it change their credit spreads because now all of a sudden it takes that risk off the
table for the next 21 months or 24 months i'm working on it oh you're working on that i'm
working on it yeah yeah it's it's tricky that it's tricky like when you put it in the sim but
yeah i'm working on it i do want to talk about i think go ahead yeah this is no great go ahead
yeah so i had talked about this and i want to go to eps for a second so um when they did the
revised and I published this on December 2nd. Well, that was yesterday, I guess. I published
this that what was missing in the document, they had two targets. They had one at 85,000 and one
at 110,000. And so 85,000 was their new bear case scenario that what happens if on December 31st,
it was 85,000 that they would have a net loss for the year. And then at 110 means that the Q4
would be positive. So I was like, what's the over under? And so we calculated that the over under is
if Bitcoin is 97,000 or higher on December 31st, the whole year has positive EPS.
Okay. If they hit 110,000 Q4 is positive EPS, and then they'll make 19 bucks a year.
So if it's like 98,000, the EPS is going to be really small for the year because Q4
is going to be a negative.
But these are your two numbers,
97,000 and 110,000 on December 31st.
And I think that's,
people like football or professional sports,
that's the over under is 97,000.
And I prefer it to be at 110.
Green, Bitcoin's working for you right now.
It's working.
What are we at, 94?
Just under, I think.
94?
93 and a half.
I'm blowing on the price chart.
Yeah.
You know, the other part, I want to bring up one last part on the prefs, and this is something that people always, they seem to overlook this.
So, Saylor uses the term digital credit.
The prefs are, even though they're in an equity, perpetual prefs, even though that's what they are, right, in an equity wrapper, they're actually classified as credit.
So when they issue these prefs, it does not increase the outstanding shares for the MSTR.
When I say MSTR, I mean the MSTR stock.
And when I say the prefs, it's STRK, F, C, D.
And so for those, it does not change the outstanding shares on MSTR.
That's why it's non-dilutive.
This is where people miss this part.
I've talked to some really, really smart people.
They're like, well, it's in an equity wrapper.
I go, yeah, but it's classified as credit.
That's why if you look up on the website, it says credit.
It does not dilute the MSTR shareholder.
There's an obligation that has to be paid, which is the yield.
That's why they established, we talked all for 35 minutes about the cash buffer.
But that's why if they hammer the prefs, that's why the amplification goes up because it's not diluting the MSTR.
Well, and the reason, exactly.
Exactly. And that's so, so attractive for a Bitcoin bull or a maxi, right? Because in your brokerage account, what can you construct of like a Bitcoin ETF sort of situation, right? You can have like, okay, maybe you can have 30% debt to leverage the debt to equity in your brokerage account using like a bit, but you have a margin call provision and that can change on a daily basis.
So what Saylor says is like, what's a margin loan?
It's a one week.
It's one week money, right?
What are the prefs?
They're permanent capital for strategy.
So if they can up their amplification to, say, 40%, they will effectively have a better credit stack or leverage Bitcoin stack than anyone can create in any margin account.
Any form.
In any form.
Yeah. And so that becomes an extremely attractive wrapper for Bitcoin maxis for everyone.
And it's not like, and people say, well, you could just buy, you know, 2x leverage Bitcoin ETF.
And it's like, well, that's 2x leverage on the daily.
Yeah, it's completely different.
2x leverage on the daily. And that's not 2x leverage annually. It's 2x leverage on the daily.
So that is not an instrument to hold long term into the future.
like it's going to if the price of it the price of bitcoin goes down you know ten dollars the it's
going to go down twenty dollars and then you now have to go back up even higher it's going to have
decay over time as a leverage instrument it's like a short-term thing so like if you want amplified
bitcoin exposure you buy amplified bitcoin equities with permanent bitcoin right you know exactly what
you're paying at ten percent a year that's my dividend obligation as an mstr common holder to
the pref holders okay 10 a year i have the bitcoin now all i have to bet on is the bitcoin
appreciating faster than the obligations which i owe to the pref holders and i retain that as bitcoin
per share in the common it's a very simple kind of formula and they set it up such that it's
permanent and you have no decay over time other than the prep drag yeah as saylor said it's the
law of thermodynamics you have like the excess volatility and it all goes to the common
yeah i just want to say something um they've done everything they they've got tables they've got the
website on strategy.com they've got every table every number you could want they tell you that
the uh leverage ration net leverage um btc years right they tell you that it's 74.8 years 21 months
in in usd reserve so they tell in every single table imaginable right they have the credit shares
outstanding all this is listed every single purchase of bitcoin they've done over the past
five years so all this information on the website then they actually do it in a presentation with
bar charts and they got this really cool rocket ship that's got a height and they say that the
the cash reserve is the freaking battery right and it's like i love it right so then they have
this figurative reason how this works and somebody's like you know there it is and so somebody is like
i know everything should be an electric car well you know maybe i don't want to charge a car and
drive to la you know from where i live and and you don't want to stop to do it you just want to stop
for gas and go and you don't want to do it so what's better an all gas car a hybrid car an
electric car some people have an electric car and some people have a hybrid or a gas car they have
have two different vehicles right and so when you see something like this people like ah he's doing
these fancy drawings i'm like what else do you want the dude to do i'm like and then you go and
then go up two slides go to slide 10 yeah right and then they got the table right and then they
got this oh that's too complex it's like you know what give me a break i mean yeah it's it's pretty
ironic people criticizing the the drawing and then not understanding it you know you know there's a
There's a bar chart.
If you go up showing the, what's the one where they have the huge bar and a really small,
oh, you're right there, seven.
Yeah.
The relativity.
The reserve relative to dividends.
Well, they're like, that doesn't make sense.
Show me the picture.
And then they show the picture and you're like, ah, I don't like the picture.
It seems like.
Too many memes.
And then they do all the math for you.
74 years of dividend coverage and 1.3, they need Bitcoin to go up by 1.35.
And I love the escape velocity, cruise speed, stall speed.
Yeah, the BTC stall speed was an interesting one to think about.
Where Bitcoin's got to go down 19% compounded annually for 10 years in a row.
In order for the business model to like, in order for the assets to be worth the value of the dividends.
or the value of the notion of outstanding this is crazy i saw some somebody had said on x well
if bitcoin goes to 10 400 then sailor is screwed i want to tell you something if bitcoin goes to
10 400 which i really hope it never does and you get people always like oh i would just go buy as
much as i can i'll tell you right now the world will be a miserable place not bitcoin the whole
world will be a miserable place if bitcoin drops down to 10 400 right to have a 90 drop from here
I think that you will wish that that did not happen.
I think you're right, Grant.
What will NVIDIA be at if Bitcoin goes down to $10,400?
It'd be like $40.
Yeah, Bitcoin is a macro asset now.
So dropping down that far, it says that there's far more issues going on globally and macroeconomically.
So that scenario, everyone's fucked.
There's $2 trillion of capital stored in it.
yeah so i i coming back to what i said what's going on is that people have people are falling
into a few camps right now one it's a ponzi scheme no matter what sailor does they're going to say
ponzi ponzi ponzi ponzi ponzi because they don't like what he's doing so that that's that camp and
the other camp is they missed it yeah the other campus people that missed it or that are um pissed
off for whatever reason that they have a group of individuals that are in this equity that um others
that they missed then i think the final camp is just that i i don't want to call them the doomers
but there's especially with what's been going on in the markets right now there's a growing
sense of people that want to see the market crash yeah to be the ones that say i told you so
bitcoin is overvalued nvidia is overvalued palantir's everything's overvalued needs to crash
blah blah blah blah i think that's that's what we're seeing a lot of the loudest voices are
so at this point strategy can do whatever whatever they can whatever they can but they're not going to
change anyone's mind so i think the path is forward and i think that's what we're doing here
and i think that's what they're trying to do and um yeah it's just weird what's going on man no
matter everything that they come up with in terms of fud strategy finds a way to address it and then
either the goalpost gets shifted or people don't like what they did to address it or like grain
said they don't like the graphic or they don't like the table or they don't like whatever i think
think we need to accept that they just don't like it yeah and the institutional sentiment is not what
you see on x like not even remotely close that's i think that's just one of the biggest yeah it's
just like there's so many people working behind the scenes on this stuff and there's so much you
don't see uh everywhere else and those doomers are the same ones that are waiting for house prices to
crash right it like okay if house prices crash do you have your job still you know like is that Is that a place that you want to be Jeff yeah i think a lot of these people waiting for the crash fundamentally don understand that we in an inflationary system that at this point
is requiring all assets to go up over time in a pretty steady manner in order to stay afloat and
to keep functioning so if if we do get a 10k 15k even 20k bitcoin in some kind of
crash, maybe like we saw with COVID, I think we'll see massive amounts of liquidity and,
and which will lead to a melt up. And I think I think a melt up is far more likely in the next
five to five, three to five years or so. And honestly, it's, it's more painful for the average
person, you know, with a crash, at least everyone, you know, the people who have nothing still have
nothing right with the melt up the the rich get richer and the uh the k-shaped economy widens and
that's kind of the the mechanism that we've been seeing in our current inflationary system in which
asset prices go up with inflation goods go up as well wages stagnate rich get richer and and the
poor or the working class get left behind yeah 100 i think i think pretty much yeah the owning
owning assets is pretty much going to be the only way that people are going to get ahead. And I
honestly do think that if you use a real estate example, people that are waiting for a real estate
crash, for instance, like you said, Jeff, do you still have your job? That's one thing they don't
think about. Another thing they don't think about is while you're looking over here, waiting for
this to fail, what other opportunities are you missing over here? AI has turned into a secular
trade. Bitcoin has been a secular movement that's slowly becoming more and more
ingrained into corporate and institutional structures. While you're waiting for everyone
to fail to be able to point at them and say that i told you so you can very likely find yourself in
a position in one three five years where everything asset prices have gone up even if we do see a
massive correction or crash and you're still left holding nothing so i i it may be more of a
beneficial use of time if people find ways to invest where they can or find ways to advance
where they can because the government is not going to help you and we're kind of all being left on
our own to figure things out and like group groups like this and groups other groups that exist online
are kind of grassroots in that way where it's everyday individual people that are trying to
figure figure this thing out as they go along which is what strategy is doing they're figuring
this out as they go along which is why they've been bumps in the road but again some people just
don't like it and we're going to see what's going to happen with it i think it's going to be
be successful. I think that the USD reserve is a huge move. I think that they've given themselves
an impressive runway for at least the next one to two years. And I think this is where things get
really interesting, especially where bank custody comes into play, where the whole calculus of the
entire system becomes different. I really think that strategies on the cusp of having, I'm not
going to call it like a price breakout or anything like that, but hitting a point of steady state
stability. Phase one was kind of announcing the Bitcoin treasury plan. I think phase two is the
preferred. So what we're seeing right now, and I think phase three is going to be where things get
really interesting. We're headed there. I've got to show the estimates because we actually have a
race here and it's pretty close. So Adrian, you're right on the nose right now. If strategy doesn't
purchase any more Bitcoin. You are the winner, the closest to the pin winner. 650,000 Bitcoin.
Ironically, if they would have bought Bitcoin with $1.44 billion, they would have 665,000
Bitcoin. So it's a fight. We'll see how many more Bitcoin are purchased in the next couple of weeks
year leading up to the end of the year but um my my money's probably on ben uh getting getting a
little bit closer on this one i think gladiator was too bullish yeah gladiator was very bullish
uh i was very bullish myself well because god candles were loading and that's why he had a
bigger number yeah doubled they were loaded and we were going to be able to instantly atm the
stock every week that's what i was figuring i think i think all of our expectations for for
what bitcoin was going to do and then hence strategy stock was was probably overextended
at that point i think so right i think so yeah absolutely well this was yeah we did this on 1231
and then they had 446 000 bitcoin at the time i mean that's pretty crazy like adrian being right
on the nose at 650 and ben being on also also we had like we had like two minutes to calculate this
like not we did yeah it was it was live on the show i think i think i think uh you know new year's
everyone's going to start doing calculus from from from this point to try to get closest to
10 for next year i might i might hold 888 for uh for 26 yeah be the bull for 26 okay the i want to
show one more thing. We're coming up on 49 minutes here. So I pulled up, I had a listener send me some
information on CET ratios, and I thought these are interesting. So these are like shock ratios.
So the Federal Reserve sets each large US bank CET1 requirement at the sum of four and a half
percent. So what I've pulled here from perplexity is current CET1 ratios on the largest banks in the
world, TD Bank, Norda Bank, JP Morgan, Morgan Stanley, et cetera. And they have these CET
ratios in around 15%, 16%. So large, too big to fail banks, large international banks have
roughly 13% to 14% CET ratios. This is to show effectively how good your bank is at
at weathering shocks in the system. So if you have a higher percentage here,
that means you've got effectively more liquid assets. You are a safer entity if you have a
higher percentage. That's why the Federal Reserve sets the large bank's ET requirement at four and
a half percent. Now, what I wanted to do is back into like, you know, what if Basel gave credit
for Bitcoin, what would that number need to be? What would the credit for Bitcoin need to be
in order for strategy to have a similar CET1 ratio? Which is interesting. It's an interesting
exercise. So a CET1 ratio, if you gave 26% credit for the Bitcoin on the balance sheet,
so effectively the $60 billion worth of Bitcoin held on the balance sheet is worth $15.8 billion
dollars from the solvency perspective, you'd have a CET1 ratio and the as-if basis of 7.2%.
So you would be within the target that the Federal Reserve sets for large US banks.
And this is including the USD Reserve of 1.4 billion. Without the USD Reserve of 1.4 billion,
these metrics change quite a bit because the numerator and the denominator take into
consideration your liquid like USD assets. So the numerator is common equity equals assets minus
debt minus the preferred notional. So you get to a numerator of 1.2 billion here in this exercise.
And the denominator is your Bitcoin on a markdown basis and then the USD reserve. So 17.3 billion.
One thing that's really interesting here. So if you change this to 30%,
percent, your CET1 ratio on an as if basis is 18.6%. So that would be better than any
of the largest international banks on the planet. And it doesn't seem outlandish to give 30% credit
for the Bitcoin on the balance sheet. So that's equivalent to saying, you know, in a shock scenario,
would you be able to liquidate 650,000 Bitcoin for an average price of $28,000?
I think we could comfortably say that would likely be the case.
That would likely be the case.
And Grant, what do they value your crypto assets, like any sort of MSTR or Bitcoin ad, when looking at your credit worthiness?
When they looked at me, they valued it at 50%.
And I think one of the parts that drives me nuts about this is that the Basel rules.
So that is value that a bank needs to have 8%, and then they can do 12.5 to 1 leverage and lend out the rest.
That's the Basel rules.
And then Bitcoin has a volatility rate of 1,250%.
So it makes it horrendous.
You just really can't have on the balance sheet the way the Basel rules look at it.
But the comical part about this is that in, I believe it was in 2020 or 2022, the Fed said
U.S. banks can keep zero on their balance sheet and lend out everything, 100%.
So Basel says 8%, which is 12.5 to 1 leverage.
And guys, the reason why this is so hard for people to understand, strategy has 11% debt
on their website.
That means they have 89% total equity, right?
Basel is the exact opposite.
It's on MSDR.
Yeah, net leverage is 11%.
Strategy is the opposite.
That means they have 89% that they're holding.
That's the equity part of this, meaning after you strip away that debt,
they're left with the remaining amount, which is 89%.
But everybody else is the reverse.
and Basel rules, you only need to have 8% of the good stuff.
The rest of it could be thin air.
And then people are like, oh, well, strategy is leveraged to the hilt.
And I'm like, no, you're exact.
The numbers are too close.
So people think they're the same and they're not.
I don't know how this doesn't get through.
Oh, strategy's levered way up on this.
No, he's not.
If anything, he's the exact opposite of what the Basel rules are.
I never heard of the set one rules are here,
but this it we live in we're in backwards world because we have the good stuff and people are like
oh i'm just going to call you a ponzi because i i don't have time to listen and figure out what's
going on yeah yeah i mean absolutely it's yeah you see a lot of these like oh it shows you how
fragile the structure is and you're like well actually the math is showing that they're probably
one of the strongest companies on the planet like if you try to put them in a similar framework
of any of these banks or any of these other institutions.
And even just looking at this, right?
Like TD Bank has a 16.6% CET ratio.
So they have an S&P issuer credit rating of A.
Right.
And so one of the things that came back when I was researching,
I just happened to be researching this yesterday
because I was on a space and Joe Carlos rightfully called me out
because on Basel rules, I said that Bitcoin is valued,
effectively valued at zero.
He's like, no, it isn't. It's a tier two asset and it's valued at 1,250% volatility. Well, in effect, you just can't have it.
That's zero. That's zero.
In effect, it's zero. But anyway, so when I was just looking at this-
1,250% volatility.
Right, volatility. And so therefore, no bank's going to have this.
It's zero.
I did some research on this and I was going to bring up some other point about this, but I was like, this is absurd.
it's i don't know how we explain this to people anymore it's we tried everything you just got to
do the math i well part of the problem for me is i'm just i think it's because of how bitcoin is
so perceived we are coming at it from a perspective of individuals that believe that bitcoin is a
pristine asset believe that it's going to be the future aspect of the world so on and so forth
the world wasn't there yet so i i think with a lot of this it's not just an education thing
of the perception thing. And as Bitcoin becomes more stable and it becomes more of the market cap
grows and the price goes up and it becomes far more ingrained into market structures,
that perception will change. I don't know if this is a matter of education. I think it's a matter of
perception and what people think and feel around Bitcoin. So as the sentiment around Bitcoin changes,
a lot of the challenges that we're seeing right now with a lot of the ways that it's valued and
viewed will change as well. Adrian, I completely agree with that. And that's kind of the takeaway
that I've been thinking about this past year, right? We saw Bitcoin go to 125. We saw BlackRock
or that was last year, but BlackRock's largest source of revenue is the Bitcoin ETF. We're seeing
pretty broad, I guess, beginning stages of acceptance of Bitcoin as a genuine asset.
And I think it's going to take 10 years to really change the sentiment of the past 10 years.
Think about how Bitcoin was reported on for the past 10 years, kind of the programming or the
narratives that have been spread bad for the environment, volatile scams, all these coming
from Jamie Dimon, Larry Fink, all these figures which are prominent and well-respected in the
traditional finance realm. And I really think sentiment is a, you know, it's going to take a
wild to to turn it around it's a tugboat or not a tugboat a uh it's like a cruise ship
you know you know what guys you see i i don't think it gets fixed and and and i think i think
i think what's going to happen here is you're going to have a group of people i've said this
before if you like if you realize that you have to buy assets whether it's a house mag seven stocks
Bitcoin
Bitcoin treasury companies
You buy that
You have assets
We believe in the debasement trade
And the AI is a debasement of human capital
Because a robot can do
Is just as effective as 10 people
And so what's going to happen is
Is that the people that prepare themselves
Will be in great shape
And those people will love life
And that'll be utopia
And for the people that are like
You know the rich just got richer
And they just don't want to see this
This is what I was going to say before.
As soon as somebody says to me, I wish house prices would crash so I could buy a house.
Well, the internet bubble basically burst in 2001.
You could have bought a house then.
Then there was a crash in 2009.
You could have bought houses then because you had a great financial crisis.
Nobody could sell their houses.
And they had loan modifications.
And you could go buy these houses.
And you can get them out of bankruptcy and whatever.
And so they had that.
Go buy.
Well, I guess you couldn't buy them.
And then they're like, oh, well, we need to have a reset.
Well, I think we had a reset in 2020 with low interest rates and people didn't.
At that point, nobody was really moving because of COVID, but you had low interest rates.
That was the prime time to buy a house because they printed the crap out of the money.
You didn't want to wait till 2022 when inflation kicked in.
Right.
And then you had the inflation go in.
So then, you know, when do you want to buy a house?
It's like you had these three opportunities.
You never jumped on it.
So when I just hear that, I just immediately discount those people immediately.
So I think you'll end up with two groups of people.
People that did the homework, they did the work, they listened to a space,
a bunch of people talking about artificial money, artificial intelligence.
Those people love life.
And every day they're like, wow, this is awesome.
I can't wait to see what Bitcoin goes to or what chip NVIDIA comes out with.
And those people will be like, this is great.
Well, I think there's – so I would agree with that,
but there's a little bit of nuance because I couldn't have bought a house in
2000. I was a little bit young at the time.
That's the problem.
So I think there's a generational factor here, which is valid.
So I think that you have a lot of, so I'm a millennial, you have the Zoomers,
you have, you know, we are,
I think we're the cohort that you hear a lot from that just doesn't like the
way things are going,
but you also have older individuals like Gen X and boomers that are saying the things that
Gray is saying, right? But to Gray's point, they did have opportunities. The problem is they
couldn't capitalize on opportunity then because they were not in position to do so. So now in
their mind, they're just seeing it all over again for a whole different set of reasons.
Because I think it's not fair to assume that it's just, you're not smart, you're not working
hard you're not paying attention i i'm so it's the best let me let me clarify this so um so i
totally get what you're saying about the generational cohorts what i'm saying is if if you're 25 years
old this is not financial advice but if you're listening to this 25 years old then you probably
think i want to buy a house in five years you know and you're going to 10 years whatever the number
is right you want to start a family and do that not have to worry about paying rent and build equity
have a place to live because you like the community, whatever it is, or the weather.
And what happens is you have to invest your money in some form of assets. You can't do it just on
your job alone. And so then how are you going to divide up those assets into those investments?
And I think the two biggest trades right now are artificial intelligence and artificial money.
And so from there, where do you want to be in five or 10 years? Well, I think that I would
probably want to invest in those mag seven companies or strategy or Bitcoin. And that
will get you to buying a house down the road. If you don't want to buy a house, don't buy one.
Great. Where's the money going to come? I'm not trying to make excuses for people. I'm just
trying to get perspective. Where's the money going to come from? College tuition is out of control,
and it has been for about a decade. If you are a person that was not born into an upper middle
class family and you had to take our student loans, like I did, are you going to be someone
that's going to work four jobs like I did? Because I've been everything from a bouncer at a bar,
to a janitor, to a security guard, while working as an analyst. Not everyone is cut out for that
because there's a reason why I don't have children right now. There's a reason why I'm
not married right now. There's cost benefits to everything. So the reality of it is that it's not
just about making the investment. It's about being positioned to do so and doing what you need to do
to position yourself. And that requires a lot of sacrifice for a lot of people. So for many people,
depending on how they were raised. Family is important. They want to have family. They want
to have a house. They want to have all this other stuff. So they focus on that. They have a job,
but they're not focused on it in the sense of this job is going to be what I do to pay the bills.
I'm going to have another job to make investments. Then I'm going to have another job to make sure
that I have something for a rainy day. Everything is a cost-benefit analysis in life. And not
everyone is positioned to make the same cost-benefit analyses. So what you're saying is valid. I'm not
saying that it's not, but what I'm trying to put across is as someone that deals with individuals
that are much younger than me on a daily basis, I'm still hearing the same story from all these
younger developers. They went to college, but they have tons and tons of debt. They're making
150 grand a year, but they still can't pay their student loans. I'll say one thing. So look,
my net worth was zero at age 33. In 2000, I'm 58. I guess the math works out. So in 2000,
I got to Silicon Valley, my net worth was zero. And so, and I did not get married until I was
37 years old. So what happened is I did exactly what you just said there. It was miserable. I
lived in a crappy apartment, a one bedroom apartment that I was able to go to work for it.
And what did I do when I got the first great job during, you know, right after it started in the
internet bubble in in in 1997 and when once I did that I was able to build up
and save money and get ahead and I did not get married and not get kids and I
did not own a house I did not own a house until 2005 so I was already like
35 years old before I bought my first house I did not get my first house from
I was at 25 years old that did not happen so I worked my ass off for 10
years and and to be honest with you you know given that i my you know it's kind of weird because
at that point i was like i just had to do it there was there was that's just the way it was
that but that works for you that works for me but what i'm trying to say is for a lot of people
for most people that that decision is not as straightforward i totally agree yeah so it's
really hard there's a lot that goes into it and i think that a lot of this is the fact that we've
been kind of we're kind of living in a reality where like grain just pointed out the world is
shifting but the narrative is not shifting with it and what's happening right now is that we're
there's a wide disconnect between what people are being told is reality what actually is happening
ai is happening bitcoin is happening yeah and to us it makes sense because we're in it but what
I trying to tell you is that there are a lot of people that I know that are highly intelligent highly educated should know this that are completely blind to it It the millennials dilemma You see you got all of
these millennials now are approaching their highest earning years in their life, right? They're like
like mid-30s, early 40s,
and they're coming up to the point of,
what do I do with my money?
Like I'm making money.
And while I'm making money,
I can't buy a house because I can't afford it.
Okay, so if I can't buy a house,
I need to put my money somewhere else.
I can't hold cash.
That's just clearly not working.
I'm not making money fast enough.
So I got to go put it somewhere else.
And it's like, all right, well, maybe I had my, my, you know, all my money in the S&P 500 over the last decade.
And that's not going anywhere. I like don't feel any richer, like $250,000 in your, you know, 401k at age 35.
Like that's still just not that much money anymore. All right. So then, okay, what do I do?
Do I go buy Mag 7? You know, like, well, these are already the most valuable companies in the entire market.
This seems kind of risky.
Like, I wish I could have bought Apple when I was born, but I can't.
Like, I can't go back and buy Apple.
So, all right, now, like, I'm not going to buy bonds because those are for boomers.
Like, those look horrible.
Like, that's underperforming the S&P 500.
And then you look at, like, AI.
Okay, AI looks really interesting.
Bitcoin looks really interesting.
It's like, it's what's left.
and the people that are leaning into AI and using AI and learning from AI very quickly are going to
succeed here because they can use math very quickly. Like if you go talk to most people,
most people, grain, like you live in Silicon Valley, you're at the front end. You like,
you know what's going on AI, but like my father-in-law came over for Thanksgiving and he's
like, he's not using any LLMs. Like he's getting to retirement and like, I'm like,
oh just throw it in chat gpt he's like no he's like i haven't so so people that are using this
stuff are going to run circles around everybody else that's not yeah jeff like that and that's
what i'm saying like for me i love it it's working to my my advantage right now because i have
tripled my output and sorry to cut you off mason but that's that's the thing in the past
socioeconomic power was cascading at the top. And now I think what's going on is that it's
productive power that's cascading at the top as well with AI. And so it's creating a different
kind of bifurcation in the market. And what you just said is very, very true because there's
several very successful individuals that are executives that I have to report to, give reports
to, give project plans to, so on and so forth. They don't use LLMs, but they're making a half
million dollars a year.
They're going to get
they're going to run into a wall here
pretty hard in the next two years, I think.
And that's going to be very, very
disruptive. And then what happens?
It's great for me.
I'm going to land on my feet because I've been
neck deep in this since Chad GBT came out.
But
just like Green said, he works.
He didn't buy a house.
He didn't have kids. He didn't get married. He did all
that stuff. Okay, that's great. But that's us.
Wait a second.
Wait, I did get married.
I did all that.
No, I know.
I'm talking about when you were coming up, right?
So you delayed things a little bit.
But so it's just very, very strange for me to see that this is kind of affecting everything across all socioeconomic groups.
You have people that are very successful that don't know what's coming.
You have people that are trying to make it that don't know what's coming.
And it's not just Bitcoin anymore.
It's also AI.
And they're kind of converging.
And it's going to be really interesting to see.
not in a good way but yeah first first off green i i know you're not a boomer green you're not a
boomer and uh i did not refer to you as a boomer second i'm gonna pass the mic over to mason
because he's been trying to jump in there let's mason give us some wisdom yeah i i mean i think
what we're talking about is the money's fundamentally broken right people feel like
they're they're falling behind because their time and energy their money you know their time and
energy in an abstracted form is literally being siphoned away from them.
And that's what Bitcoin fixes is that instead of, yeah,
instead of, instead of having to research, you know,
instead of your father-in-law having to research AI stocks with,
with chat GVT or Grog or Gemini, like the,
the layman doesn't want to do that. And, and that's what,
that's what Bitcoin provides.
It's a long-term viable solution for everyone's problem, which is how do you keep your money?
And it's long-term in that it's sustainable.
You can do it for 50 years.
You can do it for 100 years.
You buy Bitcoin and you hold it and you either sell it or you spend it when you need that capital in the future.
And I think what strategy represents is a bridge between what people maybe are not necessarily comfortable with holding Bitcoin.
That's what the preferreds are.
And then what the common is to me is investing in a Bitcoin-denominated world, right?
I think we are investors who have a framework, which Bitcoin is the hurdle rate.
And in my mind, there's only two ways to do that.
It's either invested in treasury companies, which are doing this essentially arbitrage, short fiat, long Bitcoin, or it's some version of Bitcoin venture capital, which you are investing in businesses that are building out the infrastructure of Bitcoin and are accumulating Bitcoin.
So their Bitcoin per share or their Bitcoin stack is growing. And other than that, I don't know how you outperform in a sustainable way. I see a lot of people trading. I think they'll get repped. And yeah, that's why I'm a Bitcoin advocate.
it i think i think one of the really interesting things about bitcoin and strategy and these
bitcoin equities is this is the first time ever myself like trading in the equity market where i
felt like doing the math has given me alpha like you can't do the math on like how many chips nvidia
is going to sell you hope right like you take a structural bet on like how society is shifting
and moving and like how Tesla, how many cars is Tesla going to sell?
Right.
Like, you know, you've got all these metrics that will tell you pretty much nothing because
you can't compare anything to the, any, anything else in the rest of the market.
So you've got like all of these things that, you know, people say that they use for relativities
in different sectors and stuff.
But like at the end of the day, the, the alpha here is that if you do the math on this stuff,
if you do the math on Bitcoin, right, Bitcoin is a math problem, right?
like itself like bitcoin is math money it's physics money and it's a it's a relativity you
think of like the relative the the relative size of like the population and how many there are
and you take you take uh assumptions on probability curves of adoption and all of these things and you
can actually run this math and front run it but you can't do that in really anything else so
it's been really appealing to me from that perspective.
So I want to say, this is going to sound a little bit off, but it'll make sense. And I'll get to the
point real fast. I was meeting Tim a few years ago in New York to do some, we were meeting various
people in New York, Bitcoin related, this is five years ago. And so he had an office in the Freedom
Tower on whatever, the 80th floor is like this hoteling thing. So I get there and I said,
I said, oh, we're going to meet with some clients there. And I said, hey, we need a room with a
whiteboard. And the woman looked at me. She's like, what is this, like kindergarten? I'm like,
no, there's like a whiteboard. And we had these dry erase markers in different color.
And she goes, we don't have that at all. And I'm like, oh, I'm like, okay. She goes,
we can get you an easel with like this flip paper on it. I'm like, okay, this is four years ago.
This is not in the Freedom Tower.
This is the tier A on 85th floor, whatever it is, a phenomenal view.
In Silicon Valley, when you go for an interview, when you get through that stage, we have these whiteboards in all of these rooms.
You go in there and you're talking to somebody and you're like, great, I read your resume.
I want you to go over there on the whiteboard and diagram the packet walkthrough or the logical throughput of what this design is because then I know how you think.
I want you to draw and go diagram it on the whiteboard.
That's it.
Right there.
Go do it.
I'll shut up.
Go do it.
And it's amazing that in Silicon Valley, I will tell you that you'll typically get, because
before they come in for the in-person interview, pretty much you can weed out those people.
Usually 75% of the people are able to do that.
If I had to do that anywhere else except for Silicon Valley, I would think that 98% of
the people would fail.
And so what you just said, Jeff, is create an Excel spreadsheet, create a yield curve,
create all this stuff.
The amount of people that can do that is like this big.
And in Silicon Valley, you just go draw this all out.
And this is how the business model is going to flow.
And this is where our customers are, our TAMs.
And we're able to draw this.
So I think that's my takeaway is that as soon as you ask people to do this,
and they don't teach that skill in school from what I can tell.
Yeah, math is in short supply.
Math is in short supply.
Well, it's math.
It's just this thinking process.
And I don't, you know, it's one of those things that I just don't know
the people that are teaching and mason congratulations to you you've done exactly
and the same thing with dan and jeff you guys the younger guys adrian you're a little bit older than
right so um you guys have you you jumped on an industry for me i jumped on the internet bubble
in the 90s from that was the fastest growing industry in the 90s but he said to me goes i
don't know what the internet is go figure it out still friends with him to this day very successful
lawyer. That's what he said to me in 1998. And I was like, the internet, that's for downloading
whatever. And anyway, so for me, that's what I did. But you guys embraced it. Jeff, you got a
job in this. And this is where we are today. And that was the fastest growing space, right?
Yeah, it's fastest growing. And it will be the fastest growing space for a while.
It was. And by the way, for the old timers, if they don't know this,
Apple almost went out of business. Microsoft bailed out Apple. And in reverse, why would
Microsoft bail out Apple? Microsoft bailed out Apple. This is a decade before the iPhone,
because if Apple would have went out of business, the thought process was the US government would
have broken up Microsoft because it would have a monopoly, even though it has a default monopoly on
just enterprise software. So Microsoft bailed out Apple. And then a decade later, Apple came out
with the iPhone, right?
So you have to think,
and Steve Jobs left Apple.
You should watch the movies
on what happened back in the old days.
Everything changed after the iPhone came out.
And you guys are living in that generation now.
It's not the access to information.
It's the ability to figure out
what am I going to do with it?
Bingo.
I'll go on mute now.
All right.
Well, we're on hour 18.
I got to pack.
I'm going to Abu Dhabi tomorrow.
So at the ass crack of dawn,
I got a 24 hour day of flying,
which is crazy.
But I guess maybe final thoughts, I'm going to throw this out there and you guys can react to it as well.
Vanguard's now allowing Bitcoin and crypto, which is crazy, Bitcoin and crypto ETFs to be traded on their platform.
That started on Monday.
We've also seen the price of Bitcoin rise, which is pretty interesting, interesting timing.
and MSCI. I think there's going to be a time and place to make some noise about this. It looks like
Sailor is going to be in conversation with MSCI here soon. And I encourage everybody to make some
noise as we get into the end of the year on this MSCI topic. I think there will be some publications
that we can rally behind.
And it will be a good topic to put pressure on, you know, Senate and House members and
political members and any pressure that we can apply through this group would be great
as well.
So that's kind of my final thought.
And I'll pass it over to, let's say, Adrian.
Final thoughts.
Yeah.
So with Vanguard, I mean, sooner or later, they all bend the knee.
So that was going to happen.
at one point or another.
With MSCI, I got into Yahoo Finance,
and you and I got into Bitcoin Magazine
on our thoughts around MSCI.
So I think that you're right
that we can apply a lot of pressure with that
because their rationale doesn't really make any sense.
It's clearly punitive, it's clearly retroactive,
and it's clearly a discretionary,
well, what I call part of a hit job on MSCI.
So I think that that's going to be
a very interesting conversation coming up
in the next coming weeks
because they included strategy without issue in May 2024.
Now, magically, JP Morgan is rattling the saber about delisting
and MSCI is coming around to it, which just doesn't make any sense,
especially when you look into the fact of what is the impetus, really,
when strategy trades over a trillion dollars a year
and with all the other ETFs and associated products
We're at over close to 1.4 trillion.
It's not a fund.
It doesn't operate like a fund.
I think that that is a very, very nebulous stance to take, especially when you already
included them and they've been in for almost a year already.
So I'm interested to see where that goes.
Insurance companies are operating companies and they are structured finance companies.
That is quite literally what they do.
They do structured finance and they're considered operating companies.
If you were to replace real estate with Bitcoin and say, oh, we're not going to do this.
going to include companies with real estate assets greater than 50%.
That would just be an absolutely ludicrous statement.
So the fact that you say you can't, like,
you're just picking digital assets or you're picking Bitcoin at $2 trillion
asset.
Especially after you already included them without any fanfare.
You just included them.
Because we even talked about this last year.
I did the article on it with the Russell 1000 and all that stuff.
We went through what the weighting could look like and all that stuff.
And now all of a sudden they're talking about delisting it.
because digital asset, it just doesn't make any sense.
It's like they let the Trojan horse in the gate,
and now they're starting to realize it,
and they're like, oh, shit, oh, shit.
Well, that's what happened.
The timeline is, like, MetaPlanet announced their big buy,
and that's when MSCI put out the first notice.
And then everything kind of just cascaded from there.
I think Mason's right.
They realized what they kind of opened the door to,
and now they're starting to say, oh.
They should just make a whole new index,
is what they should do.
Yeah, they should.
They should.
They should do MSCI X digital assets.
Sure.
Yeah.
If you want to buy that
and not make it,
you want to underperform
the rest of the world,
go for it.
Go for it, right?
Like right on.
Okay, over to you, Dan.
Final thoughts.
I think the next year
is going to be really, really interesting.
You got Larry Fink
pumping this narrative
that tokenization of assets
is like the internet circa 1996.
So it's going to be interesting to see how Bitcoin as the money
and the actual energy currency fits into whatever these boys concoct
in terms of tokenized assets over the next year.
So I'm really curious to see how that goes out.
Yeah, I saw that picture with Brian Armstrong.
That was interesting.
Yeah, I think people need to remember Bitcoin's the digital money.
everything else is something else.
Yeah.
Bingo.
All right.
Over to Mason.
My first point is this is the most bullish I've heard Dan Hillary on,
on MSTR.
And maybe,
I don't know,
Dan,
how many,
how many months has it been?
I mean,
last time I was bullish,
it was $110 a share and it went to 500.
Yeah.
That's,
that's signal folks.
And he,
he,
he's bullish for good reason.
I mean,
I think we're getting to an apex of fear, of FUD, of misunderstanding.
And the strength, ironically, it's never been better.
Five preferreds, 650,000 Bitcoin, 1.4 billion in cash reserves.
And I think the capital is coming.
I think it might take – it's going to be gradual.
it might take five to 10 years for it to play out, but that's,
that's why we're here. Like it was never going to be easy.
And I think if you're here right now watching after this insane volatility,
you're, you're not a Taurus and congratulations and hold on tight.
Yeah. Hold on tight. Yeah. Mason, I liked your post.
You're at this point where it's like most polarizing, right?
Like people were incredibly bullish, including myself and everybody on the screen, when the price is at 530, 540.
And they had 275,000 Bitcoin.
What was the number?
It was like 275,000 Bitcoin.
It was 250.
It was like 252 or something.
250.
No prefs.
And they had just launched the 2121 plan right after the earnings call.
And it was one of these like, oh my God, scenarios.
and the stock absolutely ripped on top of the presidential election.
Obviously, 2025 has been just a damn whirlwind
in a crab bear market that we've had to just endure here.
But the math is good.
Like, the math is really good.
Like, the balance sheet itself is just so much stronger today
than it was at that period of time.
And you just sit back and you look at that.
And, like, to your point, like, we've reached max bearishness
when the balance sheet is just so much stronger than it's ever been.
Yeah.
I said a point of maximum asymmetry between strategies,
price, sentiment, and fundamentals.
Yeah.
Totally.
Asymmetry, for sure.
All right.
Over to you, Green.
Yeah.
Look, it comes down to the debasement trade.
So the Treasury, there was an announcement that came out today.
They were trying to sell whatever the number is, $12 billion worth of treasuries, and it was triple oversubscribed.
The Treasury can't sell it.
But the Fed numbers come out tomorrow to see what happens with quantitative easing.
So I believe that happens 4 or 5 p.m. East Coast time, and I will post about that.
I did a tweet about this.
Everybody can look this up.
So it's fundamentally different this time given that the second largest line item is the interest payments in the federal budget.
it's interest only social security is higher and so this time is they have to print there's no way
around this and then we had some bad job numbers from adp today so what's going to happen we'll see
we'll know tomorrow and and the first thing about the treasury because the treasury is different than
the fed but for the treasury the fact that there was triple the amount that wanted to sell to
exchange out their their their treasuries on this means that there's there's stress in the system
So the Fed knows this in advance, right?
And so tomorrow is going to be important.
So if you're a big fan of Larry Lippard and Jeff Booth and Lynn Alden, nothing stops this train.
I think that Bitcoin could catch on and maybe you should get some.
And Jeff, have a great trip in Abu Dhabi.
Going to the Middle East, going to the desert.
Yeah, it should be a good time.
Bitcoin meta, first time out there.
I'll be there too.
So, if you're there, I think if you're at BitcoinMana for whatever reason, we are going to have a happy hour at some point.
Stay tuned.
Take a look at my profile.
We'll announce something.
It might be on the Strive page.
I think myself, Ben and Matt Cole will all be there from the Strive team and would love to chat digital credit and everything that's going on.
So, don't be shy.
yeah i was supposed to be there but i had to cancel my trip because all my good stuff so
i hope you guys have fun adrian's working hard always all right thanks everybody we're at an
hour and 27 of course we did not stay under an hour we tried kind of and we just let it roll we
were having a great conversation so thank you everybody for the time we will keep cooking uh
i do not think we will actually no we'll be on next week i think dan is leading the stream
next week because he will be
stateside.
Feel free to join next week.
You guys are going to get punished.
Punish them.
Punish them with the charts.
Thanks, everybody. We'll catch you
next week.