episode 36 true north we are here with adrian dan and the hardest working man in bitcoin
tim kopsman uh we're celebrating all-time highs we got fire in cyberspace and uh
let's let's get it on uh congratulations to everybody who's been hodling
through all the chop and celebrating all-time highs with us.
So, I mean, we'll see what the market for strategy
and for all the Bitcoin treasury companies,
we'll see how the market reacts to all-time highs tomorrow.
But, you know, I'm getting tagged in screenshots of here's IBIT's price
and here's strategy's price.
And I think Adrian's about to crash out if he sees any more of this
common ATM drivel. So I know he's anxious to talk about it. So why don't you get us started,
Adrian? What do you want to talk about with price action?
All right. So price action right now is not ideal. I understand. There are a lot of people
that are disappointed. I understand. But this is what I was talking about with all the ATM
conversations. Whenever the price went down, it was the ATM. Whenever we chopped, it was the ATM.
Whenever we started going up and then went down again, it was the ATM. So if the ATM was
instantaneously impacting price like that, and people thought it was, now that it's been off for
a little bit, and the price action is still doing what it's doing, I hope people can maybe open up
their minds to understand that there's broader market dynamics at play that's driving price
action and stop blaming sailor stop you know blaming us perhaps when the price doesn't do
what they want it to do stop looking for um causes that are you know outside of um
perhaps more logical conclusions i guess i would say there's a lot of stuff that's impacting price
right now and i think what we're seeing is that it is not as if sailor's going to push a buttons
or stop pushing a button and then the price is going to just rip, right? So I think people either
are going to start being patient or they're going to start maybe rotating out. But I think for me
personally, what kind of helped me read the tea leaves a little bit was what people were saying
about earnings. The fact that we saw so many people in the market saying that EPS was still
going to be negative, even though with FASB, we had that $35 share blowout, that tells me that
there's a wide disconnect between what the investor base on X thinks and what the actual
market thinks. And I think the market is telling us what the market told us what it thought
with those negative EPS ratings is that the market is discounting the Bitcoin altogether.
And I think it's being priced accordingly with some of that in mind, but that doesn't mean it's
going to be that way forever. I'm still long-term bullish, but the key part of that is I'm long-term
bullish price performance is not going to be linear it's going to outperform over time and
what we're seeing right now what i've been seeing and i know what a lot of you've been seeing
is that people are losing their a little bit because the price hasn't just ripped out right
now with bitcoin at all-time highs so they can't i don't know if they're still gonna blame sailor
some some still are i just think that people need to like step back a little bit and just
wait and see what happens if they can yeah i mean tim why don't you know resident bear here
real quick what what you're hearing right now from adrian morris
may be amazing but it's not financial advice so like we got the live version today appreciate it
to oh and happy bitcoin all-time high day you know yeah all the bears all the noise it's like people
aren't even grateful for a bitcoin all-time high what is is the world falling apart bitcoin is hope
back to over to you dan no i mean i agree i think what's it what adrian's saying is right i don't
know how much atm is like a really tough question because the facility of the atm maybe the common
share dilution doesn't matter because it's accreted to shareholders 100 totally get it
the atm facility in itself and like hearing kind of the inner workings of it from a couple of the
people that do in fact broker those deals it can be quite predatory towards shareholders right like
if you're a convert holder where do you get your if you're a convert holder you short the stock
and the price falls where do you get your exit or where do you close your short to realize that gain
in your gamma hedge right in your gamma trade well you get it from the atm so that facility i think
to a lot of people has been a little bit predatory and i think it's a combination of the atm with
the converts and obviously we're moving away from the convert so that's a great thing uh so that's
great but i think um the forward guidance from the earnings call of no atm below 2.5 is a great great
metric because what when you issue shares what do you what is the issuing organization saying
to the market that essentially the business whatever the business is is overvalued right
like you look at birkshire what do they do when they believe their business to be overvalued
they'll issue shares they'll sell shares and capture that spread that arb so now now strategy
has placed kind of an internal benchmark on the value of their treasury operations which they
believe to be 2.5 m nav plus right so that's what they think their treasury operations that's their
their total value of their treasury operations which i think is cool if they're doing that
i personally have no delta exposure to mscr so i can't say that anymore um but it still i think is
a really good guidance moving forward and into the near kind of long term especially with the
volume of the press ramping up with stretch being such a really game changer in my opinion
Well, I think that the guidance was a bit of investor relations. So I would agree that it could be, in theory, good to put out there. But the thing about the shorting, I think that what people are doing when they say that about the ATM is that they're blaming the road for the direction of the traffic.
the the reason why strategy is getting shorted i think would occur with or without the atm
because the market is telling us that they do not value the bitcoin as a legitimate business
or as legitimate earnings and they're shorting the stock as a result so the share the shares
being issued yes you can say that mechanically all things being equal that can be predatory towards
the shareholders however all things are not equal there are a lot of things that are pushing this
this um this i hate to use the term trade but there are a lot of things that are pushing this
trade and the direction of traffic is still market wants to short so whether there are more shares
or not the shorting is still going to take place that's a great point what do you think about do
you believe the principle or capital appreciation of bitcoin should be considered earnings i feel
very strongly that BTC gain should be the mechanism or the earnings on which there should
be placed a multiple. So for anyone watching, BTC gain is effectively the new net dollar value of the
Bitcoin per share accrued to shareholders over a certain period of time. That's BTC gain. So it's
like earnings. But I don't believe right now the full gap or FASB earnings is like an earnings
that garners a 30 to 50 to 60 X multiple.
I think the BTC dollar gain could garner a 30, 40, 50 X multiple, but that's it.
Not the capital appreciation of the Bitcoin.
I feel very strongly about that.
Yeah, I think that's exactly what the market is telling us.
So the reason why I've been pushing sentiment and market dynamics so much when I talk about
this is because to your point, Dan, if we take a look at the FASB gain, that's a one
time hit, right?
We got that earnings blowout.
Now in terms of long-term earnings, what we're saying each quarter is that the repricing,
whether that's going to be negative or positive, those are the earnings, right?
I think what we're seeing in the market is that the market is saying, no, we don't think
that's earnings.
And they're trying to-
That is absolutely right.
And that does-
It does.
And they're valuing the equity appropriately.
Now, here's the flip side of that.
The reason why I did the post in Community Today that I said I focus on NAV, not on the
ATM, not on the MNAV, is because the ATM is, in my view, and I've talked to so many people
about this and I've researched it for so long, all things being equal, can it tick the stock
price down?
In theory, yes, mechanistically.
However, there's too much going on in this trade right now with regards to the options
market with regards to Misty and iMist and the leverage plays and the convertible ARB and all
of those things to say that the ATM is having any measurable impact on the price. It's the smallest
factor. So that said, I then don't look at MNAV because MNAV is going to oscillate. That's market
sentiment. So NAV, I think, is a long-term what's going to make strategy earnest multiple when they
get credit ratings, when Bitcoin appreciates in price, when they can bring more offerings
to the market and perhaps even leverage their Bitcoin in different ways that Saylor and
team are probably reluctant to do right now.
So that is where the multiple is going to come.
But the problem with it is that we saw the run-up last cycle between 2020, 2021, and
the middle of 2021, and then we saw the long-term run-up in strategy overall, everyone's assuming
that's going to rip that way with the same kind of multiples. But that was in a market where they
were the only player in the game. There were not as many Bitcoin treasury companies right now.
There wasn't as much mind share in the sense of, you now don't just have strategy. You have
strategy, you have similar, you have MetaPlanet, you have SmarterWeb, you have Capital, you have
all of the other Bitcoin treasury companies that are taking away retail interest that in my view
would be going straight to strategy because if they weren't here, what other leveraged Bitcoin
player are they going to invest in? What do you think, what is your expectation of
NAV over 10 years plus expectation of Bitcoin yield? And what do those expectations result in,
in terms of outperformance? You mean MNAV? What kind of multiple they'll see?
Yeah, I guess that's my question. Because like when I have my models, like I sound like
gladiator over here. I have my models for how much I'll share them. But I have my prefs
they can issue based on like a consistent leverage ratio, a sort of, you know, 40 to
30% decaying category in Bitcoin, and then maximizing leverage ratio of how much actual
prefs they can issue and what kind of Bitcoin yield that will generate for the common equity.
So I have my models, but then the question becomes, will they do something crazy that boosts the MNAV?
Because I know we don't like to talk about MNAV, but ultimately, if you're trying to price this thing,
the MNAV is a monster portion of deciding how you're going to allocate to Bitcoin versus MSTR.
So, Adrian, I guess.
The whole thing is driving it.
Yeah.
Right.
So my question to you is, what is your expectation of MNAV expansion?
and what are your biggest sort of catalysts?
Do you think their Bitcoin yield will be disproportionately high over the next five years?
And thus, if the multiple compresses, it will still outperform Bitcoin significantly?
Or do you believe the business itself will potentially change and thus the MNAB will
expand despite whatever Bitcoin yield does and that will be the generator of outperformance?
I think that's my question to you.
I'll answer from two angles.
Bitcoin yield is inevitably going to trend down because as Bitcoin's price goes up, you're going
to generate less yields based on the amount of Bitcoin you can purchase. So that's always a
metric that's going to be trending down. Same thing with Bitcoin per share. Now, my view is that the
business is going to have to evolve and that's going to generate the multiple. And I think that
what we're seeing right now is growing pains. They had the first leg of their evolution with
adopting the bitcoin treasury strategy then they had the second leg with the preferreds
so the preferreds are going to scale but i don't think that they're going to scale like 10 15 20x
in the next 18 months i think it's going to be a gradual progression stopping in there well i'm i
i don't want to sound bearish but i'm trying to be realistic right so are the preferreds going to
scale yes but on the flip side before i get to my longer my my final answer the preferreds
ironically enough could be taking away interest from the common because people that would otherwise
be invested in the common might be now invested in the preferreds i know a lot of guys that say
i don't own strategy i own strike i don't know you can talk about yeah because i think i know i
know i've been posting a lot but it's just been a it's just been this ongoing thought in my head
that i can't seem to figure out maybe we could talk about it on live stream and i know people
are saying i so i have very little exposure to strife and very little exposure mstr right now
but i think there's a weird case edge case where strife becomes the mstr and we can talk about that
and you might be like dan you're absolutely nuts off your rocker and i'm a little bit but i want to
yeah so that and that's what i'm saying the preferreds have created a new investor base
but ironically enough that investor base may have been in strategy instead so yeah by the
reputation of capital is what you're saying yeah so so that we have a few things going on with
equity we have all the other mind share going on with all the other treasury companies that's
attracting interest we have the preferreds that are scaling the amount of bitcoin that they can
buy but also siphoning away capital from the from the common from from msdr and to your point dan
And to answer your question, I think that in my view, because Bitcoin's price is going to appreciate, yield is inevitably going to only trend downwards.
Bitcoin per share is only going to trend downwards.
Therefore, the business itself needs to evolve.
And I think that's where the multiple comes from.
And I think that they're going to have to look at different ways in both acquiring Bitcoin and leveraging Bitcoin in order to justify a multiple.
Completely 100%.
Yeah, coming back to my point.
The market is always...
They indicated that prefs are that vehicle by which they will do that, right?
Part of it, yes.
I think we have to speak in the face value.
And they said, we will not acquire other businesses.
We will not lend out our Bitcoin for any sort of yield.
We are issuing these prefs, and that's the way we'll generate Bitcoin yield.
So I think we have to take them at face value and say for the time being, one to four years, the press will be the way by which they yield Bitcoin.
And that's the most important thing.
There's people in the comments saying, you know, the press don't.
Why is Dan talking about press?
Why are you not talking about the press?
The only reason your comment is worth more than one MNAP is based on the success of the preferred stocks.
Literally.
That's a big portion of it.
Your comment is fucked, buddy.
Like, I don't know how to say it.
So I think all the focus should be on the press.
I mean, look, the way that they can justify multiples that those press get a credit rating,
that's going to justify multiple by itself, right? And when they scale, because I mean,
they've already been successful to your point, but they're going to be more successful. But I think
that this needs to be a delicate balance. And that's what I mean by they're going through
garring pains Me personally I know they saying that they not going to lend out their Bitcoin for yields I don think that practical I think when Bitcoin hits 250 500 or a million the kind of capital they can bring in by doing that for them to say no we not going to I don know if that going to work long
That's just my view. And I'm talking like three, five, seven years down the line. I'm not talking
like 18 months. So, to your point, are going to be a very, very powerful vehicle for them.
but if I'm being fair, I have to give the flip side to that. As a preferred scale,
so does the dividend payout, right? So that's going to have to be something that needs to be
watched if the common stock doesn't at least maintain or appreciate somewhat in order to
handle that growth. So this is a seesaw that they're going to have to balance through.
And I think that's what we're seeing right now. To get from 1 billion to 100 billion was a huge
move i think from getting from 100 to 200 or 100 to 250 is going to be much harder than people think
and it's not because of anything that they're doing wrong it's just because of the nature of
what they're trying to create they've built out an entirely new model that's why i call it an
economy they've built on an economy around their common stock and they've built out an adjacent
economy to bitcoin this is going to take time that's a good one right he's built the l3 on
bitcoin the layer three on bitcoin essentially yes that's essentially what he's done because
everyone and everyone in the prefers of the common is a passive investor in bitcoin whether
whether they know it or not so he he has created an entire secondary economy around bitcoin
through the common stock and through the preferreds but this is going to take time to scale and i'm
just saying that if bitcoin is at a million dollars and they have a million bitcoin and they
have a one trillion market cap they're really going to say no to generating yield on a portion
of that of their holdings i i don't know i i don't i don't know if that's a tenable position
because want to know why because someone else in the market is going to do it
either meta planet or someone else is going to do it and then they're going to start bringing in
tens of millions of dollars and everyone's going to pivot looking at strategy like what are you
doing you have the largest holdings you can be bringing in hundreds of millions why aren't you
doing this shareholders are probably demanded at that point yeah i think that's probably the biggest
risk is because i think that's probably the biggest risk in that whoever is competing to
to to give out the most uh you know like returns someone's going to overextend themselves and
they're going to be the first ones to get wrecked so i mean hopefully the intelligent leverage
turns into intelligent lending, I suppose.
I would say that it would, because I'm not saying that they're going to lend out their
whole stack, but if they have a million Bitcoin, using even a percentage of that would bring
in tens of millions of dollars.
And they can do it in an intelligent fashion.
I think there's big banks that will let them do that all day, every day.
So I am not a rehypothecation guy, because I saw it happen last cycle.
But rehypothecation was always going to be par for the course as we hit hyper-bitcoinization,
unless we collapse the entire capitalistic model that we have right now.
So assuming that it still goes forward and assuming that Bitcoin is going to be a part
of that, a very, very large part of that, I think they're going to have to adapt their
model and they're going to have to be open to doing things that they have not currently
considered.
That's just how business evolves.
So will the market like it?
I think that the market will.
and I think that once they get steady state with these preferreds and they scale, I think that's
the next evolution. They're going to have to monetize their Bitcoin in different ways.
It can't just be to back the preferreds because what are they going to do, have 15 preferreds and
siphon away all the possible capital from their common stock? I don't think that's practical.
They're going to have to have different levers and they're going to have to have different
verticals. But Nithu, your point is very, very well taken. If they fudge that up, the one way
strategy can get blown up is with that but on the flip side of that if they have a small portion of
their holdings being used to generate yield what's the risk if they have a million bitcoin and they're
only using thousands you know so like an easy way you would make a non-material different like impact
to their overall cash flow or value right if they're making five depends on how much they use
and depends on what bitcoin's price is but if they're making five percent on one percent of
bitcoin like i mean they're still dominated by their book value right but i mean it's a good
thought exercise i don't mean to i think uh i just remember sailor and maybe i'm misremembering
just talking about counterparty risk a lot so what happens when your counter counter
party risk is jp morgan or the u.s government is that different maybe that's different it's
an interesting experiment i think that's functionally different it's not it's not like
three arrows capital or alameda or ftx or blockfi yeah um if if the u.s government is your counterparty
i mean that i don't know if that's necessarily the same kind of level of tail risk that we're
discussing in terms of getting blown up um if they're if they even leverage thousands of their
bitcoin out of the millions that they have and bitcoin's at millions of dollars
and they do that perpetually, that's a revenue stream that they can now add to the books.
But they're also probably going to have to reclassify themselves as a business if they
do that because of the kind of earnings they can bring in and how it's going to hit the
balance sheet.
So there's so many different things that they have to consider in terms of how they grow.
Another way that I know I've been talking about and people think I'm crazy for talking
about it, their core business has room to scale.
They don't need to become Microsoft or Palantir or NVIDIA.
They just need to scale it appreciably. And if it can get to a size that allows them to expand their client base, that can demand a multiple as well. There's all kinds of things that they can do that I think that they're going to have to consider as this grows and as this becomes more mature.
because I think the 3,000% was a benefit of being a first mover.
So they've already got that first mover advantage.
Now they need to look into maintaining that lead,
which obviously they're going to,
and they need to look into different ways to justify
more long-term and broader market multiples.
I think you're totally right, Adrian.
And just to illustrate that point,
I want to bring up a sheet of max issuance of prefs before we get deeper.
So, I mean, just to recap what we've been talking about is the difference from forms of business models to demand a premium,
because ultimately price is determined by underlying Bitcoin in the multiple place on top of it,
which could be a function of future expectation of yield or, you know, a forward looking PD multiple on whatever revenue they generate by a Bitcoin.
But the prefs right now are their main source of Bitcoin yield.
We know that they're not going to issue any more prefs in the future.
So when you're looking at MSTR, you're looking at essentially a future claim on the assets of the corporation, the assets being the Bitcoin.
So you need to have expectations and assumptions over future Bitcoin yield.
The only way to model or price that out is to figure out how many Bitcoin they could essentially acquire per share on a fully diluted basis.
And that's to look at how much prefs they can issue based on Bitcoin prices and their leverage ratio.
I think one of the key things in the latest earnings call that people don't talk enough about,
it was the mention during the Q&A that the leverage ratio could be up to 40 or even 50%.
And that makes a massive, massive, massive difference in terms of the amount of Bitcoin
they can yield per share, and especially in a falling volatility environment,
which is exactly what's going on here, right? Bitcoin's volatility will continue to fall.
A higher leverage ratio means you're essentially getting more yield on your Bitcoin
because the press are technically yield on the Bitcoin. So what I've modeled out is a Bitcoin
price at the end of 2030 of 430 000 i mean that's a bit conservative in my opinion but
with a pref ratio of 30 percent and atm usage just to cover the dividend obligations roughly so
that's about that's about a hundred million dollars a month that's a little bit exaggerated but um
bear with me if you again 30 debt target based on bitcoin prices up to 430 000 bitcoin in 2030
you could see that strategy just via PREF issuance and ATM to manage the dividend payments
should have around 1.5 million Bitcoin. So that's a huge number, absolutely massive number.
And that would put the outstanding, this is the real key and something people will have to get
comfortable with or understand. They'll have to make their own assumptions about it. I don't mean
understand, but if these assumptions prove to be true and they have 1.5 million Bitcoin,
They have a market cap of $770 billion with a 1.7 multiple.
I've held multiple constant.
There'll be $180 billion of preps outstanding.
So the bet you're making by holding MSTR common is essentially a bet that the preps will be a key player or a key part of the entire global bond market.
And I think that's interesting and super relevant.
And I believe actually that the preps and Bitcoin back equity will be a huge, huge part of the future of finance.
We can look at a stretch.
I think we want to go through maybe a little bit of stretch volumes.
So stride volumes are low, 15.9 million.
That's a great.
If you want to hop in there, get the I think this is a really good trade.
Buy stride, collect the dividend, wait till it bumps up a little bit percent.
You're positive on it and sell it.
But the stride dividends, you know, insanely high.
That's a cool trade.
Strike trading too low, in my opinion.
Strike should be trading a lot higher because, you know,
the effective yield when you take out the call option on the equities is almost 13%.
Stretch, extremely high trading volumes, and they continue to be.
This is a really good sign, and I think this will likely trade up to par soon.
It's going to take a little bit of time.
That's right.
the the crown jewel which i think is kind of the uh the wild card capital structure and it
isn't talked about enough you can talk about that later so i just want to go over those things um
the volatility just to set the playing field for the next conversation
i'll take another two minutes and then we'll get get rolling so this is uh this is ibit volatility
here or btc volatility and you can see that we've been trending down uh over a period of time but
we've been stabilized around 30 percent um mstr's volatility has compressed from what was 200
during the peak to about 50 52 um so just shy of 2x out of ibid and you see the implied
volatilities right around there so those are the volatility stand and kind of the market
as a whole now maybe we can keep talking on that guys sorry to interrupt but well yeah
there no you didn't interrupt at all i think that's all valid um i actually did a post on
that recently comparing um bitcoin msgr and the mnav and that's another factor bitcoin's volatility
has been decreasing so that's obviously going to have a you know an impact on strategy as well so
there's just so many there's just so many factors that are going on into price action right now
but to your point dan i again i'm not bearish on the preferreds i think that that is going to be
their brett their bread and butter in the future however we have to also take into account that
there's all kinds of ways that it can play out and be aware that it may take longer to scale than
we realize and people saying that they only need the preferreds i think that's being somewhat
short-sighted it will take a lot longer to siphon away from 300 trillion dollars of potential
capital than people realize and i i just want to i just want to make sure that everyone is aware that
this is a long-term investment that you're making you're not looking to see what happens in the next
six to 12 months with the prefers and then you know get shaken out because they're not at tens
of billions and hundreds of billions of dollars each so you know it i think dan is right the
preferreds are going to be huge absolutely huge it will take time yeah i was thinking about it
But like I mentioned it on my interview with Tim yesterday, and I kind of look at it as like, let's just say like a Tesla.
You know, if they want to shut down their factory to upgrade it, which is then you're going to have, you know, more costs and you're going to have lower production for a brief period of time.
And, you know, that's going to be reflected in the, you know, in your efficiency.
And so the price may lag during that time. But when that upgrade happens, now you've got more product rolling off the shelves. And so I'm kind of looking at the preferreds as like Bitcoin conversion factories.
and we're shutting down production on the convertible bond Bitcoin conversion factories
and we're retooling and going over to this other thing.
And I'm kind of just like, okay, like you said, it's going to take time for that to scale up
and maybe some investors get bored waiting for that to happen.
But if people panic sold Tesla at the bottom, then they didn't get the gains
when they get record numbers coming out the door.
So I don't even think that those four factories
that they built for the preferreds
is gonna be the end, right?
There's gonna be more.
That slide that they shared
where they had the yield curve
and there was a big black section in the middle
where they could stick in at least two more preferreds.
So they're gonna get more
and the ones that are existing
are going to continue to mature, but there's no telling if it's going to happen, you know,
this month or even this year. So I think you're right, Adrian, there's going to be some patients
waiting for these to mature, but long-term, you know, my thesis hasn't changed, but I think if
people have married themselves to expiration dates on long calls, you know, those things may
have gotten a little bit dicier.
Well, I mean, yeah.
The thing is, we also have potential bullish catalysts.
You know, when interest rates come down,
well, I think the market's actually front-running
to interest rates right now.
So I think everyone's anticipating interest rates in September.
So we have that as a current macro tailwind.
We have potential S&P inclusion.
I have my own thoughts on that,
but that's another potential catalyst in the near term. And of course, if Bitcoin keeps going the way
it's going, because I think we're going to hit between 150 to 200 this year at that minimum,
that's also going to have a potential impact on price as well. But I just think that we're really
seeing right now the maturation of strategy. And I hate to just keep repeating myself and
say patience but really patience is the is what's going to need be needed here and if you guys are
options pretty heavy i got nothing for you good best of luck yeah i'm still in that boat and i'm
looking for we can't say that for one more pump yeah we can't leverage like if we're mstr bulls i
mean like and it's if you believe it's beta on bitcoin and well i don't know i just i don't think
can say like best of luck to anyone in options like at one point i was in options and mstr and
it's worked out for a lot of people over long periods of time but but it's a shame if you're
you know i think that's a lot of the downward pressure on mstr is likely that people believe
um they believe mstr is beta on bitcoin and if it's not behaving that way it's difficult to take
certain trades and that was a lot of the messaging at the beginning so i think that kind of a lot of the disconcern right now Everyone who been in MSDR for a while has made crazy returns We all outperformed Bitcoin That absolutely great
We can't disagree with that.
Absolutely.
But once the stock stops behaving like beta on Bitcoin, for traders specifically, and obviously
I am a trader and a lot of people are traders here, you have to change your mental framework
and how you are playing Bitcoin with leverage.
and I think, I don't know, I'm just acknowledging that it's tough if you're an options purchaser
for MSDR. Well, for sure. I'm in options too, but I've always gone far out of the money and I've
never used it as a way to be a primary driver of what I'm doing. So the reason why I say best of
luck is that if you are a trader, you are essentially taking on that risk by yourself
and you're trying to play the stock the stock is not obligated to act in any way you're making an
assumption and we are assuming that it's a bait on bitcoin which it is and we are assuming that
it's going to continue which i think it will but the gyrations in that process i think people have
to own so i understand their frustrations but at the same time if you are holding an equity and
then you are also playing options you are adding on additional risk so you have to kind of take that
in stride, both good and bad, is the reason why I said best of luck.
So your point's taken, but I just want to make sure I'm not coming across
entirely unfair.
I'm just trying to be more measured in the way that I kind of am looking at it.
They should take it in stride, like by stride?
Yeah, that was fun.
I mean, yeah, that can be an angle of it, yes.
But all I'm saying is strategy is volatile by itself.
Options, playing the options and trying to get additional yields is a valid strategy.
I've done it myself.
But I also understand that I can't really control what's happening in the market.
And I have to take those market gyrations on the chin when they don't play out my way.
and so i i posted it was a little tongue-in-cheek but i i said plot twist what if the the the mnav
guidance and on the atm that they put out was the same thing that they had been using all along
but everybody was so happy to see the guidance like it was something new i mean do you guys think
that that the guidance that they put out is too terribly different than what they had been doing
all along i'm sure they had a framework internally they just didn't post it to everybody
that's a good point i mean they probably did um the the thing the thing about it is is that you
know if we if you're correct and they just had an internal metric that they just decided to share
with everyone um how like what was it see this is why i think it's investor relations i think what
they're doing is investor relations they're trying to um assuage a lot of the noise that was going on
online. But flip side, did they now back themselves into a corner if MNAV doesn't go above 2.5
for a prolonged period of time? Is the way that I kind of think about it. I do think that they
had internal metrics. I really do. I think you're right. Do I think that they were these? I'm not
sure. Because if they, you know, so did they have an internal meeting and say, okay, these are the
metrics you've been going with, we have to kind of, we have to change them and we have to kind of
surface them to the investor base or part of the investor base so that they know that what we've
been doing was some guiding our decisions to give them more like line of sight to internal
decision making. I think that's possible. Yeah. Yeah. Anything more about this or did we beat
it absolutely to death? We may have beaten it to death, I think. Well, people in the comments
must have actually been reading the agenda because somebody asked what's a digital empire
so this one's coming over to you tim you're the one that's building the damn digital empire
you got two marathons and uh under your belt so far and congratulations oh he's leaving he doesn't
want to talk about it he's uh he's shy but um you know there was like tens of thousands i mean at
one point I saw 80, 90,000 people, right, Tim, that were, had eyes on your, on your marathon
digital conference yesterday? Yeah, I mean, we were down from last month when it was 168,000
toward the end of it, but, you know, you gotta, you know, the markets go up, the markets go down,
the views go up, the views go down. So yeah, I don't know that there's been
any digital conferences kind of in the Bitcoin space, specifically Bitcoin treasuries.
So yeah, we're kind of like pioneering this, testing the waters. July 8th was the first one.
Yesterday was the second one. Really appreciate everybody, including you guys, especially,
right taking time out of your day to to come on and speak but um yeah it uh to get 42 people up
on stage i mean people are not going to sit in their seats in a venue for 21 hours straight so
i i do think it has legs from that uh point of view um but you know how much will the market bear
as far as uh you know we probably don't need a monthly conference you know i mean maybe if bitcoin
goes uh you know doubles or triples or goes to a million dollars maybe we need monthly conferences
to keep up with with everything but um yeah kind of trial and and trying different things so um
i will say the kind of diving into the first in-person conference that i'm doing and thank
goodness i have guys like uh ed and adrian to to kind of try to fill in everything that needs to be
done 34 days from now literally five weeks from now the conference will already be over so that's
nuts um but for those who have been to the venue in in uh midtown manhattan we only have 500 seats
if you go to the lumen link there's already 200 and some tickets sold so um the reason i say that
i've been doing a lot of research and i don't know the numbers but just hypothetically for those that
were in vegas there were 35 000 people there statistically they probably sold 10 000 tickets
or 12 000 tickets in the year leading up to that and they sold probably 20 000 or 25 000 tickets
in the week before so like if you look at the luma link and you see the pricing just goes from like
a couple hundred dollars a ticket to like five thousand dollars a ticket like there's a reason
for that um it is going to be a premium event i've seen a few comments you're like these tickets are
expensive like yes that's why we're here like why do we have 100 000 people on some of the true north
live streams because people have made a lot of money on mstr i mean it's not a secret so um you
know not only do you have sailor kicking it off at 10 a.m but then you literally have him coming back
for premium sessions where he's hosting the session like he's going to ask the questions
so i think that's something that to my knowledge i've never seen before and um so yeah hats off to
guys like sailor that are are being helpful and are working the willing to work their butts off
because i think that's what we need um what else i mean there are other like 99 certainty that other
some other names that you would recognize are going to be there we just can't announce it yet
because of uh scheduling and confirmations but um i think the cool thing is we're going to live
stream it right so it's it's an unconference meaning it's not just one guy up on stage it's
not just panel after panel visually it will kind of look like maybe a fireside or a panel but the
difference is audience participation mics out in the crowd like think more like during even though
we don't really probably want to talk about this like election season right when you have this
town hall and people are there saying whatever they want whatever they want to say we're literally
compiling and we're going to have this out for a vote to all of the attendees what topics like
right right there adrian morris like whether it's quantum computing whether it's proof of reserves
whether it's something else by that point right i mean five weeks from now is like five years from
now in bitcoin terms right so whatever those topics are um like imagine jeff walton on stage
with pete rizzo and radu and somebody else talking about how the wall street metrics are not working
anymore right uh these these new metrics are needed and all of this is kind of like whether
you're in bitcoin or you're in trad fi it's like breaking all of these quants brains like
very topical things that people actually care about and my like personal goal for the conference is
i want everyone that's in that studio audience to literally feel like at any time because they can
they can stand up they can go to a microphone or someone's roaming around with a microphone and they
can participate in this conversation with all of us with true north with michael sailor with eric
semler with everyone in the room and you're part of this conversation that's being not just live
stream but memorialized for you know what will obviously be hundreds of thousands and millions
of people so uh i think it's gonna be a really unique opportunity i know i'm a little biased
since i'm kind of working on it but i'm uh i'm really excited about it and i we really appreciate
all the support if you go to the luma link and you use true north 15 you get 15 off your ticket
what's better than that so true north 15 obviously uh i i'm very humbled to be a member of true north
so yeah just trying to right we're all kind of going doing our doing our things during the day
doing this at night so i think it'll be a really cool way to get everybody back together in
literally prime time season of the historical bull market and yesterday was interesting right
some people were like no 150 to 200 000 180 000 by the end of the year and then that's it
and grain of salt really kind of wrapped up the whole conference literally with me and he said
we will know in 2026 whether this time is different it's gonna be very simple if we get to
to a new all-time high in 2026, this time is different.
So I thought that was insightful.
It sounds simple, but I was like, oh, that makes sense to me.
So, yeah, that's YUN Conference.
Thanks for the time letting me show this as hard as humanly possible
without being ridiculous.
Oh, yeah, man.
And just so everybody knows, every dollar that True North gets
from that affiliate link, we're going to smash by 1080s.
So there you go.
I was going to hammer it right back into the market.
No, I got a comment again because, you know, how long would it take?
How many people did you say you had on?
42 or something like that?
Yeah, we added Brian Brookshire, BTC, Bitcoin Overflow.
We added, I think we just added one.
So I think if you don't include me as the host, I think we had 42 speakers.
Yeah.
But imagine how long it would take for 42 people to meet 100,000 people one at a time. And that's why I put dematerialization in this part of the agenda because, you know, Sailor's always talking about how iPhone basically dematerialized half of the physical world and put it on your iPhone.
and, you know, Netflix dematerialized, you know, physical entertainment, you know, renting,
renting movies. And you basically dematerialized like hundreds of thousands of individual
interactions that would have, that would have taken, I don't know, a hundred years to take place.
And you, you made all of that happen in a single day. So I just think it's amazing. And I mean,
you got more flowers to announce too, right? I mean, you're an advisor now. And do you want to
talk about that at all? Not really. Okay. Well, people were congratulating you. And I said, well,
you know what? Congratulations to them for landing Tim. I think that was very lucky of them to do.
So you're clearly the hardest working man in Bitcoin. And I think it's just obvious that
people gravitate towards you. And, you know, the way that you talk to everyone is completely
genuine. And I think you just deserve all the success that you're getting.
Thank you. And I do want to apologize for clowning around during the beginning of the
live stream tonight. That was unprofessional, and I will blame it on lack of sleep. So I saw
the comments. I apologize
to Soleil.
I hope you
can join me in making money great
again, but I hope you can
appreciate a little bit of lack
of sleep and accept my apology.
That's ridiculous. No need to apologize.
Every man only gets
two apologies in their life, so don't waste
one on that.
Oh, man.
I just got the best compliment ever in the comments.
Ben Workman. Tim is everywhere all the time grinding. All right. Thank you, Ben. It's very
there. It is. It's very kind. I did. I did go grab some food and I got a text and it said,
what are you doing? I said, I'm at the office getting ready for True North. I'm going to shill
the unconference hard AF. They just said, you are wild, right? It's like, why are you not sleeping?
So we can sleep tomorrow, right?
True North is once a week.
We're all here.
And obviously, we appreciate everybody tuning in.
Heck yeah.
So next topic we got on the agenda.
So Bitcoin treasury companies, network obligations, if any.
So this is something that I've been thinking about lately.
And it was actually somewhat inspired by Julie Millard's interview from your first conference
because she was talking about authenticity. And, you know, strategy has been number one,
you know, they're true to ideal, true to self, all of these things, all of these metrics.
And there's a couple of, you know, kind of Bitcoin dramas that have been
around my X feed lately, you know, we've got spam, and we've got the,
you know, people, people running knots in order to, to try to, you know, filter out some of this
spam. And then we've got, you know, Bitcoin events that may, you know, you attend and you're
looking around and you're like, wait a minute, why are there so many shit coiners here? You know,
like why are people up on stage talking about things that are not Bitcoin And so do these Bitcoin treasury companies have any kind of ethical or moral obligation
to try to ensure the survival of Bitcoin or weigh in on some of these topics?
Or is it just you're a treasury company, your job is just to stack sats and Bitcoin takes care of itself?
Well, I think their first responsibility as a company is through their shareholders and
any kind of stewardship they choose to take part in, whether it be the Bitcoin network,
running, whether it be running nodes, proof of reserves, whatever other things that they
decide to take on should be, I would say, voluntary rather than mandatory.
So to your point, I don't know if they are required to, but certain investor bases may
say that they expect them to, and that would be something that they would have to take
on.
But primarily, the responsibility of a company is to their shareholders.
So I think that is their first responsibility.
And whether we like it or not, anything Bitcoin, purely Bitcoin related, in terms of whether
to be core versus not so what have you i think that will be secondary to it now that said i think
some of the companies are going to have to take a stance on that in the coming years because as the
network grows and as bitcoin adoption grows they can't just say uh we have no opinion on it right
they're going to have to take a stand but i do think that's going to have to be something that
they navigate very diligently yeah and i was kind of thinking of it like um you know let's just let's
just say corn as a commodity right since we got the bitcoin angle so if your if your mandate was
to acquire as much corn as possible you would also want to keep it safe right you can't let it get
ruined by you know a fungus or something right so i think i think you have to automatically assume
that bitcoin treasury companies want to stack as many saps as possible but then also you can't
can't just remain silent if there's a threat to that product itself. Because if the sats become
worthless, then what's the point of Bitcoin yield? You know what I mean? So I think that
it's going to be more and more important, especially for the strategies of the world
that are, they have a way stronger voice in the network than anyone else.
probably MetaPlanet
may need to weigh in on some of these things too
but
I don't know
I think it's a little bit
I don't want to let them off the hook
I know people criticize Elon Musk
for voicing things about being political
and whatnot like that
I'm not really going there
but some people really do think
that the spam could be an existential threat to Bitcoin
So it's been weighing on my mind quite a bit. And to the point where I got motivated to actually run my own node.
You know what I mean? And I just thought, whatever, let other people run nodes. I don't need to do that.
But it's got me super motivated. And I can't even think of any company.
We're always making these announcements like, oh, we bought Bitcoin and this company bought Bitcoin.
but I've never seen anybody saying, you know,
we're going to be a steward of the network and we're also running a node.
Right. Has anybody ever seen an announcement like that?
I don't think so. Right. Yeah. I hope, I hope it happens.
Taylor, you know, I don't want to put words in his mouth,
but he seems like an ossify guy. Like, you know,
he's always talking about the granite or, you know,
the bedrock is the foundation.
but he's in a bit of a spot too because people will you know if he tries to voice his opinion
people will say that oh he's just trying to manipulate the code you know people the devs to
to make some you know uh changes in his favor so some of these companies might be in a in a kind of
like a lose-lose situation in that sense but um you know ensuring bitcoin survival i think people
just assume that it's automatic but it's really up to us it's up to everyone um and and i don't i
don't want to let bitcoin treasury companies off the hook and just say you know your only job is to
borrow money and buy bitcoin i don't i personally don't think that that's enough
yeah no i think you have you have a point the reason why i mentioned the um primary
responsibilities to the shareholders is because you know they are a company
But with everything you're saying, the way I see it is that these companies are peers in the network, but they're just peers of a different scale.
So how they operate in the network is going to be very much voluntary.
And, you know, what you just said about like Saylor and strategy, it is true.
He may be in a damned if you don't, damned if you do situation where anything he says, there's going to be a loud outcry on the opposite side just because of his position, just because of the size of strategy has appeared in the network.
but that said you know maintaining the safety of bitcoin the sec the function of the network making
sure that bitcoin stays viable is something that's in their vested interest as a company that's
acquiring bitcoin so yeah you're right at some point they're going to have to take a stand
it's just a matter of how that's you know brought to the market in terms of communication in terms
of what exactly are they going to do is it just going to be running nodes is it going to be through
taking a more active role?
How is it going to look?
I really think that
that's something that's going to have to be thought through.
But strategy, anything that they
do is going to have a huge footprint.
I think
that they're going to have to be very careful
with what they go to the market with in terms of
how they want to be stewards in the network
as one of the
largest peers in the network.
Yeah.
That does make sense.
we don't have to beat that one to death but so Jesse actually had a suggestion and of course he
didn't show up to defend his position but he was talking about some of these companies that are
like investing in each other's offerings and is that is that fair play or is that
um you know should all of your own company's money just be plowed into your own your own
offerings like should should bitcoin treasury companies be participating in each other's
capital raises or or is that uh that a no-no
i don't think it's like insider trading um obviously goes to show you there's value in
networking and being connected but yeah that's all i have to say on that
yeah i mean you know every time we get off zero we're joining the bitcoin network and every time
a bitcoin treasury company gets off zero they're joining like a you know kind of like a
uh we're all in it together kind of thing and you know sailors always tweeting
hey this company bought bitcoin this other company bought bitcoin but is that like uh
I don't know, is that not quite a vote of confidence in your own company if you're giving other companies capital instead of buying Bitcoin with your own capital?
Or am I not understanding how these capital raises work?
No, I don't think that's what it is.
I think that we are so used to an adversarial model that we have a hard time adopting or accepting, rather, a cooperative model.
if if if these companies adopt bitcoin and more and more companies adopt bitcoin that's
that's good for bitcoin so in a way they all have a vested interest in their mutual survival
so i think that it's it's creating different dynamics in the market as to why you're seeing
that more companies are willing to invest in each other and um push them towards success like with
sailor retweeting all these companies when they buy bitcoin and whatnot he's being an advocate for
these companies because their success and bitcoin success is in his best interest so i think it
creates a self-interested cooperative model that we're having um that we're going through the
reconciliation process with and coming to terms with in a true adversarial purely capitalistic
model no that that's not what they should be doing but in a in a more cooperative model where
bitcoin is a network and you know they say bitcoin is a movement and bitcoin is this and this and
that it does create more of a cooperative model perhaps with regards to the sharing of capital
and how capital is allocated and we may be just seeing that yeah i if i was um if i was in charge
i'd be tempted to sell cash secured puts against strategy and then buy bitcoin with that that might
work out i mean you could you could do that that that there's nothing against it to say that same
with you doing that but i'm just saying that i think we're seeing more of a cooperative model
where your success is my success taking place and and we're seeing the natural output of that
um whether that's good or bad i don't know man i'm just saying what what i think could be um
playing into it yeah so i mean that's all i've got on the agenda this might be a quick one unless
you guys got other things that you want to talk about dan did you bring anything for the press or
did you get all all of that off your chest um let's just talk about whatever else we need to
talk about and i can talk about the press for a second you said and you can talk about what yeah
i can mention the prefs um i don't have much more besides volume and some theoretical ideas
okay yeah go ahead and share them the um the only thing that I put in section five is we have feds
on the streets so this this may be your your Bitcoin use case get your seed phrase ready in
case you got a dip out of the country and or get out of your little communist hellhole of a city
that you got that you're living in and get your shit hits the fan plan ready does it get any more
bearish than that i'm bullish on bitcoin but i'm bearish on uh i'm bullish i'm bearish on the fourth
turning i guess so get your preps ready get your press ready i like that so long you ready to share
dan um i think i covered most of it i think the preps are the yeah i think the preps are the full
story i don't i know people don't want to talk about them but that's the future right now that's
business model i mean before the prefs it was kind of managing the leverage ratio what is a convert
what is btc yield what is that what's the development been over the past few years right
first it was okay are they over leveraged can they cover their liabilities with their cash flows
are the converts a form of leverage are they senior capital structure what does that leverage garnish
garner like what kind of multiple is a fair assumption there then we moved into this okay
what is equity issuance and is it a sort of accretive mechanism for shareholders? We figured
that out. So I think it's cool. We've gone through this learning journey. And then we saw the first
issuances of the PREF over this winter and we started figuring out, okay, what is a PREF? What
is a liability that never comes due? Now we're trying to figure out what is BTC per share if a
liquidation preference exists? Is the liquidation preference a claim over, superior claim over the
assets or is that not even really leveraged considering that you know all of these prefs
never come due what is the liability is the liability the total market cap of all the prefs
or is the liability the annual dividend payments on the actual pref and i don't know how to quantify
that in terms of btc per share necessarily but it has a huge impact on mnav right if if the
outstanding prefs represent 30 or 40 percent of the total value nav of strategies bitcoin
then the BTC per share will be calculated, one, based on the total NAV of the Bitcoin divided by the total outstanding shares,
or total outstanding shares divided by the NAV, or it will be calculated, two, by taking the total NAV,
subtracting out the total market cap of all the prefs, which represent a liquidation preference,
and then having that be the representative BTC per share, per fully diluted common stock.
So I don't know how they're going to value that BTC per share moving forward.
And I think that's a really tough or interesting next step for figuring out how these things are valued, because that's ultimately what we've been trying to do at MSDRX for North the past year is understand how to value MSDR, how to value a Bitcoin equity, how to value these sorts of things.
And the pieces are moving and shaking as we go.
Yeah. And some of the things don't fit in a spreadsheet.
Right. I mean, I'm going back to the authenticity thing.
But how do you measure like authenticity per share?
you know what i mean because you've got you've got companies that have been doing it longer
right strategies been doing it the longest they've got the um the longest track record you've got
meta planet that's been executing well but you've got some of these other companies that you know
might even be just like hyping their own stock and uh potentially over leveraging encumbering
their bitcoin uh maybe desperate to raise capital and doing some things that that they shouldn't be
doing. So I agree with you, though. We have to figure out a way to measure those things.
And I think that the market really figured out that the EPS doesn't matter for strategies
earnings because Q1, we had a huge miss, right? It was because Bitcoin was down and it was like
billions of below expectations and the market didn't care. Strategies price didn't
really go down. And then Q2, we had that massive gain, which should qualify them to at least be
considered for S&P 500 inclusion. But again, the market just didn't give a damn. So I think that
the market is probably calculating in the same things that you're calculating, Dan, and saying
here's what they did this quarter. Because we know we're not going to give them credit for all
of bitcoin that they put on their balance sheet last year like we we want to know okay what was
your bitcoin accumulation this quarter or what was your btc and dollar gain this quarter so um i don't
i don't you know maybe we were wondering if the market was going to be fooled and they weren't
i think it was just all kind of uh expected really
hey dan or anyone i got something for you if uh i'm not interrupting so late no no good work um
i posted maybe an hour ago there was a clip and then a whole thing with uh joe burnett and the
takeaway was basically he was saying that this intelligent leverage like the leverage ratio
right 20 to 30 percent or if it's all preps maybe 30 to 50 percent could create massive tailwinds
for the price of bitcoin as it kind of ratchets up and uh i didn't know if you had a view on that
or even like the mechanics of it right like the flywheel of like the price goes up your leverage
ratio goes down. So then you got to like it just like how much merit do you put to that
statement or?
I mean, it's a great point, right, is the price of Bitcoin goes up significantly to maintain
a consistent leverage ratio. There has to be consistent bid on Bitcoin. They have to
be buying more Bitcoin through issuing more securities or debt.
right like if you have a 10 leverage ratio bitcoin goes up double you have now a 5 leverage ratio
you need to issue five percent of your bitcoin stack you need to buy five percent of your bitcoin
stack debt that debt is through fixed income issue issuance across the board whether that
be press or convertible notes or just straight debt in the case of planet right so yeah it holds
merit but there comes a point where bitcoin gets high enough and yeah that holds merit there comes
the point you if bitcoin's at 300 or 400 000 in six months you can't be holding a 30 leverage ratio
you just can't do that the vol ticks up to 30 40 50 on bdc you can't hold a 30 40 leverage ratio
you just can't do that in good faith so i i don't think i think theoretically and over a really long
period of time everything you're saying tim 100 correct i think in the short term you can't
lever up crazy during a rally got it yeah i mean his points well taken over five years
well i i think we made it all the way through the agenda um you guys want to go around and do
final thoughts you want to start with you adrian anything you want to close that close us out with
uh sure i think that bitcoin just hit on you all-time high today over one
124 what was it whatever it was oh 100 just here so i can drop off but um yeah bitcoin's gonna rip
we're gonna be fine everything's gonna be calling just zoom out and relax we're cooking
okay only only bull posting from now on just on thanks adrian appreciate you
jeff shows up and adrian's like that's it i'm out that's it i mean i can stay but i don't i got
nothing else to say so yeah for sure i'm jeff's here i'll bounce out and um everyone just needs
to chill peace just in time jeff i'm gonna close it out early you're gonna close it early 8 14.
you got dan coming in talking just a bunch of bearish stuff about uh strf and liquidation
preferences i said nothing bearish on the stream it's just it's only the tweets dan yeah but the
tweets are meant to be they're literally a stream of just a stream of stream of yeah yeah i appreciate
it i'm not i'm not i i appreciate it i i like your i like your arb perspective you're like okay hold
on there's uh there's uh credits i like how you're putting it all together you're like you're thinking
like an algo uh where you're identifying these different like opportunities to move in between
all of these different assets based on how are they're going to move in any one direction that
it was kind of that like pentagon thing that put together right where where you can like you can
like arb all of them because each each is going to have its own individual like risk relativity
relative to like the premium of msdr or all of these different components intertwined moving
together and they all lay claim they all technically are some form of claim or the underlying asset
and it's a homogeneous underlying asset
yeah which is a really interesting concept like when you look at like like when you look at a
traditional equity right a common a common share represents a claim over future cash flows or
current cash flows or in the case of liquidation the actual liabilities of the company what's left
after the common debtors after the debtors have been in the case of mstr the common represents a
future claim over the assets at some point in the future because there isn't the cash flow per se
for the common equity right like it's a future expectation of yield or accretion or generative
capabilities from the bitcoin so that is actually very similar to what strife claim may be a strife
claim effectively a fixed claim over the bitcoin but with no expectation of future yield on the
bitcoin right so that's different yeah fixed fixed claim on the bitcoin it's uh in the event
of liquidation though exactly but it's a fixed usd value of the bitcoin that's what it is right
senior claim yeah the assets of corporation period full stop in the case of liquidation right yeah
and this is the question i posed to you a little bit earlier and i just i'm curious how if you've
mulled on it a little bit it's like what's the probability that strategy gets liquidated or
bankrupt and the bitcoin's worth anything and the strife holders get anything right and that's
but would you would you would you say like so i think the real question is when you calculate btc
per share would you divide all of the shares by the total nav of the bitcoin or the total nav of
the bitcoin minus the liquidation preference of all the prefs
for what you're trying to when you're trying to calculate the bitcoin per share
i'm trying to calculate the bitcoin per share of the con uh yeah yeah yeah that is the only
fucking metric we use to to value the stock or not the only measure but that's a key factor right
like i think it's a big deal personally but maybe i'm overthinking it so your bitcoin per share
They're backing out the relative claim of the liquidation value at issuance for each
of the preferred equities and its component of that?
No, it's just I'm doing a terrible job explaining.
I'm sorry.
But like prior in prior.
I need math.
You put it on the screen.
Let's just say preps don't exist.
There's converts.
When we calculated Bitcoin per share, we took total outstanding fully diluted market cap
we divided it by the USD value or we divided it by the number of Bitcoins held minus the liabilities, right?
Yeah, we looked at it a few different ways because there's, I mean, the converts can convert into different tranches of equity, right?
It's convertible to equity into different, and that equity can change over time depending on what the underlying is and all of that.
So we looked at it fully diluted and non-fully diluted.
okay okay so in the case of the prep so that that's totally okay but in the case of the
the prefs i guess you wouldn't subtract out the perpetual limitation preference that wouldn't be
considered so you divide the total fully diluted market cap by the total number of bitcoins not
subtracting out the portion that is represented by the location preference that would be how you
calculate for fair value bitcoin per share because the professionals never come due that would be
And the reason you would do that is because that gives you some better underlying risk metric of the PREF?
I'm just curious. I'm just curious what the PREF, like is the PREF liquidation?
People say, according to, you know, GAP accounting measures, the liquidation preference, the total market cap of the PREF isn't a liability.
So that increase is not a theoretical Bitcoin per share for the common stockholder.
But if you consider the liquidation, the total market capital liquidation preference as a
liability, there's a lower Bitcoin per share for common holders.
So that's something I've been trying to figure out in my head.
How do you consider that?
But it kind of comes back to the original question.
It's only a liability if there's a liquidation.
And if there's liquidation, then the stock is probably worthless.
I don't know. I just see this whole thing as binary.
No, I think that's a great point, but then you could use that argument for 100% leverage ratio.
Right. I think that's the question. It's like, how high can you crank this thing?
I think that's a really good question.
I don't think we'd get to have 100% leverage ratio.
Well, the leverage, really your leverage ratio should be a function of the dividend payment
of the preferred, not necessarily the...
Right. Because even if you levered it to 100%, let's go crazy here. Even if you levered this
puppy to 100% technically, how we've been calculating leverage in the past and you got
77 billion dollars of capital yeah uh 77 billion dollars capital 77 billion dollars of debt and
let's just say at seven per at 10 percent interest to make the number simple then you then you've got
seven billion dollars of dividend liability annually right which comes out of the common
but it's essentially a 20 kager arb right and that so so you'd you'd have your your real liability is
your annual liability and your arbing it's funny you bring up this kegger arb because i did a little
bit of math maybe i'll share my screen so if you'll let me here i'm trying to wrap my head around this
a little bit further as well um oh shoot i gotta make it bigger and i disregard this over here i'm
just trying to like think of how to how to put this in perspective because i i feel like a lot
of people aren't really understanding uh how like they're not seeing the arb and they're not seeing
the arb from the math i think so i just wanted to put this into perspective here the strf price 117
dividend per share eight dollars uh is it eight it's ten let's just say it's ten make it equal
uh quarterly dividend per share is two dollars and fifty cents the initial rate paid on this is eight
eight and a half percent relative to $117.
So I used an incredibly conservative BTC CAGR assumption here, 25%.
So it brings us to a quarterly CAGR assumption of 6%.
That's right.
So your CAGR ARB is 16%.
So I just walked through the math, put this in the perspective.
So let's say the issue in a share of STRF at $117.
You're going to go buy $117. Strategy is going to go buy $117 worth of Bitcoin. Maybe less fees,
maybe it's $116. We can argue over this. The dividend that they're going to pay, and I'll
make this so you can see it. The dividend they're going to pay is $2.50. The net Bitcoin that they
would have, let's just say, forget additional capital raise. Forget additional capital raise
completely. And let's just say, what if they just sold the Bitcoin to pay this off?
Okay. Which I think is a good, it's helpful to wrap your head around the math here is if they
just sold the Bitcoin to pay this off. Okay. So Bitcoin price, $117. You've got a quarterly
dividend paid of $2 and 50 cents. The net Bitcoin you'd have after that would be $115.
dollars. Now that $115 is going to compound at 6% quarterly. So next quarter it's going to be worth
122, but you got to pay out another $2.50 dividend. And then that Bitcoin you'd have at that point is
$119. Now from that issuance, $117 at the end of this period, these two quarters, you'd actually
have $119 worth of Bitcoin. You paid out $5. So you technically would have made $2 in these two
quarters on that individual single transaction. So that's being counted as like this net income.
I guess the argument is, is this net income? And I think it should be calculated as net income. How
does that factor into revenue? Can you discount this to, can you discount what the ARB is over
time back to a certain point in time like today and get to a like proxy revenue figure calculating
the benefit of this arb in day one and i think that might be an interesting concept to just walk
through but then wouldn't that mstr pop to a multiple and then trade flat into perpetuity
see i i kind of caught you catching this or talking about this in the earlier say that one
time dan if you believe mstr's price should reflect the future leverage income based on a
kegger orb then the premium should pop price it all in and then mstr should trade flat until bitcoin
reaches its terminal kegger i think that i think that is a an argument that you can make it's like
you like what what is bitcoin's terminal kegger it didn't tell fiat goes to zero like what like
how forward looking does the market look right is the market is the market is the market capturing
this and like how do you value a company are you going to value a company at less than the value of
the assets on this balance sheet no and how do you value a company that's increasing in financial
strength so quickly like this company started with 500 million dollars five years ago and they're
holding 77 billion dollars like that is insane that is insane and as to use soleil's word
this is as least efficient as they will ever be
like so what is that worth bitcoin yield but in terms of actual capital
well in bitcoin yield relative to every other company trying to do the same thing yeah i agree
with that point so yeah i mean as as bitcoin gets so expensive that it hard for everyone to just scrape two sats together that somewhat true but strategy has the most effective tools to be able to do it better than anyone totally totally but effectively so do you have your mic
it's it's it's a show over here okay but effectively what it comes down to is leverage
on the balance sheet like that's where all boils down to because we can talk about the actual keger
are there but what it is is leverage right like the idea of paying nine percent to buy bitcoin
and hold it which is compounding 30 is leveraged so it all comes back down to this idea of average
on the back what premium are you willing to pay because of how forward looking do you think the
bitcoin price or the market is yes and i i agree with that i agree with that it comes down to
leverage you got to leverage the balance sheet there's got to be future operations which which
which we know that they're doing, right?
They've just launched four new perpetual preferred products
in the last six months, which is crazy.
And now they have the ability to tap debt capital
at a click of a button and a phone call.
Like they've never been able to do that before.
Like we don't even,
we don't know what this is gonna work like down the road
because we've never seen anything like this before.
Name another time in history where somebody was able
to tap debt capital at the click of a button.
infinite perpetual debt capital. I'll click a button.
No, it's super interesting.
It hasn't happened before. It hasn't happened before. So the...
I really like the framework that you're working through here, Dan. I think it's really valuable,
and I love the stream of consciousness that you've got comparing the prefs and bouncing
between these. Keep it going. Your headspace is in the right direction, and I think it's really good.
But where this whole thing, this valuation concept, in my opinion, where it breaks down
a little bit, is when you put it next to its peers, not Bitcoin peers, its other trading
peers.
I agree.
I agree with that.
I don't think the market will do it like that in the short term, but I think you're totally
spot on.
All the other companies are heinously overvalued relative to Bitcoin and MSTR, absolutely.
And that's the, that's why I hold this stock because I, I think there's an information asymmetry and I question why, like, why do you hold like what?
And I, I say this all the time and I think it's a really good question.
I encourage people to think about it.
Like, why does anybody hold any stock?
Like what, like what's the purpose of this whole thing?
Why are we here?
Why is anybody buying any of these stocks?
To make money.
You want to make money.
Like everybody wants to make money.
right well like make money or for for how long like is it is it to make money and reduce risk
i feel like
yeah i think it's i think it's a similar argument for mstr is like okay what's better a strong
balance sheet or some expectation of future cash flows i think it's i think it's a similar concept
right it's uh d like if we talk about bitcoin being an insurance policy against fiat currency
debasement then strategy that holds more insurance against fiat debasement than any other company on
the planet what's that worth a lot i i i think so um is that able to withstand like market pressures
that other companies aren't able to withstand i think so so i i don't that that's just how i'm
starting to like think through this um and i i think the market has missed it and they're they're
wildly misunderstanding it and thinking this is a one-time like i think the going back to the
conversations that i'm having currently with capital providers and then i've had over the
the last 24 months with people in very high financial positions that run, you know, billion
dollar companies, 500 million dollar companies, they are blind to this stuff. And I think there's
a point in time where you can't be blind to it anymore. Do I think that's now? No, I think that's
probably within the next four years as Bitcoin rises to different thresholds, right? I think we
we breached, Bitcoin is now worth more than a car.
At a future point in time,
Bitcoin is going to be worth more than a house.
And I think that's a, that between now and then,
I don't think people are really going to get it.
Until it's worth more than a house,
then they'll be like, holy shit,
this is worth more than, more than like the median,
the median house price in the US is $420,000.
And I think at that point, it's like,
okay, wait, hold on, this is real?
they're not even forget nominal bias they don't like most of the world doesn't even get market
caps like they don't even they don't even get it but they see just a number and i i think even a lot
of the financial world is just entrenched in that they don't even they don't even know why they work
i'm gonna be honest they don't know why they work they don't know why they're doing what they're
doing i think everybody's in cruise control doing things that they've done forever because that's
the way things have been done and their bosses have told them things have been done and they've
got to do things like that so that's it that's all i got
then yeah go ahead tim um it's just a repeat from earlier but
dan had a take on it so i'm intrigued your take so lays take anybody else who might randomly join
the calls take um there was a clip today from joe burnett he was uh being interviewed and he basically
said intelligent leverage could create massive tailwinds for the price of bitcoin he was kind
of talking like as the price runs up right if your leverage ratio is 20 to 30 or with prefs 30 to 50
it's like this flywheel where right if you want to keep that leverage ratio even not right up
up against 30% or 50%, don't you by definition have to or want to with the business model keep
buying Bitcoin? And maybe that doesn't send Bitcoin to the moon, but isn't that a flywheel
in and of itself or any thoughts on that? Yeah, I think there is huge tailwinds with
these companies doing this and multiple companies doing this. And once you have multiple companies
at scale. I mean, MetaPlanet, what started with, what, like $5 million hotel? And now
they hold a billion and a half of Bitcoin. Well, they're going to double it. And then
they're going to double it again. And then they're going to double it again. And then
all of a sudden they're going to have scale and they're going to keep doing this. And
they're going to be one of the strongest financial companies in the entire Japanese market. And
that's happening all over the globe. We are at the beginning of a super mega trend here.
is this is a complete mega trend that i think a large portion of the world just hasn't conceptualized
like this is uh this is internet right this this is adopting digital capital is as big as the internet
and all of these companies buying bitcoin with their excess cash flows and leveraging
the capital markets to buy bitcoin is huge like that's it is it is tailwind in and of itself so i
i agree with joe there once you once you're in a position like i've been recently to see things
from behind the curtain as joe has probably at this point now too uh you start to realize the
gravitas of the situation like this is a really big deal like i know a lot of people are just
wheeling dealing and posting and doing memes and um everything but this is a really big deal
like the companies that are managing billions of dollars of capital and doing this like for real
you got to be a really serious person like like sailor and the entire capital team over there
incredibly serious incredibly dialed in absolute nails same with meta planet simon is a stone cold
killer dylan is one of the brightest people i've ever met and the people that are that are operating
in this space are dead serious we're going to take over the world like this is where we're putting
our energy towards and how we're trying to move the move the world forward so yeah it's uh i think
tailwinds is a great great word for it but uh it becomes really real really quick
you're just giving me a great a great tweet it's like digital capital is as big as the internet
and it's riding on the internet yeah yeah it's it's huge and this note this whole thing is huge
dan dan i oh go ahead so i was just gonna say you missed uh 90 of the agenda but
But if you want to talk about Tim's building a digital empire over here with his marathons and his unconferences and all of that stuff, or just whatever you want to talk about, it's your show anyway.
Yeah.
So thanks for jumping in.
I've had a crazy Fiat week.
yesterday I did I was in a car 10 hours yesterday because my house was broken into
and they had stole an air conditioner and there was a whole like it was a whole ordeal so I'm like
super anti-real estate at the moment and just like you know there's so many problems in this
world that need to be solved and I just can like see Bitcoin solving a lot of things in the future
so I'm pretty bullish on that so thank you for taking the taking the reins here at the beginning
and just so I could get a couple of things on.
And yeah, Tim, you're doing it.
I look forward to seeing everybody
at the Unconference in September,
almost about a month out now.
True North 15, coupon code, True North 15.
True North 15 for the coupon code.
Yeah, it'll be great.
It'll be a great time.
Midtown Manhattan's cool.
It's a great time of year to be in New York.
It's going to be super buzzy.
I think the market's going to be ramping back up
just in general.
if you look at just liquidity like volume and liquidity a lot of people are making a ton of
noise and complaining about mstr right now which i think is justified if you think it's a hundred
percent correlated to bitcoin which is not it hasn't been historically uh and if you look at
just historical trends in the equity market like all the money managers are out in out touching
grass and doing things just like josh mandel was posting pictures on a on a boat the other day like
everybody's out doing that. August is historically the lowest month of trading volume across all
indices and NYSE, NASDAQ, et cetera. And like that data is very apparent. And the biggest month
historically for all trading volume is October. And we're going into September and October,
which are really big, really big trading months. So yeah, I'm just, I'm bulled up. I'm excited here.
Would I prefer that MSTR was trading at all time highs when Bitcoin was trading at all time highs?
Absolutely.
But at the end of the day, like nothing in the thesis has changed.
We're sitting on, what is this?
I actually just updated this right before this.
The Bitcoin gain through Q3, 45 days through Q3 at 123,500.
The strategy is sitting on a $9.6 billion Bitcoin gain through Q3.
So these are just insane numbers.
And if we see Bitcoin go even higher, right, another $25,000, a lot of people are calling for $150K, right?
If Bitcoin goes to $150K, strategy is going to make $26.2 billion on the Bitcoin gain on the balance sheet, which is just astronomical numbers.
If they make $26 billion, at that point, they're holding over $100 billion of this asset and their ability to continue to leverage that.
The story just gets better and better and better the stronger that strategy gets here because they're able to raise more capital, put on more leverage.
The credit quality of the instruments get better.
They're probably going to issue more press.
They're going to have more of these products out to the market.
They're going to be talking to all the credit rating agencies.
you've got a plethora of these other companies coming out and offering
perpetual preferred securities that the credit rating agencies will be able to
rate against. Stretch is a use case.
We haven't seen it yet. It's approaching 100, but it's getting close.
And there's so many things to be
bullish about right now. It's just crazy how bearish the community is.
And I'm also just surprised that people bash the stock. And I think there's a ton
more bots out there than people realize um a ton of people are bashing the stock and it's like well
if you hold the stock what are you doing like sentiment bots are out there uh scraping all
this data and information i love that post from you today i was like that makes a lot of sense like
like yeah i mean if if you if you had if you had listening about this if you had a billion
dollars short position on strategy 500 million how much would you be willing to pay for bots to
fud your position like how much like how much does a million get you in in bots
short bots bear bots maybe that a new bear we need a bear bots um quite a bit and as the company gets larger and larger I mean you saw it with this freaking interview
from Lynn Alden and Andy Constan.
Oh my God.
Like these are the people that are trading against the stock.
They're like, they're short selling.
They have the people in power with money
that have the stock,
that have the same perspective as Andy Constan.
are shorting the stock.
So just keep that in mind.
These people, they have no incentive to be long.
I don't know.
That's all I got.
Quick housekeeping note for people in the comments.
They keep thinking that I'm raising my hand
because I want to say something,
but I'm just saying higher.
It's just going higher.
That's all I'm trying to say.
it's like yeah i mean think about how powerful this company is this company has 77 billion dollars
what is that uh is that 7 700 million dollar homes so think about like a neighborhood that's got seven
a neighborhood of 7 700 homes and they're all million dollar homes that's that's like i think
you try to think of how big that is and that's how much money that strategy holds digitally
in their wallets. That's just so much money to try to put it in scale. It's just
hard to fathom. And the world's waking up to that.
Yeah. I forget who was saying it within the last week. It's like, maybe it was yesterday,
right? Kind of a blur at this point, but someone was like, when we're buying $10 million worth of
Bitcoin, $20 million worth of Bitcoin. It's like, and you're actually seeing wires move. It's like,
wow, that's a lot of money. But then you have a sailor. He's like, we bought two and a half
billion dollars worth of Bitcoin. Like that's actual cash that yeah, digitally, but like it's
moving around. That's nuts. Like I think about, right. For a lot of people, they buy a hundred
dollars worth of Bitcoin. My friends are like, what the heck are you doing? Why are you buying
so much bitcoin yeah just the fact that somebody can go raise two and a half billion dollars in
like a week like that's all the signal you need right people are people are bearish on this and
they just raised two and a half billion dollars like a couple weeks ago like that is that that's
so enormous what is that two is that that's a hundred million dollars 250 times do you know
do you know how hard it is to raise a hundred million dollars it's so incredibly hard and they
just did it 250 times a couple weeks ago and it took like five days like that that is that signal
that is signal people that are concerned about you know decoupling for you know the last four
trading hours or you know whatever it may be i don't know what to tell you you probably don't
have enough bitcoin if that's the case like if if you're like if you're if you're complaining
about this you probably don't have enough bitcoin and if that's the case you should probably
not hold mstr i don't know how i view my life i see uh bitcoin is like my pure pure savings
I'm continuous continuously adding to it constantly and but I also hold a very large
MSTR position that I'm just I'm long I'm not like I hold I hold I'm long both of them
and they both like help each other so
it's not an either or for me I think a lot of people think it's either or
yeah you think i don't know dan how do you feel how do you feel about this like
you spot bitcoin for you like i'm curious your take do you hold spot bitcoin yeah i hold
right now 80 of the port and spot bitcoin ibit or spot bitcoin uh 50 50.
50 50 okay 80 of the port what happened to the december 380s
I dumped them all three weeks ago.
You dumped them all three weeks ago?
Yeah.
All right.
So we can blame Dan for the decoupling.
He dumped all his 380s.
I'm not a whale.
Removed all that.
I'm not a whale.
But no, I think I bet serves a...
Back to the day.
There's different...
People are looking for different things.
Obviously, if you're looking for beta on Bitcoin,
then a levered Ibit, you know,
answers that question for you.
If you're looking for a long-term accretive stock that derives value from Bitcoin as pristine collateral, then MSTR is for you.
So there are two different things.
And I think people are getting that confused in your head.
And I had to allocate myself to my levered beta on Bitcoin.
I needed that.
Everyone needs it.
Well, not everyone.
I needed that.
So I have that.
I also have my MSTR.
That's a different play.
The MSTR is a different play.
And as long as you don't think in your head that the MSTR has to be levered BTC beta, then you can hold it for a long term.
And in the past, it has traded like beta, right?
Beta is just levered performance on BTC.
And I think that's something people are having trouble with.
I get that.
I mean, I totally get that.
As a trader in the fall last year, all that thing, all the time.
I mean, MSTR was in lockstep with BTC on the way up, way down, right?
you were getting 2x outperformance on the upside, 2x outperformance on the downside over a few
periods, over like, you know, whatever, short time frames. Probably like 4x and even higher.
Exactly. Yeah. I mean, it went up and it was pretty guaranteed that there was someone in the
market arbing that difference. Obviously that's decoupled a bit over the past few months. And I
think so that's why people are getting a little nervous. I mean, I get that. Like a lot of people
were buying MSDR for that levered data. And, you know, if it doesn't perform like that, you need
to find an alternative vehicle.
Yeah. Yeah.
And there's, I mean, there's so much opportunity cost in the market right now too.
And there's alternative Bitcoin treasury companies are popping up left and right.
I know for a fact that people are YOLOing ETH treasury companies now at this point as well.
And the market structure has changed a bit, which I think is what you're getting to.
And you think about where, like, what does a future market cycle look like as well?
And this is like this kind of gets down to different perspectives of like, why do you hold an equity?
You hold an equity for different reasons and I hold an equity.
And I like I hold an equity for different reasons than Soleil holds an equity and different reasons and Tim holds an equity.
And that's OK.
But you have to know why you hold your equity.
And what's like, what's the point?
What's the point? What's the point of this whole thing?
Dan, I got a question because after the euphoria in November, I finally like went hardcore and convinced some family and friends to like get some strategy exposure.
And so then, you know, so they're like in at like 400 shares.
So I'm just like desperate for the price to just put them in profit.
You know what I mean?
Because I feel like an asshole.
Yeah.
But like now that you're managing people's money, Dan, like has that informed your outlook at all?
Has it changed risk? Yeah. Has it, has it changed your,
your outlook in general? Because, you know, for me,
even just feeling like I was a little bit responsible for other people taking
this position, like it,
it gave me a way more vested interest in like seeing that number go up.
So I wasn't sure what it's been like for you now,
now that you're managing money yourself.
uh i mean yeah it heightens your i mean if your mandate is to outperform bitcoin you can't
underperform it over a really a week two weeks three weeks four weeks especially you can't
underperform it like that's not going to fly so um yeah i think it definitely changed my outlook
quite significantly if you get bitcoin right but you get mstr wrong how do you turn to the people's
whom money you're managing and explain that to them you can't do that i couldn't do that yeah
because they could have just plowed into bitcoin right because they're expecting they're they're
expecting a bitcoin is the hurdle rate so they're expecting extra right right i mean it's obviously
that's a tough question with the position like in the in the fund i mean we hold a spot mstr position
of the outside money we're managing yeah 100 like but it's not you know a crazy portion of it and
it's sure as hell not all our beta exposure on btc it can't be if it's not going to perform like that
right there was a time when it could be the majority of your beta exposure to btc but it can't be
anymore why can't it be anymore because it doesn't behave like beta on btc on what horizon just the
recent horizon like uh seven months seven months okay so since capital plan do you think that
changes do you think recent mnav guidance changes that and that's obviously my job and anyone who's
trying to allocate in a portfolio it's their job to figure out if it turns into beta or if we get
do we get a free mnav expansion to 2.5 from here that that would be sweet and if that was the case
you'd love rob one msdr did guidance did the management's guidance on mnav just give us a free
60 yeah yeah right it's a good question i i yeah i i don't think it did yeah
we'll see i mean like time will tell right i mean this is like you're right to say that the company
is in a completely different position than it was 12 months ago. 12 months ago, strategy held
150,000 Bitcoin. Now they hold 600,000 Bitcoin. It's a different game, different game in size and
scale, different capitals coming in the door. In order to keep that capital coming in the door,
you've got to do things to continue that capital coming in the door. And I think they're doing that
with the prefs. Prefs are huge. I mean, they're huge.
I'm the first to say.
They're huge. So like time will tell, right? I'm not, personally, I'm long both, right? I'm long Bitcoin, I'm long MSDR, but I...
Same here.
Just structurally, I don't see how it wouldn't get that beta back. Just structurally, like long term, just structurally,
structurally looking at just how the equity market's designed.
And even if like, just,
just because that concept of like the, as the market cap rises,
like that doesn't matter, like what any, anything else happens,
like as the market cap rises, you're getting this increased,
increasing, increasing. It's not, it's not even like linear increasing.
It's the, it's the increasing at an increasing rate, passive flows.
You're totally right. You're totally right.
And that's like, to me, it's like, I don't, you look at, um,
one thing that's interesting. If you look at, uh,
I did this analysis, uh, like a week or two ago.
If you look at the price to book value of like the 493 S and P 500 stocks,
non-mag seven price to book ratios are like two.
But if you look at the price to book ratios of maybe it was like,
maybe it's top 15 stocks price to book ratios are egregious like 60 30 40 50 60 and the they lack
rationality and i think strategy is going to approach that uh what's that you're saying 30
i'm not i'm not saying it's going to go to 30 it could it could i mean if if it if that happens
We're talking about strategy is going to be like pulling in tons of capital in the door.
And, you know, this thing speeds up, goes faster.
But I'm now Bitcoin's at a million in like four seconds.
Yeah, it's fast.
It goes because they're going to raise so much capital.
And like it's Tim is yelling, but he's on mute.
J64, that's the clip right there.
I agree.
But I like to compare the MNAP to traditional commodity stocks.
Plus a little plus some digital premium.
especially yield premium like if you look historically you know commodity stocks oil
stocks um particularly trade at a one to two nav but they have single digit annual yields depending
on where you kind of are in the commodity cycle and the commodities aren't necessarily on an upward
30 kager trajectory so that would mean you'd place a much higher price to book value on something
like mstr than a commodity stock yeah that's all that's all fair and well and a good way to kind
mentally frame it yeah and i think back to like uh and i haven't done this research but this might
be a good uh research report for somebody is to look at um the how the stock market has changed
over time like with uh the creation of like exxon and chevron and shell like all the oil companies oil used to be the most valuable commodity on the planet Now it digital intelligence right It was oil then it was data and information
Now it's digital intelligence.
And in my opinion, I think it's going digital capital
or digital capital is gonna be right up there
next to digital intelligence.
Like those are, these are the most valuable commodities
on the planet and they've changed, right?
Like over time, oil used to be like the top,
the five companies in the stock market
used to be oil companies.
And then it shifted tech and AI.
And then it was like oil, oil, tech, oil, tech.
And now it's like all tech.
And Exxon is number like 15 or 16.
Still a really valuable company,
but it's lost all of the excess value multiple
that it used to have relative to the other companies.
So that's why I'm here.
Because of oil.
Oh, yeah, that is why you're here, Tim.
I'm here in Bitcoin because oil is no longer what it what it was.
Yeah.
Right.
So there was probably a point in time like in the old stock market before oil started becoming a very crucial commodity on the planet.
where people probably said the same thing about Exxon and Chevron and BP and
all those before they became conglomerates. And then people are like, well, I'm just going to buy
the company that has the most oil because this is the most valuable commodity on the planet.
Right now, people are buying the company that has the corner on AI or artificial intelligence,
like nvidia like everybody everybody says i even see it in the comments like oh these people sell
stuff it's like well i guarantee everybody in the comments like probably maybe unless they have their
own individual like nvidia like under the table computers you're probably not interfacing with
nvidia really at all it's like mostly corporations and companies that are interfacing with nvidia
and you're interfacing with the product that uh chat gpt and uh you know all these other companies
create so i don't know it's just how i view the world i think it's changing
it could be wrong i don't think so though
it's changing we'll see rearranging rearranging yeah um i'm white it's time to be there yeah
i don't think you're embarrassed dan keep keep speaking your keep speaking your mind but um
I'm going to challenge you on some stuff for sure.
Next time we get into Strife more.
Dan, I look forward to sharing a couple of beers in New York in a couple of weeks.
And maybe we can battle live in front of people or something.
Jeff, I think you'll take the cake.
I love it.
Talk to me and I'll tweet in response.
I'll tweet in response while we're talking.
Hunter Jeff doesn't know he's talking.
Tim will sell a pay-per-view to that live.
Yeah. I was just going to say, I'll let Ed know we need Jeff and Dan up one stage.
Well, he bailed on me on the Portland thing. So Mason and I had to do it live.
All right. That's something important to do.
Sure.
All right. Yeah. Metaplanet Prefs too. Glad we got that in there.
That's going to be cool, man. It is going to be cool. These things are going to be everywhere.
Do you think they're going to do moving liquidation preference?
Yeah, because I think and we've talked about this, I think it's a it's a function of.
Issuing ATM, maybe it's different, it's probably different in Japan, but like in the US, the moving liquidation preference is a it was a it was a solution to a technical problem that is a function of like how taxes are issued relative to when they issue new shares of the stuff.
So I think it's like it's got to float as a function of some tax rule.
i can get more information oh i didn't know that's cool yeah let's talk about that later
off screen yeah and so the floating the moving location preference is a technical solution to
a technical problem and that because if you yeah which is why i i float that idea by you
it was like what's the value of strf if mstr is liquidated and the answer is if strf starts
getting bit up why would it get bit up if the value of the bitcoin goes down
because you have a higher claim over the bitcoin what is it what you know what is
the difference between mstr common and strife what is the difference between mstr common and strife
mstr common has got the the junior claim on assets and strife has a senior claim on assets
no voting rights and an eight dollar or ten dollar per share dividend annually and they both are a
moving technically a moving liquidation preference security i guess technically both of them so which
one would you own i want the one that's got more upside right but like if you didn't think this
thing is this thing's binary to me that this no that's the thing keeps me up tonight that's all
i'm saying i'm just posting it i don't think it's i own mstr or mcr i don't know but i'm just saying
you have two equities that represent a claim over the assets do you take the senior one with
the moving liquidation that like this is all crazy theory this is all crazy yeah it's completely
nonsense but i'm just using it as like a a sort of like i just think it's i just think it's binary
is what i'm saying i just think it's binary if if if bitcoin is valuable mstr doesn't get liquided
it all goes in all moons if bitcoin is not valuable let's just say let's just say yeah
no you're right you're right it's zero it's it's zero so if bitcoin is worth zero strife is where
zero liquidation preference goes to goes to 100 which is the floor if i buy all the strife tomorrow
if what if you buy all the strife tomorrow yeah what happens
i'm okay why let's where are you going with this so i buy all the stripes tomorrow it's
five x's in value i now own i now have a senior claim to 30 of strategies bitcoin and the bitcoin
per share has effectively been reduced for the common equity holder if you bought all the strife
tomorrow and pump the liquidation preference let's say a 5x liquidation preference and they would
just they would issue they would issue more right and i buy it and i buy it and i buy it and keep
so it's a question do you have do you have i don't know five billion dollars ten billion dollars
is there anybody that has ten billion dollars no again this is all weirdly theoretical like
i'm not saying this is going to happen by any means but i'm just saying if you bid up strife
enough it seems to be counterproductive to the car that's not the point i'm trying to make the
point i'm trying to make is what's the difference between a senior moving equity and a junior moving
equity. What's okay. So say it one more time. So like a common equity is valuable because you can
get a return on the future cash flows in the form of traditionally in the form of dividend, dividend
payments or stock buybacks. And then in the case of liquidation, you have a junior claim over the
assets upon liquidation. That's why a common equity is valuable. Plus you have shareholder voting
rights those are the four reasons why a common equity is valuable right yeah you're able to be
returned cash in the form of future cash flow buybacks dividends for the those reasons then
why is debt why is that valuable in a capital structure the debt's valuable such that uh yeah
i think i think i have that i think i have the answer to your question is the increasing bitcoin
per share for msdr what if it's what if there's a bitcoin dividend in the future that would
completely change everything i'm saying so you can view completely did that would invalidate every
point i've made in all my strife tweets so so there is a bitcoin dividend on every msdr share
it's just automatically reinvested it would have to be paid out to shareholders i think to
invalidate what or to quell the the problem i'm having with it
because if strife goes up if the price of the right goes up you technically get a
the same bitcoin dividend you now have more claim over bitcoin
no voting rights no voting rights so yeah that that maybe the voting rights are valuable enough
that mstr commission but if my price if the price of my strife goes up strife is one m now all day
long period yeah yeah yeah yeah and if the price of my strife goes up i own more bitcoin that's
more bitcoin per share if the price of your if the price of strife goes up
it's more because of the floating liquidation preference that's that's what you're arguing is
that because of the floating liquidation preference is going up you technically you're you're saying
that you own more bitcoin but you don't since you can't have bitcoin returned via common by
a bitcoin straight bitcoin dividend then all we're talking about are the claim on the bitcoin via
these different assets yeah so theoretically the senior moving claim could in a weird world
be um you know senior to a moving junior claim i don't know i just just thoughts i spitballing
yeah but even if even if you even if you owned all of it even if you owned all of it and the
and the price of it like rockets strategy is not getting liquidated so how long are you going to
hold it you're just going to get atm to weigh and they're going to raise capital and make some even
stronger totally i mean you know what i mean it's like then they're going to raise capital at a
lower interest rate and they're going to get even stronger yeah i think it's only a problem in a
falling btc environment uh but in a rising btc environment shouldn't matter i think you're right
so so in it so in a falling btc environment even then if you if you owned all of it there would
have to be a situation where if the it's just i think the thing is if the market saw this happening
and btc was falling strategy mstr could trade it at a serious discount it could but but but strife
but strife would be a higher credit risk yeah exactly i don't know so so strife would fall too
that's what you would expect that's what strategy expects that's what everyone
who created the security would expect that's what traditional wisdom would say i'm just saying
there's a weird tail scenario which maybe that's yeah i get you i get you i think i mean put me in
the loony bin and i'm just saying i can't get it i got it you're like sleeping on your pillow and
you're just like you're seeing numbers well i the thing that keeps me up is just what's the difference
between msdr and um that's right that's the question i keep having to ask myself voting rights
and how they're structured but anyway let's let's let's do this another time i i like i like uh
where we're at it's too late let's go to bed i gotta do a bunch of other stuff too uh i was
gonna get to go to bed early jeff but you know what i'm saying sorry you had to jump on and run
your mouth for an hour i i just i i have all these thoughts and i need an outlet you say
save this ring but it was good thanks by the punter bowl yeah okay thank you uh well it's been fun
appreciate the time thank you for running this so late i think i might have you occasionally
pop on and do this um it was it was uh it's great to be here good stuff yeah i thought i had the mic
stuff worked out but i think i don't know like as people joined i think it started to tax the system
or something and like i had no mic problems and then right before we went to live it was like
the gremlins came out of the system so kind of your mic sounds good now yeah i plugged it back
in but i if i don't if i don't mute as soon as i stop talking you'll get echo and feedback so
i've been playing that game the last 10 minutes lovely all right fun stuff all right yeah well
Oh, good. Final thoughts.
You want to do final thoughts?
Yeah. Final thoughts. I'm bullish here.
I'm really excited about the future.
And I'm telling you from behind the curtain, there's a lot to be excited about.
And I think that the next eight months are just going to be electric.
So I'm excited to be here.
I think digital capital is the way of the future.
And yeah, I'm going to be working in space for a long time.
Come to Tim's thing in September.
and I'm also going to Bitcoin Asia
and I'll be at a lot of these events coming up.
So I look forward to seeing everybody,
meeting everybody in person.
And yeah, it's a good time to be along.
Hell yeah, I've never been to Asia.
That sounds fun.
It'll be a good time, Hong Kong.
Awesome, guys.
It's been a good talk.
Thanks, Dan.
You want to give out the coupon code again, Tim?
Your final thoughts?
true north 15 for 15 off the unconference and uh i mean you get to see jeff and his dog right now
what's better than that it's just right right yeah my dog's tired we gotta go to bed all right
my final thoughts you know uh the the gains that that strategy's gotten over the last five years
it's the least efficient that they will ever be and me subbing for jeff tonight this was the least
efficient that true north will ever be i'm bullish on future true north you're the best thanks
everybody guys thanks everyone