00:00Just set the scene here, because when it comes to the performance of DATS, it's obviously very closely tied to
00:05the performance of Bitcoin itself.
00:08So what possibly could be the catalyst to sort of reverse the performance that we're seeing in digital gold right
00:14now?
00:16Thanks, Katie.
00:17Look, Bitcoin is digital capital, and as digital capital, it's a non-sovereign, decentralized store value asset that's supply limited,
00:26and it's digitally engineered to do so.
00:28And it sees up and down volatility because of its digital characteristics.
00:34When Bitcoin goes up, you'll see DATS go up more.
00:37That's how strategy is engineered, to be amplified Bitcoin.
00:40And as Bitcoin goes through a bear market, strategy goes down more.
00:44I think the interesting story is we've engineered something to protect investors who want access to digital capital without that
00:51volatility and that stretch.
00:52And to me, the story of the day is stretch closes at $100 is exactly how it was engineered to
00:58perform.
00:59And I want to talk a little bit about your financing, about your purchases, because when I take a look
01:05at your last three weekly purchases of Bitcoin, you've been consistent in the market.
01:10But you've sold about $307 million when it comes to common stock, only about $7 million when it comes to
01:18your perpetual preferred shares.
01:20So my understanding was that you were going to make the preferreds your primary funding source.
01:25So far, that hasn't been the case.
01:27I wonder why and what that says about demand.
01:31Well, we've seen, as an example, last year, a stretch and our perpetual preferreds raised $7 billion.
01:38That was 33% of the entire preferred market last year.
01:42We're educating customers on what a preferred can do.
01:4611.25% returns, cash dividends, tax-deferred, paid monthly, 5x over collateralized.
01:53There's no other asset class like that out there, but it does take some seasoning.
01:57It takes some marketing.
01:58This year, we've seen extremely high liquidity with our preferreds, about 150 times other preferreds.
02:05And as we go throughout the course of this year, we expect stretch to be a big product for us.
02:09And yeah, you're right.
02:10We will start to transition from equity capital to preferred capital.
02:15I need to ask you about whether Strategy would be selling Bitcoin.
02:19Both you and Michael Saylor have been talking a lot about this because this is clearly a question that is
02:24put to you quite often.
02:25Michael Stiller has been very clear saying that Bitcoin is not the idea that Strategy is going to sell its
02:33holdings were unfounded.
02:34You have made the point that if Bitcoin trades down to $8,000 for five years straight, you might need
02:40to sell your Bitcoin.
02:41What are the conditions under which Strategy might need to sell Bitcoin beyond a certain price level?
02:48Yeah, it's a topic that people like to ask the question because I think there's doomsdayers that would like to
02:53see Bitcoin fail.
02:55If Bitcoin was to go down 90% for five years sustainably, we would need to potentially sell our Bitcoin
03:02to satisfy some of our convertible debt.
03:05But it's not going to go down 90% for five years.
03:09It's extremely unlikely.
03:11People don't ask folks, well, what happens if Apple stock goes down 90% for five years?
03:15What would happen?
03:16We have a scenario planning to do that, but it's just not going to happen.
03:20I see.
03:21So you're kind of citing an unrealistic possibility here or levels that you don't see it coming to.
03:28Strategy obviously invented the DAT business model and other companies have taken their cues from you to buy Bitcoin and
03:35other cryptocurrencies.
03:36Do you think these DATs, these companies should take their cue from you if you do decide to sell some
03:42Bitcoin?
03:44No, I think every DAT is different.
03:47I think every company should think about what is your treasury strategy as it relates to Bitcoin.
03:51DATs decide that that's their primary treasury reserve strategy to hold Bitcoin.
03:55Others might decide to put a 5% or 10% allocation of Bitcoin.
04:00Others might decide that they want to have access to stretch and get 11% returns.
04:05I think DATs should operate on their own and do things that are right for them.
04:10And if they decide it's the right thing to buy Bitcoin or sell Bitcoin in the Bitcoin down market, they
04:15can.
04:15It's not something we plan on doing.
04:17Well, let's talk a little bit about the business of your DAT because the point has been made over and
04:22over again that the number of DATs in the market right now,
04:24you could probably see some consolidation there.
04:27And plenty of them are trading at a discount to their actual Bitcoin holdings, Fong.
04:32So I wonder, you know, instead of buying Bitcoin, would you ever consider buying one of these DATs,
04:38trading at a discount and basically cracking them open like a piggy bank to try and get some of their
04:44Bitcoin,
04:45probably at a discount to what you would get in the open market?
04:49I think in any new market, whether it be electric cars or AI or SaaS software companies,
04:55you want to focus on your core product and grow your core product first.
04:59And our core product is digital capital.
05:02And on top of that, digital credit, which is stretch.
05:05I think it would be a distraction to go buy at a discount to net asset value.
05:12Another digital asset treasury company, just like it might be a distraction for one AI company to buy another or
05:17a software company to buy another.
05:19And they tend to not focus on their product.
05:22Our product is stretch.
05:23And that's what we're going to spend time growing and developing.
05:26And the issue of buying other DATs isn't high on our list of things that we want to focus on
05:30strategically.
05:32Operationally, what else were you focused on to make sure that strategy is providing value added to its shareholders beyond
05:39the holdings of Bitcoin in your treasury?
05:42Yeah, it's really an increase in Bitcoin per share.
05:45And I think that's something that folks may not understand as well.
05:48We're not just holding Bitcoin, we're incrementing Bitcoin per share to our shareholders.
05:53We said over the next seven years, we could double Bitcoin per share.
05:56That allows the company then to be able to accrete Bitcoin faster than the underlying asset,
06:01which is what's unique about us and makes us an operating company.
Comments