00:00This week you issued that stock sale. Your cash reserves are up at $3 billion. My understanding is that this
00:07allows you to pause Bitcoin sales for the time being. But talk us through what the next several months look
00:13like. Do you plan to sell more Bitcoin? And if so, how much?
00:18Katie, thanks for having me. We have really evolved from being a Bitcoin treasury company to a full digital capital
00:25platform. We're the world's largest identified holder of Bitcoin in the world. We have over 840,000 Bitcoin. Digital credit
00:35has been launched in the last year in the form of stretched as $10.5 billion. So we have a
00:40responsibility to our common shareholders, our preferred shareholders, and to Bitcoin, of course.
00:46We issued now, or we've accumulated $3 billion in cash because we listened to our preferred shareholders, and they said
00:54having liquid cash in our balance sheet at their short term is important. And we also sold Bitcoin to be
01:00able to show liquidity with our Bitcoin. Yes, we will continue to issue capital. It could be in the form
01:07of MSTR. It could be in the form of Bitcoin. And we're going to make the decisions that are best
01:11for our shareholders over time.
01:13Well, could it also potentially be in the form of STRC? That, of course, are preferred shares. They're known as
01:20stretch. My understanding is that you last issued stretch in mid-May. Of course, it's been trading at a discount
01:26here. Do you plan to issue stretch again in the near future?
01:30Yeah, our plan is to get stretch back to par. Unsure how long that will take. Building up the US
01:36dollar reserve was a big part of that, and we'll continue to build that. And yeah, when stretch gets back
01:42to par, we'll issue more. We'll buy Bitcoin. We may continue to beef up our US dollar reserve. That's a
01:48big part of our capital plan is to issue more preferred over time because it's very accretive to our Bitcoin
01:53per share, which is accretive to our shareholders.
01:55Well, I am curious just about just kind of the structure going forward. I mean, to get back to par.
02:00Is there a sense here that you can do that, whether it's with selling more Bitcoin or issuing more equity?
02:07Have you determined what might actually be the best path to get there or the most efficient path to get
02:11there?
02:12We think the first thing is the US dollar reserve, right? I think we've learned over the course of the
02:17last couple of months that having that liquid access to US dollar capital, whether it be one, two, three years,
02:23is quite important.
02:24And we saw when we increased it in the last couple of weeks, we got stretched up from a low
02:28in the 75 range to close to 90.
02:31So we'll continue to build that. We increased the dividend. I don't think the dividend is as much of a
02:37factor.
02:37And I think a track record of success and a track record of execution. And then, of course, education.
02:43We're a year into the product. A lot of financial products take two or three years to mature.
02:48So we're early. We're learning. We're listening to the market. And the great thing is there are built-in mechanisms
02:54with a market, for example, going to par and staying at par.
02:57That's a mechanism that lets us know what we're doing right and what we're not doing right and what we
03:01can improve upon.
03:02What's the communication, though, with shareholders overall? There's been a lot more focus, obviously, on the preferred shares.
03:07But, I mean, you guys issued a ton of common equity in the preceding years.
03:13And I am curious if there's any sense in trying to reconcile with some of those folks who bought a
03:18lot higher than where that $96.73 price stands right now.
03:23Our shareholders understand our primary goal is over time to outperform Bitcoin, which is an extremely volatile asset.
03:31Vol is somewhere in the 30, 40, 50 range. And they understand that MSDR is built to outperform Bitcoin.
03:37And as a result, when Bitcoin goes up, MSDR typically goes up more.
03:42When Bitcoin goes through a bear cycle like it is right now, MSDR can perform a little bit worse.
03:47But as long as we're as long as MSDR is priced at greater than the net asset value of our
03:54Bitcoin,
03:54it means that our shareholders are giving us credit for the performance above Bitcoin.
04:00And when we do that, we can issue more equity for the most part.
04:03Look, we talk to our shareholders all the time. There's quite a few constituents, as you know.
04:07We're one of the most liquid stocks in the world.
04:09And when we talk to our shareholders, institutional, retail, we look at what people say on social media.
04:15We take a lot of comments. We bring that all in. And it's great to have the feedback.
04:20And, I mean, just looking forward, again, I mentioned that, you know, your cash reserves, they're $3 billion right now.
04:25It seems like you have several years of being able to cover your interest expenses.
04:30But, I mean, when you game plan out in the future, three years, five years,
04:34it just feels like Bitcoin has been stuck in this rut for a while now, you know, trading around $60
04:40,000 per coin or thereabouts.
04:42But do you have a break glass sort of plan if, you know, we go down to $30,000 or
04:47$20,000 or even below?
04:49Yeah, when Bitcoin gets down closer to $8,000 to $10,000, that's when we're going to have, you know,
04:55we have to consider some of the risks associated with our debt.
04:59Until that point in time, we feel very secure about the balance sheet.
05:03To your point, Bitcoin has quite a bit of volatility.
05:06It goes up and down. And every time it's in a bear cycle like it is, people ask, okay, will
05:11it go to zero?
05:12And it hasn't yet in its 18-year history. In fact, it just achieves all-time highs.
05:18But what we need to do is build a capital structure that can withstand bear markets
05:24and, of course, benefit from bull cycles. And that's what we've done so far.
05:29We've been through this in 2022. We're going through it in 2026.
05:32And I'm pretty excited about the next bull market of Bitcoin.
05:36So for those folks who are concerned, that sort of micro strategy, excuse me, strategy,
05:40as being kind of the dominant buyer, or at least a perpetual buyer of Bitcoin,
05:44there's some reassurance you can give them that you are not gone from that market as a buyer?
05:51We're not going anywhere. We're the largest identified holder of Bitcoin.
05:55My objective would be the largest buyer of Bitcoin for the foreseeable future.
06:01We're not going anywhere. Anybody that's worried about strategy shouldn't be.
06:05That said, Bitcoin's a lot bigger than us, right? We are 4% holder of Bitcoin.
06:11Bitcoin trades $30 to $40 billion a day. You saw a couple of weeks ago, we sold about $200 million
06:20of Bitcoin. It did not move the market. In fact, the market moved up during that period of time.
06:25So, but we're not going anywhere. We're going to, we're going to,
06:28we're sticking with Bitcoin for the long term. We'll be buyers of Bitcoin for the long term.
06:31Okay. So you're not going anywhere. I do want to go back a little bit to the preferred
06:35shares because Bloomberg News did report last week that distressed funds, they're in talks to swap
06:41their preferred shares for other securities. Of course, that would be a negotiation. And with that
06:46in mind, can you give us an update on what those conversations sound like? What is actually
06:51developing there? Yeah, there, there may be funds talking to each other about swaps. We haven't been
06:57in any material conversations. The way we're going to make stretch work is we're going to continue
07:03to increase the US dollar reserve. We're going to listen to the market. We've put out, you know,
07:09the opportunity and the option to buy back stretch if it makes sense, but we're not in any material
07:14conversations otherwise. And Fong, before we let you go, you know, I want to reflect on strategy a
07:20little bit because you're the CEO strategy. You're best known, of course, for being a Bitcoin treasury
07:25company, really the OG. But you also have a software business. And as of the end of March,
07:31you had more than 1500 employees. And I'm wondering, sitting in the CEO chair, how much of your time do
07:37you divide between this ecosystem of financing that you've built up to accumulate more Bitcoin
07:43and the actual underlying software business? I'll start with I'm an engineer by education. I'm a
07:50technologist at heart. I'm a financier as my day job, I'll call it. So I love software. I love AI.
07:58I love Bitcoin. They're the convergence of all the things that I've really enjoyed doing.
08:0550-50, 40-60, a lot of the discipline is the same. And, you know, keep in mind that the
08:121500
08:12employees, we have folks who are in finance and marketing and engineering and legal and accounting
08:20that are able to bring a maturity and 25 years of public company experience to our Bitcoin business
08:28that I think a lot of other companies that are in the Bitcoin or DeFi world aren't able to bring.
08:33And it's part of, I think, what makes us successful.
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