If you're putting 120 billion in bond purchases in the market, every month that's like kind of its pumping heroin or morphine into the patient. So now we take the patient off the morphine and we tell them that we're jacking, the interest rates through the roof. And of course, that's a massive contraction like a withdrawal.
Hello.
Welcome back to the coin Stories podcast. I'm your host Natalie Brunell and I'm talking to Leading voices in Bitcoin and macroeconomics about their origin stories, Bitcoin headlines and news topics and this movement to fix the World by fixing the money. This podcast does not provide Financial advice. Before I share this week's episode. Here are some messages from my sponsors who make this show possible. First of all, are you ready for Bitcoin? 2023? I certainly am this year's Bitcoin conference was
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so nice to have you back on. You are actually my most popular episode of this entire podcast. So welcome back.
Let's go. No pressure.
First of all, I guess I just want your overall reaction on just the markets, the macro-environment. It's been a really crazy week. There are a lot of people watching and I think getting a little nervous, especially those that got in, maybe in the 50 or 60 K range. I know you've bought some coins in that range. So, what's your overall take right now?
I think if you look at the macro climate in the middle of 2020, Jerome Powell said we're not even thinking about thinking about it, raising interest rates until the year 2024. So then we had the FED basically buying 120 billion dollars a month worth of bonds and interest rates plugged at zero and then everybody said, well, there's inflation but you know, but the politicians. So there's no inflation for a year even though
We had massive hyperinflation and assets for a year, but they denied the inflation and then and this is a result of them just tracking the CPI index because that you know, as we talked about before CPI is is one out of many inflation metrics, you could measure. So they track the one that is going to have the longest lag because like if you lock people down for a year and and they can't take a cruise and they can't go to a concert and they can't go to a restaurant.
They
can't consume so you can't consume consumer products. You can't by definition. You can't have inflation in those products. There's no demand. So the later, you know, there's a lag, and some demands, like it takes you six months to buy a house. So there's a slight lag and house prices. There's no lag at all and asset prices like Bonds hyper-inflated in minutes, equities, hyper-inflated the Amazon price, you know.
No, hyper-inflated, you know, it went to thirty four hundred dollars from 1800 dollars like in short period of time. So I think the politicians they from monetary point of view. They looked at the wrong end Decatur and they waited and they waited and they still only had raised interest rates like 25 basis points as of a couple days ago, right? And so now we've gone from there is no inflation and when I'm in thinking about thinking about doing anything, too,
Oh my theres tons of inflation and we have to go faster and I think like this morning these eight point five percent inflation number came out and it was higher than people expected. Then the markets think, oh, well, they'll have to even raise interest rates faster. So he went from not even thinking about thinking about you constantly continually thinking about thinking about, and going faster. And
It's like, you know, if you're if you're putting 120 billion in bond, purchases in the market, every month that's like kind of its pumping heroin or morphine into the patient. So now we take the patient off the morphine.
And we tell them that we're jacking, the interest rates through the roof. And of course, that's a massive contraction, like a withdrawal. The markets are going into withdrawal, right? And, and, you know, one part of the market is the real estate market. And so the way that we help, the real estate market is we double the mortgage rates in 12 months. Okay, and that takes the wind out of the real estate market and then they take the wind out of the equity market and then
After they talk about kicking the equity market, then they kick it and they talk about kicking out again and then they kick it again in and they talked about maybe taking it more and on top of all that monetary distress. I would, I would say we went from like a massive macroeconomic or monetary Tailwind to a massive monetary head, win or currency hadwin, but then you have the Ukraine war then you have the Russian sanctions.
Then you have the escalation of the Russian sanctions. Then you have the escalation of the Ukraine war like we wanted to last longer. Then you have the potential, you know, we literally have people joking about potential nuclear war this weekend.
I had a meeting with an investor in the investor, got on the call and they go. Yeah, so I mean, assuming there's no nuclear war, you know, what's the outlook for microstrategy? My gosh, I shouldn't laugh. This is not, this is not funny. So what's going on right now is a dramatic escalation in geopolitical, risk, and uncertainty and all the currency. When's that were blowing One Direction below the other direction and on top. And that's
Stop breaking things. And so in the main Market, it breaks ideas like Peloton, like, oh I can put, you know, I put a screen on an exercise bike and it's worth 20, x revenues. And now people are thinking well, maybe it's just a modern exercise bicycle company and the stock is way down. So I think a lot of mainstream ideas, or melting down and then we just saw this UST meltdown and it's like,
you know, I think, you know, Gary Gensler is pointed out. He said a lot of these, a lot of these tokens are securities. And the thing that makes them as security is a small team of people that have control over the protocol. So the small team of people can make more the small team of people are actually able to move the reserves around, then you've got investors relying on the efforts of others in order to make money and that's the Howey test. And so when you have investors,
Rolling on the efforts of others, you know, to protect their investment of money, then you become a security and there's nothing. There's nothing inappropriate about being a security as long as you make the fair disclosure. So if you look at microstrategy, we have like an army of lawyers and an army of accountants and we have thousands of pages of SEC filings and nobody in the crypto World reads them. Sometimes you tweet and crypto and you think
I'm not going to read to the 280 is character and if you put a thread and there's a second part to the Tweet 10% of the, people read the second tweet and the likelihood that they'll go to page 98 of your 10K and read the table, that tells you tells you all the details. That's not very likely. So I think the crypto Community is as having a reckoning. I think they're realizing there's a difference between crypto and Bitcoin.
There's the reason that Bitcoin doesn't need to have an army of lawyers and issue. 10,000 pages of disclose disclosures is because there's no small group of people doing anything that could do anything, right? And and on the other hand, the rest of the crypto economy is, is either producing the stable coins, or they're producing other tokens, and we can see that there's now massive uncertainty around all that.
Stuff. And
You know, in a, in a way, this is really an educational event for everybody. I I think a lot of people in the crypto community that didn't understand the issue. Like, what is the risk of getting paid twenty percent yield or okay? Getting paid, eight percent yield on a token. Now, they understand a lot of people when we said, you know Bitcoins property and the others are securities and they don't understand why I like they're all just crypto tokens.
Now, they understand that when four people can get together and do something that may work and it may crash the entire thing 20 now, they understand that that means it's a security because you can do something, and if you can do something, you have responsibilities.
And you end, you have responsibilities. You have to go very carefully. At least you have to communicate what you're doing and be thoughtful about it. So I I'm not I'm I'm not so bothered by the situation. We're in right now. I mean, other people have a lot of anxiety and I suppose I'm empathetic to anybody that does. I'm anxiety, but you know what? I said this morning on Twitter, I still believe which is
You know, in the near term, the market price is set by people with large amounts of money. A very short attention span that don't really understand Bitcoin as well as you do, right? And so in the near term people with more money and less knowledge that the price over the long term, they get the knowledge, you get the money, you just you just have to wait at some point, people will understand the difference between Bitcoin and another crypto token.
They will understand the difference between Bitcoin and gold or they just were in Bitcoin and and property, right? And and until they do, there's a market of buyers and sellers some people want to go short someone to go
long. Yeah. No, I think it's great. That you said that this is a lesson because I think this is us watching a cleansing of the system which doesn't exist in Fiat because that would be bailed out. Right? And there is no bail out for a token like this. That goes sideways.
Ways and doesn't have the Reserves. So I want to come back. I have a couple questions about Luna and Tara but first just going back to the macro picture. Do you think that a new regime has taken cold? That's just determined to tighten until maybe something breaks because Bitcoin is pretty much only existed in a QE environment. We've been in this secular bull market so much money is flooded into equities and in the 13 years that Bitcoins existed. We've basically been in kiwi, so, you know, we want to call it an inflation hedge, but as
We tighten Bitcoins falling. So what's your take on that?
I think that this is s first. Order, second derivative type stuff. We're still in an inflationary environment and they're not really tightening to the extent. They need to to stop that. Like the theoretical interest rate. You would tighten to to stop 89 percent. True inflation is nine percent.
Right. So it's this was Paul volcker. He would have raised interest rates overnight to 9%
And what we did is we raise interest rates, 25 basis points or tip 2.75 percent and talked about maybe moving it up. Another one or two percent. So in a year and a half, when the interest rate is two and a half percent, it will still be less than eight and a half percent.
And eight and a half percent is a hedonic. We adjusted number and I think I saw some calculations. They said, if they used a 1980 methodology, it would have been 15 percent have been double or something. So, the, the neutral interest rate if you actually had a conservative bank, would be sixteen percent interest rate in the US dollar. We're not there. We're not getting there. We're not going anywhere near there. And every prescription I've seen,
As is inflationary. So I think that they're they're making a lot of noise. It means the Traders are trading.
But let's and and you know, like minute by minute, hour by hour, day by day. You have you kind of have to reduce your IQ by 50 points. You can't be too smart because you have to kind of, you know, dumb yourself down to trade with Traders. This is why I don't trade with Traders because because the opposite of the rationale is the profitable or you have to do the double opposite of
Rational to trade with Traders. I don't think that makes sense. But let's get let's go back to October of 2020 on October of 2020. Bitcoin was like 12,000.
NASDAQ was 11, I think Bitcoins 12800 or something or maybe 11,800 and NASDAQ was like, eleven thousand and change and gold was higher than it is now. And if you roll the clock forward, 24 months Bitcoin is up by not quite a factor of three. But factor of 2.75. Gold is down. And as I could, so I believe
And and the rest is Sound and Fury. If you look back four years, you see the same pattern and look back eight years. You see the same pattern. So if you're a Trader, you know, you're you go through this perverse thing of all, they're going to raise interest rates, 75 basis points or 50 basis points, or they did. They said they weren't raised it. When they weren't going to raise interest rates, 75 basis points, the market rallies, when inflation is worse than you expected the market.
Tanks.
but if inflation is worse than you expected, you really ought to be buying the inflation hedge, which is Bitcoin, but you're not and that's because
People that don't really understand how Bitcoin works or just trading it based upon a back tested model. So the back tested model says, it's correlated to risk assets with higher volatility. So therefore, if I think risk is going to Trey off, I should trade it again. No, traitors the Traders are in a tug-of-war with the technocrats.
The technocrats are are bearish. They're afraid the Traders or mercenary right there. Just make a buck the maximalist already all in with dollar cost averaging. So we're kind of along for the ride and the FEDS going to control the mood of the Traders and the technocrats and the near term and the FEDS jerk and everybody around.
But in time, you know, like if the economy actually, truly compresses, that someone will come back and they'll lighten up some of the monetary policy will go the other direction. I don't, I don't really try to figure it out that much because I'm not sure you can figure it out.
Like I like if you look at the at the way Bitcoin traded in the one hour after the CPI numbers came out this morning. Yeah inflation is a problem. We saw Bitcoin aggressively. Oops. Now, we buy Bitcoin aggressively. Oops. Now, we're not sure what we do. What's Nasdaq doing? It's like it's a Fool's errand to try to
Figure it out in the near term. So I wouldn't even worry about it.
You know, that's really interesting. I mean, you bring up a great point that if they wanted to raise interest rates in order to actually fight inflation. They would have to exceed what they did probably even in the 80s, but we can't because of the amount of debt and the fact that none of these companies are, our government would be able to service the debt. So they're sort of stuck between a rock, and a hard place and I think a lot of people were expecting volatility, but it's almost as if you know, they feel like everyone expects expects the
I said put to happen once again, but every time it's happened before, we haven't had inflation. That's been this hot. That's actually affecting people's Grocery and gas bills to the extent that it is right now. And so, you know, politically I think that this is just developed into the last 10 years, growing more and more polarized. People are looking for a place to to blame because they feel left behind, they feel like the system is rigged. There's so much distrust in the system. I think this is a big reason. Why Millennials love the idea of Bitcoin because there
You know, they're passionate about technology, maybe changing some of these things. But with the FED, they're very limited in the levers. They can pull. And in order to take inflation. Seriously, they have to allow the market to continue to sell off. Right? So I think most people should explain expect, more pain, don't you think?
I think the currency will continue to expand, right? The supply of currency will continue to expand regardless of the FED policy. There's no policy to decrease the money supply. It's just a question of at what rate do we grow the money supply? It will keep expanding. And I think that the most critical issue to understand is regardless of what the FED does, the currency Supply in the US, will expand. But regardless of what the FED does, the currency,
Resupplying, the rest of the world will expand faster, right? The Japanese current, that the Japanese have a yield curve pegged to 25 basis points, which means they're buying every Bond, right. In order to keep the 10-year rate of 25 basis points and they will pump infinite yen into the system in order to keep their interest rates effectively at zero. So that's the third biggest currency in the wall, right? So that the Chinese are expanding their currency. They the Japanese are expanding their currency, the
And she's in South America collapsing. You know, Argentina is staring at a currency crisis, right? So the Argentine currency collapses, what's the solution? Get a 40 billion dollar loan in u.s. Dollars. Okay. Where did that money come from? Okay, we printed 40 billion dollars. We send it to Argentina.
Okay, that's just created out of nothing. Right? So so I think that the currencies are going to continue to expand. The currencies are going to continue to week weakened against the dollar. The dollar is going to continue to weaken against scarce desirable assets.
In the near term, they're going to be lots of gyrations and the other elephant in the room here. The big point is and this is something that I think most economists don't understand, even most, even most conventional Financial thinkers. Even want people to crypto Community, don't understand. The inflation is not only a monetary phenomenon. The inflation is not being driven only because of currency collapse.
Inflation is a policy phenomena. So the Federal Reserve in addition to not being able to stop the policies of other central banks. They also can't stop the war. They can't stop the and what is the war, they can't stop the war in the Ukraine. They can't stop. The they can't stop the trade Wars. We have trade Wars right now. We have massive tariffs. It can't on snarl the supply chain. They can't stop the war and covid and they can't stop the war on carbon.
Okay, so there are massive inflationary things. If I tell you, you can't use carbon. And 80% of the energy in the world comes from carbon fuel fossil fuels it is, you know, you're just driving that up, right? If I tell you, you can't import fertilizer from Russia, you know, in the war stops, you from importing it from Ukraine.
Right, then you're driving up the price of everything and if I tell you, you know, you have to stand six feet from everybody else. And and none of your workers want to show up to work because they're afraid to be in the office because they're afraid to stand next to other people.
Right, the medical policy, the commercial policy. If I tell you you can't buy cheap semiconductors from the Far East or from Taiwan, but you got to manufacture them at 2 or 3x the price in the US. All of these things are inflationary. And then if I tell you that, the way I'm going to solve the problem is giving away, free money or get give away money. I'm going to subsidized fuel. I'm going to subsidize food. I'm going to give tax subsidies that's inflation or yep. So the the monetary policy is
Only one of ten policies that create inflation.
Right? All of these other policies in our outside, the control of the central bankers, and you've got the policies that are outside the control of the US government, right? The policies of Russia and China are outside of our control. So the Chinese just recently locked down, right? Okay. So, if the Chinese want to wage war with covid and they're going to lock down their economy, they're going to Cripple their production and that's inflationary.
So all, you know, pretty much every every policy you read about in the paper and the past 24 months.
Is inflationary what policy is not inflationary driving. On the right side of the road is a policy which is not inflation like stopping at a red light and going at a green light, right? These are non-inflationary policies, people agreeing to speak the same language when we all learn English. We all use math, when we adopt the same protocol, when we use the internet,
Right. Are useful technologies that create productivity or not inflationary. So any policy that encourages rational, spread of efficient technology is not inflationary, but all the other interventions of which pretty much that's all that's all you see in the paper. They're all inflationary. They're not stopping.
If you check the interest rates to 15% tomorrow, you couldn't stop the other inflationary policies. The currency will continue to weaken and is the currency continues to weaken. The real question is just what do you want to own? And I think the answer at the end of the day is you want to own things that affluent intelligent. People will want to buy from you in a
decade. What's been the biggest surprise for you over the last two years?
Just with everything in the market. It could be Bitcoin. But what's something that you really didn't expect?
I expected it
all, that's why you're fortunate.
You know, like I would have expected. Bitcoin will be stronger than it is right now, so I'll give you that. But but, you know, the chaos and the inefficiency I think is all
predictable. Well, for people, I mean, there are folks out there who are getting nervous. Maybe they're new to bitcoin and they see a company like yours that's taken on a lot of Leverage, a lot of risk, and I know you put out at
We I'll read what you tweeted earlier. This week microstrategy has a 205 million Term Loan and needs to maintain 410 million as collateral microstrategy has 115,000 Bitcoin that it can pledge. If the price of BTC Falls below. 3562, the company could pose some other collateral. See slides 11, through 12 and q1 2022, presentation. And this followed, I think an article may be a week prior that microstrategy could be margin called at 21,000. So, can you maybe clarify that, because
There's a lot of people who tweet about you, who are wondering. Is there a price at which, you know, microstrategy has to sell.
Yeah, you know, our company had about five billion dollars worth of unpledged bitcoin. Just just an asset and we thought it would be reasonable to take a 200 million dollar loan. So we basically borrowed four percent four percent loan to value against the Bitcoin in order to create more Bitcoin.
I think it would be too much if we done 10x that much, that would be. That would be aggressive leverage. But if you had a million dollars and you borrowed 40,000 dollars against your collateral, I think that's very reasonable. So, I think a lot of people don't really understand what we did because they don't really have the patience to read all our financial statements or they don't sit through our presentation. So, I put out that tweet just to clarify because some of the trolls on Twitter, we're kind of a
First, they implied, we'd have some Margin, Call It, 30,000 then they implied, we have some Margin Call or some liquidation of, in a 21,000 and the truth of the matter is we have enough collateral to, we get to about 3500 and some change. And then we just have to post some other type of collateral. We figure it out then. I don't think the coins going to decrease by a factor of like 90 95 %. I think that if you are borrowing against Bitcoin and you plan for an 80% drawdown, you still, can you still can
Over the lawn that you're fine, right, based on what we're seeing right now. I don't expect an 80% drawdown in the market, but I did that to clarify for shareholders in might have anxiety because some people just read what they read in the in the tweets and the trolls will just always say something - if they can come up with something negative to say
what's behind your decision to take on so much leverage and actually take out debt to buy Bitcoin. Why the
risk? I wouldn't call it.
It so much leverage. Some when people when you say so much leverage people think oh, well, I had a billion dollars and so I borrowed two billion more against it, you know, 11 have three, two, one. And, and so you can take 22x leverage in the markets and that means, like, you started with a million dollars and you borrowed, 20 million that's loveridge. If you start with a million dollars and you bar 40,000, you see the difference between barring 40,000 and barring 20 million, right? So 20x Leverage is boring.
A million dollars against a million. And what we did was borrow 40,000 against a million. The company has some debt different types of debt. We've got 2.2 billion dollars worth of debt, 500 million dollars of senior note, like a junk bond and 1.7 billion and convertible debt.
But the 1.7 million in converts or really unsecured, you know, sort of equity-linked financing. So we don't pledge any assets against those things. And they're, they're basically five six years in duration, the pay no interest. So it's a bit more like, issuing Equity than issuing debt. And the reason we did that is, if you could borrow a billion dollars at 0% interest in order to buy Bitcoin. It seems like a rational thing to do. I mean, I think pretty much anybody.
Send the world. If the, if I offered you a billion dollars for free for five years and said, do you want it?
All right, to do anything. If you, you know, almost if you're in any business at all Cosmetics, you know, technology, mobile phones, Aviation, fill it up. If, if you could borrow a billion dollars at 0% interest and invest in your business, you would if you if you're not willing to invest in your business, then it's the only reason not to would be. I don't have a use of the Capitol. I can't use the money or I don't believe in the business.
For the longest time, we didn't really have a use of capital. Like if you're not, if you're a non Capital intensive business where you can't get any more output from money, doesn't help to have the billion dollars. But but Bitcoin is a capital intensive business, right? Our strategy is to acquire and hold Bitcoin. So if you offered me a hundred billion dollars instead of a billion, I could acquire 100x more Bitcoin. So so we have a use of proceeds. So we raised
capital.
We've raised quite a bit of capital. I guess. Now we bought four billion dollars almost four billion dollars a Bitcoin 3.97 billion. And if you trace what we did, not only we we took 250 million dollars in cash and we bought Bitcoin with the treasury. Then we did a Dutch auction and in a Dutch auction. It's on. It's like you're doing a share buyback. We offer to buy back our stock for a hundred and forty dollars a share.
And the proceeds after the buyback, where excess, then we bought Bitcoin with the proceeds.
So that was a that was the second transaction. The third transaction was a 650 million dollar convert when we did that, we trade we paid 75 basis points. So the reason we did that is we thought paying 75 basis, points was cheap cheap money. We're kind of effectively short the dollar and we'll long Bitcoin and we expect both going to go up more than one percent a year.
And then the fourth deal was a billion 50 million and we borrowed that at zero percent interest.
And I think the conversion price was fourteen hundred thirty two dollars a share. So it wasn't really diluted to our common stock shareholders, and we felt that Bitcoin would go up more than 20 percent a year and it helps us drive our strategy, which is to acquire home or Bitcoin. So, in Bitcoin, went down after China, Exodus. Hmm. We are stock traded down Bitcoin traded down. It wouldn't have been a creative to issue equity and it would have been a creative to do a convertible debt.
Dancing, so we had a company generating a lot of cash flow. We had not actually levered it or mortgaged it. So we went and we did this junk bond offering 500 million dollars and that we pay six and an eight percent interest. So in essence, we're mortgaging, the future cash flows of the company to buy Bitcoin. And our view there is
If you have a set of cash flows for the next decade, and if the money supply expands at 15% a year, then you have to Discount the cash flows 15%. So if you discount the car at 18% growth, that means your cash flows are worth half as much in four years and they're worth 25% as much an eight years. So the money expansion rate is the discount rate. And if you're operating a cash cow, the
The thing to do is to forward Finance, all the cash flows and converted into scarce desirable property. So we in essence mortgage the company because we could borrow cheap. The cost of it would be almost impossible to raise that money now.
So, it's kind of like asking a question, like, would you mortgage your house and pay two and a half percent interest for 30 years? Or would you wait until the cost of the mortgage is 5%? Answer is like why wouldn't I actually borrow the money at two-and-a-half percent, right? Get the cheap money and then buy something that I think is going to appreciate in value more. So so that all of those bonds when you add it all up it's like to
A point two billion dollars with a 1.8 percent interest rate.
And they don't come due until late, 20, 25 or 26, or 27 and either way, either convert them to equity or we refinance them. At that time. That's what we did that. Because I think any rational person that could borrow 2.2 billion dollars at one point, eight percent interest.
Would probably borrow the money and now we'll Bitcoin go up more than 1.8 percent a year. I think certainly, it will go up one and one point eight percent a year when the market changed change direction after that, junk bond, our stock traded way up. So, we sold a billion dollars of equity, that was actually a deleveraging.
So if you look at what we did, you know, we bought a billion, we bought 250 million of Bitcoin, and then we delivered with the Dutch auction. Then we partially levered with two converts. Then we levered with the junk bond, and we delivered a billion dollars of equity, then the market traded down. So, then we levered up 200 million, but the 200 million was, again against a fairly small large collateral base. So it's like a small degree of love.
Average. And the reason we do these is because every single transaction we did keep secreting, our Vic coin, right? And from a macro point of view, the whole, the only thing that really matters is how much Bitcoin do you have. At the end of the day, you're buying 121 millions of all the energy in the network forever. And so if you keep a creating your Bitcoin, then you're getting a greater share of the energy in the network forever. And and the network is getting more powerful as people learn more.
So, the macro economic strategy is straightforward. The corporate strategy is also straight forward which is where a publicly traded company with a security and someone buying our security is buying it because they want to be long Bitcoin exposure. So if I had a million dollars and I wanted to buy Bitcoin, but I can't buy the Bitcoin. Like a lot of people can't buy the underlying property either for legal reasons for tax reasons or
Nicole reasons or Charter reasons, there are a lot of reasons why they can't buy Bitcoin directly so they have to buy a security.
So, any biosecurity their choice is to buy an ETF either by Beto are they, by gbtc, or they buy a Bitcoin miner or they buy microstrategy. And, and they all have different characteristics, but microstrategy looks more like a levered spot Bitcoin.
Holder, and and we're paying yield, instead of charging you a fee. Right? Right. Like if you were to put a billion dollars in a fund that charge you two and a half percent fee, you pay 25 million a year. If you put it into a Futures product that has a 10 or 12% rollover cost. You're going to pay 125 million a year to have the billion dollars invested. If you put it in microstrategy, we're not charging you a fee. We're not rolling over Futures and we're levered to the
Side.
And you're getting a yield and it's tax-free because we're not actually paying out a dividend. We're rolling it into more Bitcoin. So the day before our Silver Gate long, we had 125,000 Bitcoin. And then after we did the loan, we ended up creating up to 129,000 bitcoin. So you get more Bitcoin and we didn't issue any more Equity. So it's not dilution is not diluted to our shareholders.
and,
Now, you're back to this very interesting question, which is so your investor Bitcoin goes to zero and you invest a million dollars. You lose a million dollars.
But with microstrategy, you can't lose more than a million dollars. You can only lose the million dollars if you invest in a straight spot ETF one to one, then you lose the million and if it doubles you make a million, but you have to pay 1% fee. But if you buy something like microstrategy, it goes to 0. If it goes as are you lose your million, but if it doubles, you'll probably get more than the million because we've got leverage on the upside and there's no feet.
So now we're providing an instrument, a security instrument that meets a need for a public investor, the ones Bitcoin exposure, the needs by security. So that's why we've constructed the company. The way we have not to mention. Let's just State the obvious because we could write. Would you rather own? 60,000 Bitcoin or 130,000 Bitcoin? I'd rather on 130,000 Bitcoin. That's better than 60,000.
Number is better than the other number and if if the way you're going to buy the extra Bitcoin is with extremely cheap dead. That's good.
And the last point I make is that if the currency is collapsing, then you need - working capital. You need - net working capital. So, if you have a billion dollars in pesos and the peso is losing 50% of its value where year then it's costing you 500 million dollars to hold a billion dollars in peso working capital. When you flip the billion dollars into USD. You're losing 200 million a year to hold that as working capital because that's the M2 money expansion rate.
So if you didn't have Bitcoin, I mean, the ideal thing is by a billion in Bitcoin and hold it. But if you couldn't do that, what you would do is you would buy back your stock with the billion dollars. Or you would borrow two or three billion.
You don't want to be plus a billion. You want to be my you want to 0 2 billion. So, you would borrow two billion dollars in or three billion in pesos.
And so instead of actually losing 500 million a year by having positive working capital. You would make the equivalent of 500 million a year by having - working capital. So, so leverage for a retail Trader means, maybe you're going to get Force liquidated when when the asset trades up or down. That's a bad idea. But debt for a corporation is almost essential.
It's almost essential if you're in a n a inflationary currency regime. And if you look at all the companies in the world, pretty much every company is running with zero working capital or - working capital. If they can even the ones that look like they have cash. They'll have like 30 billion in cash and 60 billion in debt or or something like that. And so
that's just kind of basic shareholder, wisdom for that reason.
Is there a scenario where, you know, Wall Street can use Futures to essentially bet against a company, like micro strategy that has a lot of Leverage when it comes to bitcoin? And basically draw the price down and bet against you and pull, pull Bitcoin, you know, in the other direction. I don't think we move the
Bitcoin price their coins much bigger than us. If you look at the total spot volume.
The future is volume of Bitcoin. We're just a small part of it. I think that certainly people on Wall Street, do shorter stock but it works the other way too. When Bitcoin moves up to unwind the shorts. So if you look at the volume of trading, it's excessive and what you're doing is you're arbitraging. I'm sure people are arbitraging, our star equities versus our debt versus other people's, equities versus other ETFs versus Bitcoin versus Bitcoin. Futures all
The time and that's fine. They can do what they like at some point. The problem is if they if they push too far, they'll get caught short naked, make it short and then they'll get squeezed. Right? And that would be a dangerous thing for them. Right? Because on one hand, you can say, well, you know, someone to Wall Street, might short you down, but there's someone else on Wall Street, that actually wants to squeeze the shorts, right? I mean, it works that way too. Like, if you look at the
At the GameStop situation for example, so if people get too short, look I could I could short microstrategy and go long Bitcoin, but I could flip it and I could start shorting Beto and go long microstrategy or I could start going long microstrategy and short Bitcoin, right? It works that way to the question is who wants the money now.
It doesn't really matter to us, you know, whether whether the stock fluctuates in the near term because we're not in ETF and we're not a fund. So our capital is permanent for, you know, for no one's withdrawing capital from the company, right? You can drive, the you can move the stock price here and there and it will happen. But but the capital is permanent, and that is unlike an ETF.
You know people could, if people sell the ETF off the ETF has to redeem the asset.
There's No Redemption feature here. So, whether the, if the company's stock is trading at $10, a share, a hundred dollars and share a thousand dollars. A share it doesn't change the fact that we have a hundred and twenty nine thousand two hundred Bitcoin. All it means though is like, you know, if you were foolish enough to short it to the extreme, you know, the company could just buy the stock back from you, right? And it will cost you a fortune. But before we got a chance to buy it back off the time, somebody else in the market will go in and do that.
And they'll make the fortune right? So while I mean wall Street's playing these games all the time, right? And we could, we could talk about both sides of the trade on GameStop or the bill Wong trade or you can look at talk about Luna and UST. It's like there's someone on the other side of that trade. The real question is, are you fragile or Not Fragile?
Right. And the company's not really breakable by shorting a stock. Right? All you're going to do potentially is lose a lot of money when you get squeezed. So in the near term, it's going to move or if it's going to move and when people have hysterical days, they'll actually aggressively but the one of the big advantages of being an operating company like microstrategy is we're not a fund know.
Is redeeming we're not an ATF know, there are no Redemption rights where a permanent operating company. It's harder for us to raise Capital. We have to do it pursuant to a registration statement. You know, we have to. We issue a shelf registration. We sell it in the market and I'll pursuant to all those statements but once we've raised the capital its permanent, like impermanent means forever. Like the capital is there for a thousand years forever. It's not like you have a nine-year lockup or a 3 or lockup, right? We were a stick.
Capital, we buy the Bitcoin. There's no, there's no concern about that. And the closest the most complicated part of the capital structure is probably just the bonds. And that's why you have to read, write all the all the terms of the bonds. And that's why the management team has to spend a lot of time thinking about what kind of financing transactions. We enter into.
Yeah. Well one of the reasons I wanted to ask is because it seems like, you know, one of the things that happened with Luna and Tara is
SLI there. There were people piling in from Citadel and BlackRock. I think just helping squeeze it down and push it down. And so just, you know, a couple questions on the Luna situation, you obviously said, it's a really big lesson, but you're also a obviously a proponent of stable coins and I know they're really important especially in developing nations. And for for people that can't handle the volatility of Bitcoin. So what's what is the big lesson? What do you want people to know after seeing this situation with Luna, play out. I think the big
lesson. Is that all of these cryptos.
Has other than Bitcoin or securities?
And if their Securities that means that there are management teams and there are policies. And the question is, what's what's the reserve backing the coin and what are the policies back in the coin? Right? And so I can't really tell you what, the reserves were or are with UST. And I can't tell you what the policies were right because there aren't two hundred pages of SEC filings that explain to you that.
Right. No one in the world knows what the back. What the the reserves are for tether.
You know, you kind of have a vague idea but you don't really know and one of the policies you don't really know, you know a little bit more but you you still don't really know what are the reserves to the other stable coins. So the whole the whole point of of The Regulators like Gary Gensler is their Securities there should be full disclosures.
The disclosures require loyal armies of lawyers and accountants, right? They slowed things down, you know, you can't go fast and break things when you're dealing with that much money. You have to actually just close everything and people ought to know what they're investing in. So if you buy microstrategy stock, you can read, you can read all of our bond terms. They're published, we public, you know, we publish the terms of the Silver Gate loan, the terms of the converts, the term,
Of the junk bond, you can read them, right? You can read the financial statements of the company. You can read about who governs the campaign, right? You know, who the shareholders of the company are, you know, every single time, any material thing changes, right via an 8K. That's the way that that Securities work when you're when you're responsible for large sums of other people's money. I think that the crypto industry is immature.
ER,
It's going to grow up. Right? And it needs to we're crossing the chasm from entrepreneurial entrepreneurial driven entities to institutional entities. And one thing that institutions do is is they have very sophisticated systems for providing transparency, you know, and they have like, three attorneys to figure out when you write the sentence saying exactly. Who
Does what? When how do you punctuate it? And did you enter? Is there any confusion if there is some confusion? That's the problem. That's why people obsess over these things, right? It's and you can see, even when you make if you make adequate or full disclosures with 1,000 pages of text, people will still get confused either intentionally or unintentionally, right?
So, if you don't make all those disclosures.
Then I think what you have is chaos, and, and I think that's the lesson from this. I think, I think it's time for the industry to grow up and I think it's time for people to figure out the difference between a security token and a digital property.
Well, you know, I watched Gary Gensler is MIT lecture, and he clearly understands Bitcoin than I think, a lot of bitcoiners out there. He can speak to really the the programming and the computer science behind it. So I know you've been one of the people
Says that we're kind of, we're lucky to have Gary Gensler and as you see who understands Bitcoin to be digital property and understands that the others are securities, then others in the Bitcoin space, call him a crook. And you know, he had he approved the Futures ETF, which I would argue is a bigger risk to investors than the spot ETF and I know there's a big push. You just tweeted out for people advocating for grayscale to convert to this body TF. So what are your thoughts on SEC regulation? And and Gary, are we going to get the spot ETF?
First of all, I think genzler's position is that the crypto exchanges are trading tokens. And most of those tokens are securities and therefore, their trading unregistered Securities. And that means, he's got a problem with trading unregistered Securities and he's also got a problem with the fact that exchanges trade Securities without registering. And I think that UST thing is like an example, right of why their Securities and why. That's a problem in, why is concerns
I think that his resistance to bitcoin ETF has been predicated upon his observation that he wants the crypto exchanges to register with the SEC.
And there's been some resistance there. And I I think that
It'll be interesting to see how that resolves itself. I think the highest likelihood for getting a spot Bitcoin. ETF is the conversion of grayscale gbtc. And I think the gbtc is, is a is a different fact. Pattern is a unique circumstance versus all the other spot. ETF submissions. They don't have investors and greyscale has lots of investors. And the others are are are to provide a service to the market. That's new.
Where's gray scale is simply upgrading an existing offerings in the market. So if anything does get approved, my belief is the grayscale. The gbtc trust will get approval to become a spot ETF first. It's, I can't really know the future, but I think it's more than 50 percent likely based upon all the facts that I see right now.
Should they approve a spot ETF? Yeah. Are a lot of crypto Securities. Yeah, should the crypto exchanges register with the SEC? Yeah. So all those things are true. Right? I mean, like, everybody's got a point and they've got an and I empathize with all their points of view, right? I empathize with the Congress doesn't want to damage the retail investor the SEC wants to regulate Securities and protect the
Faster, the administration wants to move forward but appropriately, the bitcoiners would benefit from a spot ETF. There is an inconsistency between approving a Futures ETF and and not approving a spot ETF. It's much much better for Bitcoin. If there is a spot ETF. The future is DTF is probably the equivalent of find the charge. You ten to twelve percent fee a year like it's obscenely expensive.
Civ to to achieve the exposure by rolling over future, so if I said to you, give me your money and I'm going to charge you a 10% fee a year to invest it in Bitcoin, you would think it out, right? So
so why did Gary approves a Futures and not the spot?
I think that again, there's a different law that presides and it was, it's definitely being approved or rejected on a technicality. But it's, you know, laws the laws either a technicality or it's the law depending upon whether you agree with the. All right. He had he had legal reasons to approve one and not approved the other and I don't know that he makes all the decisions. Probably it's a consensus thing and in the SEC or the administration.
I do think it's pretty obvious. They've been denying the spot ETFs in order to create pressure on the crypto Community to register.
But that's why that's happening. There's tension between the crypto exchanges and the crypto tokens in the security tokens on the SEC.
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There's tension between the crypto exchanges and the crypto tokens, and the security tokens and the SEC.
Well, I really hope over the next couple of years that there's some more clarity that happens overall, especially in the media about Bitcoin versus the other tokens and crypto Bitcoin versus crypto. I know that everything gets lumped together, but last couple of questions you spoke with Kathy would on stage at the Bitcoin conference. One of the things Kathy said when she was talking with you, as she expects a million-dollar Bitcoin by 2030.
How do we get there for those out there who are really shaking with these prices right? Now? How do we get to a 1 million dollar Bitcoin by 2030. Do you think that's possible as
well? True said that, I thought she's so
conservative.
I thought I can't believe she said, just a million in front of this audience. But that was just, my reaction is kind of interesting. Other people have different reactions
even more than a million u.s. Dollars by 2030.
I don't I wouldn't put a date on it. Okay, but I think it's
Worth more than a million. I think that the next the next steps are are pretty clear. My check was would be the administration, the administration recognizes Bitcoin check that happened in March, the treasury, you know, accepts it check the happen in April. So we've already got the administration that recognizes a need to support.
The digital asset economy and they recognize the Bitcoin is an asset class. I think the SEC approving. A spot ETF will be important Milestone. I feel like we're moving toward that with this gbtc process because I would be disappointed if it isn't approved. But but I'm certain reasonably, certain will get a spot ETF sometime in the next 36 months. I can't imagine that we won't and maybe we'll get one with
The next 12 months, I would say it's more than fifty percent likely in the next 12 months and it's 90% likely I think in the next 36 months, I think clear guidance on stable coins is a another important thing when Senator Toomey was speaking to Janet Yellen yesterday. He brought this up and he said, can we get legislation this year? And she said, I would think so. I would think
Should so. There's a there is agreement between the administration and that's a Democrat Administration and a Republican senator. Right? The Republicans would like this, the Democrats would like this. So, I think that, that kind of guidance is important because there's a massive demand for digital currencies in the form of stable coin. And yet the uncertainty, the fact that the currencies are currently being delivered in the form of stable coins, which are unregistered Securities, which are unlicensed, which are in a,
Military grey zone, right? Kind of it. Has the industry twisting in the wind because really big Banks can't get it. They can't issue. None of the banks can issue even though the world wants a trillion dollars worth of digital currency, right? So so resolving. That will be created, will create a big on-ramp for Capital into the digital economy and ultimately that on-ramp and the competent means. I mean, imagine if I had five hundred billion dollars of
SD stable coin and then I can die. It was sitting in a secure with a secure counterparty that I trusted.
And now I could move it by a lightning Antero, right?
Right, you really could have 6 billion people with a mobile phone moving millions of transactions a day, maybe tens or hundreds of millions of transactions a day paying for everything. You see a massive Avalanche or conversion of all the weak currencies to the dollar. You see, you see digital dollars become the medium of exchange everywhere in the world, moving on, on Lightning rails, which would be incredibly good for Bitcoin. Incredibly good for the
Tire crypto economy. So I think that the stable coins maturing as a big deal. I think that the FDIC when they provide guidance to banks that allow Banks to either custody Bitcoin, or take Bitcoin as collateral against loans.
Right. Now, I think a bank would probably have they can't really use Bitcoin as part of their asset package or be like have to be reserved for 1 to 1. Whereas, you know, the dollar is reserved for it, five percent. Sometimes it's zero like a banquet issue, 100 billion dollars of loans, 40 reserve. And then when they're, you know, at some point they could take five billion dollars of us, treasuries and issue a hundred billion dollars in debt against it. So I think the
He has a very important lever in the way that they the guidance, they give for Bitcoin as an asset.
And I think that the other big knows that happened. It's happening right in front of us, Natalie. I mean, the sound and the fury causes people to miss these things that really matter yesterday, when the Secretary of the Treasury said, we need to get this done this year. And and so did, the Senate does a big deal and this morning fast be Matt and voted 720 and they're meeting to to create a formal project, too.
Review accounting for digital assets, which means Bitcoin. And right now the accounting is toxic and prejudicial. So there's pretty much no outcome that I could imagine that wouldn't be beneficial or better than the current status quo from a gap accounting point of view. So so fast be FDIC treasury. White House, SEC. All of these things are there, all gating items.
For institutional adoption of an asset class and all of them are in motion right now. And even the negative things, what you can look at, look at the market and all the trading down. I don't think it's necessarily - I think you have a lot of liquor liquidity, or a lot of Leverage shaken out of the system.
Everyone that's everyone that don't doesn't know the difference between Bitcoin and every other altcoin, you know, kind of a city. Now has an interesting example of the difference between Bitcoin and Luna. Hmm, right? They understand the difference. At least at least figuratively, understand the difference. The Regulators are now going to have a catalyst to move faster.
Right because now, you know, genzler said, you know, someone's going to get hurt if we don't fix this and the Congressional view three months ago was no, don't don't do anything. Don't move too fast because you might mess up the market. And Gensler said, well, a lot of these are, these exchanges are trading security tokens, and we don't know what they're backed by and when they crash someone's gonna lose a lot of money.
Now, I think the political sentiment will shift to, okay. We understand why you think we should regulate this, right? We understand why the administration thinks this needs to be brought into the public policy framework. I think this will bring the Democrats and the Republicans together. I think this will bring the Congress together with the administration. I already think we know where their sentiments are.
They want, stay safe, safe transparent Welbeck, stable coins. They think Bitcoin is digital property. They think that some of the other the other security tokens ought to be treated as a security who some disclosure. That's what they think. They thought that a year ago. And I think there's a little bit of paralysis six months ago, when the president's working group put out the note on stable coins. I think that the sentiment was somebody in Congress will try to do something but
It won't happen this year. It'll happen in 2023, maybe. So I think this crypto, what do they call a crypto crash or crypto? Something? I think this, this many meltdown is going to give a lot of energy, a lot of momentum to the movement to publish, clear guidelines for digital currencies, and digital Securities, and digital exchanges. And I really think,
Ink the Bitcoin benefits from all those because when people think well, they're seventeen thousand different things and they're all equal, but this one gives me twenty percent yield and that one's named after my favorite dog. And this one is up three thousand percent. And you know Bitcoin is Boomer coin. I think that holds back the industry, right? And I think when people say, oh well Bitcoin is actually the best engineered, most conservative, most responsible crypto.
And it's property and is not a security and they understand the technical Hazard and the moral hazard and the legal Hazard of dealing with something other than Bitcoin, when they properly risk assess everything and then they properly understand what can go wrong. And when the, when the rules are clear, then the benefit of using Bitcoin is going to become
much clearer as well.
And it's not becomes clear. And also as I become safer, right, institutional money will flow in because they'll feel safer because they've got clear rules and then all the risk Capital that, you know, that they underestimate the risk of holding the other cryptos. Everybody underestimated. Say, the lunar risk. Yep, and they, and they underappreciated the Bitcoin benefit, right?
And you could describe it, theoretically but until you see something blow up, then you you know, you really can't get it through two people. So I think that this is its catalytic event that's going to accelerate adoption and the maturity of the entire asset class, you know, it's going to do it by accelerating the regulation and by accelerating the guidance, but the conclusion is hot
Of course. Well, let me ask you something because a lot of people are in this because they want to recreate the financial order, make it more fair and accessible and to create a more egalitarian society. And I think, you know, bitcoiners are the first to say, it's not it's not going to be equal. Everyone's not going to be making the same because everyone has different levels of motivation and talent and Merit will I think be more important under the Bitcoin standard, but what does the world look like as we adopt?
Coin. If there are people or companies that have huge amount. So let's say Bitcoin gets to a million, you know, microstrategy has 129,000 Bitcoin. They're big people that have been in the space for a long time. Does that, how does the wealth concentration play out and how is it going to be better than what we're seeing under Fiat
Bitcoins continuing to decentralize. I mean, it's every single day that goes by it gets more decentralized. I think that
Most people understand that it is, it's the, you know, the lowest risk most robust most secure digital property of not the only digital property. Then I think you see an explosion of corporate adoption and institutional adoption and Technology adoption. And, you know, that will manifest itself in in companies like block, or or PayPal or others building Bitcoin and then building lightning and
Ooh, their mobile apps, right? The mean, the real way, it spreads is eight billion. People have a mobile phone. They've got an app that runs lightning on the mobile phone and they've got a communication system, some kind of app from Facebook or Google, or Amazon, or, or apple or somebody or block that actually moves money around and they move and you're going to move some combination of a stable security occurrence.
Or property on a on a high-speed rail. And it's either going to be moving on. It'll move on the base layer like Bitcoin, but that'll be really big movements. I think you'll see blocks of 25 million dollars at a time. We were on the base layer or more. I think you'll see some move on Lightning rails and then you'll see a lot. Move on layer 3, rails, you'll like, people just what's up the money? Or they'll just move the money. Cash app cache tag to cash.
#And it will never even hit lightning or they'll iMessage the money and it'll be moving through the Apple network or the block Network, or the coinbase network, or the Google Network. And then I think you'll see lots of Institutions that will and lots of products of just how Bitcoin embedded in them.
Microstrategy just has Bitcoin embedded in it. So, microstrategy stock is a derivative of Bitcoin, right? We're like a product, but there's no Redemption, right? We don't support. You can't redeem your Bitcoin on the on the base layer and you can't lightening around your Bitcoin. You can simply own and trade microstrategy stock, and I think you'll see that spread everywhere.
I think that there are, I mean there's going to be a hundred thousand different applications a Bitcoin, right? I mean, I would like to, I could start naming them all, but we would like talk for an hour, right? You can use Bitcoin or Bill Bitcoin into cyber security apps and Enterprise apps. You can build it into payment apps. You can build it into marketing apps. If you understand, it is digital energy.
Then I can build a website that sign that shines satoshi's on your skin by like, imagine if people show up to listen to your podcast and they get paid 10 SATs a minute. What if it's 100 cents a minute. What if it's 1000 sets a minute, what if it's a million sets a minute? Okay. Well, that's the definition of bright sunlight. Right? Like if the sun shines brightly, I just crank up the amount of satoshi's I say.
And the direction of the audience.
That's interesting. Right? And the opposite is while people pay you. Okay? What's the polarity 100 people? Pay you ten cents a minute or you pay 100 people, ten cents a minute. One of them is sales. One of them is marketing and the orange check idea. Is anybody that wants to show up and post a comment on your website has to post, you know, 100,000 SATs. And when they post a comment with a phishing attack URL,
You know, you delete their access and you and you, and they forfeit their sat deposit. Okay, so now, that's security. So, you can build this into any marketing app. You can build it into any payment app. You can build it into any Security app. You can build it into the balance sheet of a family, an institution, a company, a government. There's only 21 million ever going to be right, which means that every is going to fight over that Bitcoin.
All right, and it's some point when Apple needs it. They're going to pay a lot of money for it. And when Google needs that they're going to pay a lot. And so there's going to be a continual increasing demand, but it's also going to serve as the underlying base layer for for the balance sheet of like 200 million Africans.
Right. It's the single best property solution for everybody. So they won't they may not have a lot, but they'll have some and they'll get it by an Android phone or some other very cheap device.
And if they can't afford it, you know, then some you know, some organization the world, you know, the World Bank or the IMF is going to buy the Bitcoin, so they could distribute it right now. They're Distributing dollars as their Reserve asset. But what happens when they start Distributing Bitcoin?
And ultimately, I think the summary is weak properties, are going to continue to demonetised weak. Currencies are going to continue to demonetised money is going to flow from the week to the strong. So you're going to sell your pesos and your Bolivars. You're going to buy your dollars. You're going to sell your farmland and central Africa and you're going to buy Bitcoin. And
The politicians are going to metal every which way to block that, right? You're going to have Capital controls. You're going to have wage and price controls. You're going to have regulations. They're going to be continually ever-shifting Ubi. Yeah, you know all back and forth. And if you fixate like like fixate upon the near-term news and Argentina, you know,
On a Wednesday, the banks in Argentina, let you buy Bitcoin on a Friday. They closed along with the IMF for forty four billion US Dollars and then they direct the banks to stop, sawing, the Bitcoin. Now. There's how many millions of people in Argentina that are wondering whether or not they should buy Bitcoins some other way. Yeah, you know, like they that they can, they can stop you from converting 10 million pesos into Bitcoin. They
They can't stop an Argentine employee from getting paid in Bitcoin over the lightning Network. You see? So what's going on here is is
And idea is spreading right, a technology is spreading two steps forward one step back fits and starts lots of noise.
Right. Sound and Fury but yeah, no force on Earth can stop an idea whose time has come. And you can't stop people from downloading a mobile app and application to a mobile phone. And and even if you do right, there's other devices right at some point, you know, I could just I can send you, you know, a hardware, a wallet or you know, or or something some kind of device that holds the Bitcoin.
And and so those are those things are going to start to circulate more and more everywhere in the world. And that force is the decentralizing
force. But do you believe that it will remedy the wealth concentration? Because I would argue that at least in the u.s. Right now. That's probably one of people's biggest grievances. All right.
I'm not an idealistic, idealist. Right? Like I've said, it's not going to solve all the problems in the
World just half the problems and more. For example, right? I can still take a gun and shoot you and take your stuff. Right? Even if you own, you know, if you own Bitcoin, I can take your house. I can still declare a war on the country to my left. Right? As long as there's a government I can, you know, I can still like pass a law, taking 10% of everybody's property and give it to my friend, right?
I can still pass a tax that says that if you drive, you know, 22 miles an hour, you lose half your stuff. So there's there's going to be wealth concentrations from asymmetric law from from Wars, from tariffs from politics, you know, the content, the content effect is, you know, it says that if everybody uses, if everybody had all their wealth and currency, it would be very easy for me.
Me to steal it all. Well, actually, if all the wealth in the world was currency and I printed twice as much, I could take half, right? But all the wealth in the world isn't currency, right? Some of it is in Collectibles and some of it is in property. And so if it's in property, I can't use the money printer to steal it. I have to use property taxes to steal it, or I can use eminent domain which is like immediate seizure. So, I think that you're going to continue to have those. And efficiencies, write the conclusion is
You know, like it, if you own Bitcoin and you live in North Korea, I don't think your wealth is as secure.
You know, I would not suggest you tweet about Bitcoin from Cuba or North Korea, right? Because because they don't have property rights, if you own Bitcoin and you live in the United States, right? You're probably safer, but on the other hand, if you start tweeting about it, right? Then you're putting a Target on your head one way or the other. So I think that there's risk to everything. There's and the world's going to be an imperfect Place. Bitcoin is just going to
Improve things.
Right. It's a better technology. And so therefore everything it touches. We may better.
But not be made Flawless.
That's fair enough. I think I'm actually more bullish than you on the topic of wealth concentration being remedied. But okay. Last question, I wanted to ask you is I feel like you have really transformed through your journey and Bitcoin and becoming basically the biggest corporate Bitcoin bowl out there. So, can you just kind of speak to that like how much have you changed over the last two years? Because I feel like there's a BB a before Bitcoin Michael and an after Bitcoin a name.
You know what? I think that.
I become more optimistic as I've continued this journey. Like I would say that.
If you're if you're working as hard as you can for a decade.
And no matter how hard you work, you can't get ahead.
And you don't know why.
Right, then then you're kind of stuck in a rut if you're working as hard as you can for a decade and you can't get ahead and you know, why, and there's no solution.
Write your despondent. That's just, you know, that's just despair.
Right, if you're working as hard as you can for a decade, you can't get ahead and they figure out why. And then you and then you find something that maybe a solution right now. You're now you're in.
What would you call this? Right? It's like you're in a fight. You're in a fight, right? You're fighting. And then if you actually find something that may be a solution. Then you start to conclude it is the solution.
Now, you're on a mission.
It's not fight anymore. Right? It's like you, you know, it's just a mission right now. It's a mission to spread the word and I think that that has the journey I've gone through and I've gone from from, you know, frustration to despair to, you know, to aggression to
Mission.
I love that. That's that's the way I feel. That's the way I feel. Well, I guess last question. What do you think about Mike? Novogratz is Luna tattoo that he might need to get removed. Now.
My mother told me don't get any tattoos when I was growing up.
Same here. Alright. Anything else you want to share with folks? Thanks so much for coming back on. I know a lot of people are really nervous out there. They're worried. You know, this is for many people, life savings and what you mentioned, they don't want to be on the road.
Serfdom. They want to be on the road to taking care of their families in the future and that's why we believe in Bitcoin. So any final thoughts.
Yeah, my final thoughts are.
If you look at all the fundamentals, they're better than ever. I mean all the all the planets are aligning. I like I like the activities of the regulator's. I think they're the rational ones. Even the ones that people in Bitcoin don't like, or actually are actually going to accelerate the adoption in the maturity of Bitcoin. I think that political political consensus is is pretty solidly. Aligned behind.
A coin. I think we're a good shape there. I think the Network's never been stronger. If you look at the hash rate, I think we've got a great set of Bitcoin miners that defend the network and 24 publicly traded companies and they're growing. So the network looks healthy. The consensus is is there the industry is shaking out and maturing it needs to show you the wall can't handle 17,500 cryptocurrencies.
Right. I know we need one.
I'm not sure between you and me, we need to but I know we need one right? And it's probably good to have a few because it keeps everybody on their toes, right? The competition is kind of catalytic and keeps you from getting, you know, kind of arrogant but but the ShakeOut is healthy. You just got a see through the noise. If you if you look at this thing day by day week by week, you get despondent, but, you know go back to
Two years ago and Bitcoins trading eight thousand dollars a coin.
There's four thousand dollars, you know, at the bottom of March, but you know, when microstrategy made their first by, you know, it's between ten and twelve thousand. And so, ultimately over a long enough time frame. You see that? In fact, it's doing exactly what you would expect it to do. The only mistake you can make is just have a short really short time Horizon with massive leverage that just as a recipe for giving yourself anxiety.
If you've, if you've, if you say that, I'm just going to take the money that I want to hold for the next decade in a savings account and just dollar cost average in. I think ultimately that works fine. And, you know, the other thing that's worthwhile to point out right now Natalie is, if you look at the investors in everything.
Everything. How do you think that the Peloton investors feel right now? How about the Amazon investors? How did they feel right now? The Facebook investors, how do they feel how do I investors in l.a. Property field, you know how to investors in real estate feel how to investors and international stocks, feel how to investors in the bond market feel.
You love gold. Gold is down versus when we started at buying Bitcoin. Okay, it's not working. So tell me who actually in the world. It doesn't feel anxiety right now and then
The irony is Bitcoins winning Bitcoins. Outperforming everybody else over a 24 month time frame in a 48 month, timeframe. So everyone's got anxiety. And the real question is, what do you want to wear? What's the safe haven right now?
What is the safe haven tell me one piece of land or company or commodity, or Bond or currency, in all of South America that you want to own other than, a Bitcoin that what's better than a Bitcoin?
Right. Same in Africa. Same in Asia. Same in South America. So the world's full of a lot of chaos and a lot of anxiety. And I think that, you know, a very simple principle, isn't it? And a world where everyone is dissipating, their energy. The most rational strategy is to conserve yours.
It's very simple while everybody else is losing their mind, right? They're going crazy. They're trying, they're trying to stop the passage of time or they're trying to fight off the inevitable by trading or hedging or running or Screaming. The right thing to do is just do the Bruce Lee move, where you just like, sit down a Lotus position and take a deep breath and chill and wait.
And the Hippocratic Oath. Do no harm. That's the beauty of Bitcoins by the Bitcoin. Wait.
Don't shoot yourself in the foot right there. Do no harm and I think that Bitcoin is tailor-made for this and if you if you take that point of view, then I think you're fine. And then you don't really caught get caught up and all this other hysteria everybody else. Just they just try to get too cute and too complicated, right? They too much motion too much speed too much complexity and they
They lose sight of the big picture which is at the end of the day. Bitcoin is the most secure, least, risky. Most understandable. Most indestructible thing in the universe right now. There's nothing, there's nothing less risky. And so you can't eliminate all uncertainty in the future.
but,
If you're trying to minimize uncertainty, you know, you buy a, you buy a big Tech monitoring Network. That's a dominant near Monopoly of not a monopoly that doesn't have employees or company and a management team and it doesn't have a headquarters and it doesn't have income taxes and it doesn't post quarterly results.
That isn't captured by a corporate interest or isn't captured by a nation-state. And you just buy you just join that Network and you wait and let nature do its work because most every other strategy is going to underperform if not underperform. I think people are starting to realize now that there's no Silver Bullet here.
Well, I speak for a lot of people when I say I for one am so relieved that Michael Sailors not losing sleep at.
Night with Bitcoins price, hovering around 29k 30k. So thank you so much
Michael. Yeah. Thanks for having me. Not only
thanks so much for listening to this episode of coin stories. I'd love to connect with you. If you have questions or guest requests, so feel free to get in touch on Twitter at nap, Brunel or Instagram at Natalie Brunell. Take care of till next time.
