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Nice to meet you.

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Let's go.

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Hey, you.

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Look at them yo-yos, that's the way you do it.

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You play the guitar on the MTV.

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That ain't working, that's the way you do it.

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Money for nothing, hurt me just for free.

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Now that ain't working, that's the way you do it

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Let me tell you, damn guys ain't dumb

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Maybe get a pistol on your little finger

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Maybe get a pistol on your thumb

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We got some install microwave ovens

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Custom kitchen deliveries

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We got some movies, refrigerators

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Woo! Here we go. All right.

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It's True North, episode 55.

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We are back.

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We're weathering the storm.

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We've got the crew here today.

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We are going to rip it up.

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We're going to talk about digital credit.

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We're going to talk about Amplified Bitcoin.

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We're going to talk about securities, Bitcoin, macro environment.

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We've got a whole bunch of things we're going to talk about today.

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And for those of you that are new here, this is True North, the investment-grade Bitcoin

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podcast.

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And we've got Mike, Grain of Salt, Soleil, Dan Hillary.

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I think Mason Ford is going to join and pop on as well.

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He's kind of in and out, but he's got bad internet.

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And yeah.

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Okay.

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So we're going to work through that.

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All right.

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I guess first thing, we'll kick it off with a little bit of Tim.

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Ladies and gentlemen, what you're about to hear may be amazing, but it is not financial

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advice.

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It's for informational and educational purposes only.

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boom there it is uh everything we're going to talk about is for fun and not financial advice

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we're going to talk a little bit about uh the earning strategies earning call we're going to

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talk about bitcoin thinking about how to value a amplified bitcoin company or a as soleil called

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it last week a continuous capital raising company a ccrc and we'll think about you know valuations

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How do we think about the PREF equity? How do we think about what this looks like on the horizon?

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Think about the entire market as a whole macro. What's on the horizon here in the next couple of

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months? We've got a potential new chairman of the Fed, Kevin Warsh on the horizon. We've got a Fed

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meeting in what, like about 35 days. It's one of Jerome Powell's last couple of Fed meetings,

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anticipation for reduction in interest rates on the horizon. AI is ripping through everywhere.

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Clodbots are all over the place. Everybody's trying new different AIs. I feel like every

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single AI you use is outdated as you start using it. I mean, Dan, I've seen you now post about

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every single one of these AIs. Every week, you're like, oh my God, Opus 4.6 is incredible.

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and you were doing Opus 4.5 like the week prior.

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So the world is changing so fast and we're here to try to unpack it.

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So I'm going to kick it over to, I guess, Soleil.

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We'll start with you.

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What are you thinking about?

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What's on your mind throughout this week?

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Man, Jeff, I'm all bulled up.

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And when I say that my life has never been better, I mean that literally.

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So let me know.

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Have you guys seen Office Space?

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Yeah, absolutely.

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So it's an absolute classic.

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if you haven't watched it, like your homework is to watch it. And without giving too many spoilers

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away, the main character at the beginning, he's talking to his therapist and he said, look,

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ever since I started working, every day was the worst day of my life. And the therapist is like,

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well, what about today? Is today the worst day of your life? And he's like, yes, it is.

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And I mean, it's kind of relatable, you know, maybe not Mason, because he's only ever had a

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Bitcoin job. But for the rest of us, we work our butts off and your wealth is just being destroyed.

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It's being debased. So the harder you work, the poorer you get. And Bitcoin inverts that.

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And you can literally just buy Bitcoin and get off zero and you become wealthier every day for

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the rest of your life. Even if you stopped working, your Bitcoin would continue to gain value.

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And so instead of like every day being the worst day of your life, once you buy Bitcoin, every day is the best day.

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It's just going to get better every single day.

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And it's just got me super bullish.

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And I'm ready.

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I'm ready to go.

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That's a great, that's a really great framework rolling into this, especially you think about it for your person.

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And then you think about it for a company as well.

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I mean, I was working in traditional finance for 11 years. What I thought was like a very

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important job, like looking back at it, you know, I have a different perspective now, but

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I was working harder and harder and harder. I was working 80 hours a week. I was working on

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all these different deals. I was struggling to get ahead. I felt like I was just constantly on

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this rat race and I was getting tied up with these golden handcuffs of like, oh, hey, we'll give you

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this dollar denominated bonus four years from now.

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If you work here for four years,

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I'm like, this doesn't make any sense.

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And I just kept getting tied up into it.

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And I truly have never been happier working here.

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I mean, the volatility is crazy,

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but having a baseline and thinking about Bitcoin

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as savings vehicle, long-term savings vehicle,

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I'm just happier than ever working here.

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So yeah, great framing.

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Well, kicking over you, Dan, what are you thinking about?

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look I mean stretch hit par at 100 today with Bitcoin at 68 000 67 000 I thought that was quite

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remarkable um I think that's quite remarkable and I think you know I was working through some of the

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financial derivatives you can build on stretch you can transfer kind of yield to like a someone who's

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looking for safety and someone who's looking for for more risk and more return I think I think

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stretch is going to be the bedrock of a lot of stuff like obviously I'm building a stable coin

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backed by stretch. But I think people are going to build ETFs on these things. People are going to

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build banks that hold a portion in these things. There's pref ETFs that are backed by this stuff.

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Like Bitcoin will just be the bedrock of the financial system. And yeah, I mean,

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the price action is terrible, so I totally get it. But to lighten people's spirits,

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if you look at the daily moves of MSTR relative to Bitcoin over the past couple of weeks,

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it's starting to trade like it did in 2024 for the first time in a long, long time.

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because when Bitcoin goes up, it actually goes up too.

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So something to look out for.

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Most bottoms have been marked by,

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I mean, I've been calling for a bottom for the past three months,

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but most bottoms have been marked by MSDR outperformance

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relative to Bitcoin.

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Yeah, yeah.

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Bottoms have no bottom.

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The MSDR I-bit ratio, yeah, moving up,

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like trending and breaking out, right?

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Which is weird.

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You would think if everyone's,

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if the institutional investors who actually move the price of MSDR,

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It's no one on Twitter.

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You would think if they were very bearish on Bitcoin, they would be selling MSTR to a discount.

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Because people have to remember, if Bitcoin goes down forever, then MSTR will go down faster.

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So therefore, there shouldn't be an MNAP premium.

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There should be an MNAP discount because the leverage cuts in the opposite direction.

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However, people are obviously assigning a premium to MSTR right now, more so than they have in the past few months.

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And that's a good thing.

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So, I mean, just excellent game theory there.

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thinking through it. It's the, if institutions thought MSTR was going to break, it would just

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keep going down. I mean, the takes on X are ridiculous, right? People are like, oh, I'm

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getting that, uh, tingling in my plums, thinking about FTX collapse and like, you know, just like,

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oh my gosh, they can't look at the balance sheet, right? Like we talk about this literally every

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single week. They've got $48 billion of net capital on their balance sheet against $8 billion of debt

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that they can refinance and $8 billion of PREF equity. And I mean, how much capital have they

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raised in Q1 already? It's like billions of dollars of capital that they've already raised in Q1.

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So yeah, I mean, it's just crazy out there, the takes of everybody thinking this strategy is

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going to go out of business. It's just asinine. And then you look at the product like Stretch,

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like that's it. Like that's what we talk about today. Stretch hit 100 while the underlying

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collateral has dropped 30%, 40, 50, actually 46% since the all-time high back in like what,

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October, November. And their instrument is trading at par. Like that is a signal that people believe

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in the security of Bitcoin being around for the long term. And this is something I just keep

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hitting on is that the market doesn't understand the risk of these things. I'm personally trying to

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build a risk framework of what this looks like, trying to wrap your head around it because there's

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so much data here. There's so much data looking at these preferred instruments that has never

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existed before compared to any of these other traditional debt instruments. And you could start

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to build entire risk profiles thinking about like historical backtesting. Okay. What would it have

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done historically? And you could go look at that performance. What would it look like on a future

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basis? Like take some assumptions and play with those assumptions based on history, based on

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future expectations. Take all of the Bitcoin on-chain data, decipher it with an AI computer.

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Like we have the power to do that stuff now. Get an understanding of your view of

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the future adoption curve of Bitcoin, right? And the supply curve is fully calculable.

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And the supply doesn't change as the demand increases or decreases.

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That is fundamentally different than anything else that's ever existed before.

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And you can underwrite that. That's so underwritable. And I just think people are just

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largely missing this and nobody is pricing the risk appropriately or even thinking complex about

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the risk um do we get there maybe not i don't know but i think there's a lot to do on that front

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maybe computers just do it without thinking about it i don't know fun stuff dan actually question

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for you have you looked much at the options market on on stretch or these other preferred instruments

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they're pricing the forward rate of the dividend as about 10 11 annualized so they're pretty

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efficient right now i mean the spreads are super wide so for anyone watching like all the strategy

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preferreds except strike that's strk have an options market which is pretty interesting

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so you can hold your your product and sell covered calls and get even more yield if you if you so

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choose but um the way you price an option on a instrument that has a dividend is there's a forward

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value of the option based on the dividend annualized over time blah yada yada yada essentially

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it means the puts are more expensive than the calls. That's all you have to know. And

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if you look at the options market on stretch, that is the case. You know, the 100 strike

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calls are very cheap because obviously sailors selling the 100. But anything below the puts

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are, you know, look, it's like 23% annualized volatility. And most options are valuable

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because of the volatility, the underlying equity. And the volatility on the presser

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still is actually quite high. It's almost as high as gold and Bitcoin. So what that

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means is the options are pretty expensive. They're illiquid, but they're very expensive.

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And so I think if you wanted to,

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this is an interesting trade idea,

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not financial advice,

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but one way to go levered long on any of the prefs

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is you can just sell the put option,

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which is the right to purchase it at a lower price,

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which gives you essentially exposure,

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dividend equivalent exposure

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because of the way the options are priced

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based on the dividend to the underlying security.

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So instead of having to go out

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and buy a bunch of STRF to collect the dividend,

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you can just sell the put.

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with much less capital and have price exposure and appreciation if strife doesn't go down too

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significantly. So- Especially if you're willing to buy it. Yeah, right, right.

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Yeah, exactly. It's like a capital efficient way to get the dividend exposure to one of the

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instruments. Capital light. Capital light, exactly. Capital light. Leverage heavy.

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All right. I like how you think, Dan. All right. Over to you, Mike. Or go ahead, Dan.

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Yeah, yeah. Actually, no, I'm done talking about that. I'll hop in after Mike.

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Yeah. Mike, what are you thinking about? You're grinding, you're pounding the pavement on the

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silicone. What's cooking? Yeah. So look, when I write an article for X, I have to have a thought

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where, you know, is it defensible? And I want to put something out that can stand scrutiny.

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So when it comes to AI, I'll dream up my own idea. I'll do a framework. And Jeff, you're like me.

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We could do it in Excel or Google Sheets with an idea, rows and columns, come up with an idea.

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And then we plug in some formulas, numbers, assumptions, come up with something.

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And then what I do is then I stress test it in two or three different AIs after it comes out.

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Does this hold up for scrutiny?

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So by the time I post it and somebody comments on me, it's already been stress tested.

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That's what I use AI for.

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And people are like, you know, I don't think what people get about AI is this.

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If you ask AI a simple question, you get a simple answer.

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If you ask AI a complex question, you get a complex answer.

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And so the more complexity in your prompts or the more complexity in the spreadsheet that you build, and then you ask the prompts for it, you get a much better return.

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And I know this is true because I see people using, I told people, use the AI of your choice for my last, the article I wrote last night.

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And this one guy kept on posting it into Grok.

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and it was it was brutal how terrible he was at prompting it right and yeah and grok in the

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comments is like uh you know dumb grok like it is comment grok is dumb grok like you if you want

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the real stuff like you got to go prompt it in the and you by the way if you buy a paid for version

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you get a different version for 20 i pay the 20 a month i don't get paid by chat gpt i don't get

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paid by perplexity or Claude. Claude is free though. But I've tried, each one has a, is,

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I use different ones for different purposes. And it's just not one is, they all have different

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designs. But anyway, so my takeaway for this is that AI has, has made me more balanced because I

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don't, I'm not scared of posting something because I've already stress tested it. So I think that's

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my big takeaway. And then we'll talk about my model coming up, what I worked on. But I'm looking,

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I just want, are you guys going to be in Las Vegas? Is there anything going on there?

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Oh, yeah. Let's hit on Las Vegas. Boom.

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That's a good idea.

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We should go to Vegas.

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We should go to Vegas.

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Dude, we should all meet in Vegas, right?

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We should meet in Vegas. We are having an event at Strategy World in Vegas. It is coming up in

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the next couple of weeks. It is Monday, February 23rd. If you are interested in attending, go to

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our website, mstrtrtrunorth.com forward slash event. If you click the event tab up here at the

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top, you can have the ability to go get tickets here. This is going to be a high alpha, high

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signal event. It is not going to be recorded. There is going to be opportunity to network with

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people that are operating in the industry. The True North team will be there. A lot of

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of C-suite level people from Bitcoin treasury companies will be there. You'll have operators

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at a bolds bracket bank. You'll have custodians. You'll have trading platforms that are operating

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in the space. So our goal is to really shine a light into what is actually happening behind the

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scenes with these Bitcoin treasury companies, companies that are holding Bitcoin. How does it

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work? How does securitization work? How do banks think about these things? How does trading,

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like how do you go from buying Bitcoin to put it in custody? What does institutional custody

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look like? How do we think about that? How do companies manage these things? And we're trying

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to shine a light into that. So if you're interested in that stuff, this is going to be the only place

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you're going to be able to hear about it. You're going to hear about it at Strategy World as well,

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but this is going to be like very focused for our event. We have a preliminary schedule here

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and it looks something like this. We've got a bulge bracket bank. Barclays is going to be there.

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James Lavish is going to be talking about macro from the BTC Opportunity Fund. We have Anchorage

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Digital. We also have BitGo. Mike Belshi, CEO from BitGo is going to be there. And then we also

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have somebody from Kraken coming. We've got BitWise is going to be in the house. Matt Hogan,

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CIO at BitWise. So good perspective of being an investment officer. Ben Workman, CIO of Strive.

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So a lot of people are going to be in the room talking about what is actually going on behind the scenes here

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There's also a networking and after-party event from 8 to 11 p.m.

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This is the location. It's at Gatsby's in Las Vegas. It's going to be a great time

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You're going to have to have a wristband to get in there. There's only 33 tickets left

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And yeah, look forward to seeing you all there. It's going to be a great time. We had a great time last year

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I think it'll be even better this year

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You guys got anything else to add?

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Can't wait.

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Can't wait.

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Yeah, I think it'll be fun.

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Yeah, and I've said this before.

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If you want to meet Sailor or Fong or Andrew Kang, the exec staff, or Strive, these people will be there.

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You get to meet them, and you get to talk to them.

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It is completely different meeting them in person than it is just watching a video from them.

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It really is, because you can just ask them and say, well, what do you think about this?

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and see the reaction. So I think it's great. Yeah. And the reality is we cover a lot of things and

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we're like trying to stay at the knife's edge of what's happening in this industry. I mean,

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I'm working for an operating company now thinking about this entire world and I see the world a

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little bit differently. Dan, you do the same. Soleil, I know you're constantly thinking about

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these things. So we can address all the questions that come in the comments here. And that's a great

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place to do it. Like have those conversations. I love meeting all the people in the space.

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and it's a great time.

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So we can commiserate over the sucky prices

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and then think about what these should be worth

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in the future.

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Good stuff.

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Yeah, you know, we had talked about this previously, Jeff,

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in 2024 and I showed it, the price of,

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it just barely hit $2,000.

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This is pre-10 for one split prior to May 1st.

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And then the price, it dropped 50% on May 1st of 2024.

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And I was there and I was like, wow, this is, you know, kind of, you know, did I know

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that it was then going to do a 10 for one split and then do a 4X in August for the rest

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of the year?

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No, I didn't know that.

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But I still went to the event, met the people, and it was an awesome event.

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And then I was there, obviously we were there last year.

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We did our you know our inside event last year and then we now following it up now So I could not imagine that this would have transpired over two years There just no way Oh yeah The landscape has changed so much And I mean Mike to your point

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let's see, Strategy World was in May of 24. That first one you went to is May of 24.

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The price of MSTR went from, what is this, $45 to $1,900.

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It went from $450 to $1,999.99.

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They came back down around $118, even bottomed here around $100.

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A lot has transpired since then.

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I mean, strategy at the time held about 100,000 Bitcoins.

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Now they hold 714,000 Bitcoin.

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And the price is very similar to where it was then.

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and we've never seen this business model work. The PREF amplified, the amplified preferred equity

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business model work in a bull market. This is back in the era of convertible bonds. This is

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even the convertible bond era that we have yet to see this puppy turn and go to the upside during a

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bull market. So I'm excited about that. I'm bowled up. I think this is a great opportunity. The

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balance sheet has never been healthier. You are seeing signals in the market with stretch trading

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at 100. They're likely selling shares of stretch today. So bringing in more capital to buy more

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Bitcoin. That's incredibly accretive to the common stock as they're able to buy Bitcoin.

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You've got to think about, they've got to pay dividends on that PREF equity into the future,

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but any gain on that Bitcoin held over and above the interest rate payable is effectively going

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right directly to the common stock shareholder. How'd Saylor explain this? It's like the thermodynamics

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dynamics of volatility. Like if you slice off the volatility, you strip off the volatility

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to the upside on stretch and you strip off the volatility to the downside on stretch,

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that excess volatility is transmuted over to the common stock. It doesn't just disappear,

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it goes to the common stock. So to the extent that there's been a significant drawdown in MSTR,

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there's a lot of excess volatility from the preferred equity, the $8 billion of preferred

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equity instruments that they've issued in the last 12 months in the common stock. But as that

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flips and turns the other way, that excess leverage starts to look really attractive,

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in my opinion. I mean, Dan, you're pulled up on MSTR right now too, right? I mean,

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you're thinking long-term here. Yeah, I think MSTR is good here,

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especially because I think Bitcoin is depressed in terms of price. So if you think Bitcoin is

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the present of the price.

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I mean, it was cheaper relative to book value

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a couple of weeks ago,

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but Bitcoin is a little more expensive.

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So, I mean, you're getting at like 1.8,

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1.18 times MNAV with like massive leverage,

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33 amplification.

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So, you know, it's definitely significant

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Bitcoin outperformance.

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Hey, can I switch to a quick,

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I did three surveys, show you the results

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and I can show you what the current sentiment is.

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Let me do it. Let me figure this out here.

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Share screen.

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Okay. Share this window. Let's see if this works.

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Aha. It does work. So I did three different polls. I did this poll over here. Does MSTR

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retake all time high in 2026? And 51.9% said yes. Okay. And there was almost 1,200 votes.

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so that's a decent sample size right yeah yeah now what's really interesting is that and this

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is where people this is where i always get the comment from the person with like 32 followers

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that's been on x for three months um does bitcoin retake the all-time high in 2026 i had 615 votes

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and the yes was six almost six 64.4 percent of course i always get the person that's like dude

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are those the same people that vote in both of the polls? I'm like, I don't know. It's freaking,

328
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I'm just telling you what the sentiment is, right? And they're like, well, how do you pick? I don't

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pick any of these people. It's whoever wants to respond back and vote. And then Michael Cantrell,

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who's been on TV like a whole bunch of times, I just met the guy recently online, never in person.

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And we talked about the Goldilocks and that that's over here. And I did this one. It kind of

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worked out this way, but not this way. So Goldilocks means, just like it says there,

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the US economy is in Goldilocks phase, which you have steady growth, low inflation,

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strong jobs, and neutral rates. That's like pure Goldilocks. So are we in pure Goldilocks, 21%?

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Close to it, but soon is 29%. And then you have no, meaning inflationary. And then you have no,

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meaning recession. Well, it's kind of crazy that this came out 50-50, right? I mean, it's crazy

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that each category was almost precisely, it was pretty close. It's pretty close in the middle and

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then you have like your little bell curve. So I think that that's kind of odd. Again, you know,

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the same person, you know, different people are always like, oh, are all these polls with all the

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same people? I'm like, no, I don't know. It's just a sentiment indicator. And so anyway, so

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So I put this together to see how things are going.

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So do I think, am I bullish?

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Yeah.

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Do I, you know, am I bummed about the price action?

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Absolutely.

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So hopefully that helps.

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And then can I switch to a quick history lesson?

348
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Yeah, ribbit.

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So let me do if I, let me do this.

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Share screen, share window, this window.

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So Jeff, we had talked about this.

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I wanted to figure out a valuation for strategy. So I started looking through the decks because I

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wanted to kind of figure out what happened in the past. But this ended up being really interesting.

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And I'll show this because now when we begin to think about things, it's kind of weird that it's

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like that. I know these are kind of small. So in Q3 of 2020, this was the first presentation

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where it was after they started buying Bitcoin, right? Because they bought it in August and then

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the presentation for the Q3. Yeah. Can you zoom in a little bit? Let me see how to view.

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That better? Yeah. Yeah. So in their presentation, they were still talking about

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analytics market and cloud growth. Over here, they talked, they have a proven history of free

360
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cash flow, right? And then when you get to this section over here, it has a unique balance sheet

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strategy that uses Bitcoin to provide asymmetric upside and energize new investors.

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And there's like one other mention of Bitcoin in it. That was it. So you look at that, you're like,

363
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oh, okay, wow, they were just getting started. This is the part which I kind of didn't realize,

364
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which is kind of crazy. Let me move back over here. So in the Q4 2024 financial results,

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right over here, February 5th of 2025, they use this use use of excess cash to acquire more Bitcoin.

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You're like, okay. And that's Q4 2024. The crazy part is when you get to this one is that

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the new strategy website did not go live until January of 25.

368
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So when we talk about Bitcoin per share and all of these metrics,

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the first KPI for that was here.

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It basically came about in this presentation over here.

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And it says Bitcoin.

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Let me zoom in.

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you see it says incremental, incremental Bitcoin accretion per share through purchases using excess

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cash. That happened in fourth quarter of 2024. So when we talk about Bitcoin per share,

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it's, it's five quarters old, right? It's the last quarter of 2024. And now we're in the first

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quarter of 2026. So they just started doing this. And then they came out with this website because

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everybody thinks, oh, well, Bitcoin per share, this has been around. Nah, no. The website didn't

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come about, was announced on February 5th, 2025. One, less than a year ago, right? Or just about a

379
00:28:56,528 --> 00:29:03,308
year ago, it says introducing the new strategy website. That's when they introduced it. So when

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When we talk about Bitcoin per share and all this stuff, and by the way, Fong uses the term seasoning.

381
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He goes, oh, well, these instruments have to be out there.

382
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When we talk about Bitcoin per share, this metric is really not that old as a metric.

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So, of course, we all get this and we all get MNAP.

384
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But when we go talk to like the normies, they're like, dude, I have no idea what you're talking about.

385
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And part of the reason, because this is relatively new.

386
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And I think now when you look back at this in retrospect, oh, their dashboard website didn't go live until whatever, January of one year ago.

387
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I thought it was been alive for two years.

388
00:29:38,068 --> 00:29:42,788
But when you check the presentation, so is this surprising to you guys?

389
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I'm just imagining explaining this from where they're at today to one of my friends that's never heard about this.

390
00:29:52,808 --> 00:29:54,908
I wouldn't even mention Bitcoin per share.

391
00:29:54,908 --> 00:29:58,688
You know, it's like I need to get over the Bitcoin hump first.

392
00:30:00,008 --> 00:30:04,968
Yeah. And so when you look at this crazy stuff, I'm going to show one more thing.

393
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Let me pull this up. And I think when you look at the, you know, you go to the strategy presentation, you know.

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Earnings.

395
00:30:16,248 --> 00:30:20,388
Earnings. The earnings present. It is so much better than what it used to be.

396
00:30:20,388 --> 00:30:25,948
you cannot, this is the one showing that, you know, season, again, here's the word,

397
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seasoning of digital credit. You know, this word is seasoning. I didn't come up with the word. Fong

398
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is using this word on TV because stretch is only been around for one year. Sorry. Stretch IPO was

399
00:30:39,968 --> 00:30:47,428
July of 2025. It's not even a year old. Right. So that's why that term is seasoning. We're hearing

400
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that in the news. And then I want to go to this. This is when they launched everything. So STRF

401
00:30:54,588 --> 00:31:04,628
went live in March of last year, March 21st. So STRF isn't even a year old yet. And STRD came out

402
00:31:04,628 --> 00:31:10,648
in June, right? And STRC came out in July. So people are like, oh, well, it hasn't ramped up.

403
00:31:10,648 --> 00:31:16,548
It's like, really? I'm like, I don't know why people assume this. And then you get to these

404
00:31:16,548 --> 00:31:21,808
other crazy numbers, but I want to go to this. This chart is crazy right here.

405
00:31:23,288 --> 00:31:32,268
You know, what I was posting, and if you look at the end of Q4 of 2023, that was the tail end

406
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of crypto winter. And in Q4 2023, they had sub 200,000 Bitcoins.

407
00:31:38,428 --> 00:31:48,408
and now they have over as this deck it's whatever 714 000 now but did i think that they were going

408
00:31:48,408 --> 00:31:56,148
to acquire 500 000 bitcoins as the price rocketed up no there's no way i looked at these decks again

409
00:31:56,148 --> 00:32:01,948
yesterday and the day before and there's no way i could conceive that they would acquire 500 000

410
00:32:01,948 --> 00:32:03,828
Did you guys think they would acquire 500?

411
00:32:04,008 --> 00:32:10,708
They acquired, if they had 200,000 Bitcoins in Q4, they had 189,000.

412
00:32:11,448 --> 00:32:19,688
They acquired more than double the amount of the previous two and a half years with a higher price.

413
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Is that absurd?

414
00:32:21,948 --> 00:32:23,288
Yeah, no, it's totally absurd.

415
00:32:23,528 --> 00:32:27,848
I mean, back when they were holding 100,000, I thought, oh, wow, maybe they'll get to 200.

416
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And I was like, it might take a decade.

417
00:32:31,948 --> 00:32:33,988
And here we are with 700,000.

418
00:32:35,648 --> 00:32:39,668
It's moved a lot faster than I anticipated.

419
00:32:40,368 --> 00:32:44,128
And they're able to build an entire industry on top of it.

420
00:32:44,588 --> 00:32:49,048
You know, one of the criticisms that I've really disliked throughout this whole thing is like,

421
00:32:49,428 --> 00:32:56,348
oh, wait till they can build or they can, you know, create products using this capital.

422
00:32:56,968 --> 00:32:59,868
It's like, that's what the prefs are, right?

423
00:32:59,868 --> 00:33:04,428
Like they're, they're using the capital to issue these instruments and they're taking on risk by

424
00:33:04,428 --> 00:33:10,468
issuing the press. And then somebody else put on your, um, Bitcoin per share. Like it's not a good

425
00:33:10,468 --> 00:33:14,688
metric in the pref era. Well, I mean, even in the convertible bond era, you could think about

426
00:33:14,688 --> 00:33:22,648
Bitcoin per share, but you'd need to think about like the, the, uh, basic and then the diluted and

427
00:33:22,648 --> 00:33:26,588
then the diluted varied. So you could even say that Bitcoin per share and the convertible bond

428
00:33:26,588 --> 00:33:36,328
era was kind of a tricky metric. I do agree there are some challenges with identifying how much

429
00:33:36,328 --> 00:33:42,568
Bitcoin exposure, but ultimately, in my opinion, it's about how much Bitcoin exposure is there per

430
00:33:42,568 --> 00:33:47,388
share. It's like not Bitcoin per share. It's like Bitcoin exposure. How much excess volatility

431
00:33:47,388 --> 00:33:53,788
is shoved into the common stock? The more perpetual preferred equity at the issue,

432
00:33:53,788 --> 00:33:56,708
They're shoving more excess volatility into the common stock.

433
00:33:56,708 --> 00:34:02,268
And I think that's why they use this Bitcoin per share metric is because it's it's a proxy

434
00:34:02,268 --> 00:34:12,728
for shoving that excess volatility, shoving that excess volatility into the common stock.

435
00:34:13,348 --> 00:34:18,148
I like that evolution that you showed, Grain, where they were talking about their positive

436
00:34:18,148 --> 00:34:18,928
cash flow.

437
00:34:18,928 --> 00:34:23,708
and now that's definitely not something

438
00:34:23,708 --> 00:34:26,748
that they just hammer at their earnings calls now

439
00:34:26,748 --> 00:34:29,228
because they're beyond that stage.

440
00:34:29,568 --> 00:34:31,768
It reminds me a little bit of that kids game.

441
00:34:32,208 --> 00:34:33,088
I don't know the one you've seen

442
00:34:33,088 --> 00:34:35,708
where kids will roll a wheel

443
00:34:35,708 --> 00:34:37,848
and keep it going with a stick

444
00:34:37,848 --> 00:34:39,388
and chase the wheel.

445
00:34:39,488 --> 00:34:40,108
Have you seen this one?

446
00:34:40,788 --> 00:34:42,608
And that's kind of what the cash flow positive

447
00:34:42,608 --> 00:34:43,288
reminds me of.

448
00:34:43,408 --> 00:34:46,908
You only need a little bit of that cash flow positive

449
00:34:46,908 --> 00:34:48,448
to keep the wheel going

450
00:34:48,448 --> 00:34:51,628
and then the momentum does everything else, right?

451
00:34:51,728 --> 00:34:53,948
So if you don't have the cashflow

452
00:34:53,948 --> 00:34:55,388
to even start buying Bitcoin

453
00:34:55,388 --> 00:34:58,548
or to get the convertible bond thing going,

454
00:34:58,708 --> 00:35:00,428
then you're kind of dead in the water.

455
00:35:00,528 --> 00:35:03,268
But once this gets ramped up and it gains momentum,

456
00:35:03,988 --> 00:35:06,208
the cashflow positive part becomes,

457
00:35:06,328 --> 00:35:08,168
you know, a footnote in the story.

458
00:35:10,468 --> 00:35:12,768
Yeah, it's really because they've created this vehicle,

459
00:35:12,768 --> 00:35:14,628
right, that you see on the screen,

460
00:35:14,848 --> 00:35:17,348
this image here, right?

461
00:35:17,348 --> 00:35:22,188
You've got the battery being the USD reserve, and then you've got the nuclear core, which

462
00:35:22,188 --> 00:35:28,788
is the Bitcoin that's held there, that really powers the vehicle into the future.

463
00:35:28,948 --> 00:35:36,328
But the cash was effectively like pulling down cash flow and holding it for a period

464
00:35:36,328 --> 00:35:37,368
of time into the future.

465
00:35:38,348 --> 00:35:38,508
Yeah.

466
00:35:38,688 --> 00:35:43,028
And going back to what you guys are saying, first of all, a lot of people don't like this

467
00:35:43,028 --> 00:35:43,368
slide.

468
00:35:43,508 --> 00:35:46,008
And I'm like, I love that slide of the rocket ship.

469
00:35:46,008 --> 00:35:49,428
because freaking Michael Saylor is a real MIT rocket scientist.

470
00:35:49,588 --> 00:35:50,488
Let's be realistic.

471
00:35:51,848 --> 00:35:57,488
But what I'll say is that why are markets hard to trade

472
00:35:57,488 --> 00:35:59,408
or why do they invest?

473
00:36:00,388 --> 00:36:02,448
And Fong said this again on TV.

474
00:36:02,568 --> 00:36:04,848
He goes, look, originally we were buy and hold Bitcoin.

475
00:36:05,688 --> 00:36:08,308
That's what happened in 2020.

476
00:36:08,668 --> 00:36:11,008
And I didn't check to see when they started doing the preps.

477
00:36:11,568 --> 00:36:13,108
Sorry, not the preps, with the converts.

478
00:36:13,348 --> 00:36:15,608
Once they did the converts,

479
00:36:16,008 --> 00:36:18,688
They were like, oh, we could lever up a little bit with converts.

480
00:36:19,328 --> 00:36:21,248
And they started doing that.

481
00:36:21,388 --> 00:36:24,668
And it's like, oh, we could acquire more Bitcoin faster in the capital markets.

482
00:36:25,208 --> 00:36:31,068
Then what happened is it's like, oh, you know what we, so then obviously the market ran up.

483
00:36:31,068 --> 00:36:34,668
The last convert they issued was in January of 2025.

484
00:36:35,208 --> 00:36:41,048
And then they came out with the prefs in, like I just said, in February of 2025.

485
00:36:41,888 --> 00:36:45,008
And so what happened is now everything is different.

486
00:36:45,008 --> 00:36:46,728
Again, it's like the converts.

487
00:36:46,888 --> 00:36:49,188
Oh, they had to be Delta hedged.

488
00:36:49,368 --> 00:36:51,568
And there's these convert guys that do it.

489
00:36:51,608 --> 00:36:52,968
They totally get how this works.

490
00:36:53,508 --> 00:36:55,268
And back then, it's like, wait a second.

491
00:36:56,208 --> 00:36:59,388
Strategies is able to sell converts and the coupon is 0%.

492
00:36:59,388 --> 00:37:01,008
He's borrowing money for 0%.

493
00:37:01,688 --> 00:37:03,068
And I'm like looking at it.

494
00:37:03,148 --> 00:37:04,588
Listen, you morons.

495
00:37:05,008 --> 00:37:08,328
He's giving a 40% upside on the conversion.

496
00:37:08,668 --> 00:37:10,028
So it's built into it.

497
00:37:10,068 --> 00:37:14,008
It's kind of like, hey, you want to go buy a product on eBay?

498
00:37:14,008 --> 00:37:15,668
and they're like, oh yeah.

499
00:37:15,968 --> 00:37:18,488
And you're like, do they charge for shipping?

500
00:37:18,628 --> 00:37:19,988
So I'm like, oh, they don't charge for shipping.

501
00:37:20,388 --> 00:37:21,108
Let me tell you a secret.

502
00:37:21,788 --> 00:37:23,868
They just increased the price of the product

503
00:37:23,868 --> 00:37:25,008
to include the shipping.

504
00:37:25,228 --> 00:37:26,128
It ain't free.

505
00:37:26,248 --> 00:37:26,908
It's rolled in.

506
00:37:27,028 --> 00:37:28,108
Yeah, it's rolled in.

507
00:37:28,108 --> 00:37:31,268
So the coupon, oh, he's borrowing money at 0% coupon.

508
00:37:31,868 --> 00:37:33,448
He just gives you a 40%,

509
00:37:33,448 --> 00:37:36,508
he has to give a 40% upside after the term.

510
00:37:36,688 --> 00:37:38,888
And that's built, like if you click the PDF

511
00:37:38,888 --> 00:37:43,048
and you read it for 30 seconds, you would see that.

512
00:37:43,048 --> 00:37:48,348
but they don't even click the link. So now where are we today? Now we're in this third scenario of

513
00:37:48,348 --> 00:37:55,928
any, the STRC has seasoned. So now it's the third environment. The convert environment is over.

514
00:37:56,168 --> 00:38:01,068
Initially it was buy and hold Bitcoin. Fong said that. Then it was the convert market. Now it's

515
00:38:01,068 --> 00:38:05,108
the PREF market. And if somebody is like, can you tell me how the PREF market's going to affect

516
00:38:05,108 --> 00:38:11,368
MSTR? You know, I have some good ideas, but that becomes hard to model. Take it away, Jeff.

517
00:38:12,208 --> 00:38:16,168
Yeah. And some other new evolutions that are happening in the space, and I've seen this happen

518
00:38:16,168 --> 00:38:22,248
with some of the shitcoin debt companies. And now I think MetaPlanet, their recent equity issuance

519
00:38:22,248 --> 00:38:28,168
used this model as well. They sold equity at a premium and had warrants attached to it as well,

520
00:38:28,288 --> 00:38:34,748
which was an interesting model. It's effectively selling your equity at a premium and then having

521
00:38:34,748 --> 00:38:39,028
a call option attached to it. I don't know the exact details. I haven't looked incredibly deeply,

522
00:38:39,028 --> 00:38:49,708
But that's another interesting model that, you know, companies are finding other ways to issue equity at a premium by attaching little pieces and components to it.

523
00:38:50,008 --> 00:38:51,108
So just something to think about.

524
00:38:51,228 --> 00:39:05,068
But another thing, I was listening to a Bitcoin Today space and they were all fumbling on what is so fascinating about Stretch.

525
00:39:05,268 --> 00:39:06,448
Like, why is it cool?

526
00:39:06,448 --> 00:39:08,828
Like, what is the novelty here?

527
00:39:09,028 --> 00:39:14,628
And I think it's helpful to just reiterate, preferred equity has been around for a very long time.

528
00:39:14,848 --> 00:39:20,148
This access to the capital market has been there for a very long time.

529
00:39:20,568 --> 00:39:25,068
Historically, preferred equity used to be the last resort.

530
00:39:25,748 --> 00:39:30,468
You'd go raise debt capital, and then you'd go to the preferred equity market if you couldn't raise debt capital anymore.

531
00:39:31,008 --> 00:39:36,028
And it was seen as a desperation move to go access the preferred market.

532
00:39:36,028 --> 00:39:43,348
Now, strategy has completely flipped that on its head and used it as a position of strength.

533
00:39:43,668 --> 00:39:50,868
Like, okay, how can I take infinite duration leverage, no margin call, like no principal due,

534
00:39:51,008 --> 00:39:55,808
I can do it in the preferred market. Okay. Innovation number one. Innovation number two

535
00:39:55,808 --> 00:40:09,956
is you put a ticker on it and you make it publicly traded Okay If you wanted to go buy like Boeing perpetual preferred equity you can trade it It trades 144A You like you got to go to a broker and go trade back alley to go get some

536
00:40:09,956 --> 00:40:15,756
pref equity exposure or go buy like PFF, like a preferred equity ETF. Basically it's illiquid.

537
00:40:15,756 --> 00:40:21,656
It doesn't trade, but these instruments are so sexy. Lots of people want these,

538
00:40:21,956 --> 00:40:26,676
like not just institutions, like normal people, normal people want to think about this as like

539
00:40:26,676 --> 00:40:31,456
a savings account because this is backed by Bitcoin risk. I'm long Bitcoin exposure here.

540
00:40:31,816 --> 00:40:38,396
I can effectively have a theoretical type savings account or like a two month, three month type

541
00:40:38,396 --> 00:40:45,136
savings account in a, in a wrapper that's publicly traded and I can get it on Robinhood.

542
00:40:45,436 --> 00:40:50,696
I can get it in any of these brokerages. Okay. That's interesting. Now on top of that,

543
00:40:50,756 --> 00:40:55,876
they have a ATM, a shelf offering, and they're able to issue new shares of this stuff,

544
00:40:55,876 --> 00:41:03,176
which effectively is why STRC was able to be created because they can issue shares to peg the

545
00:41:03,176 --> 00:41:10,336
price at a hundred and they could raise that debt like capital without having a cliff maturity

546
00:41:10,336 --> 00:41:18,796
with a click of a button, very low cost. They don't have to go back out to market and go do the,

547
00:41:18,796 --> 00:41:25,536
you know, song and dance and go like make a bunch of presentations and go run around the world and

548
00:41:25,536 --> 00:41:34,436
go find preferred equity buyers. They're building the demand as we go. And they have the ability to

549
00:41:34,436 --> 00:41:39,696
tap into that demand as it comes in the door. So that's why these things are so interesting.

550
00:41:39,936 --> 00:41:46,756
It's all of those components. It's like took an area of the capital markets that was historically

551
00:41:46,756 --> 00:41:54,496
just kind of drab and not very exciting. And they made it incredibly exciting by making it

552
00:41:54,496 --> 00:41:58,516
publicly traded, throwing a shelf offering, making a unique instrument that's relatively

553
00:41:58,516 --> 00:42:01,236
stable, low vol with high yield.

554
00:42:01,816 --> 00:42:04,536
I mean, these things are better than like, look at this.

555
00:42:05,236 --> 00:42:08,656
So on the screen right now, STRC is seasoned trading near par.

556
00:42:08,776 --> 00:42:09,456
It hit par today.

557
00:42:09,576 --> 00:42:10,096
It hit 100.

558
00:42:11,156 --> 00:42:12,836
Interest rate, 11.25%.

559
00:42:12,836 --> 00:42:18,336
But at the same time, since August, the value of the underlying Bitcoin that sits on the

560
00:42:18,336 --> 00:42:19,496
balance sheet has gone down 30%.

561
00:42:20,216 --> 00:42:23,996
Yet the instrument itself is up a point, 1%.

562
00:42:24,496 --> 00:42:26,956
And the dividend itself is up 5.3%.

563
00:42:26,956 --> 00:42:30,456
They've issued an additional $400 million of this stuff.

564
00:42:30,876 --> 00:42:31,596
It's crazy.

565
00:42:32,296 --> 00:42:32,416
Yeah.

566
00:42:32,536 --> 00:42:36,776
And I want to say why I think this is why they label this the iPhone.

567
00:42:36,916 --> 00:42:37,996
People ask this question.

568
00:42:38,596 --> 00:42:45,376
And the reason why on the other prefs, they have a fixed dividend.

569
00:42:45,676 --> 00:42:49,196
I don't use the term coupon because Saylor doesn't like the term coupon.

570
00:42:49,556 --> 00:42:50,956
That has a particular legal meaning.

571
00:42:50,956 --> 00:42:57,076
So it has a, it has a, the yield that it pays is set at 8%, right?

572
00:42:57,136 --> 00:42:58,976
On the other ones typically.

573
00:42:59,336 --> 00:43:01,756
And so what happens is the price is able to float.

574
00:43:02,156 --> 00:43:08,876
What they've done on STRC, if you can go back to that slide, slide 61, what they do here

575
00:43:08,876 --> 00:43:09,796
is they have two levers.

576
00:43:10,056 --> 00:43:16,616
It has a floating, it has a floating dividend rate that can be, that's changed based upon

577
00:43:16,616 --> 00:43:18,136
the VWAP at the end of the month.

578
00:43:18,136 --> 00:43:20,656
and that's where they're able to,

579
00:43:20,796 --> 00:43:23,256
A, if we want to keep this target range,

580
00:43:23,336 --> 00:43:25,496
and that's the term they use, target range,

581
00:43:25,796 --> 00:43:27,116
99 to 101,

582
00:43:27,636 --> 00:43:31,376
then what they do is if the VWAP is too low,

583
00:43:31,556 --> 00:43:33,336
then they ramp it up a quarter point

584
00:43:33,336 --> 00:43:34,656
or they can go up a half a point.

585
00:43:34,896 --> 00:43:40,216
Now, as long as there's more demand for this,

586
00:43:40,476 --> 00:43:41,256
what they're going to do

587
00:43:41,256 --> 00:43:43,216
is they're going to continue to sell it off

588
00:43:43,216 --> 00:43:46,356
to keep it in that target range of 99 to 101.

589
00:43:46,776 --> 00:43:47,796
That's the goal.

590
00:43:48,136 --> 00:43:51,636
So they want to keep that rate relatively high.

591
00:43:52,296 --> 00:43:53,716
And Jeff, we went back, we talked about this.

592
00:43:53,936 --> 00:43:56,256
What happens if STRC dropped to 50 bucks?

593
00:43:56,796 --> 00:43:58,756
Well, at 11, just assume 11%,

594
00:43:58,756 --> 00:44:01,816
if you could buy it at 50 bucks,

595
00:44:02,136 --> 00:44:05,076
automatically the effective yield would be 22%.

596
00:44:05,076 --> 00:44:07,956
Because instead of it being at 100, we have 50 bucks

597
00:44:07,956 --> 00:44:10,356
and they have to pay out these dividends

598
00:44:10,356 --> 00:44:14,476
at an 11% rate based upon that par value of $100.

599
00:44:14,476 --> 00:44:18,136
and that's straight bonds.

600
00:44:18,456 --> 00:44:21,456
And so when we have these commentators

601
00:44:21,456 --> 00:44:22,836
that make these flippant remarks

602
00:44:22,836 --> 00:44:27,236
or these people with 100,000 or 150 or 200,000 followers

603
00:44:27,236 --> 00:44:29,436
and they don't get what strategy is doing,

604
00:44:29,896 --> 00:44:32,936
I'm like, well, that's obvious, right?

605
00:44:33,236 --> 00:44:34,856
And after a while, it's tiring.

606
00:44:34,856 --> 00:44:38,356
But the problem is they have 150,000 or 250,000

607
00:44:38,356 --> 00:44:39,256
or a lot of followers

608
00:44:39,256 --> 00:44:40,616
and they just don't get what he's doing.

609
00:44:41,676 --> 00:44:42,756
Oh yeah, it's crazy.

610
00:44:42,756 --> 00:44:49,216
um like this is the most interesting interesting story in all of finance like these are interesting

611
00:44:49,216 --> 00:44:55,576
stretch a perpetual preferred equity i mean today it hit par and it traded 97 million dollars

612
00:44:55,576 --> 00:45:01,156
today like that's interesting what other perpetual preferred equity preferred equity

613
00:45:01,156 --> 00:45:08,316
is trading 100 million dollars a day there isn't one like it just doesn't exist like if you want a

614
00:45:08,316 --> 00:45:15,016
yield instrument and want liquidity associated with it on one specific thing that like these

615
00:45:15,016 --> 00:45:23,096
are it like this is it so it's uh yeah i mean these these products are fascinating very uh

616
00:45:23,096 --> 00:45:31,436
very interesting to analyze can you go to can you go to slide 22 yeah so you know you know look on

617
00:45:31,436 --> 00:45:39,096
slide 22. Look, I think the reason why people don't get this is not because it's complex,

618
00:45:39,096 --> 00:45:45,216
because it's dead freaking simple. And people just, they just can't, they're like, it can't

619
00:45:45,216 --> 00:45:49,896
be that simple because the mindset is it must be too good to be true. So when you look at this

620
00:45:49,896 --> 00:45:57,256
slide right here, strategy was the largest US equity issuer in 2025. That's what it says.

621
00:45:57,256 --> 00:45:59,856
Are they allowed to lie in an SEC deck?

622
00:46:00,196 --> 00:46:00,576
No.

623
00:46:00,756 --> 00:46:02,136
So let's just take it at face value.

624
00:46:02,796 --> 00:46:05,056
They were 8% of the equity market.

625
00:46:05,796 --> 00:46:08,176
Total equity raise, they raised $23.3 billion.

626
00:46:08,796 --> 00:46:10,536
They were 6% of the common-

627
00:46:10,536 --> 00:46:12,016
That's an insane statistic.

628
00:46:12,536 --> 00:46:17,096
You look at these, any person will look at this and they're like, oh, hey, Saylor, do

629
00:46:17,096 --> 00:46:20,936
you think you can raise $888 million to pay the prefs?

630
00:46:21,576 --> 00:46:24,316
Well, we raised $23 billion last year.

631
00:46:24,316 --> 00:46:27,116
Maybe we'll peel some off and buy cash, right?

632
00:46:27,256 --> 00:46:37,196
Well, the dude did that in January and you go to the rocket ship and they have $2.25 billion sitting in cash, 30 months of paying the preps.

633
00:46:37,496 --> 00:46:39,396
So I don't think you could raise money.

634
00:46:40,036 --> 00:46:41,256
It's like –

635
00:46:41,256 --> 00:46:50,316
So in 2025, they raised 26.2 times the annual dividend interest.

636
00:46:51,596 --> 00:46:52,636
Yeah, and they're like –

637
00:46:52,636 --> 00:46:53,036
26.

638
00:46:54,036 --> 00:46:56,096
Yeah, and I want to jump into this last part.

639
00:46:56,096 --> 00:46:59,116
There are people, so this is what's been going on on mainstream media.

640
00:46:59,236 --> 00:47:01,016
It's like, so Fong says this.

641
00:47:01,136 --> 00:47:04,396
And by the way, I think Fong was like, hey, could you guys get into trouble?

642
00:47:04,476 --> 00:47:14,936
He's like, well, yeah, if Bitcoin drops to $8,000, which is a 90% drop, and it stays there for five years, you know, we'll probably have to refinance.

643
00:47:14,996 --> 00:47:18,156
And people are like, you see, you see, they're going to get in trouble.

644
00:47:18,156 --> 00:47:18,976
I want to tell you something.

645
00:47:19,236 --> 00:47:25,796
If Bitcoin drops to $8,000 and stays there for five years, I'm not going to be talking about Bitcoin.

646
00:47:26,096 --> 00:47:33,456
I'll be like, I think we're all, I'll tell you right now, I will give up on this show

647
00:47:33,456 --> 00:47:35,976
if Bitcoin drops to $8,000 for five years.

648
00:47:36,076 --> 00:47:37,716
I'm not going to be in this call waiting for it to come back.

649
00:47:37,736 --> 00:47:38,176
That's fair.

650
00:47:38,356 --> 00:47:38,836
That's fair.

651
00:47:39,276 --> 00:47:39,556
Okay.

652
00:47:39,616 --> 00:47:40,996
Just give you guys a heads up.

653
00:47:41,056 --> 00:47:41,256
Yeah.

654
00:47:42,516 --> 00:47:43,456
That was so funny.

655
00:47:43,456 --> 00:47:50,336
I mean, they bring Sailor and Fong on those shows like when things are down, right?

656
00:47:51,516 --> 00:47:54,096
I guess they bring them when things are ripping too, but like-

657
00:47:54,096 --> 00:47:55,216
So I don't know if I told the story.

658
00:47:55,216 --> 00:47:57,936
So in 2024, I was there.

659
00:47:58,096 --> 00:47:58,836
This was in public.

660
00:47:58,996 --> 00:47:59,816
First time I met Saylor.

661
00:47:59,876 --> 00:48:01,396
And I ran up to him after his presentation.

662
00:48:01,696 --> 00:48:02,856
We're at Strategy World.

663
00:48:02,956 --> 00:48:05,496
There's a whole group of people around us, not a private setting.

664
00:48:05,856 --> 00:48:06,876
I walk up to Saylor.

665
00:48:07,096 --> 00:48:08,596
I don't know if I think maybe I don't know if I told him.

666
00:48:08,716 --> 00:48:10,736
So I walk up and said, hey, I'm grain of salt.

667
00:48:10,796 --> 00:48:11,276
You ever hear me?

668
00:48:11,336 --> 00:48:11,916
He's like, no.

669
00:48:12,356 --> 00:48:13,516
I'm like, OK.

670
00:48:14,056 --> 00:48:16,376
Anyway, I said, can I ask you a quick question?

671
00:48:16,396 --> 00:48:16,956
He's like, sure.

672
00:48:17,296 --> 00:48:19,296
I said, look, Andrew Ross Sorkin.

673
00:48:19,356 --> 00:48:20,876
I think he seems like a sharp guy.

674
00:48:20,956 --> 00:48:22,356
He doesn't get what's going on.

675
00:48:22,356 --> 00:48:24,596
Does he not get what's going on?

676
00:48:24,596 --> 00:48:27,036
or is there something else going on?

677
00:48:27,516 --> 00:48:29,236
He's like, they get what's going on.

678
00:48:29,316 --> 00:48:31,376
He goes, look, they call me when the price is down.

679
00:48:31,876 --> 00:48:34,376
They can't have, Andrew can't say to them,

680
00:48:34,636 --> 00:48:36,576
hey, Saylor, how's the Bitcoin thing going?

681
00:48:36,976 --> 00:48:38,556
You know, it looks like it's going up pretty good.

682
00:48:38,636 --> 00:48:40,116
And Saylor's like, oh yeah, I'm buying a lot of it.

683
00:48:40,136 --> 00:48:41,236
I think it's going to go really high.

684
00:48:41,296 --> 00:48:42,196
And like, oh, that's awesome.

685
00:48:42,256 --> 00:48:42,916
Oh, that's cool.

686
00:48:43,156 --> 00:48:45,036
He goes, it doesn't work like that.

687
00:48:45,636 --> 00:48:46,716
He goes, they can't say that

688
00:48:46,716 --> 00:48:48,936
because then they'll be accused of just pumping up

689
00:48:48,936 --> 00:48:50,956
the price of Bitcoin or MSTR.

690
00:48:51,536 --> 00:48:54,136
So when they come on, it's good cop, bad cop.

691
00:48:54,136 --> 00:48:55,156
I didn't invent this.

692
00:48:55,556 --> 00:48:56,736
Ross is bad cop.

693
00:48:56,836 --> 00:49:00,916
Andrew Ross Sorkin is bad cops like Saylor, you know, how can this go wrong?

694
00:49:00,936 --> 00:49:04,136
And he's like, well, it can't because of all the metrics we just talked about.

695
00:49:04,296 --> 00:49:07,896
And then they're like, oh, so Saylor is playing good cop.

696
00:49:07,976 --> 00:49:10,576
And these people on mainstream media play bad cop.

697
00:49:10,636 --> 00:49:11,536
And that's the routine.

698
00:49:11,776 --> 00:49:13,176
This is not lying.

699
00:49:13,256 --> 00:49:16,936
But I just want people to realize he said this in front of a whole group of people.

700
00:49:16,956 --> 00:49:19,496
This is not like this was a private conversation.

701
00:49:19,816 --> 00:49:22,536
And I'm like, oh, and I'll let you guys know.

702
00:49:22,536 --> 00:49:29,516
when executives have to do a press release they run that through pr and legal for like three weeks

703
00:49:29,516 --> 00:49:35,816
before it goes out and usually legal writes the press release then the executive looks at it's

704
00:49:35,816 --> 00:49:39,756
like do you agree with the executives like well yeah if legal approved it looks pretty good right

705
00:49:39,756 --> 00:49:48,736
jeff i mean yeah yeah yeah it's crazy out there uh the it was sailor was there he was brought on

706
00:49:48,736 --> 00:49:53,756
one of the shows and it's like they asked okay if bitcoin goes down to five thousand or to eight

707
00:49:53,756 --> 00:49:57,496
thousand will you be able to refinance the debt like will the bank still lend to you and there's

708
00:49:57,496 --> 00:50:01,996
just like oh my god i just can't believe we're here like people still think that this is the

709
00:50:01,996 --> 00:50:08,976
case like that that that's the highest probability like the the questions that they ask make it seem

710
00:50:08,976 --> 00:50:16,876
like that's the highest probability outcome you know without thinking about the future like the

711
00:50:16,876 --> 00:50:23,436
upside exposure. Jeff, let's go to this slide here because this is what people keep on saying.

712
00:50:23,516 --> 00:50:28,516
They always get wrong. They always get this wrong. Oh, strategy is leveraged to the hilt.

713
00:50:28,816 --> 00:50:35,856
You hear this all the time. Strategies leverage is 10%. And they're like, you see, he's 90%

714
00:50:35,856 --> 00:50:41,896
leverage. I'm like, what? That's what people think. They cannot understand this. We talk about

715
00:50:41,896 --> 00:50:50,076
this every week. And they're like, no, strategy is 10%. AAA rated is 23.1%, right? And then the B

716
00:50:50,076 --> 00:50:58,336
is 31%. So they have the lowest leverage out of all these comparisons. And you look at this and

717
00:50:58,336 --> 00:51:02,636
they're like, oh no, he's leveraged to the hilt. It's like, I guess they can't... I don't know how

718
00:51:02,636 --> 00:51:06,616
they maintain their composure when they keep on getting the same question over and over again.

719
00:51:06,616 --> 00:51:15,856
yeah yeah yeah going back to that 20 billion that they raised in 2025 it took them like 10 years to

720
00:51:15,856 --> 00:51:19,996
raise two or three hundred million right for them to get to the half billion that they had

721
00:51:19,996 --> 00:51:27,316
when they started this strategy like it took them 10 years to come up with half a billion dollars of

722
00:51:27,316 --> 00:51:32,616
cash and since they started the strategy now they're just like yeah we'll just raise 283

723
00:51:32,616 --> 00:51:39,596
billion dollars of uh you know to buy bitcoin with every year in a year in a year yeah in a year

724
00:51:39,596 --> 00:51:44,836
yeah now they do whatever 500 million to a billion in a week it's like oh exactly in a week and you're

725
00:51:44,836 --> 00:51:52,436
like it's truly absurd so going through this deck is is crazy i mean yeah the deck's important one

726
00:51:52,436 --> 00:51:56,156
one other thing i wanted to talk about is uh i don't know i gotta jump here in like six minutes

727
00:51:56,156 --> 00:51:59,156
because I've got a meeting tonight that I got to jump to.

728
00:51:59,396 --> 00:52:04,176
But there was a lot of complaints this week

729
00:52:04,176 --> 00:52:08,256
about strategy selling common stock last Monday

730
00:52:08,256 --> 00:52:11,396
and buying Bitcoin last Monday.

731
00:52:12,596 --> 00:52:15,256
I think they bought, what, they sold $90 million

732
00:52:15,256 --> 00:52:17,476
and they bought $90 million worth of Bitcoin

733
00:52:17,476 --> 00:52:20,156
and the average price was 78,000.

734
00:52:20,696 --> 00:52:23,496
But at the time when the announcement came out,

735
00:52:23,496 --> 00:52:33,336
Bitcoin was trading at 67,000, 68,000, something like that. And people exploded, right? Like,

736
00:52:33,416 --> 00:52:39,356
oh my God, buying the top. Why didn't they buy when it was 60,000? Why aren't they buying the dip?

737
00:52:39,356 --> 00:52:46,136
But it's like hindsight's 20, 20 in all of this stuff. Strategy is not a speculator.

738
00:52:46,636 --> 00:52:50,476
They are a long-term investor. When they get the capital in the door, they are deploying it

739
00:52:50,476 --> 00:52:57,816
immediately. And just to give some perspective of kind of like how this works, like, yeah,

740
00:52:57,916 --> 00:53:04,976
like when you get the capital in the door, like you can go clear, you can clear $90 million in

741
00:53:04,976 --> 00:53:10,636
the Bitcoin market. Like they could have done that in an hour. Like that Monday that they bought

742
00:53:10,636 --> 00:53:19,896
that Bitcoin, I think Bitcoin traded like $70 billion that day. So the ability to go deploy

743
00:53:19,896 --> 00:53:28,116
that amount of capital, like $90 million is just not that big of an order to clear in the market.

744
00:53:28,276 --> 00:53:32,876
So I'm not surprised that Monday morning, the stock opened strong and they were able to sell

745
00:53:32,876 --> 00:53:40,956
equity into the market. And they turned right around and probably had a TWOP for two or three

746
00:53:40,956 --> 00:53:46,156
hours to clear the $90 million. And boom, they had the Bitcoin immediately on the balance sheet.

747
00:53:46,156 --> 00:53:51,316
And I don't think they're not speculators. I don't think they want to be taking on

748
00:53:51,316 --> 00:53:56,776
price volatility risk in any one direction if the price of the stock goes a different way or the

749
00:53:56,776 --> 00:54:01,416
price of the Bitcoin goes a different way. All of a sudden, the economics that made sense when you

750
00:54:01,416 --> 00:54:07,276
originally sold the stock may not make sense anymore. And people can complain like, oh,

751
00:54:07,316 --> 00:54:09,836
why aren't they buying it over a week? Well, if you're buying it over a week,

752
00:54:09,836 --> 00:54:15,596
you're taking on timing risk and timing element risk of your entire calculation

753
00:54:15,596 --> 00:54:17,196
for your corporation.

754
00:54:18,156 --> 00:54:20,056
So this is a large-scale operation.

755
00:54:20,776 --> 00:54:22,596
They think about this stuff very critically,

756
00:54:22,856 --> 00:54:26,076
very focused on it.

757
00:54:27,456 --> 00:54:30,356
And yeah, that didn't surprise me at all

758
00:54:30,356 --> 00:54:33,296
that they sold stock on a Monday morning,

759
00:54:33,756 --> 00:54:34,816
bought Bitcoin on Monday morning

760
00:54:34,816 --> 00:54:36,776
when the price was at $78,000

761
00:54:36,776 --> 00:54:39,176
and then proceeded to fall off a cliff.

762
00:54:40,216 --> 00:54:41,676
Yeah, the way that I look at that,

763
00:54:41,836 --> 00:54:43,036
and since we're going to be in Vegas,

764
00:54:43,336 --> 00:54:44,296
might as well just look at this

765
00:54:44,296 --> 00:54:45,356
from a gambling perspective,

766
00:54:45,356 --> 00:54:51,836
right? So EV is your expected value. There's always a correct play to make. And the point is

767
00:54:51,836 --> 00:54:58,056
to try to either make more or lose less when you make that play. And so if someone offered you the

768
00:54:58,056 --> 00:55:04,956
chance, you had to bet that Bitcoin would be more expensive tomorrow or less expensive tomorrow.

769
00:55:04,956 --> 00:55:09,296
And you had to make that bet every single day for the rest of your life. You would have to take

770
00:55:09,296 --> 00:55:17,296
the bet that it was going to be more expensive tomorrow to get positive ev so the idea of like

771
00:55:17,296 --> 00:55:25,296
holding back some cash for a dip just doesn't make sense from a from a pure you know expected value

772
00:55:27,056 --> 00:55:35,536
view and if you got a long-term price target on bitcoin if it's 500 000 over the next 10 years

773
00:55:35,536 --> 00:55:42,556
that if it's at 78,000 or 65,000, it doesn't really matter.

774
00:55:44,236 --> 00:55:50,836
Right? Like you're taking a long-term perspective. Like this is a 40 CAGR asset for the next 10

775
00:55:50,836 --> 00:55:55,876
years. I want to be long this asset whenever I have the money to buy it. It's the universal

776
00:55:55,876 --> 00:56:08,316
target, right? Like a M&A target. Somebody asked if they buy OTC. I think there's opportunities to

777
00:56:08,316 --> 00:56:12,136
buy OTC, but they don't have to. And I would suspect they have trading partners. Look,

778
00:56:12,236 --> 00:56:16,956
we're going to have three trading partners at the True North event in Vegas. If you want to talk to

779
00:56:16,956 --> 00:56:20,396
the trading partners about how trading works, we are literally going to have them in the room.

780
00:56:20,516 --> 00:56:24,156
We're not going to record this. You go ask them the questions that you want to ask them.

781
00:56:24,156 --> 00:56:27,276
You could ask them how they do the trading. You can ask them how that goes to custody.

782
00:56:27,816 --> 00:56:32,996
Like, I can't promise you that it's exactly what strategy does, but like, you're going to get

783
00:56:32,996 --> 00:56:38,116
perspective on how like hundreds of millions of dollars of Bitcoin is purchased. And I think

784
00:56:38,116 --> 00:56:44,776
that's really interesting because this market is like totally not retail anymore. Like retail

785
00:56:44,776 --> 00:56:49,616
doesn't move this market anymore. Institutions move this market, how institutions are buying it,

786
00:56:49,616 --> 00:56:56,896
a buying spot, how institutions are hedging in different derivatives. Um, yeah, it's, it's just

787
00:56:56,896 --> 00:57:03,476
so much more complex than I think a lot of people really understand. And, uh, they don't, they don't

788
00:57:03,476 --> 00:57:11,256
need to go OTC to go clear a $90 million order. And it's like OTC isn't always available. Like

789
00:57:11,256 --> 00:57:17,996
sometimes, sometimes it works, sometimes not. Yeah. You know, I just want to be respectful.

790
00:57:17,996 --> 00:57:24,556
you got to drop off. But look, I don't know why there are some Bitcoiners that are hoping for

791
00:57:24,556 --> 00:57:31,716
either Michael Saylor or Strategy's failure when they're buying $23 billion worth of Bitcoin.

792
00:57:32,316 --> 00:57:37,096
It's the biggest buyer of it. So I don't see why they're self-destroying. Oh, it's centralized.

793
00:57:38,016 --> 00:57:43,196
You know what? The Gini coefficient for Bitcoin is highly centralized already with the big

794
00:57:43,196 --> 00:57:48,696
shareholders. So that's always been the case. So the takeaway is if it's good for a person,

795
00:57:48,796 --> 00:57:52,516
it's good for a company, and then it's good for a sovereign nation. And I don't know why they're

796
00:57:52,516 --> 00:57:59,716
like, oh, this is antithetical to what Bitcoin is. I'm like, no, it's a store of value. And now

797
00:57:59,716 --> 00:58:04,396
it has switched from a store of value to being collateral for digital credit. And if you don't

798
00:58:04,396 --> 00:58:08,916
believe in that, then you're not updating your beliefs. That's the whole thing. You're just

799
00:58:08,916 --> 00:58:14,276
arguing for the sake of arguing. Totally. Okay. So one thing that's interesting,

800
00:58:14,556 --> 00:58:19,956
this is Coinbase's balance sheet. And I brought this up because the valuation for MSTR and Coinbase

801
00:58:19,956 --> 00:58:26,796
are very similar, right? As of right now, MSTR has got 714,000 Bitcoin. Coinbase has 14,000

802
00:58:26,796 --> 00:58:33,676
Bitcoin. So MSTR literally has 700,000 Bitcoin more than Coinbase and their market cap valuations

803
00:58:33,676 --> 00:58:38,016
are nearly identical. So I looked at the balance sheet just for curiosity.

804
00:58:38,916 --> 00:58:46,536
And Coinbase has $31 billion in assets and $15 billion in liabilities. And it was interesting

805
00:58:46,536 --> 00:58:51,416
when I was looking at the balance sheet here, the customer custodial funds is sitting on the

806
00:58:51,416 --> 00:58:57,976
asset side of the balance sheet, at least some of their custodial funds. And so that was interesting

807
00:58:57,976 --> 00:59:05,016
to me. And I think, I mean, strategies obviously got what, like $55 billion of Bitcoin.

808
00:59:05,016 --> 00:59:07,456
Yeah, Jeff, let's do the simple math here.

809
00:59:07,856 --> 00:59:16,636
If you've got $31 billion in assets and $15 billion in liabilities, that means you're 50% freaking leveraged.

810
00:59:17,116 --> 00:59:18,436
Yeah, exactly.

811
00:59:18,736 --> 00:59:22,456
Or to say it this way, they have five times the leverage, right?

812
00:59:22,496 --> 00:59:23,436
Because strategy is 10%.

813
00:59:23,996 --> 00:59:26,936
So they have five times the leverage of strategy.

814
00:59:27,116 --> 00:59:27,596
Yeah.

815
00:59:27,676 --> 00:59:30,996
And they're like, oh, and strategy has a 700,000 Bitcoins.

816
00:59:30,996 --> 00:59:35,676
So basically 700,000 Bitcoins in these two comparisons, the 700,000 Bitcoins are being

817
00:59:35,676 --> 00:59:36,416
valued at zero.

818
00:59:36,816 --> 00:59:37,136
Zero.

819
00:59:38,536 --> 00:59:39,136
Yeah.

820
00:59:39,356 --> 00:59:44,936
And like of the assets on Coinbase's balance sheet, 5.4 billion are intangible goodwill.

821
00:59:46,956 --> 00:59:49,336
Can you explain, Jeff, what goodwill means?

822
00:59:49,696 --> 00:59:51,376
Goodwill is like a fugazi.

823
00:59:51,696 --> 00:59:52,196
It's like you...

824
00:59:52,196 --> 00:59:54,556
You know, I'll tell you what goodwill is.

825
00:59:54,856 --> 01:00:11,204
Goodwill is like a trademark like the Nike swoosh or the Ferrari logo I would tell you that the fact that Coinbase thinks that they have billion in goodwill I think that that kind of wishful thinking in my view So it the excess

826
01:00:11,424 --> 01:00:15,984
I think if I remember correctly from my accounting days, my conversations with our internal accounting

827
01:00:15,984 --> 01:00:20,424
team, it's like the excess premium that you paid for a company that you've acquired.

828
01:00:23,324 --> 01:00:27,204
So it's like the valuation, it's like the excess valuation of a-

829
01:00:27,204 --> 01:00:29,404
Think about what you just said, if that's true.

830
01:00:29,404 --> 01:00:30,604
Oh, it's crazy.

831
01:00:30,744 --> 01:00:32,864
It's like I overpaid for a company.

832
01:00:32,864 --> 01:00:37,244
I then count that as you carry it as an asset on your balance sheet.

833
01:00:37,284 --> 01:00:37,924
It's insane.

834
01:00:38,324 --> 01:00:38,684
Overpaid.

835
01:00:39,224 --> 01:00:42,584
Oh, I guess that's true because you overpaid because you thought it was good.

836
01:00:42,844 --> 01:00:44,864
So therefore, it's a good thing that you overpaid.

837
01:00:46,264 --> 01:00:48,684
They overpaid for that damn Super Bowl commercial, too.

838
01:00:48,844 --> 01:00:49,664
It was terrible.

839
01:00:49,924 --> 01:00:50,184
Yeah.

840
01:00:50,584 --> 01:00:53,824
And and Goodwill is one of these things that like it kind of gets audited.

841
01:00:53,824 --> 01:00:59,644
but it's this place where accountants can kind of like, you know, move stuff around a little bit.

842
01:00:59,724 --> 01:01:05,384
Like you're supposed to kind of draw it down over time. But it's just this moving figure

843
01:01:05,384 --> 01:01:10,384
that's always a bit strange. Anyway, that's not the reason I brought it up. The reason I brought

844
01:01:10,384 --> 01:01:14,864
it up is because they have customer custodial funds on their asset side. And I don't know how

845
01:01:14,864 --> 01:01:19,804
much strategy has with Coinbase, but I think it's like, I don't know, it's probably a decent amount.

846
01:01:19,804 --> 01:01:24,584
and they have 5 billion sitting as a technical asset on their balance sheet. I would assume

847
01:01:24,584 --> 01:01:31,264
that's like Bitcoin in custody. That's not truly in like self custody. It's not like held in self

848
01:01:31,264 --> 01:01:34,984
custody or something like that. I'm not a hundred percent sure. You know, what's crazy about this?

849
01:01:34,984 --> 01:01:39,764
If you look at the liabilities from 2024 to 2025 in the bottom row, the two columns,

850
01:01:40,324 --> 01:01:45,944
it went up by $3 billion in additional liabilities on strategies balance sheet.

851
01:01:45,944 --> 01:01:51,064
It went from zero in cash to $2.25 billion in cash.

852
01:01:52,224 --> 01:01:54,464
And so these went in opposite directions.

853
01:01:55,204 --> 01:02:02,484
They acquired an additional $3 billion in liabilities and strategy raised $2.25 billion

854
01:02:02,484 --> 01:02:04,604
in cash in one month of December.

855
01:02:05,384 --> 01:02:09,564
And so, like you said, the market has mispriced this.

856
01:02:10,124 --> 01:02:13,084
And you look at this and you're like, people are like, yeah, I don't get what you guys

857
01:02:13,084 --> 01:02:13,604
are saying.

858
01:02:13,604 --> 01:02:15,924
I'm like, I don't know how I can make this any simpler.

859
01:02:15,944 --> 01:02:17,864
And I don't bring this up to shit on Coinbase.

860
01:02:18,004 --> 01:02:19,504
I think Coinbase is a good company.

861
01:02:19,704 --> 01:02:27,484
I think they are acting in best interest of the people that hold assets at their company.

862
01:02:27,644 --> 01:02:31,004
I think they have a good solution for custody.

863
01:02:33,004 --> 01:02:34,864
And I think they're good trading partners.

864
01:02:34,864 --> 01:02:38,504
They've got good options or ability to lend off of it and do other things.

865
01:02:38,744 --> 01:02:40,064
But this is a good example.

866
01:02:40,224 --> 01:02:44,064
This is like comparing AWS of Amazon versus Google.

867
01:02:44,584 --> 01:02:47,584
I'm not talking about the Amazon delivery side of it.

868
01:02:47,784 --> 01:02:52,264
But if you wanted to compare something that's in the same industry, I will tell you that

869
01:02:52,264 --> 01:02:55,324
Coinbase is basically in the same industry as strategy.

870
01:02:55,484 --> 01:02:57,144
And therefore, I think it is a fair comparison.

871
01:02:58,204 --> 01:02:58,364
Yeah.

872
01:02:58,464 --> 01:03:01,284
And they're valued about the same right now, which is just insane, right?

873
01:03:01,284 --> 01:03:06,064
Who has a better product right now, like Stretch or Coinbase Custody?

874
01:03:07,524 --> 01:03:09,264
Think about the moat, right?

875
01:03:09,264 --> 01:03:15,624
Like capital 700,000 Bitcoin is like absolutely fucking enormous mode.

876
01:03:16,564 --> 01:03:21,924
Like custody is not an absolutely fucking enormous mode.

877
01:03:23,304 --> 01:03:24,064
And it's disrupted.

878
01:03:24,524 --> 01:03:25,664
And it can be disrupted.

879
01:03:26,624 --> 01:03:26,844
Yeah.

880
01:03:27,104 --> 01:03:28,564
And think about custody.

881
01:03:28,564 --> 01:03:34,244
It pays an incredible low sub 1% or BIPs, right?

882
01:03:34,444 --> 01:03:39,164
These fees are like just, you know, like they're going to go lower and lower and lower and lower.

883
01:03:39,264 --> 01:03:49,604
right yep did we just lose jeff i think that was uh unceremonious departure

884
01:03:49,604 --> 01:03:54,144
so are we still going guys or what's what's the story what do you want to do

885
01:03:54,144 --> 01:04:00,224
sorry jeff is back yeah sorry guys my internet cut out but yeah i gotta jump uh thank you

886
01:04:00,224 --> 01:04:05,404
everybody for thank you everybody for joining my final thoughts are i'm i mean price action sucks

887
01:04:05,404 --> 01:04:08,004
but I'm incredibly bullish here.

888
01:04:08,124 --> 01:04:09,244
I like these price targets.

889
01:04:09,444 --> 01:04:10,784
I think risk is mispriced.

890
01:04:11,124 --> 01:04:12,564
People don't understand what the risk profile

891
01:04:12,564 --> 01:04:15,064
of these instruments are

892
01:04:15,064 --> 01:04:18,984
and I look forward to talking about it.

893
01:04:19,544 --> 01:04:22,064
So yeah, come to True North World.

894
01:04:22,184 --> 01:04:24,264
It's Monday, February 23rd if you can make it

895
01:04:24,264 --> 01:04:26,724
and yeah, look forward to meeting everybody there

896
01:04:26,724 --> 01:04:27,784
that can be there

897
01:04:27,784 --> 01:04:30,084
and let's chat all this stuff.

898
01:04:30,184 --> 01:04:31,104
But I'll kick it over to you guys.

899
01:04:31,164 --> 01:04:32,644
Feel free to keep running.

900
01:04:33,004 --> 01:04:34,324
Mike, you got your model

901
01:04:34,324 --> 01:04:35,804
that you can walk through.

902
01:04:35,984 --> 01:04:36,824
But if not...

903
01:04:36,824 --> 01:04:38,724
Yeah, I'll walk through the model right now.

904
01:04:38,804 --> 01:04:39,984
If you guys want to stay on for this,

905
01:04:40,064 --> 01:04:41,544
we'll just do it since we have a lot of people here.

906
01:04:41,604 --> 01:04:42,404
I'll take people through it.

907
01:04:42,904 --> 01:04:43,544
Catch you all later.

908
01:04:43,904 --> 01:04:44,164
See you.

909
01:04:44,344 --> 01:04:44,884
See you, Jeff.

910
01:04:45,524 --> 01:04:45,964
See you, Jeff.

911
01:04:46,424 --> 01:04:47,644
Okay, let's see if this works.

912
01:04:48,064 --> 01:04:49,604
You guys want to cover something real quick

913
01:04:49,604 --> 01:04:50,544
before I go through the model?

914
01:04:52,184 --> 01:04:53,204
No, let's see the model

915
01:04:53,204 --> 01:04:54,964
and then we'll respond.

916
01:04:55,684 --> 01:04:56,304
Yeah, okay.

917
01:04:56,404 --> 01:04:57,284
So let me show you this.

918
01:04:57,684 --> 01:04:59,084
So I'll give the quick backdrop.

919
01:04:59,084 --> 01:05:03,604
So at Strategy World,

920
01:05:03,604 --> 01:05:07,384
at the True North event that we're having, the inside event.

921
01:05:07,684 --> 01:05:11,444
I'm going to be a host with a couple of people on stage.

922
01:05:11,624 --> 01:05:14,424
I already know who they are, but we're not saying who they are publicly.

923
01:05:14,964 --> 01:05:19,364
And so the question is, as the host, how do you value a Bitcoin treasury common stock?

924
01:05:19,444 --> 01:05:20,244
That was the idea.

925
01:05:20,664 --> 01:05:22,124
And I was like, well, I got to put something.

926
01:05:22,244 --> 01:05:24,124
I have to figure out how I would value it.

927
01:05:24,424 --> 01:05:26,564
And then I will talk to these other people in advance.

928
01:05:26,564 --> 01:05:30,804
It's my goal to have a discussion with them beforehand and say, how do you guys value this?

929
01:05:30,844 --> 01:05:31,904
So we have that.

930
01:05:31,904 --> 01:05:34,324
So I wanted to come up with something that I can figure out how to evaluate.

931
01:05:34,524 --> 01:05:37,024
So with that said, let me jump to what I did.

932
01:05:37,604 --> 01:05:38,344
Share window.

933
01:05:40,464 --> 01:05:40,864
Okay.

934
01:05:41,264 --> 01:05:43,684
Let me know if this is big enough when it comes through.

935
01:05:43,764 --> 01:05:44,204
Let's see.

936
01:05:46,344 --> 01:05:48,184
I will zoom in here.

937
01:05:48,184 --> 01:05:54,244
So let me view, zoom, 150%.

938
01:05:54,244 --> 01:05:57,824
Is that big enough or I need to zoom in some more?

939
01:05:58,684 --> 01:05:59,304
Yeah, do it again.

940
01:06:00,144 --> 01:06:00,424
Okay.

941
01:06:01,904 --> 01:06:12,464
that's the biggest thing okay so let me tell you why i did this i based this on a slide that was

942
01:06:12,464 --> 01:06:17,504
in their deck so i will scroll down over here this is the slide that's in the deck and because

943
01:06:17,504 --> 01:06:22,544
i have it zoomed in it's hard for me to scroll around so this this is important this is what i

944
01:06:22,544 --> 01:06:29,104
reverse engineered so strategy says on the top of this slide medium they had a low medium and high

945
01:06:29,104 --> 01:06:34,824
And what they said was double the Bitcoin per share in seven years, right?

946
01:06:35,224 --> 01:06:39,224
And I was looking at this and I thought seven years is an odd number.

947
01:06:39,224 --> 01:06:42,204
And then I saw the annual BTC yield is 10%.

948
01:06:42,844 --> 01:06:47,924
And then it hit me because Saylor, I've already talked about this.

949
01:06:48,104 --> 01:06:49,224
He says this all the time.

950
01:06:49,284 --> 01:06:50,244
This is rule of 72.

951
01:06:50,644 --> 01:06:54,424
So they just rounded down from 7.2 years to seven years.

952
01:06:54,784 --> 01:06:57,684
So 7.2 times 10% equals 72.

953
01:06:57,884 --> 01:06:58,904
That's the rule of 72.

954
01:06:59,104 --> 01:07:06,024
that's the double metric. And so they're showing the Bitcoin per share in sats doubles. That's

955
01:07:06,024 --> 01:07:10,584
their numbers. That's not mine. Now, the other tidbit that they put in here is they also say the

956
01:07:10,584 --> 01:07:15,744
MNAB will have the 1.75x. Now, if somebody says to me, you don't know if it's going to, I'm like,

957
01:07:15,824 --> 01:07:21,544
you know, I don't know that. But in an SEC regulated deck, strategy put this out there and

958
01:07:21,544 --> 01:07:28,564
they said 1.75x. Not me. They said it. So I'm like, okay, given this information, let me start

959
01:07:28,564 --> 01:07:35,084
calculating this. So what I did was I did the historicals. How does it work historically?

960
01:07:36,084 --> 01:07:45,724
So starting in September of 2020, they had 38,300 Bitcoin. Let me do, hold on one second.

961
01:07:47,744 --> 01:07:55,664
MSTR share price was $15. That was split adjusted. And the share is outstanding.

962
01:07:55,664 --> 01:08:00,584
they only reported it yearly in the old days.

963
01:08:01,004 --> 01:08:01,724
So I just want to be clear.

964
01:08:01,804 --> 01:08:05,564
The reason why I don't have it quarterly in these over here,

965
01:08:05,664 --> 01:08:08,104
why they're in yellow, is that was at the end of the year,

966
01:08:08,164 --> 01:08:10,244
they then reported the number of shares outstanding.

967
01:08:10,764 --> 01:08:15,084
So the old data is not as good as you'd like it to be.

968
01:08:15,924 --> 01:08:17,964
So there's a little bit of, there's no inference.

969
01:08:18,164 --> 01:08:19,184
So here's the date.

970
01:08:19,284 --> 01:08:23,624
So your Bitcoin per share was 0.00074.

971
01:08:23,624 --> 01:08:29,184
Well, if you get to today, you're at 0.0021.

972
01:08:29,684 --> 01:08:36,484
Now, because I'm super fast in math, I know that 7 times 3 is 21, right?

973
01:08:36,684 --> 01:08:42,244
So basically, your Bitcoin per share tripled over this time frame in five years.

974
01:08:42,324 --> 01:08:43,024
They got to triple.

975
01:08:43,664 --> 01:08:46,584
Like, okay, now they're saying it's only going to double.

976
01:08:46,804 --> 01:08:47,984
This is in five years.

977
01:08:48,024 --> 01:08:49,744
They're saying it's going to double in seven years.

978
01:08:49,744 --> 01:09:12,944
So I looked at that and so here's the, I came up with my own metric, which is this over here on the right. Here's your quarter over quarter growth rate and here's your BTC year over year growth rate, which is about 62%. And this is on a quarterly basis. The numbers are all correct, but mathematically, if you have more data points, the numbers look a little smaller. It's just the way it looks.

979
01:09:12,944 --> 01:09:17,044
And then I did this BTC per share value multiple since 2020.

980
01:09:17,664 --> 01:09:20,144
So this is the part that people don't get.

981
01:09:20,244 --> 01:09:21,004
They say this all the time.

982
01:09:21,064 --> 01:09:22,364
They're diluting the shares.

983
01:09:22,604 --> 01:09:24,044
They're diluting the shareholders.

984
01:09:24,364 --> 01:09:26,844
But the value, it went up.

985
01:09:26,904 --> 01:09:32,184
If you look over here, the BTC per share times the BTC price was equal to about $21.

986
01:09:32,884 --> 01:09:35,424
And it went to 256 bucks.

987
01:09:35,524 --> 01:09:37,764
And that's because there's more Bitcoin per share.

988
01:09:38,044 --> 01:09:39,024
It did a triple.

989
01:09:39,344 --> 01:09:42,824
But when you look at it on a dollar basis, it did a 12X.

990
01:09:42,944 --> 01:09:49,704
so this is my own metric that i made up and put it in there so with that said how did i then

991
01:09:49,704 --> 01:09:55,664
calculate how do i get a price so now we go down here to my projections and i have low

992
01:09:55,664 --> 01:10:05,384
medium and high in the low projection i said that the btc kegger which means your btc held

993
01:10:05,384 --> 01:10:12,864
somebody asked me dude how'd you get a bitcoin price of 672 500 no that's the number of bitcoin

994
01:10:12,864 --> 01:10:16,264
held on December 31st of 2025.

995
01:10:17,104 --> 01:10:19,404
They had 672,500 Bitcoins.

996
01:10:19,824 --> 01:10:22,864
And I'm saying that grows at 20% a year.

997
01:10:23,924 --> 01:10:24,144
Okay?

998
01:10:24,604 --> 01:10:26,884
Now, what I did independently is I said

999
01:10:26,884 --> 01:10:29,984
the shares outstanding grows at 8%.

1000
01:10:29,984 --> 01:10:32,844
The sweet spot is about 12%.

1001
01:10:32,844 --> 01:10:35,004
But if I was to make this over here,

1002
01:10:35,444 --> 01:10:39,324
if I was to make this 10%,

1003
01:10:39,324 --> 01:10:40,844
it recalculates.

1004
01:10:40,844 --> 01:10:45,944
that is equal to, oh my God, remember this slide over here?

1005
01:10:46,044 --> 01:10:49,144
They're saying the annual BTC yield is 10%.

1006
01:10:49,144 --> 01:10:52,784
And so what I wanted to, the reason why I didn't do this

1007
01:10:52,784 --> 01:10:55,384
is just Bitcoin per share at 10%

1008
01:10:55,384 --> 01:10:57,884
was because I want people to realize

1009
01:10:57,884 --> 01:10:59,684
that it's fricking accretive.

1010
01:11:00,044 --> 01:11:02,284
And they're like, well, how is it accretive?

1011
01:11:02,284 --> 01:11:06,784
It can only be accretive if you're getting 20% per year

1012
01:11:06,784 --> 01:11:09,564
in Bitcoin held and your share count

1013
01:11:09,564 --> 01:11:12,384
is only going up by 10%, right?

1014
01:11:12,644 --> 01:11:16,304
So the difference there is that 10% BTC yield.

1015
01:11:16,864 --> 01:11:18,144
And people are like, it's not accretive.

1016
01:11:18,204 --> 01:11:19,504
They're just diluting the shareholders.

1017
01:11:20,124 --> 01:11:22,184
No, because on a percentage basis,

1018
01:11:22,184 --> 01:11:26,424
and this is why if you look at the BTC share calculations

1019
01:11:26,424 --> 01:11:30,344
over this over seven years, it's 0.00216.

1020
01:11:30,784 --> 01:11:31,864
And it goes here.

1021
01:11:31,964 --> 01:11:34,144
It does not make the full double.

1022
01:11:34,824 --> 01:11:35,784
It doesn't.

1023
01:11:35,784 --> 01:11:43,084
And that's the reason why I changed this to 8% is because these are both being calculated independently.

1024
01:11:43,484 --> 01:11:50,244
So when I change it to 8%, right, which is about 12% because they're two independent variables,

1025
01:11:50,884 --> 01:11:56,064
your BTC per share calculation finally doubles.

1026
01:11:56,264 --> 01:11:58,864
And I can change this to 9%.

1027
01:11:58,864 --> 01:12:04,964
So I made this particularly, you can see right there, when the difference is 11%,

1028
01:12:04,964 --> 01:12:11,044
your BTC per share doubles. And that's why I made this with two separate calculators to get to that

1029
01:12:11,044 --> 01:12:16,524
number. And then I basically calculated the share price over here in this column. So I'll take any

1030
01:12:16,524 --> 01:12:22,244
questions from right there. Did I make sense the way I'm doing this? It's really the most rudimentary.

1031
01:12:22,244 --> 01:12:28,024
Now, if somebody says to me, did you take into account the cash, the converts, the prefs,

1032
01:12:28,024 --> 01:12:34,644
the yield payments? No. No, because I'd have to make all these crazy assumptions,

1033
01:12:35,184 --> 01:12:38,224
or I'd have to get everybody to convince that these assumptions would work,

1034
01:12:38,404 --> 01:12:43,204
and I just couldn't do it. Dan, you have much more complex analysis than I have.

1035
01:12:43,824 --> 01:12:49,764
But what I then did, somebody said to me is, you didn't use MNAV. And I'm like, okay, I'll do MNAV.

1036
01:12:49,764 --> 01:12:59,644
here's the mnav calculation and what i did on the mnav calculation um let me zoom over

1037
01:12:59,644 --> 01:13:11,864
so now you can see the mnav here and so here's the price again this is at 20 and 8 percent

1038
01:13:11,864 --> 01:13:19,544
you you double your bitcoin per share in this case the mnav is 0.75 and the share count is 783

1039
01:13:19,544 --> 01:13:23,464
Now, what's also important to note is that I said Bitcoin's only going up 10% a year.

1040
01:13:25,564 --> 01:13:30,804
So in 2032, the price of Bitcoin is only $231,000.

1041
01:13:32,684 --> 01:13:39,384
Because if Bitcoin goes up higher and everything else stays the same, then the price of the stock goes up more.

1042
01:13:39,964 --> 01:13:45,384
And, oh my God, I don't know if you guys remember, there was this slide that strategy said,

1043
01:13:45,384 --> 01:13:49,204
and they said their MNAV guidance was 1.75.

1044
01:13:49,964 --> 01:13:51,264
I didn't say it.

1045
01:13:51,604 --> 01:13:52,384
They said it.

1046
01:13:52,384 --> 01:13:57,304
So what I did was is, well, this is the 1.0 MNAV over here.

1047
01:13:57,504 --> 01:14:01,224
And then if I go scroll all the way down here and I'll go across,

1048
01:14:01,504 --> 01:14:04,004
here's the 1.75 MNAV.

1049
01:14:04,484 --> 01:14:09,124
So the Bitcoin per share, it almost doubles in this calculation.

1050
01:14:09,364 --> 01:14:11,384
I did 36 and 24%.

1051
01:14:11,384 --> 01:14:15,244
The price of Bitcoin is going up 20%.

1052
01:14:15,384 --> 01:14:22,324
And this almost doubled and the share price is $3,068 a share at a 1.75 MNAP.

1053
01:14:22,844 --> 01:14:24,064
And you're like, that's too aggressive.

1054
01:14:24,204 --> 01:14:27,864
I'm like, okay, but I'm saying Bitcoin only gets to $428,000.

1055
01:14:28,124 --> 01:14:32,084
I'm not saying Bitcoin even gets to a million at a 20% growth.

1056
01:14:32,484 --> 01:14:36,684
So you guys tell me which one you want me to change and I'll change the numbers and we'll

1057
01:14:36,684 --> 01:14:37,624
come up with a good number.

1058
01:14:40,444 --> 01:14:45,124
Yeah, that bull case almost kind of looks as far as Bitcoin's category.

1059
01:14:45,384 --> 01:14:47,544
That almost looks like the base case.

1060
01:14:48,564 --> 01:14:50,224
I'd pump that to 30.

1061
01:14:50,224 --> 01:14:53,424
So if a pump, okay, you want to pump this to 30.

1062
01:14:53,544 --> 01:14:53,824
Okay.

1063
01:14:53,924 --> 01:14:54,564
We pump this.

1064
01:14:54,704 --> 01:14:56,284
Now this is linear CAGR.

1065
01:14:56,624 --> 01:14:58,004
I pump it to 30.

1066
01:14:58,384 --> 01:15:02,764
It goes to, Bitcoin goes to 746,000.

1067
01:15:03,124 --> 01:15:05,664
I didn't change the 1.75 multiple.

1068
01:15:06,104 --> 01:15:08,344
The price of the stock goes to 5,300.

1069
01:15:08,504 --> 01:15:09,364
It almost doubles.

1070
01:15:09,984 --> 01:15:12,024
You know, and I could go over here in this scenario.

1071
01:15:12,024 --> 01:15:15,504
We could do them all at 30, do this one at 30%.

1072
01:15:15,504 --> 01:15:21,404
The stock goes to 3,000 at a one, this is at a one MNAV, right?

1073
01:15:21,484 --> 01:15:23,884
On the 30% number, right?

1074
01:15:23,884 --> 01:15:26,724
This is at a, you know, a one MNAV.

1075
01:15:27,084 --> 01:15:28,604
Bitcoin hits 746.

1076
01:15:29,044 --> 01:15:31,264
I think that the 30% is kind of high.

1077
01:15:31,684 --> 01:15:34,424
I would make that, Dan, what do you think is a good number on the CAGR?

1078
01:15:34,544 --> 01:15:36,184
I think 20% is more realistic.

1079
01:15:37,704 --> 01:15:38,444
On BTC?

1080
01:15:38,444 --> 01:15:43,324
Yeah. What do you model BTC CAGR for the next five to seven years?

1081
01:15:44,424 --> 01:15:44,924
I do 30.

1082
01:15:45,604 --> 01:15:52,784
You do 30? Oh, wow. You guys are... Okay. Go back to... Okay. 30%. At a 1MNAB,

1083
01:15:52,864 --> 01:16:00,044
the stock goes to 3,000 bucks a share in 2032. And the BTC share calc is pretty much exactly

1084
01:16:00,044 --> 01:16:03,584
double. And they've got 4 million Bitcoin?

1085
01:16:04,044 --> 01:16:05,424
They got 4 million Bitcoin.

1086
01:16:05,824 --> 01:16:11,004
You see, what happens is in this scenario at the top at a 20%, they only end up with 2 million.

1087
01:16:11,164 --> 01:16:17,224
And if I change this to 30%, they only end up at 2.5 million Bitcoin.

1088
01:16:17,884 --> 01:16:19,924
Bitcoin is at the same 746.

1089
01:16:20,224 --> 01:16:24,064
The MNAV, I will change the MNAV to 1.0 for all the bears.

1090
01:16:24,624 --> 01:16:25,404
And there it is.

1091
01:16:25,484 --> 01:16:27,924
The stock price is $3,300 a share.

1092
01:16:27,924 --> 01:16:36,444
it's the the btc basically is a little bit more than a double right i can make this nine percent

1093
01:16:36,444 --> 01:16:43,984
right here it's a there it's a perfect double it's at 3 100 bucks a share bitcoin's not even a million

1094
01:16:43,984 --> 01:16:49,524
i mean this makes sense right now i don't take again i'm not taking into account the reason why

1095
01:16:49,524 --> 01:16:52,504
i don't want to take the prefs into account because they have two and a quarter billion

1096
01:16:52,504 --> 01:16:58,044
dollars in cash which means they can pay the yield for two and a half years. So I figured

1097
01:16:58,044 --> 01:17:01,124
why model that? Because they already have the cash to pay the yield.

1098
01:17:05,484 --> 01:17:13,324
Yeah. Okay. That's the whole analysis. Oh, the other thing I did, this chart might be

1099
01:17:13,324 --> 01:17:21,044
interesting. Bitcoin CAGR. This chart is interesting. I want to just do real quick and then we zoom.

1100
01:17:22,504 --> 01:17:42,884
This I find interesting. People keep on saying, when does Bitcoin hit a million? And so I did the different CAGR amounts starting at 100,000. And if you look, the biggest drop, the biggest change is from 10% to 20%. But when you go from 20% to 30%, it hacks off a few years, but then diminishing return sets in.

1101
01:17:42,884 --> 01:17:51,844
So I don't think we have 40% CAGR, but the difference between 30, this is like the sweet spot is about 30% CAGR.

1102
01:17:52,044 --> 01:17:54,424
That gets us to a million in about nine years.

1103
01:17:54,804 --> 01:17:57,164
And this is just plain simple math.

1104
01:17:59,704 --> 01:18:02,064
Yeah, I agree with that sort of timeline.

1105
01:18:02,824 --> 01:18:05,844
Yeah, and I'll wrap up with this part.

1106
01:18:05,844 --> 01:18:12,664
The reason why I do multiple columns is to force people to make a constrained decision.

1107
01:18:12,884 --> 01:18:18,604
oh, do you think the CAGR is going to be 20, 30, 40%? They're like, well, I don't know, maybe 30.

1108
01:18:18,684 --> 01:18:23,184
I'm like, okay. Well, now that you see the difference, like 30 is kind of like the sweet

1109
01:18:23,184 --> 01:18:29,584
spot, not too high, not too low. It's probably not going to be 50 and 10% doesn't justify the risk.

1110
01:18:29,824 --> 01:18:37,284
So it's probably going to be somewhere between 20 and 30, right? And that tends to be, well,

1111
01:18:37,284 --> 01:18:41,624
we're going to get to a million in less than 10 years, you know, somewhere about there.

1112
01:18:41,624 --> 01:18:48,364
So that's why I show multiple columns to force people into making a decision, an informed decision.

1113
01:18:48,724 --> 01:18:49,784
That's why I do it this way.

1114
01:18:49,944 --> 01:18:51,744
But anyway, that was my whole thing.

1115
01:18:52,844 --> 01:18:53,724
I like it, Grant.

1116
01:18:54,844 --> 01:18:55,084
Yeah.

1117
01:18:55,264 --> 01:18:55,604
And so.

1118
01:18:57,144 --> 01:18:57,824
I'm wiped.

1119
01:18:59,104 --> 01:19:00,544
I'm probably going to sign off.

1120
01:19:00,604 --> 01:19:01,604
Should we do final thoughts here?

1121
01:19:02,084 --> 01:19:02,724
Final thoughts.

1122
01:19:02,924 --> 01:19:03,344
Go ahead.

1123
01:19:05,264 --> 01:19:06,904
I think we need to weather the storm.

1124
01:19:06,904 --> 01:19:13,484
I think there's a lot of irrationality at market lows, and there was a lot of irrationality at market highs, myself included.

1125
01:19:15,824 --> 01:19:20,524
Keep the middle path. Stay along the middle road. Don't get too crazy in the direction.

1126
01:19:21,784 --> 01:19:22,144
Salai?

1127
01:19:22,684 --> 01:19:29,364
Yeah, for me. I mean, if Bitcoin's going up forever, Laura, then every day is the best time to buy.

1128
01:19:29,884 --> 01:19:32,844
And if not today, then tomorrow's the best time to buy.

1129
01:19:32,844 --> 01:19:40,764
Yeah. And I will reveal a conversation before we went live. Look, if the price of Bitcoin and

1130
01:19:40,764 --> 01:19:47,644
strategy is way higher, then we'll be drinking to celebrate in Las Vegas. If the price is lower,

1131
01:19:48,104 --> 01:19:54,644
then like I said, we'll just hang out and have a good time with friends and commiserate. But

1132
01:19:54,644 --> 01:19:59,504
I think the numbers, it's NGU, the numbers going up. So thank you everybody for joining.

1133
01:20:00,704 --> 01:20:01,004
Amazing.

1134
01:20:01,004 --> 01:20:02,484
Yep. Thanks, everybody. Thanks, guys.

1135
01:20:02,844 --> 01:20:02,964
Bye.