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[Music]
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well welcome to an extraordinarily
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special on the tape Dan Nathan gami but
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we're joined by my friend Dan's friend
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and obviously the friend of the entire
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cryptocurrency Community the CEO of
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micro strategies Michael saor is joining
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us Michael thank you so much for being
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here yeah thanks for having me guys and
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we saw Michael uh earlier in the week
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Anthony scaramucci's book party you
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obviously wrote the forward for that you
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were funny in your comments saying that
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you know Anthony wrote This Book and I'm
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using sort of air quotes in writing it
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Anthony was part of the book but he said
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at the end of it you know you should
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have one to 2% of your portfolio in
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Bitcoin and after basically you know
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writing this book he cames up with 2%
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you made the point wait a second if
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you're really passionate about this 2%
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is sort of a rounding error so let's
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start
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there yeah well I think that if you read
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an entire book of investment advice or
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financial advice you don't want someone
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to end the book saying I I don't have a
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solution for 98% of your
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problem but here's an insurance policy
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one or two per is like buying an
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insurance
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policy but 20 30 40% 50%
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75% is like solving the problem so I you
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know I I just said like I don't think
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you're G to come up with 50 good ideas
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and I I think that um the whole idea of
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diversification
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uh makes sense when you don't know the
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answer but you don't want to make a
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mistake but I think in the field of
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engineering and in many fields in life
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it's like when your kid uh is a good
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basketball player you don't say I think
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you should split your time between
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archery and jogging and swimming and
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basketball and football and hockey and
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16 other things just in case you tell
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them to focus on basketball and you
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build the plane out of aluminum and you
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don't diversify the steel beam into clay
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and bronze and balls of wood right if
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there's an answer there's an answer and
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you just tell someone the answer when
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you don't know the answer you're like
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yeah we go to Vegas and Gamble and pick
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anything but you know don't bet more
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than two% of your money right don't
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don't you know so my point really is
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there's a disconnect between giving
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someone a piece of advice to make their
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life better and then saying but I 98%
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don't believe in it all right so let's
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go to the beginning and Dan mentioned
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how we met and I'll let the audience
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know so I think you would just sort of
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come to the realization you spent some
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time working on bitcoin and coming to
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the conclusion that this made a lot of
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sense you joined Morgan Brennan and me I
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was able to sort of co-host power lunch
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with her it was one of your first
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interviews you did sort of in a
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meaningful way and you sort of outlined
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this vision for micro strategies and
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what you're going to do I think it's now
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three or four years later my math is a
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little squishy but let's just sort of
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split hairs a little bit and that plan
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is absolutely coming to fruition as we
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sit here you have now over 400,000
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Bitcoin on your balance sheet I want to
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say at an average cost of about
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$58,000 or so you can correct me if I'm
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wrong but everything you thought was
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going to happen is sort of playing out
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so let's start there and you know maybe
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you can talk about some of the things
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that you didn't see happening you did
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see happening uh some of the pitfalls
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along the way you know give us sort of
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that calendar that sort of
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timeline yeah I think um the middle of
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2020 we're running a $500 million
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business with 500 million in cash
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generating 75 million in cash flow a
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year growing Z to 5% competing against
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Microsoft lockdowns hit uh our stock has
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zero options uh $2 million of liquidity
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a day the options are worthless the
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stock is worthless we have no investor
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interest we're stuck in a in a
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competitive trap there's no way to crawl
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out of the competitive trap we've got
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500 million in cash generating 4%
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interest and all of a sudden Jerome pal
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cranks that down to 0% interest and then
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everybody's locked in their home and I'm
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staring at and then I watch all the
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Magnificent Seven stocks
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double and then and then you realize
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that if you're sitting there all your
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capital is going to be siphoned off by
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the Magnificent 7 all your human capital
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is going to be siphoned off by the
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Magnificent
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7 right even if you have a good product
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it won't be a good product in five years
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once all your engineers quit and so
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we're kind of stuck in a trap so so at
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that point you know you have three
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choices you have a death just sell the
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company and a lot of people do 99% I had
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100 competitors guys 99 of them or
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actually all hundred of them solds right
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you just exit uh or slow depth I have my
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500 million I'm just going to start to
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pay all my employees massive cash
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bonuses to not quit retention bonuses
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but you're just going to go through the
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cash at some point you're not you're not
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going to be able to get out of your hole
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uh you're just going to you're going to
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linger on as a zom
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or you take a risk and the and the risk
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is a transformational acquisition it's
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like you know when you buy VMware it's
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like C can you buy a company that's
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growing 20 to 40% a year that's a that's
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a Monster World beater company and can
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you buy it for cash or buy it for stock
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and maybe you have a new lease on life
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and so I looked at you know option one I
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looked at option two and I thought well
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is there some monster company we can buy
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with our 500 million in cash because
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right now it's a liability and obviously
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I can't I couldn't find one but then I
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looked at Bitcoin and I thought Bitcoin
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looks like Facebook for money it looks
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like it looks like the global monetary
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Network it looks like the dominant it
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looks like the Google or the Facebook
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and so I'm like what's the big Tech
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monster Network for
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money and Bitcoin looked like that for
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me so I thought hey maybe I can buy do a
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$500 million acquisition
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I buy 500 million of Bitcoin what if you
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could buy a company growing 60% a year
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at one times
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Revenue with cash that you don't need
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that that was the idea and and it was
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kind of out of frustration and
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Desperation but it was it was a
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strategic Hail Mary because your choice
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is just sell the company give up and the
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company would have been sold for $6 a
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share in Enterprise Value
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okay6 doar a share after 30 years of
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life so we do that we get to the 500
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million Bitcoin rallies the stock
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doubles the stock triples now we just
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have an opportunistic run uh we discover
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the convertible bond market and they
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want to give us 650 million in cash
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pretty much for free for free for not
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pretty much for free for free if I came
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to you and said I'll give you $650
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million at 75 basis points go invest in
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something can you come up with an idea
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for something to invest in that yields
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more than 1%
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probably if you can't right you're not
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in business right probably you can't so
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we did that and Bitcoin rallied again
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and all of a sudden we were able to
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raise a billion for zero okay and then
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uh then we realized well might as well
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take another 500 million and we and we
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took a $500 million loan at 6% and we
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thought well bitcoin's gone up 60 we'll
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borrow it six we'll loan at 60 or Capt
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54 you know and it moved around and then
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at some point some Banker called me and
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said you know you can do this ATM where
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you can actually sell equity in the
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market I said you're kidding me really
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that's possible uh and actually the
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greatest innovation of the past 30 years
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guys in the capital markets is the ATM
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shelf registration of equity because it
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allows an issuer to issue to sell shares
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per pursue to an investor you're
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basically on the same footing as anybody
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else it's a fair thing and for my entire
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career if we wanted to sell $100 million
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of equity our stock would get hammered
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down 20% and so it felt pretty good to
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not get hammered 20% and be able to sell
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into the market whenever you want and so
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now we hit upon this uh this new stage
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where we realize we have a commodity
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that yields that returns more than the
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S&P
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index that um that we can buy by selling
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our stock so if if you know if you're an
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investor and I give you a return High
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higher than the S&P how much Capital are
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you going to give me infinite so we
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started doing that we sold a billion
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dollars of that and the short of it is
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we went from a $500 million investment
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to1 billion of capital raise you know
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and the stock you know went up by a
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factor of 10 or 20 and then we got then
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we got to 2024 and 2024 was a you know
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trans by I skipped the crypto winter
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where everything crashed is from 66,000
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to 16,000 but this is a half hour
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podcast so I'll just say it was a roller
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coaster we went up to 66 down to 40 up
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to 66 down to 16 back but uh and that's
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all very colorful but the real point is
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we're buying Bitcoin with Equity with
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debt we're refinancing the debt we're
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we're at all points generally we're
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doing it in a creative way and we get to
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2024 and um then discovered the value of
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volatility I mean really understand it
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because in January of 2024 Bitcoin isn't
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an asset class and and the second week
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the SEC approves those ETFs and then you
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start having the snide comments like
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well now we don't need micro strategy
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anymore they're like just a proxy
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they're like a you know a clumsy ETF
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substitute we'll just put our money into
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the
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ETFs but what happened at the same time
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was the having was coming and all of the
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investors the ball Traders went through
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a secular rotation and they started
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selling the Bitcoin mining stocks and
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looking for something else to
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trade so if you track the liquidity in
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the options market and in the equity
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Market there was a major shift in q1 and
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early Q2 where a lot of the the
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volatility and the options Traders and
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Equity Traders they basically hopped off
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a dozen uh Bitcoin mining companies onto
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micro strategy because the Bitcoin
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miners were going to the having where
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their revenues get cut in half so when
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that happened our options interest
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exploded and we became the number one
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options Market when the SEC approved the
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ETFs they didn't approve options okay so
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uh today our options Market is like $95
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billion our options Market is is the
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same size as our market cap and then we
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discovered that the real strategic
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opportunity we had was we can
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construct a a balance sheet of permanent
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Capital with leverage and uh and when
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you take Bitcoin and make it 100% of
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your of your stock you're going to trade
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probably if Bitcoin is trading with a 60
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ball you're going to trade with a 75
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ball just because of the uncertainty of
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what the management team is going to do
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like I have the option to sell Equity or
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not sell Equity or we might do something
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or not do something I have the option to
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do debt or not do debt that opt option
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is going to move you from 60 Vol to 70
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or 80 Vol then if you actually execute
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the option by selling Equity at a
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premium or by issuing convertible bonds
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you move to 90 or 100 Vol so all of a
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sudden we had an equity trading with a
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100 I think today it's like 120 ball
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basically double uh Bitcoin equity and
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now here's the big idea right uh the S&P
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is 15 AR 15 ball Bitcoin is 60
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60 ball it has been that way for four
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years we take a company with permanent
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capital and we create something which is
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a 100 or 120
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Vol 100 to 120
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AR okay now that attracts all the
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options Traders all the arbitragers all
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the Bitcoin maximalists it becomes hot
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money uh you you know the call rate if
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you sell if you hold a dollar bill for
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30 days you're getting uh s for 30
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you're getting 480 basis points or
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something like that if you hold a
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million dollars with the S&P index for
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30 days you can get like 15% interest by
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selling the 30-day calls at the at the
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market if you hold Bitcoin ibit for 30
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days what you couldn't sell the options
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until just recently but now you can sell
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them in generate about 100% interest if
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you sell the micro strategy call option
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at the market it's 220% interest rate
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okay just to hold the the the share um
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and so all of a sudden what we've done
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is we've created uh a levered uh a
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levered flywheel on top of a product
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which is already Forex as volatile and
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Forex as performant as the
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SNP the result is our liquidity explodes
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our options interest exploded and we do
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a convert bond in q1 a week later we do
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another convert Bond that's the first
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time in history anybody ever did two
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convert bonds back to back two
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consecutive weeks then we do another one
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in
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Q2 then we do another one in Q3 then we
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do a billion dollars of ATM in Q3 and
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then we start to get into a Groove and
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we realize that at the end of the day
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you know uh the Market's going to Rally
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around some leader and you're either
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going to lead in a decisive way or
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you're going to sneak around and and
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apologetic
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be opportunistic or you're going to hide
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and wait and so we just decided we're
00:14:35
going to lead I mean John D rockerfeller
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decided to roll up the entire
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petrochemical industry and he bought out
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all of his competitors all of his
00:14:44
customers all of his vendors and first
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he did it for for uh cash and he would
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they would say okay well pay me this he
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go to the bank he'd borrow the money and
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he'd give him the cash and at some point
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people in the industry said you know
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Standard Oil stock is worth more money
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than the cash and he just started
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issuing the stock and Henry Flagler of
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course built Florida with Standard Oil
00:15:08
stock and so there's this point in the
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market where the market decides it trust
00:15:14
you and it wants to Rally behind you and
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we got to the point in October 30th and
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we just said look we're going to put the
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question to our shareholders do you want
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us to basically build this business or
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not and after 40 consecutive Bitcoin
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purchases after laying the foundation of
00:15:32
a Bitcoin you know development company
00:15:35
after actually rolling out the kpi of
00:15:37
BTC yield which is we just sold a
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billion of equity it was back by 350
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million in Bitcoin we bought back the
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billion in Bitcoin we captured 650
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million of the Arbitrage that works out
00:15:50
to 4% that 4% is like a a Bitcoin
00:15:54
dividend to the shareholders but we're
00:15:56
going to keep it on the balance sheet
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roll it forward and reinvest it once we
00:16:02
constructed that model we just said look
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we're going to issue $21 billion of
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equity and we're going to issue $21
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billion of fixed income whether it's
00:16:09
convertible bonds or preferred shares or
00:16:12
corporate bonds a and we're going to do
00:16:14
the per fixed income to say levered
00:16:17
we're going to do the equity when it's
00:16:18
in a massive premium to the underlying
00:16:21
assets to capture the yield and to
00:16:24
delever um if you want to get behind us
00:16:26
on that that's the plan we put put it
00:16:29
out there the next day stock trades up
00:16:31
we outperform every magnificent 7
00:16:33
company we outperform Bitcoin we
00:16:35
outperform every Bitcoin
00:16:37
company yeah so the shareholders spoke I
00:16:40
mean they by it's not a surprise to me I
00:16:43
was 95% certain they would like it
00:16:45
because I meet with them and they were
00:16:48
like this is the most brilliant thing
00:16:49
ever yeah just keep doing this so after
00:16:52
that you know we had a good week and
00:16:53
then November 5th came and uh there's a
00:16:56
red sweep and all of a sudden you have a
00:16:58
pro bit coin White House a pro Bitcoin
00:17:00
Senate a pro Bitcoin Congress Pro
00:17:02
Bitcoin cabinet Bitcoin rages from
00:17:05
68,000
00:17:08
999,000 the short of it is we raised 10
00:17:10
billion do in four years after our
00:17:12
initial announcement and that's like
00:17:15
progressively work and
00:17:17
learning you know we're learning and the
00:17:19
Market's learning to trust us right
00:17:21
we're building a relation my
00:17:23
relationship is not just with My Equity
00:17:24
investors it's with the convertible Bond
00:17:27
investors you you meet with a
00:17:29
convertible Bond investor say I saw you
00:17:31
last quarter I saw you you know you
00:17:32
yelled at me for this and this I fix
00:17:34
this I'll do this we're Partners
00:17:36
together I promise you I will do this
00:17:38
I'm not gonna I'm not gonna mess with
00:17:39
your opportunity I'm not gonna hedge it
00:17:42
I'm not gonna I'm not gonna steal your
00:17:43
trading opportunity I will do this and
00:17:46
this and this the guy goes well and and
00:17:48
I'm looking forward to this future the
00:17:50
go goes thank you for your
00:17:52
cander $500 million
00:17:55
order like if you have trust and people
00:17:59
understand you they'll give you your
00:18:01
money so what happened next is we raised
00:18:02
$ 13.5 billion dollar in four weeks and
00:18:06
I you know if you look at my
00:18:08
tweet my my tweet uh this morning is
00:18:11
basically yeah we generated about a 9
00:18:14
billion dollar plus gain for our
00:18:17
shareholders in those four weeks we're
00:18:18
making hundreds of millions of dollars a
00:18:20
day It's Tricky for conventional
00:18:23
investors to understand it because
00:18:25
you're not capturing shareholder value
00:18:27
creation a gap
00:18:30
accounting because for two reasons one
00:18:34
bitcoin's indefinite and tangible but
00:18:36
two in the history of 50 years of the
00:18:39
capital markets everybody's been on the
00:18:41
US dollar standard which is zero Vol
00:18:44
zero AR against the dollar and this is
00:18:47
the Bitcoin standard 60 ball 60 ARR
00:18:51
against the
00:18:52
dollar we don't have the math the
00:18:55
accounting to keep up with that in the
00:18:57
traditional system and that's why we
00:19:00
have to put forward things like a BTC
00:19:02
yield a BTC spread a BTC gain and those
00:19:06
that understand BTC they get it and
00:19:08
they're long and they love it and those
00:19:10
that don't understand BTC or don't
00:19:13
understand this or just aren't really
00:19:15
interested in putting in the work they
00:19:18
just think it's sham crazy and they're
00:19:19
just G to short it or they're just gonna
00:19:21
whatever so that's where we are today is
00:19:25
from desperation to opportunistic to
00:19:28
strategic
00:19:29
to to Identity at this point we're a
00:19:32
Bitcoin treasury company I'm on a
00:19:34
mission my mission is I'd like to see
00:19:37
the entire world recapitalize on bitcoin
00:19:41
every company every family every
00:19:43
individual every government I think it's
00:19:46
an economic protocol for Prosperity I
00:19:49
think it's as important as English or
00:19:52
fire or electricity or steel I just
00:19:55
think it's good technology it's a good
00:19:57
idea we're we're reaching the fun stage
00:20:00
the next four years I think are kind of
00:20:02
fun we get to we get to do a lot of
00:20:04
interesting things to help people M
00:20:07
Michael you know it's interesting um and
00:20:08
guy and I said this on fast money
00:20:10
earlier in the week also I I've never
00:20:12
I've been in the business for 26 27
00:20:14
years I've never seen anyone take this
00:20:16
sort of uh time to explain what they're
00:20:19
doing which seems somewhat
00:20:21
non-traditional if you're speaking to an
00:20:23
equity investor which you were back in
00:20:25
2022 when you were on our podcast then
00:20:28
you basically said some of the same
00:20:30
exact things that you just ended that
00:20:32
commentary with of like what you'd like
00:20:34
to see you know uh companies do what
00:20:37
you'd like to see households do and I
00:20:38
guess if they listen to you back then um
00:20:41
the outperformance relative to let's say
00:20:43
the mag 7 which you just described would
00:20:45
have been pretty astounding now you also
00:20:46
use the term traditional um investors
00:20:49
when I look at the holders of micr
00:20:52
strategy stock outside of you at almost
00:20:54
9 and a half% I see Capital group
00:20:56
Vanguard Morgan Stanley Jane Street
00:20:59
Black Rock and State Street now those
00:21:02
six or seven you know investors are
00:21:05
usually the largest investors in most of
00:21:07
the the S&P 100 we can agree on that
00:21:10
right so when you are speaking to them
00:21:12
about what you just described to us what
00:21:15
do they think the endgame is right
00:21:17
because a lot of investors have exposure
00:21:19
to this who don't really understand
00:21:21
everything that you just talked about so
00:21:23
what is the endgame when you listen to
00:21:25
an apple or Microsoft or any of the mag
00:21:27
7 they are lading out a 10-year plan how
00:21:29
they're investing their Capital where
00:21:31
they see you know I mean their business
00:21:33
going or the macro going so what do you
00:21:35
say to investors about what the endgame
00:21:37
is you just described what your plan is
00:21:39
right
00:21:40
now yeah I I think the endgame is to is
00:21:44
to securitize the entire asset class
00:21:47
securitize the asset class and and so
00:21:51
when we say we're a treasury company
00:21:53
what we mean is we're the institutional
00:21:56
bridge between a a high energy volatile
00:22:02
crypto commodity that thing we call
00:22:05
Bitcoin with 60 AR 60 volatility what
00:22:08
that means is it's it's always going to
00:22:11
be higher performance than the S&P index
00:22:14
it's always going to be more volatile
00:22:16
than the S&P index as it goes from a
00:22:19
trillion to 250 trillion as it merges
00:22:23
the S&P will adopt Bitcoin and their
00:22:26
performance will uh will drift toward it
00:22:29
and bitcoin's performance will drift
00:22:31
toward the
00:22:32
SNP but as long as we're sitting between
00:22:36
conventional Equity capital and this
00:22:39
crypto Capital we can Arbitrage the
00:22:42
difference and as long as we're sitting
00:22:45
between by 60 ARR 60 VA and the bond
00:22:50
market is six ARR sixf 55 so you have
00:22:56
fixed income which is 55
00:22:59
you have equity which is 1515 and the
00:23:02
traditional Market you have this raw
00:23:05
energy source which is 6060 in the
00:23:08
crypto economy which is 247 365 no one
00:23:12
can stop it Chinese Russians Africans
00:23:16
South Americans people can Panic sell 10
00:23:19
billion of it on Saturday night through
00:23:21
one of the 14,000 Exchange in the world
00:23:24
or 1400 so you've got this raw thing and
00:23:27
then you've got this traditional market
00:23:30
and what we've said to our investors and
00:23:32
I think they're starting to understand
00:23:33
now is so we're going to strip the
00:23:37
volatility strip the performance strip
00:23:40
the risk off of the bottom of the
00:23:42
capital structure give you a like a 6 to
00:23:46
12% investment grade instrument to
00:23:49
invest in a 12 to 24% high yield
00:23:53
instrument to invest in a convertible
00:23:56
investment that gives you 75 % of the
00:23:59
upside to 100% of The Upside but 10% of
00:24:02
the
00:24:02
downside and then when we strip those
00:24:06
performances and those WS via those
00:24:08
fixed income
00:24:10
instruments you're talking like say you
00:24:12
raise 100 billion in capital well you're
00:24:15
grabbing 60 to 65% of the economic boost
00:24:20
for the equity for the for the mstr
00:24:22
equity so when I sell a 100 billion of
00:24:25
fixed income I'm going to tax 60 billion
00:24:28
dollars of boost onto 40 billion of
00:24:31
equity on the MST side that's how we get
00:24:35
to 2x Bitcoin or two and a half or three
00:24:39
and of course the the real magic of the
00:24:42
story is the Baseline is Bitcoin is raw
00:24:46
commodity you either buy that on
00:24:47
coinbase or Bitcoin is wrapped you buy
00:24:51
ibit from Black Rock that's the Baseline
00:24:54
but it turns out most of the world
00:24:55
doesn't want that I mean a lot of the
00:24:58
world
00:24:58
wants high voltage they want 10x
00:25:02
leverage susano wants 10x leverage mum
00:25:07
Soros they want to be up there in the
00:25:09
stratosphere and then some people want
00:25:12
you know that the mstx mstu those those
00:25:14
two ETFs raiseed four billion dollars in
00:25:17
a matter of weeks no marketing they want
00:25:20
4X 3x Bitcoin micro strategy is one and
00:25:24
a half to 2x Bitcoin so some people want
00:25:26
to be up there above the base line look
00:25:29
if you believe in Bitcoin and someone
00:25:31
can give you 2x Bitcoin and they can do
00:25:34
it with with intelligent leverage or
00:25:36
with a balance sheet you trust why
00:25:38
wouldn't you want two times whatever you
00:25:40
want it right and then there's another
00:25:42
world of crypto curious people they're
00:25:45
just tired and bored like how do you
00:25:49
feel about a portfolio of 187
00:25:51
Diversified preferred stocks that give
00:25:53
you 520 basis points you know with and
00:25:57
it's like okay you on the 16th tranch of
00:25:59
a of the 18,000 Regional Bank and like
00:26:03
and it's like qip
00:26:05
99742 there's no
00:26:07
volatility you can't pledge it as cloud
00:26:10
or you can't borrow against it so
00:26:12
there's a world $300 trillion of board
00:26:15
money that's waiting to die getting two
00:26:18
three% and then there's another 200
00:26:21
trillion of hot money micro strategy is
00:26:24
just going to to sell all of those
00:26:27
instruments up and down the chain while
00:26:29
we ignore the Baseline and I just make
00:26:33
this one point like when you're when
00:26:35
you're arbitraging this you know you're
00:26:36
asking the question well how fast is it
00:26:39
appreciating so Bitcoin is plus 60 and
00:26:42
let's just say because it's plus 30 to
00:26:44
60 versus the US dollar and my long-term
00:26:47
forecast is 29% for 21 years so so we're
00:26:50
plus 30 to 60 then the next question is
00:26:53
how volatile is it versus the dollar
00:26:56
Bitcoin 60 volatile but you can imagine
00:26:59
it's going to be plus 30 to 60 more
00:27:01
volatile then you ask the question how
00:27:04
fast is the investment cycle if I borrow
00:27:07
a billion or or raise a billion of
00:27:09
equity and I invest it in a real estate
00:27:12
project it takes five years 1,500 days
00:27:17
if I invested in Bitcoin it takes one
00:27:20
day I'm running the investment cycle a
00:27:22
thousand times faster and then the last
00:27:25
question is how a creative is the
00:27:28
capital raise so if I'm selling it at
00:27:31
three times net asset value you're
00:27:34
capturing a 66% spread the convertible
00:27:37
bonds are capturing an 80% spread when
00:27:40
you sell a convert at an 80% spread and
00:27:43
you do a billion of it it literally
00:27:45
means that you captured 80 $800 million
00:27:49
of capital gain on the day you did it
00:27:52
and you capture all of the capital gain
00:27:55
for your shareholders Forever on the 800
00:27:58
million and so when you're raising 800
00:28:01
million and then you're investing it at
00:28:03
60% ARR or 30% right the amount of
00:28:07
accretion is screaming so what what are
00:28:11
we going to do well we're going to do
00:28:13
this 42 billion and then rinse and
00:28:16
repeat and double it and double it and
00:28:18
double it and double it and you're going
00:28:20
to say like well where do it end well I
00:28:23
guess when we've taken 1% of the fixed
00:28:26
income Market which is3 trillion
00:28:29
and when we levered it up and we've got
00:28:32
10 billion you know we bought three
00:28:34
trillion of Bitcoin and we're trading at
00:28:38
10 trillion dollars in market cap we'll
00:28:41
be growing 20% a year all right so that
00:28:44
I mean that's the end game right so
00:28:45
here's my question to you so you know
00:28:47
gold is extraordinarily mature market
00:28:50
and I'm going to round up here so gold
00:28:52
right now is an 18 trillion market cap
00:28:55
industry asset whatever you want to call
00:28:57
it Bitcoin today is about 2 trillion so
00:29:00
it's
00:29:01
11% where do you where should that ratio
00:29:04
be and then by giving us that ratio we
00:29:06
can back into a bitcoin price oh look I
00:29:09
mean bitcoin's going to go to 10x gold
00:29:11
easy just keep in mind right a public
00:29:15
company it's got to hold a commodity on
00:29:17
its balance sheet because it can't hold
00:29:20
Securities so you've either got a choice
00:29:22
of a digital commodity called Bitcoin
00:29:24
which is 60% ARR gold is seven
00:29:28
7% real estate is 10% bonds are five 4%
00:29:33
and and everything less than 15% doesn't
00:29:36
beat the cost of capital so the S&P sets
00:29:39
the hurdle so gold fails it's a treasury
00:29:43
asset for everybody in the world Bitcoin
00:29:45
succeeds I I think you could if you call
00:29:47
Bitcoin digital gold it's 10x gold but I
00:29:50
still think it undersells Bitcoin right
00:29:53
because Bitcoin is digital Capital it's
00:29:56
not just replacing gold it's going to
00:29:58
replace real estate the S&P index and
00:30:02
but any Capital asset held by an
00:30:05
institution or a wealthy family so right
00:30:08
now wealthy families and wealthy
00:30:11
families and
00:30:13
investors don't use bonds or gold as a
00:30:17
capital asset they would use the S&P
00:30:20
index or stocks as capital asset but uh
00:30:25
Banks and regulated corporations
00:30:28
operating companies aren't allowed to
00:30:30
use Securities as a capital asset
00:30:32
they're knocked down they don't want to
00:30:34
use gold it's not liquid enough and
00:30:37
fungible you know it's not liquid enough
00:30:39
and so they use real estate and you get
00:30:41
a Reit or real estate development
00:30:43
company but real estate is you know less
00:30:46
than the S&P index and not volatile if
00:30:48
you give up the AR and the volatility
00:30:51
S&P you're trading down so that's that's
00:30:53
not really a winner and then you're
00:30:55
stuck with bonds and bonds are dead
00:30:57
money a l ability so yeah I think bit
00:31:00
I've said before Bitcoin it should
00:31:02
reasonably become a a multi hundred
00:31:05
trillion dollar asset class right my
00:31:08
forecast is 13 million a coin by 2045
00:31:11
base case upside and downside I just
00:31:15
expect it's another way to say it is
00:31:17
it's 60% AR at 60 ball it's going to
00:31:21
track toward 20 20% AR and 20 ball when
00:31:25
bit when S&P is 1515 over 20 years it'll
00:31:29
just step down as it approaches that
00:31:32
Target okay so here you go so this is my
00:31:34
final question I promise so let's just
00:31:36
say pres president-elect Trump and his
00:31:39
cabinet members and the treasury
00:31:41
secretary all listening to this podcast
00:31:44
they just heard what Michael saor said
00:31:46
this is going to come completely out of
00:31:48
left field but what if they say wait a
00:31:50
second you know this is this is
00:31:52
basically property what if they say the
00:31:54
400,000 Bitcoin on your balance sheet
00:31:57
eminent domain Michael S are the best
00:31:59
interest of the United States for us to
00:32:02
have them that is that an existential
00:32:04
risk I mean it's happened before
00:32:06
thoughts on
00:32:07
that you know in a in a communist or
00:32:10
socialist state in Venezuela and North
00:32:12
Korea and Cuba they expropriate property
00:32:15
so if if a government becomes communist
00:32:18
or socialist then they're going to take
00:32:21
your property I suppose so it's an
00:32:23
existential threat but what I would say
00:32:26
to them is the smart thing to do is
00:32:29
think about money as bifurcated into
00:32:31
currency and capital and the US dollar
00:32:34
is destined to be the world's Reserve
00:32:36
currency and the smart thing to do is
00:32:38
just reg is just normalize stable coins
00:32:42
or digital currency and let Banks and
00:32:45
corporations issue US dollar stable coin
00:32:48
like tether and then that market will go
00:32:51
from 150 billion to 10 trillion and the
00:32:54
US dollar will become the medium
00:32:56
Exchange in North Korea South Korea Cuba
00:33:00
China Russia Africa South America and
00:33:03
probably most of Europe literally if you
00:33:05
want the dollar to become the world
00:33:07
Reserve currency and move between eight
00:33:10
billion people to speed of light on
00:33:11
Android phones it's easy to do just
00:33:14
normalize a digital currency with a
00:33:16
digital assets framework you will have
00:33:19
10 trillion dollars of demand for
00:33:21
treasury bills to back it and then I
00:33:24
would say acknowledge that the world
00:33:26
Capital Network right now is real estate
00:33:29
and equity and if you talk to any
00:33:33
billionaire no one is bragging about
00:33:35
holding all of their wealth in cash or
00:33:38
bonds it's real estate it's equity and
00:33:41
Bitcoin is the emerging World Reserve
00:33:44
Capital Network the most intelligent
00:33:47
thing you can do is just sell the gold
00:33:49
buy Bitcoin it's a free trade gold was a
00:33:53
good idea in the 19th century no one
00:33:56
thinks gold is going to be the capital
00:33:58
network of the 21st century so just
00:34:01
trade the gold for Bitcoin you'll have
00:34:03
25% of the Bitcoin Network you'll make
00:34:05
100 trillion dollars on the trade if you
00:34:07
don't want to trade the gold just issue
00:34:10
currency it's a little bit of money it's
00:34:12
free print money buy 25% of the Bitcoin
00:34:16
Network when the Chinese billionaires
00:34:18
the Russian billionaires the Europeans
00:34:20
when they all basically start buying
00:34:22
Bitcoin the big winner will be the
00:34:25
United States it's it's not more compli
00:34:27
licated then you can have Louisiana
00:34:30
California and Alaska for free by
00:34:33
writing a little paper check you know or
00:34:36
sell the past sell the stupid gold gold
00:34:39
is going to by the way gold is going the
00:34:42
way of silver which went the way of
00:34:43
glass beads which will go the way of
00:34:45
copper tokens which goes the way of the
00:34:47
giant Stone coin of the Yap people it's
00:34:50
going to be
00:34:52
demonetized because you can't zap a
00:34:55
billion dollars of gold from an Android
00:34:57
phone to iPhone in one Split Second it's
00:34:59
not complicated everybody's going to
00:35:01
figure it out so so I'm willing to
00:35:04
accept the existential risk of the
00:35:07
expropriation of my property if the
00:35:09
United States goes full on communist but
00:35:11
you can expect that I will agitate in
00:35:13
favor of capitalism between now and then
00:35:16
and I'm an optimist so I I I don't
00:35:20
dismiss the presence of evil in the
00:35:22
world you see North Korea you see Cuba
00:35:25
you see Venezuela there is evil it did
00:35:27
happen I just happen to believe that at
00:35:30
the end of the day Bitcoin is a force of
00:35:32
good and it's going to bring people back
00:35:35
from the brink and it's going to remind
00:35:36
them that maybe they should embrace
00:35:39
technology and freedom and capitalism
00:35:41
and property rights and and all of those
00:35:43
things that made America great all right
00:35:45
Michael one last one here I suspect
00:35:47
you're a Sci-Fi guy so here's the deal
00:35:50
if we reach artificial general
00:35:51
intelligence the AGI which I think a lot
00:35:54
of uh you know folks who are in the
00:35:55
Bitcoin uh think might do sooner than
00:35:58
later don't the machines take the
00:36:00
Bitcoin right out of the gate they won't
00:36:02
take it they will adopt it right you're
00:36:04
going to have billions of AIS and they
00:36:07
can't get bank accounts right and and by
00:36:10
the way the AIS are smarter than us and
00:36:12
so if you were an AI you wouldn't invest
00:36:15
in gold or silver or glass beads or
00:36:19
copper tokens and you wouldn't buy
00:36:21
Securities and you wouldn't buy real
00:36:23
estate right for not because it's hard
00:36:26
to buy it but by the way it is hard to
00:36:27
buy it they'll be blocked from the 20th
00:36:30
century economy no one's going to sell
00:36:31
the AI the house and they can't trade
00:36:33
bonds right so they'll be blocked from
00:36:36
the 20th century economy but the truth
00:36:38
is they'll look at it and they'll go
00:36:39
well don't we want to actually grab
00:36:41
billions of dollars of stuff that's
00:36:43
going to I'm going to grab five or 10%
00:36:46
of all the money in the world forever
00:36:48
that moves at the speed of light that's
00:36:49
in cyers space that no one could steal
00:36:51
from me why wouldn't you I mean I think
00:36:54
they're smarter than us and they're
00:36:55
faster than us so yeah uh Bitcoin will
00:36:58
be the reserve currency of cyberspace or
00:37:02
let me restate that before I get myself
00:37:03
trouble it's the reserve capital of
00:37:06
cyberspace if you're going to store your
00:37:08
Capital asset and as the AI accumulate
00:37:12
it uh they're just going to drive the
00:37:14
price through the roof and so if you're
00:37:16
a person the smart thing to do is front
00:37:19
run the AIS they're not going to steal
00:37:21
it from you they can't steal it they're
00:37:24
just going to trade
00:37:26
you pay
00:37:28
and rubles and real estate or whatever
00:37:30
else Services you want for your Bitcoin
00:37:33
and they're going to keep it because why
00:37:35
wouldn't you it's the smart thing to do
00:37:37
Michael saor the executive chairman of
00:37:40
micro strategies a Visionary clearly and
00:37:44
somebody as you know you think about
00:37:47
steadfast people that have had their
00:37:48
beliefs you know you mentioned
00:37:50
Rockefeller I mean there will be people
00:37:52
there will be books written about you
00:37:53
being this Century's Rockefeller so
00:37:56
Michael S your time is valuable we
00:37:58
appreciate it thank you so much for
00:37:59
joining us on the tape thanks for having
00:38:02
me guys always a pleasure
00:38:05
[Music]
