We'll be right back.
um
welcome back true north episode 51 we are back and we've got the crew here we've got a whole squad
Let me turn off my screen.
All right.
How's everybody?
Good?
What's up?
True North.
Welcome back.
True North, the investment grade Bitcoin podcast.
Your place for everything finance, everything Bitcoin, every Wednesday night.
Your signal within the noise.
We touch on Bitcoin treasuries, macro analysis, securitization and tokenization of Bitcoin
products and general humanity trends.
We've got a awesome agenda for you tonight.
We're going to get through a ton of great information.
The agenda today is we're going to talk about MSTR and STRC, that entire balance sheet, how
it's changed over time, volume and capital raising status, how that's going and what
we think is happening this week, because I think it's one of the most exciting weeks
in the history of these securities.
We will get into STRC versus real estate.
I think a lot of people are making some buzz about that.
It's a great topic at the moment.
projected MSTR Bitcoin holdings over time, thinking about what does this look like? If we see this
trend into the future, what does the next two, three, four, five, six, seven, eight years look
like? And how do we start to think about it? We'll talk about the What Bitcoin Did interview
chatter. I mean, the name of this episode is Bitcoin Did This. So here we are. And then if
there's any time left over, we will talk about recent acquisitions in the market. We've been
incredibly busy. If I look a little tired and frazzled, it's not only because I've been coding
up until the middle of the night, but also because we had a huge acquisition that went through here
just recently this week. So a lot of things going on. We may hit on the Fed. We'll talk about credit
cards, real estate, Fannie and Freddie Mac, liquidity, chaos, war, everything that goes around
and hits on all of these different assets. So very unique place, very unique time.
And without further ado, I'm going to pass it over to Tim for a very important announcement.
Ladies and gentlemen, what you're about to hear may be amazing, but it is not financial advice.
It's for informational and educational purposes only.
All right, we're back. Okay. So yeah, this is going to be exciting. We've got a lot to cover
here and we've got a short amount of time but Ben is back it's been a while since you've been on
great to have you here and yeah how are you feeling what's what are people's thoughts what's
top of mind I know STRC is big huge volumes today where do we want to start what are people thinking
about you believe it's only been 14 days so far this year feels like a heck of a lot has happened
in the first 14 days of the year.
This has been crazy.
Yeah, even less trading days.
Dan told me not to sell covered calls
after the 6th of January.
So anyone who's on the inside is winning right now.
I'm glad to hear you listen, Dan.
I got smoked.
I was counter trading you, Ben.
Oh, were you?
Oh, all right.
Don't counter trade.
I guess I'm up 1-0, though.
Do not ever counter trade.
There's a few times in my past where it would have worked out great.
So, you know, we all take our knocks here once in a while.
Yeah.
So, you know, I'm going to jump right into it.
I think strategy had an absolutely enormous day.
And I think this is the perfect topic to start with.
And let's start with the common equity, because I think this is something that's kind of flown under the radar because STRC has been the biggest topic, at least on X today.
So MSTR traded $7.1 billion worth of equity today.
It was the ninth largest publicly traded equity in the entire market.
And it jumped up seven companies within the US publicly traded rankings.
So some big movement on that front.
But the magnitude here is crazy.
I think the, so over the last, you know, several months, strategy has kind of been top 20.
And it's kind of been bouncing around between 15th and 25th largest publicly traded equity,
which is, it's a really interesting statistic.
And we continue to bring this up because you got to ask why, like, why has this stock been
so liquid?
And, you know, what is going on here?
I know we hit on this a bit last week, but there's, because there's a significant amount
of Bitcoin on the balance sheet and you can calculate or have some understanding of a
valuation in real time connected to the value of the Bitcoin held on balance sheet, it makes
it a really interesting stock for a lot of people to trade.
There's significant numbers of pair trades that can happen in many different directions,
but it's also incredibly liquid.
And so people can go in and out of it, but relatively easily.
And the options market is incredibly deep.
So when you see a change in volume day like today, going from top 20th publicly traded equity down to 9th, top 9 publicly traded equity, I would suspect that strategy was probably on the ATM on the common stock today, and there was probably a pretty massive day.
generally when we when we've seen the really large days of volume in the past strategy has
has raised their most capital i think there was a period of time in november of 2024 when the stock
was moving incredibly quickly and it was the top one two or three publicly traded company
on the planet and that was when they raised you know two billion dollars in a day and they were
raising billion dollars a day because of how much volume was coming into the equity so i think
really important to keep an eye on not just the what's happening with the prefs and the volume
there but just the common stock i mean obviously the common stock from a price perspective has got
absolutely hammered but there's still signal within within the noise if you kind of peel back the onion
and do you mind if i jump in there jeff because the most interesting and i was in the office today
i couldn't help but tweet about it because you're seeing sailor raise all his money at book value
right which theoretically isn't accretive to the shareholder theoretically if you raise bitcoin at
exactly one m nav or you raise equity common equity at exactly one m nav and then turn around
and buy bitcoin it's probably slightly unaccretive because you have to pay fees to the brokers right
the people actually issuing the deal okay but is that um but if you expand the collateral base
you essentially can issue more preps so that was the thing we were talking about last kind of
spring last summer it's like okay so if the m nav collapses or goes down to one and strategy can't
issue equity was what we were assuming then there's an upper bound on the amount of digital credit or
or preferred equity that strategy could issue they can't really go beyond like a 40 or 50
leverage ratio as it stands right now what we're seeing now is the expansion of both the common
equity, the common equity and the preferred equity at the same time, keeping pace with each other,
right? They're both going like this. So the common equity, the collateral base is expanding
exponentially while the preferred equity is expanding exponentially. And what this is creating
is a bid on Bitcoin. And so long as stretch stays at 100 and there's liquidity and volume in the
common equity, this flywheel can continue. So I've never been more bullish on, I think this is what
traders are seeing in Bitcoin, quite frankly, because they're marching along lockstep. And
then what can Saylor do to keep this wheel going? What if next month he jacks the stretch interest
rate up to 11, right? Or sorry, it's at 11, jacks it up to 11.25. Like it's going to be at 100 every
day, right? And so then he can continue doing this. Like, so I don't know. I think there's
really crazy scenarios where we get a massive bid on Bitcoin, billions, billions, billions of dollars.
you you issue you issue stretch and that instantly makes your common stock more exciting because you
put on amplification but what do you do when you get those stretch proceeds you instantly go and
buy bitcoin so when you instantly go and buy bitcoin that actually improves the collateral
base so the common again looks more attractive because you got to push the common higher in order
to maintain parity of what your you know theoretical valuation is for the company
which gives you more potential liquidity and ability to raise in the common which gives you
more capacity to raise uh on the on the preferred stretch which pushes bitcoin higher and you've got
this reflexive flywheel uh loop which we'll get into a bit later but i built a whole model like
thinking through this because it is like as one pushes higher it makes the other more valuable
which pushes pushes the other higher which makes the other more valuable which you know it's like
just a whole circle and i'd argue i'd argue book value common atm in so far as it actually puts a
bid or a floor on bitcoin is in fact creative to the common atm shareholders so yeah i wanted to
chime in on this so look james van stratt and i'll call him out and he did a great thing you know one
of the things that we hear is there's no buyer of last resort for bitcoin and he proposed this theory
online and and and i agree with him and i reposted him i think that strategy is the buyer of last
resort for bitcoin he buys it all the time and if he's buying a billion dollars a week here's your
buyer he he buys it at the top he buys it when it's low people are critical when he buys it at
the top and then he buys it at the bottom it's like well he should just only buy at the bottom i mean
he he's yeah if you buy a billion dollars in a week you know and i by the way i calculated my
number for the year of what i think he'll acquire that's where we are so i think stretch by itself
is is doing incredibly well and i think that's where we are today i mean we you guys what do
you think about that as an idea well this is what everyone used to look for right this was the
constant criticism in the past it was he can only buy it when bitcoin's flying right he's only going
to buy the top forever he's never going to be able to buy anything else and then he added a couple of
of additional weapons out there.
And it completely changed the way
that I look at this sector, right?
I look at it from two perspectives now.
One, when I look at the common, I look at the volumes.
There is such a massive discrepancy
across the treasury sector in terms of volumes trading.
And I don't think people really understand
how important trading volume is
to being able to raise capital, right?
Like you can have a good premium.
If I've got a 1.6 or a 1.7 times NAV premium, but I only trade one, two, $3 million a day,
I can't actually raise that much capital.
I can't move that fast.
There's a big difference between the stocks that are incredibly liquid and the ones that
are illiquid in terms of the velocity that they'll achieve.
The second thing is having a non-equity correlated product in your arsenal.
You need something that derives its value from something else, not Bitcoin.
The value that comes in these preferreds is in the yields.
These are yield products.
People want the cash flow.
That's what these are getting valued on.
And we're starting to see now that rotation that happens when a new product comes to market.
So if you think about the prefs when they get launched, what happens at inception?
Right away, it's going into all these institutions.
It's going into all these large buyers who are looking to purchase it because it's at a discount.
And something like a stretch is incredibly appealing because what the company is telling you is you're going to be able to get this at a discount.
We're going to work on your behalf to drive it up to par.
So you're picking it up at a 10, 15, 20% discount, whatever it's offered.
You're going to float it until you take that gain.
You'll get that capital back.
You'll move on to the next transaction.
But the next layer of buyers are buying it because they want the tax advantage and the
dividends, right?
These are fixed income purchasers.
So as you rotate shares out of those initial hands and you get them into the hands of the
people that are looking for the yield that want those dividends, particularly if they're
sophisticated and they understand the tax advantages here. Now you've got a new holder
base and that holder base doesn't have the same capital appreciation component of this that they're
concerned with where they're looking for it to go up. You know, if you bought it at 99.50 and it goes
to 100, are you going to sell it to capture the 50 cents? Probably not, right? You want that
constant dividend that's coming in. So now what happens is you've got all these people that don't
have an incentive to sell this thing anymore. They want the dividend, they want the tax advantage,
They want the cash flow that comes with that product.
So what happens?
Sellers leave the market.
You've now rotated those.
You don't have the same incentive you have with like a normal equity to go and sell when
the price moves up because the price isn't going to move up.
So what happens?
You have to create that supply.
So once all that supply dries up, the price can only go up, right?
The price needs to move up until it finds the seller.
The seller for strategies case is strategy.
You get above 100, they will sell you the shares. You can get supply above 100 and everybody knows that now. And so that's a very different type of product. So one product is going to allow them to buy not just the top forever, not just the bottom forever. It's just going to let them buy forever. And they're going to continue to accumulate and it's going to scale and it's going to become more liquid. And that's going to create this massive, massive bid on Bitcoin.
And then you couple that with what he's doing in the common equity.
And I'm not surprised at all that they're willing to sell common equity, you know, at
one times NAV or even maybe a little below that, because they've got a massive belief
in the expansion of the digital credit market.
And what they want is as much capacity to issue that as possible.
What they don't want is the massive bid to come on to stretch and they push it up above
100 and they don't have the balance sheet capacity to be able to absorb that.
They have to be able to absorb that.
And so that's incredibly important.
So if they sold a little below nav, you've got to look at the entirety of that transaction
for whether it's going to be accretive or not.
And in the end, it will be.
It'll be very accretive.
So the model has changed.
I mean, this is a massive, massive shift.
And I didn't really understand it until I was in it and just spending all day staring
at this stuff now but it's fundamentally changed the way i look at investing in the space because
it's pretty rare to be able to create that and allow yourself the ability to operate no matter
what market cycle you're in that's unique to just a couple players at this point
yeah i wanted to chime in yeah i wanted to chime in on a couple something that that ben said and
something dan said so dan you were saying what happens if stretch gets cranked up and i was like
I thought if it traded above $100 in the last week of the month, that they would do a rate decrease.
But I now just rechecked the slide, and I was incorrect.
It's above $101.
So if the stock, let's say it's trading at $100.50, they could pump this up to $11.25, to $11.50.
And that's when bewilderment, oh my God, he keeps on raising the annual rate.
But he wrote that in the slide that he would do that to continue to drive to drive stress.
Sorry, stretch.
So this can go on for the next four or five months.
And then if it goes up to 12 percent, right, then he would ratchet it back down.
If it stays above one on one, then he would bring he'd bring it back down again.
So I had to check your number.
And Dan Hillary is correct.
I want to talk about what Ben said real quickly.
Ben, what Ben said was a symmetry test.
And what a symmetry test is, hey, Saylor can only raise money through the common stock ATM if it's accretive, if it trades at a positive MNav, right?
Or if it's at 1.5 or 2.0 or 3.0.
So he's saying people like he can only raise money when it's at a positive MNav.
What he has now shown here, whether the MNav is at, let's just say it's at 1.0.
That's Ceteris Paribus, all things being equal.
he's raising a billion dollars at one MNAV so that's the symmetry test it
passes both sides of it and you're like well that that's got to be true because
we've now seen this so that's where we are today do I think that the price of
Bitcoin going up helps yeah but what I'm seeing as an investor it's like you know
what MSDR is not going up it's going down I have other money in other places
is if I want to put that in some park it for three months,
I like the prefs.
Why? I like what strategy is doing
and it pays the best yield return.
And then when the price of Bitcoin goes back up,
I use the word that Ben said,
I rotate that back into MSTR,
some other stock that I think will beat the pref return.
So Ben, does that make sense?
What I just said?
It does.
But the other mindset shift
that I think a lot of people are lagging on at the moment
is they're looking at the model
when there weren't multiple tools.
Right. So the saying used to be true, right? You wouldn't want to use the common ATM at or below one times nav, because if your only tool is common, then you are truly just resulting in a dilutive transaction.
If you have nothing on the other side, that's the more high octane rocket fuel version of creating yield.
but because they have that it changes the way you have to think about that you can allow for
some more flexibility in that execution as long as what you believe over time is that they'll
offset anything they're issuing in the common with what they're going to issue on the digital
credit side of the house and that's clearly the path that they're going down here now they've got
you know tools in place you mentioned the 101 that's an important tool but what they're really
looking for in the product, I think, is equilibrium. I think they probably want to get to the spot
where you find the balance, where they can absorb, call it 40, 50% of the daily volume,
a little bit above 100. But what they have to do as soon as they get into the territory where
they've got the right amplification on, where they're comfortable at that amplification is now
for every dollar they issue in digital credit, they got to be over there issuing three in common.
to keep balance right so you have to keep balance in your amplification ratio out there
and right now the moving of the rates is seek it's searching for that equilibrium point where
you find that constant sustainable bid in the market that you can just consistently absorb
and they've got room right now right it can run hot at the moment because they've still got the
ability to put on more amplification and there a significant amount of capital that would still need to come in for them to get to a 35 or a 40 amplification ratio So they can absorb a lot today But when they get to that point then I think they step back and they wait to see if they reached equilibrium in that product where they can continue to absorb that demand and offset it with the issuance in the common
And it's a little more complex for them because it's not just managing stretch versus common.
And it's managing stretch and strife and stride and strike and all of the demand that comes out of the digital credit products relative to what they're issuing in the common, right?
So you're always most likely going to see more common issuance than anything.
But if they get moving here and if they keep on pushing the common equity issuance, you might find them getting under amplified.
where you might see some weeks where while they've got this type of a bid coming into digital credit,
they don't lay on the common equity and they just let the digital credit products ride
to try to put that amplification on or at least close the gap again.
So it's going to be fascinating to watch because we're just seeing the emergence that's happening
in the demand for digital credit, right?
This is what everyone was looking for, where you have these consistent days strung together
where you're seeing demand in a product like Stretch that's keeping it pegged up there around
100. And obviously you get some of that when you come around the record dates and the ex-div dates
and the market starts to heat up there. We were starting to see the demand before that. So now
the test will be, you know, after you get past that, you know, ex-div date, what type of reaction
does that product have? I agree. And I think you're going to keep getting shallower and shallower
sell-offs on the other side of that where it might only take a couple days for it to rebound and then
the bid comes back so it's it's going to be a really exciting year i think to watch this stuff
evolve because now we're seeing the bid come in that means there are real dollars at the door here
that are going to start to scale this thing and you're seeing it in the bitcoin price and the bid
that's being put on bitcoin it's almost terrifying how much bitcoin they buy a week right like look
look at what we had to do.
We've been in the public markets for four months
and we've been burning in at both ends.
We did the pipe raise, we issued Seda,
we did the acquisition with Semler
and we just got to 12,798 Bitcoin
and Saylor bought that last week.
Like that is, we're so numb to the amount
that their purchases are like for how hard,
we've been working to get close
to what they just acquired in that week.
It's the scale is incredible.
And I don't even think we appreciate it yet.
Yeah.
Go ahead, Dan.
Yeah.
I was just going to say, I think you said something interesting there,
talking about where the leverage ratio, the amplification ratio will land.
And that's ultimately the question.
Obviously, right now they're expanding the balance sheet with common equity
issuance.
But if we see a week where there's no common equity issuance, which I don't,
I think this week they'll issue common equity.
You know, where is this leverage, this amplification ratio going to go?
And I think now with the USD Cash Reserve in particular, they can take this amplification ratio extremely high.
And in that case, the price targets, the price, the value of MSTR relative to Bitcoin, if Bitcoin continues to compound at an aggressive rate, are quite astronomical over a 10, 20 year time horizon.
And so that's what I'm really excited about is how high can they pull this amplification ratio and take their sort of issuance of credit more similar to that of a bank or an insurance company lender or something of the sort.
Well, let's take a moment to Ben's point and think about how crazy this is.
Strategy is a B-minus issuer credit rating.
They have unrated perpetual preferred securities.
stretch alone has 545 million dollars volume in three days this week
an unrated perpetual preferred equity that's six months old has 545 million dollars of volume in
three days like go look at any other bond in the market go look at the 40th tranche of ford 2069
six percent interest rate bonds like they're not trading 545 million dollars of volume in three
days like this is incredible this product is literally in these terms at the pace they just
raised last week they will acquire the same amount of bitcoin as the next closest public company in
one month totally one crazy yeah this is digital credit they're plugging digital credit into
the traditional financial markets and you're seeing how it interacts you could say they're
using a SATA cable, Ben.
But yeah, I mean, these are crazy numbers
and you got to think that the overhang
from the IPO is probably gone.
They've raised the interest rates now a couple of times
and they've got balance sheet
to crank the amplification higher,
but they're also have got significant demand
on the common stock.
Like if you're a top nine publicly traded company
you're ranked 195th you monetize that you give yourself more balance sheet to go issue the best
product that's trading 545 million dollars in three days as an unrated instrument that's six
months old like that's what you do yeah it's incredible jeff i want to comment on a word you
said there because i don't know if people caught this you said the overhang from the ipo is probably
over and what that means is this is what i think it means you could tell me if it means what you
mean is that um sailor decided to strc as an ipo he goes to the the book runners the investment
banks that this is the new product does his road show and it's it's got a peg it's got a variable
rate what's your appetite for it comes back and he realizes it can do this amount so um they make
a commitment to buy a certain amount of it he gets the cash he goes and buys the bitcoin what they
don't do and this is where the overhang work word comes out is that once they announce this and they
go live on some day they don't then dump all of the shares in one day in a market order because
they they can't do it it'll drop the price down so the overhang is the amount of time from the ipo
date to when they can slowly release those shares into the market and so given you have enough
volume now to absorb all the net new shares that were done i'm not saying the market makers or the
the book runners or the investment bankers don't retain some of those shares for themselves
because they might like the message right but they're probably done opportunistically selling
or whatever they could sell and you can call it an unlock but they that is that your idea of the
word overhang being done yeah yeah and also like you gotta wonder i mean the people that are buying
this how many actually bought it because it was priced at a discount and how many are continuing
to hold it because they're like holy they're paying the interest rate you know that's two
You're paying 11, you know? Like, oh my God. It's coming in. It's real.
I'm getting yield on Bitcoin exposure.
I'll buy it at 90 and then sell it at 100.
Yeah. Yeah. That's crazy.
Also, I've been reading Taleb's... Can you guys hear me better? Is this mic all good?
That's much better.
Okay. I've been reading Taleb's Black Swan again.
And what's really interesting is just kind of historic bias.
And I think a lot of this, and I've definitely been seeing it in what I've been doing at Buck, but like, oh, there's so much fatigue and so much PTSD from the Terra Luna Celsius block by yield, all this stuff.
Right. And so I think there's a large cohort who really believe this is the next thing to blow.
But obviously, this is a public this is a public company audited by big accounting firms.
the management team is liable for the actions taken at the corporation.
So there's just a lot of things different here than in the past,
but I think people still can't get over that.
And then furthermore, to really understand how the preferreds work
and what the investment protection is written into them,
going to the website is one thing, and there's nice, helpful numbers
for Bitcoin credit, Bitcoin, you know, days to cover,
or not days to cover, excuse me, years of dividend payments, et cetera.
But until you actually look into the prospectus and understand how the product protects the investors, right, what terms are written in there, such as if the yield doesn't get paid, what do investors have, what protections do they have to rectify that?
It's hard to get comfortable with these products.
So I think over time, there's only two ways you get comfortable with them.
Either you're like us, you read the prospectus, you got comfortable with them.
Or you see that they've been getting paid for like three years, and then you're comfortable with them.
So I think we're getting to that point slowly but surely.
Yeah, track record is huge, right?
And for a lot of the large institutions,
Matt's talked about this quite a bit,
where a lot of them will require a three-year track record
before they'll be able to allocate.
So there's still huge amounts of capital that have years
before they're going to be able to allocate to these.
The other thing I think I've learned along the way is
we assume everybody takes a sophisticated view around all these products.
And I don't think that's the case. I think these products start showing up on stock screeners,
where you've got a lot of people that'll just go and sort dividends high to low,
and they'll do like a cursory glance. Like it's very rare for investors, even
pretty seasoned investors to go into all these prospectuses and everything all the time. It's
It's just not as common as we think it is.
But we've just analyzed it, which is why it's so confusing to us
that people aren't just crawling all over each other
trying to get these products because they're
such good products.
They've got the right protections.
They've got the right mechanisms in place
to make them successful.
They've got the collateral backing for decades today.
No requirement that the business continues
to be able to go operate and scale
and do better manufacturing and have their sales team
be out there being more effective
and raise their bottom line by 10%,
like the assets are there now, right?
They've got them.
And now they've got several years in cash to pay the,
like these are such secure products
that we have a hard time seeing
why people wouldn't be rushing into these.
I just think we're at the phase
where it's still at the point where nobody's heard of them.
We live in this echo chamber where this is all we talk about all the time.
We think the whole world's talking about these things because it feels like that in our little
worlds, but nobody's heard of them yet.
Even people that you would expect to understand because of how transformative and how much
capital has been going into these and how successful the IPOs have been, you'd expect
them to catch headlines quicker.
But I think they're easy to dismiss in the early days when people just go, ah, it's a
Bitcoin thing. And if they haven't already had their head around Bitcoin, it doesn't move them
down that path yet. But that's not going to last for long, right? Bitcoin's becoming too ingrained
at this point for most people to ignore it. That's why we do this show, by the way. That's why we do
this show, by the way. That's why we talk about it every week. But go ahead, Adrian, get in there,
hop in there. Yeah, no, these products, these products are still very, very niche. I had to
have a whole conversation with my financial advisor last week about him, because he had no idea
about any of them. And I had to sit down with him. I actually sent him to the strategy website.
I sent him to a few different clips that we have and I had to walk him through it. He still didn't
get it, but he's slowly coming around to the idea. But I think Ben's right. These products are still
very niche. They're still very, well, perhaps niche isn't, niche is the right word, but I don't
want to give the impression that they are fringe products, right? When it comes to Bitcoin, when
comes to digital credit when it comes to the whole notion of preferred offerings preferred offerings
by themselves aren't a huge market so now you have something that's not a huge market in something
that's very niche and big still very very niche and so very very new in bitcoin even though it's
17 years in so it's very very hard for people to bridge that chasm because they have to take two
steps instead of one and i think that that's a lot of the um another challenge but there's a lot of
the the the road that we still have to go on for these products to get um more notoriety but to
But to your point about volume, Jeff, I think based on what I've been doing in my analysis,
I've been running a biweekly.
What the market's doing from what I can tell in the data is that they're pricing in a move
in Bitcoin and they're using strategies of proxy for that.
So the options impact and the impact of Bitcoin on the price has been kind of running in tandem
now for about a month.
And if my guess is that the swell and volume in MSDR is because people are pricing in a
move in Bitcoin and they're using the options market, they're using MSDR to express that
the market that's the best kind of guess that i have as to why the volume has been spiking so much
in recent weeks so i think that we are in for some interesting times i think on top of it it's got to
be a little bit of stretch as well right i mean you've got people that have shorted stock for a
very long time and they've been very adamant about you know being against mstr they've shorted the
stock i have no idea under haven't understood what's going on and then all of a sudden you're
like okay um you know still selling common stock like if you have jim chanus's view like you're
selling you're like i'm making the same trade as sailor i'm selling the shares and buying bitcoin
it's like well guess what jim you don't have a preferred equity and you have this defensive
mechanism where you can issue non-dilutive equity pay the dividend and it increases the balance sheet
of your common stock and the technical valuation of the common stock and anybody that was shorting
the equity when the dividends get paid they have to pay the dividends or i think i think when they're
if they if they were to short strc for example or any of the other preferreds they would have
they would short those equities and then they have to pay the dividends when the dividends get paid
so they've got this like two pieces that are working against them they've got the balance
sheet is floating higher because they're issuing the perpetual preferred equity and it's it's making
the valuation framework much higher for the entire combined entity you got like a couple
of moving pieces here yeah i've stopped spending a lot of time deciding to argue you know with guys
like channels because what i realized over time is we are fully misaligned on the time frames of
how we approach this right like there's going to be traders in and out of this thing all the time
that are going to have successful long successful short successful everything and they're going to
do it on time frames one month time frame six months time frames and the reason why i hear all
the negative things coming from them and i used to react so viscerally to it is because i'm looking
at five years and ten years and going you're out of your mind like you're going to get blown out of
the water but in your mind you're conditioning yourself to say well he's holding this position
as long as i think i'm holding a position and it's just not the case right everyone's talking
their own wallet all the time. If you've got a short position on, you want everyone on earth to
be scared of this thing. You want them to think Bitcoin's a scam, sailors a snake oil salesman,
these companies are Ponzi schemes, they're all going to implode. That's what you want people
to believe because that's the way you're aligned. And then if you flip the other way, well,
Bitcoin's doing well, maybe it's got some legs and it flips. And so to me, the most value that
think groups you know like ours can bring is you continue to hammer on the five-year the 10-year
the 20-year outlook on these things most people when you hear about them making an investment
making huge amounts of money it's decades that they're sitting on it right they place a concentrated
bet early before anyone understands anything and they just sit on it because they have conviction
in the direction that it's going and when you look at an investment like this like the reason
why I've calmed down from having to go and argue on the internet with all these guys taking short
positions is because now that, you know, we've spent so much time looking at the impact of the
compounding that happens here, right? Like everyone's looking in one month and two month
timeframes in terms of whether the yield's impactful or not. You're missing the biggest
impact, which comes year five, six, seven, eight, right? The compounding doesn't even really start
until later, right? The massive impact of it. And so for me, I get to the position where I go,
if I believe in Bitcoin as an asset, and I think it's as transformative to both the financial
markets, maybe as a money one day, but just a transformational asset, I'm building a leveraged
exposure portfolio to that where I put myself in a position of no liquidation risk, and I'm going to
sit on my freaking hands and i'm gonna let it compound right let it do the work and i get very
comfortable that way because you've seen it and it's you're investing in something you believe and
you can stop staring at the day-to-day movements in the charts we overanalyze everything and i've
started seeing it more because obviously i'm in a company now and so i see the chatter that goes on
about our own company and what I realized is people are speculating and it's almost always
wrong. Almost always. I've seen very few things that's been correct out there. And there's
a lot of narratives that come up and these companies admittedly are confusing to the
market because we took all the ways that companies used to operate and we threw it out the window.
So things that people were traditionally scared of, like a preferred equity was like an issuance
of last resort back in the day.
It's like a bad thing.
You saw it coming out of all these companies
that were going defunct.
The latest one is going to be these things
like reverse splits, right?
Like what used to happen?
Well, it used to be that a company, you know,
was starting to fail and the stock price was going down
and they'd continuously reverse split.
Well, we've got this brand new sector
of all these new companies that came into the public markets
with a reverse merger.
And what a lot of people don't understand
is that your capital structure is inherited
from the company you reverse merge into.
So if you end up with a ton of shares out there,
that's a function of the company you merged into.
It's a byproduct of that transaction.
So you might be trading at a low dollar value,
but that's a function of that merger activity
because you have to take on the capital structure
of the company that was public.
So-
Quite literally just paperwork, just paperwork.
Just paperwork.
But so now you get all this fear that happens
because people used to hear the word reverse split
and think, well, that's a company that's on its last leg.
And, you know, that's obviously happening with us right now that I'm just sitting here going, we've got after this, more than a billion dollars on the balance sheet.
We've been in the public markets for four months.
Like this is a cleanup activity that opens the doors.
Because what you learn when you talk to all these institutions is by policy, they have limits that stop them from being able to invest in equities.
And some of them will have cutoffs that are $2, $3, $4, $5, right?
The limits are all different.
but you want to make sure that you open the doors.
I don't want artificial gates in front of my equity
that stop people who want exposure from getting it.
And so if there's a administrative activity
you can undertake to clear that barrier, you do that.
But it's new, right?
Every other company that you've heard of
that does these types of things,
it used to be these old legacy companies that were failing.
And this is a totally different thing.
And so we're going to have years of all this rewiring, the way we think about corporate governance, about traditional finance, about financial markets, capital markets.
Like there's a whole rewiring that's happening.
And the people that watch this and this group that's been in it forever, like we're leagues ahead of where most of the investing public is today.
they'd come in they'd hear these terms and they'd run away because they're hardwired to think this
whole sector has got to be a disaster because they're issuing preferred equities and doing
reverse splits and you know like all these things like it's got to just blow their minds so it's a
it's a weird area we're operating in and i think that it's still going to take quite a bit of time
for a lot of investors to get comfortable with what happening here because it uncomfortable in the beginning to have to challenge everything you hardwired into yourself about investing yeah it reminds me of that uh that podcast that sailor like you know shaking his friends that
are uh you know trading facebook between 14 50 and 15 dollars like facebook ipoed at 38 it went down
to 15. It's currently today trading at $615. It's up 15x in 10 years. It's like, you know,
what are you doing? Like, this is a monopoly. Stop trading this thing. Like, just sit on your
hands. Like you, if you just look at what's happening, like you don't have to do anything,
but there, you know, everybody gets, you know, gets all up in their head about, you know,
short term narratives or whatever, whatever is happening in the news.
it's great well you have to learn it too there's cycles right we all went through them
like that's why i say in 2025 the only thing that had a cycle was the treasury sector
like that had a full bitcoin cycle in there right the treasury bitcoin didn't have its cycle but
the treasury sector did and in the early days you gotta go through that to really reset and figure
out okay now that we've gone through the excitement phase of all of this right in the mania phase of
all of this and we've seen all the different companies come into the public markets and how
they're approaching it now you get that opportunity to reassess and figure out when i sit back now and
i look at everything that's out there in all the different models that are being deployed
which one do i think is going to give me the best amplification and the best long-term
compounding effect and then that's where i'm going to allocate my money right and every individual
investor gets to pick that. You heard Saylor say it on the podcast that he did with Danny,
where he said there's a thousand different flavors of what these are going to look like,
even just in the digital credit space. There's hundreds of different ways you could structure
these digital credit products. And so you're going to see all these different approaches to it.
And that's going to open up avenues for each individual investor to pick their flavor of
amplification that they like if they're trying to get amplified exposure to Bitcoin.
Yep. Mike, you were going to jump in there.
Yeah, I was going to call out to what, um, to what Ben was talking about. And Adam Livingston,
he put, he did a screenshot of all the comments on Reddit and, you know, and look, and you got
people writing stretch can't make it because it's, it's 11% a month or 10% per month. If somebody
doesn't have the reading comprehension to know it's an annual percentage rate that's paid out
monthly, we have the choice and what Ben was saying here is I just don't engage with that person.
It's not even worth it for me to say I can't do a FUD busting with somebody that doesn't have
basic reading comprehension. And so from that perspective, I just don't have the conversation
with that and i was on a space earlier today and this guy gets on and he he's he was saying all
these things about strategy he did not know who i was and i said and they were going to cut him off
and i said no no i think i could take this one guys and i went through and i said tell me everything
you want to say and he went through all the tired tropes doesn't like strategies business model
doesn't like them so i go through each one and there's 500 people on the phone call
and I dismantle them all by one, one by one.
And the guy's like, oh, that's correct.
I agree with all your math that you said, grain.
My name is Mike.
I go, great.
You agree with all my math and everything I just told you.
Did you change your mind about strategy?
No, I just don't like it at all.
And I want to tell you the reason why.
He goes, Saylor can't guarantee that the price of Bitcoin
is going to go up at any rate at all.
It can go down.
And I said, well, that happened. I said, by the way, can you guarantee that any other company can
make a guarantee that their stock is going to go up or the, and he goes, no. And then I said,
then what happened in March of 2020? And he goes, oh, why'd you bring that up? Because this guy
sounded very sharp. He was an older guy. I said, what happened with oil? And he goes,
oh, I go, as we all know, it went from $50 a barrel, it dropped down and it went negative,
a negative number and he goes well i wait it's nine dollars and i bought in and then it traded
negative on the futures market and i said don't i go but prior to that happening did you ever think
that oil can trade at a negative number could you guarantee that he's like i never thought of that
and i was like why are you then again the symmetry test why are you requiring sailor to guarantee
that the price of bitcoin is going to always go up and we're showing here that he can acquire bitcoin
at one M nav, but yet you don't say to require all the other companies to guarantee the future
gains. And I was like, dude, yeah. Yeah. We talked about the Danny Knowles interview.
Yeah. Hold on. But before we go there, but before we go there, I've got to jump into,
um, I got to jump to my screen. I'm gonna share my screen here. And first of all, I want to shout
out to the builders out there because there was a new dashboard that was built just, I think in the
last day, strc.live. And it's looking at the price of strc, the Bitcoin price. And you can look at,
you can estimate different ATM thresholds and you can see how the volume is traded every five
minutes. And then there's an estimate of how much has been traded over the week. So you can start to
calculate how much you think, how much capital you think strategy may have raised
on an individual week based on the volume metrics that are happening on this particular equity.
and and this is great i mean everybody should be building like this is awesome if this came to your
mind like cool like build on this and please people give him feedback and him or her whoever
built this give them feedback and like these things are helpful when you're going to try to
explain these to the market and the the really cool thing here is you could build uh you could
build instruments and dashboards incredibly quickly now um and maybe we'll get to mine here
in a second, but also shout out to Bitcoin Quant. I think Rohan's working on this as well.
STRC weekly breakdown, seeing total traded volume on each one of the individual days,
percentage of the Bitcoin mine supply, and continuing to work on that stuff. So big shout
out there. And everybody should be building because you can build easier than ever now.
I'm going to jump over to this here real quick. And this is a amplification treasury simulator
later that I created in six hours. So I've done this in six hours. I've had zero past coding
experience outside of, uh, you know, coding in Excel and basic Python script stuff that I've
moved incredibly slowly on. So I'm pretty proud of myself with what I came up with here. And I
haven't had this much fun playing on a computer since I was playing with roller coaster tycoon
in like the early two thousands. So like, this is the most fun game on the computer right now is
like cursor AI building dashboards. So it's a little small, but we're going to run through this
anyway. And I came up with this because I was curious, you know, thinking about our company,
like trying to forecast, you know, some of these metrics and instruments. And then I just asked
myself the question, at what point would strategy have a trillion dollar balance sheet? And I'm like,
wow. And then I immediately went to Excel and I started calculating this out. And I said,
there's gotta be an easier way to do this.
I jumped into cursor and I said, okay,
I'm gonna build a dashboard and kind of work through it.
But there's so many different variables
because when we're like what we're talking about here
with STRC, as STRC comes in the door,
they go and instantly buy more Bitcoin,
which gives them additional capacity.
And if they raise common stock equity,
that gives them additional capacity to go buy more Bitcoin.
And as the price of Bitcoin goes up,
that also gives them additional capacity
and the whole thing is kind of reflexive.
So I built a simulator tool
to look at these different parameters. And so what I've got over here and guys, please jump in at
any time. So I've got strategy starting Bitcoin on the left-hand side. The Bitcoin price when I
built this was $95,000. We'll just keep it there. A price CAGR assumption of 45%. So assuming a 45%
compound annual growth rate. However, that 45% decays at 7.5% annually. So diminishing return
of the compound annual growth rate into the future.
Bitcoin holdings CAGR from the common ATM.
So how much additional Bitcoin are you going to add
on the balance sheet from the common stock ATM every year?
And then a holdings CAGR decay as well.
So understanding that there's economies of scale
and you can't add 10% more of your balance sheet
from the common stock ATM every year.
So you got multiple, all these different moving pieces.
And then you assume a 30% amplification ratio
based on if that balance sheet is able to grow into the future.
Can I keep the amplification ratio the same?
I'd argue probably yes, because as these instruments get rated,
people understand them.
The capital doors are going to blow open.
There's going to be a bunch more interest in this.
So I kept the amplification ratio at 30%, but you could change it.
Preferred interest rate, I'll keep it at 10%.
We know stretches at 11, but on a combined basis, it's roughly 10.
And then the projected horizon being 10 years.
So all of these different variables, and it comes into play here in this graph.
So you can see, and the summary statistics are up here at the top.
So based on these summary statistics, the strategy is estimated to have a trillion dollars in BTC notional value on the balance sheet by June of 2031.
That kind of blew me away.
And I was thinking about it.
Okay.
June of 2031.
Oh my God.
That's five years from now.
Yeah. And by the way, Dan Hillary will not even be 30 years old yet.
That's right, Grant. Watch out.
June of 2031, strategy would have a trillion dollars of notional USD Bitcoin value on the balance sheet.
And then thinking, okay, there's not a single other company on the planet with a trillion dollar balance sheet.
Well, that's interesting.
Okay, if you can reasonably project that by 2031 that they're going to have a trillion dollar balance sheet.
I mean, what's that company worth?
What is that company worth if you think that the product is going to sell that much into the future
and then have a trillion dollar balance sheet in 2031?
And then what can the company do with it from there?
I mean, if you have a trillion dollar balance sheet,
you're talking about issuing $300 billion of perpetual preferred equity
or having $300 billion of perpetual preferred equity outstanding.
I mean, this thing gets really big.
Like, Sailor said the word monster.
Like, I want to build a monster.
that's what this thing is and you start running some of these like kind of reasonable projections
and the numbers get just stupidly big incredibly quickly hold on a second jeff i want to make sure
i understood you because i listened to you i thought i understand what you said and then you
said it'll be the biggest balance sheet in my brain i proceeded i process what you had said
even though you said balance sheet, I processed it as trillion dollar market cap. That's not what
you said. You said a trillion dollar balance sheet. A trillion dollar balance sheet. I now
understand. It took me literally 15 seconds for that to imprint in my brain. So now what somebody
would say is if they have a trillion dollars on a balance sheet, which is the largest balance sheet
in the world. That's according to your analysis, right? Yeah. Okay. Now what multiple would that
trade at? Cause it's not going to, you could say, well, it just trades at one-to-one. You could say
that, but then you said the second order of fact that they could issue. If, if let's assume there's
a decay, like you said, and last year it was 23%. Let's just assume it drops down to 10% in 20,
in 2031, that would still be a hundred billion dollars that they're issuing in digital credit.
Yeah. That's your decay from 30% down to 10%. That's the second order effect. So I didn't think
about that. I thought in my head, and this is important for everybody listening. I was thinking
market cap. Jeff said balance sheet. A trillion dollar balance sheet. Right. And if they only
issued 10% a year, that's a hundred billion dollars. Last year, they only did, not only,
I mean, they did 25 billion. I mean, it's still awesome, right? And Saylor just posted that
literally earlier today. So Jeff, kudos to you for coding this. Congratulations. And you did this
in cursor. I think this is awesome. I did this in cursor. Yeah, it's incredible. And I will share
this. I think we're planning to post this on the TrueNorth website. I mean, there's going to be a
ton of disclaimers on everything. None of this is financial advice. This is just for fun and
information versus only but i think some really really interesting components here like obviously
so many variables right if there's nation state adoption or bit like what do we know about bitcoin
it's incredibly volatile if it just rips everybody's face off here and it goes to a million
i mean all this model is broken everything's broken right this is assuming like a static
average over time and you can create some assumptions around it to have an understanding
of what you think it means. But a couple of crazy things here. June, 2031, having a trillion dollar
balance sheet, this assumes a Bitcoin price of 512,000. And this assumes strategy has about $2
million of Bitcoin or 2 million Bitcoin, not $2 million, but 2 million Bitcoin in June of 2031.
And that's just, again, using the math and the reflexivity of keeping amplification on
at 30% as the price of the Bitcoin goes higher and pushes the balance sheet even higher. So you're
adding from issuing credit, which pushes the balance sheet higher. You're adding,
and then I've also included a common stock ATM capital raising metric in here as well. So
I could throw that in here, advanced analytics.
the yeah so i assumed uh an average oh yeah i backed into an estimated stock price so we could
think about moon math here i backed into an average m nav of capital raised and i put it at a modest
1.6 and we can crank this number higher and we can have some fun with it and see what it looks like
but i was uh i was backing into some numbers here of like june 2031 an mstr share price of
$2,100 and a nav per share of $1,300, assuming a 1.6 M nav, assuming that the capital that they
raised throughout the time horizon was at a 1.6 M nav in composite. I would argue there's probably
a reason to push that number a bit higher, given that historically it's gone up to two,
three, four, and almost a five. So there's a few different variables here that make it
really interesting. So, um, yeah, so I had a lot of fun with this and then, you know, Dan,
you bring up power law a lot. So I plugged in a power law model in here as well. And like,
it actually doesn't change the numbers drastically. If you look at, you know,
just going from the base case to over the power law, hitting a trillion dollar BTC notional balance
sheet would occur in December of 2032 instead of June of 2031. Yeah, exactly. Power law is like
right now, like 30K over the next 10 years. Yeah. And it assumes a decay as well. So there's kind
of, there's a decay component in there as well. So it's like, I've kind of taken the power law
model and I've just kind of bumped it up a little bit and I've taken the power law model and bumped
it down a little bit on the bear in the bull case scenario. So you've kind of got a little bit of a
window there. And that's what Saylor's model is too. It's exactly that. It's just a decaying,
Like all the power law is a decaying exponential over time.
Yeah.
And he just has a terminal exponential, which like I think yours as well.
And that's something we should talk about later on a different episode.
So just for funsies, moon math, I'm going to click into moon math.
I'm aware this is not financial advice.
So I got to click this button as well.
And then I've also got to click in advanced analytics and go to an average MNAV of three.
And what would the price of strategy be by 2036?
None of this is financial advice, but in taking this moon math scenario, a $313,863 share price.
And that's assuming common stock dilution.
That's assuming capital raise.
That's assuming the perpetual preferred amplification stays at 30.
Obviously, we're talking about a 10-year horizon.
A ton can happen.
But anything with a remote probability with this type of excitement on the horizon is worth having exposure to.
A couple of things in looking at the moon math, which was hard for me to kind of wrap my heads around.
But you can see a number here, final Bitcoin hodl in 2036.
It's got 26.9 million Bitcoin.
and you say, Jeff, that's more than the Bitcoin, all of the Bitcoin. Like that's more than all of
the Bitcoin. Yeah, I get that. It's more than all the Bitcoin. However, once this balance sheet is
so big, they're going to start eating everything else of value. There's going to be more than 21
million of Bitcoin of value in the entire world, right? If Bitcoin's your unit of account,
you got to go look at, all right, there's 21 million of Bitcoin, but every, you got to think
about the rest of the world priced in Bitcoin. Like how many Bitcoin worth of value is out in the
world. Like, I don't know, um, a hundred and 150 million, I don't know, 200 million. Like
we can speculate on what that number would be, but like they would effectively have the ability
to go eat up the rest of the balance sheets of the rest of the world in different places,
whether that's, you know, who knows what that means, whether that's insurance or buying,
you know, all of these different equities or real estates or, you know, whatever that may be. But
uh yeah i think it's going higher a trillion dollars on the balance sheet is more than the
entire market cap of jp morgan or walmart so it's a good amount of capital it's a good amount of
capital a trillion dollar balance sheet is a good amount of capital and like you know by the way you
know that you're gonna have a fudge to be like well you know bitcoin can go to zero tomorrow
and it'll be worth nothing you just know somebody's gonna say that a trillion just because it did
this for for if they started in 2020 and this is in 2030 they've been doing it for 11 years it could
just go to zero tomorrow everybody knows that i mean we just know we're going to hear that in five
years from now well i just say the dollar has a head start right it's moving faster right by the
way i did an analysis and i said i put all the numbers for the u.s government you know two trillion
dollar a yearly shortfall on the budget 38 trillion dollars in debt i said if this was to be evaluated
as a company and i didn't say what it was it would be like this company's completely insolvent and
then chat gpt just said you're talking about the u.s government though it can print money i go sure
would it be investable though as a company the answer that is no if you guys don't believe me
it would be kind of funny if you just plug in if you keep the exact same site and plug in the u.s
dollar into this and it'll it'll look horrible it would keep everything the same but just do start
off with you know how much the dollar is is being debased per year just change all the metrics leave
everything the same just change all the names on it same format and have it because as bitcoin goes
up right it's not really going up it's the amount of dollars it takes to buy each bitcoin which is
what you calculated here and so but if you plug the government into this instead it wouldn't um
wouldn't look so big.
Yeah, I mean, all this stuff is so dynamic.
And I think it seems so asymmetric.
It seems like there's an information disparity,
like people that are using AI
and understanding what going on in financial markets and seeing these trends that are very clearly changing over time right Like what fixed income product is trading million of volume in three days Like the whole world as to use your word Ben is like completely being
rewired. And we're, we're literally doing it. Like we are doing it. Everybody that's working in the
space is doing it. Dan, you're doing it. Ben, you're doing it. Adrian, like we're all doing it.
That's all part of what we're doing here is rewiring everybody's brains to like see what's
happening.
Really fascinating stuff.
Anyway, good time to plug what's happening down in Vegas.
So in Vegas, there will be Bitcoin for Corporations 2026.
This is February 24th through 25th.
We have a True North event on Monday, February 23rd at Strategy World.
I have seen the draft schedule for Bitcoin for Corporations 2026.
and I think this is,
this is like,
you're not going to want to miss this event.
I think it is going to be pretty epic,
especially seeing everything that's happening now,
going on with the securitization,
what's going on with Stretch,
what's going on with Preferreds,
what's going on with like everything globally.
I think it will be an event
that you will kick yourself for missing.
We are going to have a event on Monday, February 23rd.
If you're interested in attending,
there are 70 tickets left.
uh we so we've sold 53 of the tickets there are 70 tickets left uh it's a chance to chat with
everybody in the true north team we will have some special guests kind of swinging by we will
have giveaways we're going to have a great uh event in the evening drinks and food and networking
and everybody can chat and we want it to be a very special in-person event we're not going to
live stream it. We want it to be, you know,
hands-on and interacting with people within the community.
So I think it's going to be a great event.
We're really looking forward to it. If you're interested,
you can check out our website.
It's got true North tickets here as well. And yeah,
it's the site is on Luma. You can check it out here and yeah,
your tickets. I think they're going fast. Actually,
I was supposed to say we, we do want to give away one ticket.
to True North World.
We're going to give away one ticket tonight.
Anybody that's retweeted our stream,
we will be giving away one ticket
and we'll pick at random
and hopefully we'll do that at the end,
at the end of the show tonight.
So if you're watching,
please retweet it and pass it around
and we'll go from there.
Even if you bought a ticket,
we'll figure it out.
Cool.
Last year was amazing.
So I'm looking forward to this next one.
Oh, we're going to crank up the volume a little bit.
It's going to be good. We've got some resources. Uh,
I think it'll be a really good time.
We're not going to throw it together in a week like last time.
Yeah, exactly. Yeah. And we've, we've had some more time to plan this. Uh,
we've got some power behind us with, uh,
with strive and the team working here at true North. Uh,
there's just a significant group of people working behind the scenes to make
this a great event.
Hey Jeff, while you were talking, um, I just,
I just hit perplexity real fast, you know, to talk about what strategy is done versus stretch.
So, sorry, to compare, give a comparison. TLT, which is long-term treasuries, has a 46 to $47
billion market cap. You guys want to guess what the trading volume is per day? TLT,
46 billion dollar market cap long-term treasuries trading volume what's the 30-day trailing what's
the average daily volume uh um it's probably 200 million or something like that 300 million i don't
know it's it's like 30 million dollars in a day it's 34 million shares per day so it's it's um
the dollar amount we'll multiply this out it's like a really low number given it's 46 billion
dollars in terms of liquidity so if we do that quick comparison you know as a percentage of the
of the market cap of it's a really low number and and that's the part where bonds that's the
whole part it's off by a factor of 10x versus uh versus mstr that's all these preferred equities
are novel right because they're actually equities they trade in value there's no repayment period
they fluctuate based on the credit quality but also speculative behaviors you've got the first
preferred with an ATM on it that completely changes the price dynamics.
There's a lot going on and they are unlike other instruments in the market.
Like bonds are quite boring, especially private placement bonds.
Yeah.
So.
Bonds are boring.
I mean, that's a crazy, that's a crazy statistics.
And Dan, you bring up a really good point.
Like a lot of people just really throw this piece to the side, but the fact that there's
an ATM on these instruments is just so fascinating because you can get that capital in the door
at any point in time that you want it with effectively like a click of a button or a
quick message.
And I was talking to Mason about this the other night.
The only, I was like, we were reflecting on stretch and it's like, it's so novel because
you couldn't have created that product without an ATM on the preferred.
If there were no ATMs on stretch, the price would just blow out right now, right?
and then they could adjust the interest rate.
It would come down, but there's only one mechanism
and the interest rate is such a kind of large adjustment mechanism
on a course adjustment mechanism on a monthly basis.
They need the ATM to cap that price.
So if it wasn't for the ATM, they can never create a stable,
perpetual preferred product like Stretch.
So everything, it really was lightning in a bottle,
all these different mechanisms that they were able to pull together
into one product.
You can't do this with a bond.
I mean, the bond can be illiquid, so there's less mark-to-market ability
and so therefore it could be a little more stable. But you don't get that sort of liquidity
in the bond that's necessary to issue large amounts of it. So in terms of public security,
this is the way it had to be. So Leigh, what's up, dog? How are you?
Great. I love chopping it up in the comments. I get to just fanboy.
You get to hang out for a while. Yeah. Adrian had a pop off. We're an hour in and we're cranking
through here um i mean what what's your thoughts what are you thinking about sole what's the uh
big takeaway from you right away oh right away um i don't know we're going to talk about jerome
powell's hostage video you know he's like over there blinking in morse code trying to like help
me yeah yeah we could start there we could go there we could go what bitcoin did interview
we'll talk about the we'll talk about the fed yeah that's good yeah i was worried you guys were gonna
to talk about what Bitcoin did too much and I was going to miss out on it.
Let's jump in. Let's talk about it. And okay. So what happened? What Bitcoin did? Danny Knowles.
I like Danny a lot. He's a good guy. We've had some great conversations. I've enjoyed trying to
teach him about like what we're doing in this space and what's going on. And he's picked up
this podcast from Peter McCormick and he's just really kind of run with it. It's had a very like
strong Bitcoin OG ethos. It's, you know, a lot of it's focused on folks that have been in the space
for quite a long time and they're building like the, in the developer community, like what are
you building on top of Bitcoin? Whether that be like medium of exchange apps or custody solutions
And a lot of it, a lot of the bigger conversations have happened with some of those folks.
And it's been really fascinating to see this evolution because like finance showed up and finance showed up quick and they got a lot of Bitcoin very fast.
And a lot of people didn't like it.
And it was very confusing because capital markets are inherently in the past have been incredibly opaque and people are confused.
These are different structures.
Well, it's equity.
It's not Bitcoin.
people hate that it's like not your keys not your coins uh blow up in the past these other you know
exchanges and things and now it's hard to differentiate between for some people between
like what's what's happening here and like opportunity cost and thinking about portfolio
development and you know efficient frontier and all of these different things and i think that
really just came through like you could see that in the entire podcast it's very clear that
Michael studied his host.
Like, okay, hey, I'm going to welcome you to my house and we're going to do a podcast
together.
And I'm sure he went back in and looked at every single podcast where Danny had talked
about MSTR and got to the point of what are these guys missing?
Like they literally, what Bitcoin did literally had an episode like, is MSTR a Ponzi?
I've talked with Danny twice in the last six months and almost exclusively talked about MSTR
and like all the perpetual preferred securities, how they're working, why they're working,
who they work for, how the capital markets are interacting here. And I'm not surprised
that his response was exactly the way it was because what's happening over there is like that
it's just a little tired. Like this argument is a little tired of what these Bitcoin
treasury companies can do because bitcoin is capital and having a having a vehicle where you
can hold this capital and do things with it that's the point like we're doing like a human is
effectively a business right like you like my family i see my family as a business i buy bitcoin
for my family and i do things with it i buy bitcoin exposure for my family i do things with it
and a business is no different, right?
You've got like a group of people,
but that group of people has access to different types of capital markets.
They've got debt structures that they can access.
There's things that you could do.
You could utilize that capital in different ways to build X, Y, Z.
Now, what are those things?
They're literally being built right now,
whether or not you want to participate in the things that those companies are
building, that's your prerogative. Like that, that's completely up to you.
You could take that risk decision if you want, but like,
you're not going to stop any of these companies from putting Bitcoin on your
balance sheet because it's good for them. If it's good for you,
it's good for the company and whether or not like the price is volatile and
people, people get wrecked because, you know,
the price moves up and down and they don't have the long-term view.
Like we've talked about like this entire podcast, like that's like,
that's what it was. And I'd be curious to get your guys' take.
Yeah.
Go ahead, Sol. No, you first.
Yeah, I think he actually could have even went farther because he took a little bit of offense because he said, well, what about these bad companies and companies that don't have positive cash flow?
And I think Saylor, he kind of caught himself a little bit because he was like, well, don't invest in bad companies.
Like, what are we talking about? At least the ones that own Bitcoin, own Bitcoin and everyone else is still on zero. Right.
But I think he could have even taken that one step farther and said, well, are negative cash flow companies even bad?
Or are they just victims of monetary debasement like the rest of us?
Like you could have a good business, but if you can't keep up with the manipulated inflation, you're going to be cash flow negative.
But if you're on a Bitcoin standard, you might be cash flow positive when you're actually stacking real cash.
That's not a melting ice cube.
so um i i think yeah i mean was he a little harsh on the guy but i think he could have even taken it
one step for uh one step further and said like these companies that you're calling bad may not
even just be bad they're they're out there busting their ass and they might be cash flow positive on a
on a you know a bitcoin standard well that yeah that was exactly it well if your bitcoin is
cagering if you have 100 million dollars of bitcoin is making 30 million dollars a year at
30% interest and you burn 10 million, you still just made $20 million a year.
Yeah.
Okay.
Like, are you going to be mad at those companies?
Do you support them?
Like, you don't have, you don't have to buy the equity.
Nobody like, does it help if you get out in the market and talk about your equity?
Yes.
Go look at every, every financial podcast on the fucking planet.
Like everybody's like talking about everything.
Like, do you want interest in, in the stuff that you're working on?
Yes.
Like, what is finance?
Finance is all about storytelling.
Like, and to me, capital flows to the best story.
Like, what is the best story?
And you've seen that in the market right now.
A lot of capital flowing to AI.
Like, AI is a great story.
Like, it's going to eviscerate people's jobs.
These companies that are running AI, like, they're going to make a ton of money.
And I think what's happening here in Bitcoin is a really fascinating story.
I'd argue even more interesting than a lot of the AI stories that are happening at the moment
because of, you know, hardware multiples, PE, all of that stuff. But, um, my, and that's what
I'm here talking about it. Right on. The, there's a flaw in human nature, I'll say, where
people want things to stay the way they understand them. And I think that's the difference we're
seeing between the OG Bitcoiners and guys like us. And they want it to be the original movement
where it's just individuals that are buying Bitcoin. They're moving it into cold storage.
They're creating these micro economies amongst themselves. And they're transacting amongst
themselves in Bitcoin for goods and services. And they're fully cutting out the financial system.
Okay, great. That's one view. The problem is if you really want Bitcoin to succeed,
like really succeed. What you have to do is build ways for it to take over the scaffolding that
holds up the entire financial world. And to me, that's what's happening now. That's what these
treasury companies are all about. That's what digital credit is all about. We are embedding
Bitcoin at the foundation of the capital markets and scaling it and eating it alive. And if you
want to see Bitcoin succeed, if you want to see what makes it interesting to other people,
it's going to be success, right? That number go up is going to attract more and more of the
builders that will build that functionality that they talk about that they deem as valuable.
But I see it entirely differently. I want Bitcoin to be so systemically important
that you can't ignore. And the only way to do that is to intertwine it in the fabric of the
financial markets, right? Make it undeniable. Get rid of every attack vector because the cost is too
high to attack it. And that success is going to breed all these builders coming and pushing Bitcoin
forward in the way most people want to see it. You want to be able to transact with Bitcoin one day
and buy your goods and services in the grocery store with Bitcoin or whatever, like get it.
So powerful banks can't stop it.
Or politicians or politicians.
Yeah. You're building the industries right now.
Like this is, you know, you've said it before with the digital credit side, Jeff, like this is year zero.
I view that for a lot of things, right?
If you don't like the way that banks have you transact money, well, someone needs to go out there and build a better bank.
and you need to build that with Bitcoin, if that's what you believe in.
You can start rebuilding today what's going to be the powerhouses of tomorrow
that are driven and enabled by Bitcoin, right?
Sound capital.
And so spending time as Bitcoiners attacking whether Satoshi wanted just individuals to have it
or wanted corporations involved or wanted countries involved, everything's built by people.
So if people are starting to believe in Bitcoin, they're going to start building it into everything that they do.
And that's what you're starting to see.
You can't take a gift like Bitcoin, create it, release the code out to the world, let everyone mine it and run nodes, and then decide how it's going to be used.
That's not real.
Bitcoin's a gift to the world, and the world now gets to decide how it's going to be used.
And we've all got different ideas for what that looks like.
So, you know, when we get into these arguments, like I'm not going to be apologizing for what we're doing, because I think what we're doing is incredibly important to the next phase of Bitcoin success.
And I don't want those OGs to stop building what they believe in.
Yeah, we need them to.
We need them to.
Functionality. This isn't going to happen by one small group.
This is an open source project for the world to push forward together.
And as individuals, if you're concerned with the way things are going, start building the
next chapter.
If you don't start building it today, you're going to get run over by what's happening
now.
And you can't complain about that.
Yeah, Ben, look, I get what you're saying.
But what Saylor did was an open source project.
And they don't realize that.
It completely was.
Not only, and if you're like, what do you mean, Grandis all is open?
in 2021 or 2022 sailor published a playbook how to put bitcoin on your balance sheet and convince
your board members how to do it he ran that you can guys you can google this and go find it
he did three pdfs they were 50 pages each and explain how to he open sourced the manual of what
they did and so the og bitcoin was like oh well i don't like the fact this is comical another
symmetry test is I don't like the fact that Saylor is equitizing Bitcoin. They're putting
Bitcoin in an equity wrapper. And I'm like, yeah, bro. Then why do you like the fact that we can
tokenize a real world asset, an RWA? You're like, oh, would you just say? I'm like, you want me to
go slower for you? You think it's a great idea to tokenize everything, but when then Saylor
equitizes, notice how I shift words. You're like, oh, we don't like that. And I'm like, really?
Really, bro? Maybe you don't talk to anybody that doesn't have an incentive to be nice to you.
Or you haven't gotten anybody that had enough balls to challenge you.
And that's what happened exactly with Danny.
He showed up for a knife fight with a guy that had a gun.
And what that means is, I'm dating myself.
The guy watched the videos.
That's Taylor.
Danny was completely unprepared.
He did not do his homework.
He shows up against a $20 billion guy that's a legitimate rocket scientist.
I mean, let's just think about this.
That graduated from MIT and wrote a master's thesis on the geopolitical structures of the world.
That's Saylor.
Saylor's read all these books.
Danny shows up.
Oh, well, don't you think all these Bitcoin treasury, some of them are scams?
I'm like, bro.
There's a reason he's a billionaire.
There's a reason he's a billionaire because he's sharp as shit.
You just poked a gorilla.
And I'm not going to pretend if we all showed up that he wouldn't drive over us and back over us.
Oh, yeah.
This guy's on a different plane.
But he's giving us, he's accelerating all of our journeys by sharing what he's learned through all of that.
We're getting the Cliff Notes version of decades of learning that he's had.
Sure.
And that's huge.
In the class in corporate finance we're all getting right now is equally as huge.
It's equally as huge.
The craziest part of the whole video is after Danny and Danny's watching this, dude, I will say this.
I will date myself.
You had poise and temerity to sit through that the beating.
Congratulations to you.
Many people would have just walked out.
That is great that you have done that.
And from that perspective, I respect you.
Now, the fact that you showed up unprepared is a different issue.
OK, so that's one part of it.
But something that came out in that video was crazy that I had never heard before.
Saylor said that there were, that strategy is a $40 billion company.
They could not get insurance and he had to personally underwrite it himself for years.
I never heard that.
You guys ever hear that before?
Yeah.
I heard that story.
Yeah.
I heard it as well.
Publicly?
Privately.
Oh, you heard it privately?
I had never heard that publicly. So I never heard that. So when I heard that,
it's like somebody's like, Oh, I see sailor. He didn't do it. I'm sure that's whatever.
It's like an iceberg we're here. We're seeing the top of the iceberg with sailor and sailor knows
there's a hundred things that we don't know. I just going to be clear with you guys. It
doesn't matter how smart we are. Sailor knows a hundred X more than we know. And my number might
be low and when i heard that i was like wow and you you're poking that guy look i mean a little
bit more a little more i'm a little bit more careful ton of ton of respect for insuring your
directors and officers like i i will personally that was wild i will personally insure you not
only did he give the investors an out like i'll give you an out i'll buy your stock if you don't
agree with his bitcoin strategy i'm going to buy your stock this back in 2020 and so he went through
that and then the insurance industry dropped him and we don't want you buying bitcoin they dropped
him and i think he was insuring like 40 to 70 million dollars of dno coverage like if we have
a loss like i got you which like they could come after your personal assets like if something
happened they could come after your personal assets and you know that's that's a very tricky
place to be when you have a 500 million dollar balance sheet now today like that that equation
is a bit different and like they could easily assume uh assume that insurance limit now and
maybe they buy it because it's cheap i don't know maybe maybe the market likes them now i have no
idea well jeff i think you should stop talking about insurance because you don't know anything
about insurance okay it's uh i mean that that world is just when you're in sailor's seat
you've got a ton of pressure to continue providing people the air cover to think differently than
everyone else does. And I think that's what you saw him reacting to, right? He was seeing this
idea, which fundamentally, if you're a believer in Bitcoin, should seem like a good idea, right?
Bitcoin on the balance sheet is better than not Bitcoin on the balance sheet, right? Just if
That's as simple as it ever is.
That's the idea is Bitcoin is transformative capital for companies to hold, for individuals to hold.
And so I think when you're in his chair and you've got all the arrows in the back that he has, right?
People have been coming after him for years saying all kinds of things.
I think you do hit a point where you need to show how deeply you believe in all of this.
And I think that's what he was doing, right?
He challenged the idea head on.
And a lot of people will say things like, oh, well, these treasury companies, they don't
do anything.
And all I saw him really doing, and it was in an uncomfortable manner, right?
I was not envious of Danny's seat over there because he was the guy in the room that asked
the question.
But he pushed back on that idea and made you think critically about it.
You're going, you know, yeah, it is a little strange.
If I am a believer in Bitcoin and I do believe this asset's going to succeed over time, and here I am throwing mud at all these companies that are putting tons of capital on their balance sheet that I think is going to be worth an absolute ton here over the next five or 10 years, that seems a little silly, right?
And you're seeing him push.
And then he's also pushing on the notion of, you know, what is a pure play treasury company?
And we've even used the term a lot.
I've used it a lot.
and it really doesn't follow through.
Like if you look at what all these companies do,
they all have some type of core business under them, right?
Like we're an asset manager.
We've got ETF products out there in the market.
Like we have an operating business.
Strategy has a half a billion dollar software business that's out there.
SmarterWeb has a web development business out there.
KindlyMD had their business.
Like there's all these businesses underneath all of this.
Now, you can argue whether those businesses are material when you look at a Bitcoin strategy, but pure play, the way people use it doesn't mean no operating company, right? These are operating companies.
But the Bitcoin side of the house starts to dwarf the operating company if you're even remotely successful with it on any timeframe. And so I think you were seeing...
That's the biggest point.
Yeah, but you see, guys, I'm protecting the notion around, or challenging the notion around
Bitcoin, right?
Are you really willing to criticize Bitcoin as an improvement in how every one of these
companies is operating, right?
Is integrating that into your balance sheet a bad idea or not?
And if Danny could have defended that he thought it was a bad idea, you'd get a different conversation. But in that room, there was not going to be any way where you could say having Bitcoin on your balance sheet is worse than having dollars on your balance sheet over the long term.
Right. But Ben, there was two things that happened. What you just said was exactly correct. You're saying, Danny said, I believe this. And let me back it up. Why? Now, Saylor, tell me this. What went viral for two days after this was Saylor's demeanor and that he attacked him.
right and so i am discussing the meta message and you're discussing the message so you're saying the
message is structurally sailor's refuting what he is saying what what happened with sailor is like
oh he was grumpy oh he got agitated oh he got irritated it's think about it and people and
the reason why people were so mad is because they were like sailor should answer the question he did
he did he totally did and he did not hold back and he applied the symmetry test you're you're
getting mad at 200 companies or 400, 200 companies that have Bitcoin in the balance sheet. Why don't
you make the same argument about 400 million companies that only have, you know, fiat or don't
have any Bitcoin. And that, that froze Danny right there. That is a classic symmetry test.
And he never came across, Danny never came across anybody that could do that to him. And that's
people like, oh, well, he attacked him. And what happened is the reason why people get upset is
that, and I talked about this on Spaces with 500 people on it. If you attach your identity to your
position, that is subjective. If you have a position, you have a belief, Bitcoin treasuries
are this, and you could argue about it and you don't get upset, that's objective. Subjective,
your identity is tied to it. The reason why people get triggered is, oh, he's being mean to Danny.
He would be mean to me because I believe in that question. They're attaching their identity to that.
And with this is when you think objectively, which is the way we talk here is, well, objectively, you just said, Ben, if you think about this, for these reasons, this holds true.
That's an objective conversation.
But what happened with Danny and why it went viral was because the meta message, the way that it was delivered, and people are like, oh, I don't like Saylor's tone.
Now, the other point here, and I'll wrap up on this, is that if Saylor is on mainstream media,
CNBC, MSNBC, whatever, Fox News, or so forth, he has to operate a certain level,
because he's on mainstream media. When he's on a podcast, he will function as executive chairman
and his ex-CEO of strategy, right?
But the way that he can go full bore against a podcaster
is different than the way that he would talk to a newscaster
or a host on mainstream media.
And Danny missed that.
He watches him on TV.
Oh, this guy is going to be so-called civil.
But in a podcasting format, that level of decorum is different.
And if people don't understand what I'm saying, that's cool.
but it will sink in that there's a difference between a podcast and being on television and
danny just did not get any of that it's kind of like like if you're getting so say you're out with
your family and you're scolding someone there's a difference between how you do it out in public
versus how you would do it behind closed doors and because this is a bitcoin podcast this is a
he's talking to bitcoiners and i'd say he did two distinct things he answered the question
and he sent a message.
He sent a message.
That's what it was.
He did.
And I think that Danny was legitimately confused.
He's like, no, I'm not trying to be insulting or whatever,
but we didn't really understand is that when you say,
well, I'm not criticizing the strategy,
but I'm going to ask this loaded question,
why would anybody buy these companies?
You're kind of criticizing the strategy
the way that you phrased the question.
So he shouldn't have really been that confused
but you know he kept trying to backtrack off of it and it's like i'm not criticizing the strategy but
like i like what you've done with the press you know yeah like what about the other companies it's
like yeah they're doing stuff exactly also yeah and also just like i don't see why when we talk
about like the evolution of capital markets and bitcoin in the balance sheet everyone has to focus
on knocking down 99 like that's what they mean when they say like all the other companies they
mean every other stock down 99 i like are we serious here like why do we have to why does anything good have to be watered down by like the few scenarios in which the strategy it was a it was a like
would you say this about the.com bubble in 2001, right? Would you say, so this internet thing,
sure, but like, look at, you know, X, Y, and Z company. And like, that's pretty much where we're
at in the whole thing. And like, investors are going to burn. And that's the other thing I don't
think Bitcoiners get is like, and Saylor was really keen on this in the interview. Like equity
investing is a lot different than Bitcoin. He's like, I've been telling you for the past five
years to invest in Bitcoin because it's risk-free. There's no counterparty risk. And you decide to go
out and invest in equities without cashflow or for whatever you decide to invest in. You decide
to invest in equities and you take on management risk and no executive controls the price of their
stock furthermore. So like that's the risk. Those are the risks you take on. Like you can't just
blame the universe for equity.
There's no discussion of nuance in any of that.
There is a lot of complexity in equity investing.
So for instance, when you look at when all these companies
were emerging and you were seeing all these high prices,
half the time, the companies hadn't even merged yet.
So what was happening was people were rushing in and buying
the equities of the target company, the company that
was public, which had incredibly low float.
And it takes very little capital to spike those things.
right like that's what was happening that's why you were seeing such visceral movements and a lot
of these equities out there and it's all a part of that equities learning curve right like there
was a ton of things that we all learned in this past year a ton and now you go through another
cycle you would look at the market entirely differently as these companies are coming out
you know what to look for you know what terms to look for you understand the different types of
financings that they can use and the nuance with how those play out in the markets right like there
was a ton that happened there was an absolute crash course in investing but when you get into
social media there's no room in short numbers of characters for nuance and so it's you know scam
pump and dump whatever people want to say like it gets distilled down to emotions right not
intellect it's emotions and that's you know you you can't really communicate in that style and get
to any type of outcome.
I think it's why you need long form conversations
and you need to reflect on investments that were made.
I've had winners, I've had terrible,
I've had all kinds of stuff, right?
And you do learn way more
when you go through a cycle like we just did.
It's not fun, of course not.
But you learn what to look for the next time around.
And so now with things like reverse mergers,
you understand that during that period of time
before the companies even merge
and become the company you think you're investing in,
right there's probably very few shares out there you'll learn that with pipes there's timing periods
where those investors finally get control of their shares and they're able to sell them right you need
to pay attention to those like there's all kinds of things that you learn because equities are
incredibly complex and there's a million ways to do the financing sub them which is why to sailor's
point bitcoin is the easy investment if you don't want to have to go that deep and have to understand
and all of these different nuances with equities,
yeah, Bitcoin's the choice, right?
That's gonna behave the same way all the time.
Yeah, and to your earlier point
where you were talking about saying cashflow,
pure cash play is like a derogatory term.
Like I use it, but I don't mean it in a negative way.
But how many people,
how many real estate stories do you have
or do you see where people are like,
I sold all my properties and bought Bitcoin?
They're exiting cash flow positive positions, right, just to buy Bitcoin.
They'd rather just own Bitcoin than have cash flow positive because it can't compare with Bitcoin's returns.
So it's a weird thing to call pure plays as an insult when there's people out there just exiting cash flow positive businesses to stack SADS.
Yeah, I think when people say pure play, they just mean it's the primary focus, right?
Like when you look at a lot of these companies, that's what they're messaging.
Why would it not be your primary focus?
It's their vision.
It's making the most money everywhere.
Like what's making the most money?
Like doing that, doing what strategy is done.
Like why would you not do that?
Yeah, but I'm going to give a distinction here.
And I said this on spaces earlier.
So, and I can make this real simple.
So almost all companies except for Bitcoin treasury companies are income statement driven
companies.
by and large, 99% of what they do is income statement driven. They have too much income.
They can either buy back shares or do use dividends or build up their cash balance,
and then they can buy other companies. Bitcoin treasury comes, they're balance sheet based
companies. And due to the FASB fair value accounting that sailor pitched and went into
effect in January of 2025, they can show positive EPS, which does not trigger CAMT,
corporate alternative minimum tax. And that was a big win. Now people would be like, wow,
you did that really fast green can you simplify that yeah let's assume that somebody's 80 years
old they're retired they bought a house 40 years ago right so what's the and they make this statement
i'm house rich and cash poor the house rich is they're sitting on an unrealized game because
they've been in for 50 years the house has been paid off for 20 years that's their balance sheet
Oh, I'm cash poor. What does that mean? I am now surviving on social security and whatever meager pension I have or investments. And I have to continue paying property taxes. And of course, somebody goes, well, we should just eliminate all property taxes.
Now, that's the distinction between the balance sheet, the house, and the income statement,
which is how much money they have coming in.
Why do we like strategy?
Not only are they probably going to have the biggest balance sheet, as Jeff just said,
but they give us a choice.
You want to buy MSDR?
You get no dividends and you get no yield at all except for it going up.
If you want to realize a gain and take something out, you must trim a piece of it and sell
it and pay taxes.
or you could take some of your money and you could buy the press and there you'll get a yield.
So Soleil, I don't think anybody is really selling houses, cash flowing in order to buy Bitcoin.
I think that there are people that are selling houses to buy a prep like stretch because it's
paid monthly. I get 11% and a typical cap rate on real estate is maybe five to 8%.
percent and for them they're like oh i can get this cash flow from a prep without having to fix
the backed up toilet yeah that i think does happen but buying native bitcoin unlikely
because it does not pay what they used to get and so i'm not saying
buy all preps or buy all mstr buy all bitcoin maybe can't we all just get along and buy a little
little bit of each? Well, your example there, Green, is spot on for all of this. And that's
why people are going to understand these companies ultimately, because it's how you structure your
own personal financial life. There's the saying, nobody gets rich on a salary. You have to own
something. So people understand compounding. That's what you're doing with retirement accounts
and those types of things is you're buying assets that compound over time. And the earlier you
start the longer that compounding period is the more impactful it is the more wealth you end up
with on the back end it's the same thing that's happening with these companies we flipped it
all these other companies are going out of business slowly focusing on their income statements
and now you've got a whole cohort of businesses that are focusing on the compounding of the
balance sheet side and so people do understand the concept they just don't know it yet they're
still getting there it's confusing because businesses have always just been measured by
top line bottom line margins right that's what you're focusing on so they have to shift it going
well that's not how you run your life right if you're planning to retire one day you know what
you're doing you're buying assets somewhere you better be right because otherwise retirement's
gonna be tough but but you know what you know i'll tell all you guys and and dan dan was with me
many places we traveled around the world last year um i talked to a lot of people that are cfos
that aren't running bitcoin treasury companies or analysts or so forth and i had a lot of these
conversations and i'm like well can you know what's your opinion on fasby fair value accounting
what it's going to do with strategy and you know what i got what i'm like and i'm like cool you
I think the beverage counter is over there.
Let's go, I'm going to go grab a diet.
The fact that I could say it to somebody
that has an accounting degree,
and this is the biggest advance, I think,
in FASB and accounting in probably 10 or 20 years.
I say that with no hyperbole at all.
And they're like, they looked at me like, what?
I'm like, you just told me you're an accountant.
You just told me you're a CFO.
You just told me you're a controller in a company.
You just told me you're a CEO.
I'm not talking to Joe Retail,
but you don know how many times in different places around the world Orlando Las Vegas Prague New York City New York City multiple times
I would say this to hear what I want to hear what their opinion about this was.
And what I got was.
What?
That was very calm.
And Dan was with me.
And I know I'm not going to name any of these people or call them out.
They're probably not listening to that to an hour and 46 minutes as we talk about this.
But I'm just going to tell you guys, that was my takeaway for last year.
It tells you how few people are willing to allow themselves to think differently.
These guys are slowly dying because they're fighting this uphill battle against innovation constantly, while they're not reserving a war chest that's going to keep their companies alive if something shows up that competes with them.
right they're not even willing to make that change because if they suggested and they're not plowing
all of that cash flow that's coming in back into r d and more efficient facilities and more sales
people if they're not getting it out the door and showing growth growth growth they feel like
they're failing but you're one disruption away from being out of business if you have no fallback
if you have no balance sheet capital to rely on if you have to reinvent yourself yeah so so ben
I'm telling you what you're saying.
You know, this comment came up and this guy wrote,
hey, I know somebody that during COVID
sold all of his properties and bought Bitcoin.
Okay.
No matter what I say, there's always somebody,
hey, I typically don't see 80-year-old people
running on buying a Tesla.
Oh yeah, my grandpa's got a Tesla.
And I don't see the same thing
with people buying Bitcoins being 80.
Oh yeah, my grandpa bought Bitcoin.
Like, okay, you taught me about the exceptions.
Let me tell you this.
In 2018, I bought a house
because I went all in in 2017 in Bitcoin.
It's sub $2,000, Grayscale Bitcoin Trust.
That real estate agent that helped me buy the house,
I'm still friends with him to this day.
And I said, in the intervening eight years,
how many people have purchased a house in Silicon Valley
with the most, typically the most technologically,
you know, focused people, right?
In Silicon Valley, from San Jose up to San Francisco.
How many people use profits from either Bitcoin or crypto
in the intervening eight years?
and his response to me was zero, absolutely zero.
I said to him, oh, okay.
How many times has the word Bitcoin or crypto
ever come up in a conversation at all in your whole life?
And this guy sells a hundred houses a year.
There's a whole thing.
This guy's a top performer in real estate.
And he's like, never once.
The only time I've ever heard of Bitcoin or crypto
with you is with you.
Never once has it come up.
This is eight years later,
typically with the most advanced people and young people, and none of them are using any of those
gains to buy or even mentioning it that they do it. And then I said to him like, well, how do they
buy all these houses? I'm like, what percentage of the people that buy houses are at Nvidia or
AWS specifically, even though they're at Amazon? He's like, oh, that's 70% of my business.
So these are all tech people, but they're not interested in Bitcoin or they don't even bring it
The world's going to move so fast around them.
I mean, if you're not paying attention to it, this stuff is going to get huge really quick.
And it's going to dwarf everything very fast.
Very fast.
I want to go back to the podcast for just a moment because I've got a fun sailor story.
And just thinking, watching this podcast with Danny brought back memories.
So a lot of people said sailor was very rude.
he was like out of line which i thought isn't was an interesting uh like comment for the for like
people on x to make but i also realized like oh a lot of these people probably haven't met him
in person probably haven't met what it's like to meet a billionaire like you don't waste a
billionaire's time like you come in and like if you got a 30-minute meeting like i've had a one-on-one
meeting with him last year at strategy world 30 minute meeting walked in he's like okay how do you
want to spend the time luckily i came prepared i had a few things i wanted to talk about i'm like
need your opinion on this like i'm curious about this and um you know i came and came to him with
an idea of like uh starting a credit rating agency for bitcoin companies and he's like well you could
do that but if you do that go raise 50 million dollars by 40 million dollars of bitcoin and when
the credit rating agency fails at least you have 40 million dollars of bitcoin it was like okay
what's next and i was like i was like holy you know like i thought it was gonna be like you know
at least you know 10 to 15 minutes part part of this conversation and i'm like okay it's just
like obliterated like the face like in 10 seconds and um i'm like okay next topic
and you and by the way you think what the guy's doing is great yeah right you were trying to be
helpful and and he right looking back are you mad at him because he said this to you looking back
like i mean i walked out the door i'm like damn wow like did that go bad you know like we talked
about a few other things i'm like did that go like what happened there but honestly i i was so
appreciative of his honesty because like look at where i'm at now i joined a company and i'm like
running a bitcoin treasury strategy and we've launched a perpetual preferred equity it's
trading in the market like that was some of the best advice i've ever had like don't waste your
time and do that like do the best idea like this is the best idea and it just it kind of it
continued to bring me there. So, um, I mean, it helped shape what this podcast is today,
the investment grade Bitcoin podcast. And, um, I was incredibly appreciative of it,
appreciative of it. I've had a few conversations with him since then. And it's like,
he's been very gracious with his time, very appreciative of it then. But the thing I,
the thing I appreciate the most is it's, he's so honest and he's just, he's so true to himself.
And he's so true to his brain. He's just listening to like, whatever is coming to his mind. And he's
like giving it right to you and he's just like slamming it in your chest so and that's what
happened to danny it's like he walked into a bitcoiner's house like he walked into his house
like that that was gracious that was respectful like danny invited him in like and had it had a
conversation i'm sure like it was a respectful conversation but like when the lights are on like
i'm gonna give you my thoughts i'm gonna give you exactly what i'm thinking i'm gonna
like shove it in your face.
But I think he expects it in return too, right?
I don't think people understand
that this is truly how he's wired
and what he thinks about all the time.
I mean, I've never not seen him be focused on this.
I remember even once when I was at dinner
and I was at a table with him and, you know, he's eating.
And then all of a sudden he pops up
and he just looks across the table at somebody
and he goes, what aren't we doing well
and how do we do better?
And like, he really wanted answers.
He wanted to hear what he wasn't doing good at and how he could improve it.
You saw panic set there on the table.
I mean, but that's how he operates.
Like, he'll give you exactly what he thinks, just how he thinks it, unfiltered.
And he'll take the time.
You always see him pause, right?
He always thinks about everything he says, but then he gives it to you, you know, blunt.
And that's pretty rare today, right?
There's a lot of pleasantries that are exchanged.
And to your point, Jeff, when you meet, you know, guys that are in his position and billionaires and guys who really value their time, that's how they interact.
Right. It is. It's straight to the point. They're not going to beat around the bush. He's not going to couch it. He's not going to make it OK for you.
This is what he thinks. And he's going to tell you exactly how he thinks it.
You know, I'm thinking about how like it probably took him more time to take a deep breath and sigh than it did to just obliterate your entire idea.
it was just that quick but by the way guys look we were at the bitwise event and we were in new
york city and the the event kind of had ended all the speaking and i we went over we were talking to
say there's a whole group of this so there's a group of people it's a public setting there are
many people everybody was asking all kinds of questions and so i had said to him and this was
in march of this year and i said to say i thought i thought this was a fabulous idea i said well i
said, I kind of have two ideas for you. I can run past. He's like, sure, Mike, what is it? And I said,
did you ever think about stable coins and how that could potentially help you? He goes,
why would I think about stable coins? I'm like, and then I'm like, well, would it make sense to
issue MSCR stock in different currencies? And he's like, no, I could raise MSCR stock up in any
dollar amount in us dollars and the conversion be done by somebody else and then he proceeds
to hand me my ass for the next five minutes you guys were some of you guys yeah and i'm like
i just thought this was and i'm like okay i i just stood there and took it
now i will say this well he then came out with a product called stre he's got he's got it right
in a different market grain of salt right sprinkling from salt on it in euros and then he talks about
canadian dollars so when i said that to him i was like i thought it was a good idea now nine months later when STR came out I like I guess the idea wasn that bad Right But you know
Yeah.
If you're in this space, it's just, it's a matter of time before it's your turn, right?
Like if you're vocal and you're sharing ideas and sharing your thoughts, it's a matter of time before you've got one that you let out that you didn't think through all the way.
But I'll tell you what, it sharpens you.
now you know you need to really think through what it is you want to discuss make sure you've
actually thought about it deeply oh totally before you just start throwing it around which you know
we're on podcasts we're throwing crap around all the time but it's a better way to operate right at
an event before that i was i was you know again you guys if you show up at an event and you're
respectful and you wait in line look i mean you know you could have a good chance of talking to
sailor and depending on how many people there you could talk to them for three minutes or five
minutes and i went to an event i said hey you know i was talking can i talk to you for a minute he's
like yes be fast i'm like okay i'm like i'm trying to figure this out he goes this is what you need
to do and he points at me i'm like oh what do i need to do he goes use chat gp yes make sure you're
going to deep research mode and then you have it really think and then you let it you let it you
let it sit there and they are using deep research i use deep research more are you using it i'm like
no, I'm not using deep research mode. I didn't know the deep. And I found out that deep research
mode came out like three weeks before he said this. I'm like, I don't know about deep research
mode. And he goes, okay, you got to ask these questions. I'm like, okay, thank you very much.
He's like, have a good day. And then he walks up and I'm like, I didn't know deep research mode
existed. So how would I know to use it? And because he knew about it. So again, it's just
the style sometimes and I didn't take and I continue to talk to the guy you know in public
settings so I that's what I'm saying folks yeah you you learn a lot from being around these things
and it's crazy going to an event like that because you see like a flock of people kind of like go
around them and just kind of like listening to what's going on especially those smaller events
but I mean he's he'll sit there and he's super gracious with his time because he'll sit there
and chat for 20, 30 minutes.
I've seen chat for like an hour
with like a group of people around just watching.
So it's a really cool experience
being a part of like these events in person.
Highly recommend it.
I mean, it definitely builds conviction
if you're on the fence on any of these things.
You could go meet these people in person
and talk to some of the people
that are operating in this space.
And it's pretty impressive.
Going to a Bitcoin conference for me,
like back in 2024 was kind of it was a whole new experience for me like totally changed my
perspective on like how much is actually being done behind the scenes and how many people are
working in the space because sometimes you know you just see numbers on a screen on a brokerage
account and it's hard to put into context cool all right we're out of hour 54 we've got uh we've
got a winner of the uh free ticket for the true north world it is uh i believe and i think kyle
if you don't mind putting it on the screen the winager the winner is voyager 21 m there you go
boom voyager you've been around he's been around since the dawn of time he deserves it for quite
a while he's an og uh we we will dm you and we'll reach out i appreciate you being here thanks for
retweet and uh yeah we'll we'll be in contact on that but um i mean maybe we'll pass it around
final thoughts so we could try to keep it within two hours and uh we'll go from there i mean we
didn't hit on so many things like uh like the fed uh what's going on the fanny and freddy real estate
uh through credit cards um points points getting obliterated i mean war and chaos everything going
on right now but uh maybe we'll have some little side shows talking about that but maybe i'll start
with uh i'll start with you dan your final thoughts on what you're thinking about sure
uh we didn't get to bring it up tonight but i have a slide deck on volatility on stretch
when bitcoin fell 33 from its all-time high of 126 down to whatever it was 80k or so the the
the volatility on stretch spike to about 18 or 19%.
Right after that volatility spike,
it's, you know, all the press really had some serious red on that day.
The USD cash reserve was announced by strategy.
Since then, all of the press have been trading extremely low volatility.
And in particular, stretch has been hitting the ATM
or has been hitting that $100 peg.
So I think strategy has been nimble
and they've updated their guidance with the USD cash reserve.
And finally, we're seeing some momentum with stretch.
So I think it's super exciting moving forward.
Yeah, all eyes on the next couple of days
because the ex-dividend date,
if you wanted to be a part of the dividend payment for January,
you needed to have, I think you needed to own the stock
at the beginning of trading today
or at some point throughout the day today.
And the ex-dividend date is tomorrow
and the record date I think is the day after that.
So it'll be really own it at the close of yesterday,
own it at the close of yesterday.
So it'll be really interesting to see how it trades Thursday, Friday,
because I think you have to hold it through that period, right?
You've got to hold it through the 15th.
So you've got to hold it through the close of tomorrow.
So we'll really find out just open Friday.
Just open.
It's they take the snapshot at the open of the market of all the holders,
which is why you got to have it at the close the day before.
Okay.
Yep.
So we'll see how it trades tomorrow.
Yeah.
if it's going to sell off it's going to sell off right after the open uh today at this point
but you probably expect it to come back in right like if people are rolling to different places
they're going to go out they're going to come back in they're going to go into other things
maybe other yield products absolutely rolling it back into other back into stretch so we'll
yeah we'll see how this goes cool pass it to mike hey i just thank you so i thought this was a
different uh msdr true north tonight so i thought this was great content i want to say congratulations
dan hillary launching buck uh which is a stable coin backed by stretch so i think that's awesome
congratulations on your new role there i think that's awesome thanks yeah you're welcome and
it's always about constantly reinventing yourself and so so with that you know just let's just keep
on doing it and i think that um by the way mason had a post today that was awesome mason ford who's
part of MSC Archery North. His post was buying Bitcoin sub $100,000 is like boomers buying
houses sub $100,000. I thought that was a great parallel that he said. So I'll end with that.
And then can't wait to see you guys next week. And in Las Vegas.
Excellent. Thanks, Mike. Congrats, Dan. Over to you, Soleil.
Yeah, I got another message for the 1XMNav bears. Let's say you're making a decent salary,
100k six figures good for you and you've got one bitcoin and you are getting your little three
percent raises every year when bitcoin hits a million do you know what your nav is trending
towards one x freaking m nav stupid head so get over yourself lol one x m nav ponzi bears yeah
Thanks, Soleil. Over to you, Ben.
Yeah, I'll just keep mine short.
And I'd say it's going to take a lot of us to continue to push Bitcoin forward.
So be willing to tune out the noise, keep building, keep pushing things forward.
We're going to win in the end.
We all know this, but it's going to take a lot of us building to make it happen.
So don't be afraid to keep pushing.
Bingo. That's in line with my final thoughts is always be building.
Yeah, it's going to take so many people to communicate this message and everything that's going on and everything that everybody's building here.
Don't be afraid to talk about this stuff.
And it's easy.
It's easier to communicate when you have rationality and numbers and graphs and charts and statistics and data.
And historically with Bitcoin, that was pretty difficult to do.
And now with some of these newer instruments that have hit the market with the perpetual preferred equity, you can create really compelling stories with data and graphs and analytics that are a lot easier to consume for people that are generally nervous about volatility.
so go build something keep operating in the community communicate with people and uh yeah
go to your local bitcoin meetups talk to other people and talk to local businesses about you know
how they're operating their treasury every business on the planet has a treasury
it's not just corporations like even your local carpenter or uh you know your teriyaki shop or
what you know whatever it may be they all have treasuries so it's good if it's good for a person
And it's good for everybody.
It's good for businesses, good for corporations.
So thank you, everybody.
Appreciate the time.
And that is it for episode 51 of True North, the investment-grade Bitcoin podcast.
Appreciate it.
See ya.