If mstr what think about if Bitcoin goes to whatever you think it does in 2025 do you know the earnings per share that micro strategy is going to record in that scenario do you know that Equity Market investors and and you know all these passive you know these passive flows are going to value that at a multiple of the current earnings and so this is entirely unprecedented this is like the you know the micro strategy Team is writing the history books right now um so I think there's there's still a ton of opportunity and remarkably
it's still like you know only like the third inning here what's going on guys today we have Dylan lir he is one of my favorite voices in the Bitcoin community and he does not hold back Dylan unpacks the great world of the corporate treasury strategy putting Bitcoin on the balance sheets of publicly traded companies why It has created the best performing stocks in the entire world and what it means for all these individual businesses there's different flavors of it there's different strategies but Dylan unpacks exactly what these people are doing how it works why it's
creating value and where he sees these businesses going over the next 10 to 20 years there's micro strategy there's similar scientific there's metap planet and many many others these businesses are Pioneering corporate finance and the results speak for themselves Dylan lir is here to explain it all so I hope you enjoy my latest conversation with him so Dylan I thought the best place to start this conversation is micro strategy is obviously executing a somewhat novel and new Corporate Finance Playbook uh you're very involved with metap Planet which is also doing the same thing in Japan
ja there's a couple of other countries around the world that are now realizing Putting Bitcoin on their balance sheet could be this unlock in the public markets um help me understand what is the corporate treasury strategy for Bitcoin in these businesses yeah um well where to begin I think you know we I'm sure many many of the listeners here are familiar with the story I mean I actually you know quite vividly remember I think I think you were the second one not not to to to say that but uh sailor came on to your Podcast
quite early I think it was peters's and then yours and and basically laid out you know the the the realization the aha moment back in August of 2020 Dylan I was Dylan I was first don't worry I was first fair enough um but you know that even back then I think the the the Playbook as you would you know articulate it today was was quite different right this was it was a defensive move against covid um there's Cash on the balance sheet um we're going to put it into Bitcoin it's fastest horse it's digital gold
I think that those those things still apply but the Playbook as it is now as sailor and and the micro strategy uh treasury team of which you know they rebranded yesterday um there's a few iterations of of well what is micro strategy what is what what are you what what is your business and Bitcoin Bitcoin treasury company BTC um is is a I I like it's a novel Name U it's a novel label and I think you know that the the strategy of a Bitcoin treasury company is is you know much more much more advanced
and much more uh of a well oiled machine than it was the the idea was four years ago of let let's just let's just buy buy this thing and see how it plays out um because you know I think back then no one even even sailor and Co admit this that they didn't they didn't really fully understand the opportunity that They were you know walking into um and so you know just two days ago Pomp and um you know I'm sure you you saw everybody did um you know micro strategy announced the the biggest at
the money Equity uh facility in the history of capital markets to buy Bitcoin um you know said with convertible notes and Equity issuance uh through the ATM they're going to it's basically you know they're going to dilute you know over the next three years they plan to dilute Those shares outstanding by you know 80% or so and so you know in a traditional Financial context the shares would crater at 9:30 open um I mean that's just that's you know if if Costco or AT&T or or you know any of these kind of Legacy companies and
S&P 500 or the Dow like you know pick one out of the hat did this you know shareholders would would you know protest they would they would sell the stock in in a in a rage um but Micro strategy shares uh you Finished slightly right on the day but outperformed Bitcoin right and and they they have a leverag Bitcoin balance sheet so I think the point is that that there there is a novel concept that that they you know sailor the Bitcoin strategy um kind of you know they've stumbled into the last four years which
is the notion that incremental dilution as you call it and I I have I almost hesitate now to say dilution because it's not not even dilutive it's a Creative um to acquire more Bitcoin and this this not this this concept of BTC yield which some people have have said you know they don't like the FRA the the phrasing of the term because of you know kind of the history of of yield in in these crypto markets um but their their new kpi micro strategies kpi which I think they the bigger vision is is this is
you know 20 years from now a widely adopted metric maybe an official accounting metric in the corporate uh uh Treasury world in the world of Finance is you know what's your what's your BTC per share per fully diluted share worst case scenario every convert employee stock option executive comp all that's baked in what's your Bitcoin per fully diluted share is that is that increasing or not right and in a Bitcoin Centric framework that's what shareholders care about and so year over year micro strategy is up you know 177% BTC yield their Bitcoin per fully diluted
share is 17% so when you think of like Equity markets right the the the crazy thing to think about is like you have to Discount growth into the future Nvidia is trading on 40x you know price to earnings or or whatever the whatever the current um PE ratio is now Apple's trading at at 25x 30X Amazon's trading at 30X their their price to earnings so in micro strategy saying all all we want is more Bitcoin all our shareholders want is more Bitcoin and our Bitcoin per share is up 20% this year you have to Discount
that right and so there's this really there's this really interesting thing going on where all the bitcoiners are are cheering the delution on and all the Trad five people on the sideline are saying you know these Bitcoin people are idiots and and you know I that micr strategy has gone from a$1 billion dollar company to a $50 billion doll company in in four years so I think this is you know remarkably so this is still Early days um for the for the Playbook and um you know the Bitcoin strategy as we know it is the
radical notion that that you know Equity financing and debt financing structured in an intelligent way um isn't isn't a bad thing um and it it's almost flipped the entire corporate treasury world you know debt Finance BuyBacks hold no cash hold no Capital trip it all away return it to shareholders it's turned that on its head and the remarkable thing is like no One no one has realized it yet except uh you know basically one or one or two companies um you know even even the Bitcoin companies the crypto companies like the coinbase of the world
coinbase just announced a billion dollar buyback two days ago right so there's a lot to dig into um but I I still think it's crazy enough it's still early in the recognition that that you know this is a big big big shift and Bitcoin is bringing the shift right so there's a Lot to cover that we can kind of dig into all those details but that I always kind of say that's that's the overview of of what we're looking at let's talk about this Bitcoin yield being kind of a benchmark um so the idea is
if I own one share uh there's a certain amount of Bitcoin uh that I basically have claimed to on the balance sheet um and even though there are more shares being issued which usually meant means that uh my value of my share should be going Down instead here because is buying more Bitcoin for the balance sheet the amount of Bitcoin that I have a claim to is actually going up and that's kind of this idea of this Bitcoin yield what are the ramifications of this do does it change the way that people think about investing
in micro strategy um or is this more of something that from a corporate finance standpoint drives the return of you know the value of the business and and shareholders and so It's purely about optimizing kind of capital appreciation yeah I mean so let's remove micro strategy out of it and let's just say we're we're in a hyper Bitcoin IED world and um you know you you you know you're looking at a publicly traded laundry mat right and like this company has a bunch of laundry mats all over Manhattan and wherever else and and all they
do is they is they have the facilities and they own them and they Own the machines or maybe they lease them who knows but every single quarter this company spits out cash right and what do they do with the cash do they hold it do they well there's there's they already have the the saturated the the laundry map Market what do they do well one of the things they can do is buy Bitcoin right and so no shares outstanding no debt just a a plain old vanilla laundry mat business let's just say it's public market
so they're Reporting all this stuff right quarter over quarter their CA their cash flow is positive their cash is going up they take that cash they sweep it in to buy Bitcoin there's a positive Bitcoin BTC yield quarter over quarter there's a positive there's a the rate of change of Bitcoin per fully diluted share is going up right and so for a Bitcoin denominated investor for an investor that's saying Bitcoin is my unit of account it's my store of value this is How I want to measure value in this in this world even though maybe
there's a little bit of more volatility even say 10 20 years out than the dollar right which is fine um then then that that is positive BTC yield I think what's what saor and micro stratey and and kind of the early the Early companies in this sort of phase transition are realizing is and this is something that some like someone like myself you know coming from the world of just like oh I can you know Me or you or whoever else we log on to coinbase or cash app you send money you buy Bitcoin in
10 minutes you can send it to Cold Storage doesn't matter like you know it's it's easy as one two three like getting getting orange pilled and understanding Bitcoin yeah that's the step but like once it comes down down to it it's pretty easy to buy Bitcoin if you're a a pension or a a a corporate you know if if you have a mandate to own corporate bonds or you are long only Small cap equities fund or and I'm just naming you know kind of ideas but the point is there's trillions of dollars of capital that
that can't access they can't even buy the Bitcoin ETF they can't even buy ibit you know the most best performing ETF ever there's a lot of there's a lot of funds that can't even buy micro strategy right but what can you buy well you can you know some of these funds they can allocate $400 million to to to corporate convertible Notes or junk dead right and so the earnings call yesterday two days ago I I highly recommend everybody go check it out um with micro strategy was was amazing and and the slide deck they they
went through was was the the the it was just one of the the best earnings presentations I had ever seen there was the crazy staff that the corporate convertible notes issued by micro strategy right the the you know the this this is an unsecured convertible note You know right now they have $18 billion of Bitcoin they have $4 billion of debt so you know 4 to1 almost 5 to1 over collateralized currently in terms of the you know debts to the assets on the balance sheet um not including the software business um you know that's essentially
right those bonds have outperformed Bitcoin they' they've issued six of them if you take the Blended return of those and the Blended return of where Bitcoin the price of Bitcoin and the price of Bitcoin today they outperform Bitcoin but they also have an embedded putt option where they're a bond right so so if you if you're a bond holder and six years later bitcoin's gone nowhere you know they have to pay you back right and so that's that's pretty crazy um and and and they've said like you know we don't necessarily expect these bonds are
are not to outperform bitcoin into the future but the point is micro strategy Levered BTC they're outperforming Bitcoin on the upside and they're recruting bit more Bitcoin per share these convertible notes you know say at a 40% conversion premium the stocks at a th at 1,400 you're a bond holder you have access you know your your bond converts into shares of the most volatile stock on the market and the best performing stock on the market that's levered BTC right so the the real novel you know the lowlevel conversation Is well here's the nav here's the
net asset value and here's the premium and they're playing this ARB and it's fleeting and we'll see how long it lasts like that's the Normy take of like this is GameStop it's rational exuberance it's coming to an end the real you know the big brain take is that you know this this is the first early phas phases of like the Bitcoin isation of the Legacy Securities Market Bitcoin ETFs were kind of a line in the sand for the Institutional adoption we you know the the you know the green light has gone on the race has
started this you know the starting gun has gone off Bitcoin ETFs are the best performing ETFs of all time in terms of inflows and so there's now there's not the career risk there was on on this and so you know Equity Securities that are you know quote unquote backed by Bitcoin not not in the sense of a mutual fund not in the sense of an ETF because an ETF can't issue a Convertible note an ETF can't you know can't sweep excess cash flows they don't have excess cash flows it's overnight deposits but if you're a
public operating company you have a lot of flexibility and so I think the point is that that valuing things as they has micro strategies pioneered in a TC denominated framework that all Bitcoin maximalists and everybody that's you know thinking in this new world um you know is is Benchmark to and and they and They want they want more Bitcoin they want more Bitcoin returns and they want leverage Bitcoin exposure right and so I think that you know the the issuing Equity issuing debt to buy more to buy more Bitcoin in a way where you know
they're borrowing money for five years at at 1% at0 percent at 2% interest right and and the point is that they're they're not even really paying that debt down because it's just converting into new shares of common stock right so so Bitcoin P per fully diluted Shar is going up the solvency ratios are going up as they continue to dilute their shares and the shareholders cheer for it um and so you know the the point they made on the earnings call was you know everybody's having this debate on like well it's here's a premium here's
a net asset value and it's irrational it's not irrational we're we're a Growth Company we're a tech company how do you how do you value a company that's gone from 1 Billion to 50 billion in four years you know in q1 when fastb is adopted they're going to have A1 billion earnings print it's like it's like the biggest rate of the biggest you know quarter over quarter change in earnings in the history of capital markets so like the real crazy take is when you think about fby adoption and this Bitcoin treasury strategy you have essentially
kind of like a merging of the the PE multiple world and this and this you know new Corporate Bitcoin treasury strategy world right where the debate around M you know market cap to net asset value and all this stuff sort of merges with the world of PE ratios right if mstr what think about if Bitcoin goes to whatever you think it does in 2025 do you know the earnings per share that micro strategy is going to record in that scenario do you know that Equity Market investors and and you know all these passive you know
these passive Flows are going to value that at a multiple of the current earnings and so this is entirely unprecedented this is like there you know the mic strategy team is writing the history books right now um and so we don't know what comes next um but I think you know based on the last four years you know past results don't don't equal future performance um but it's clear there's an insatiable amount of demand for these Bitcoin back Securities Equity Securities and debt Securities and no one in the world can offer what they are offering
you can't a hedge fund can't offer it a bank can't offer it a public operating company that's 130% exposed to bit coin on their balance sheet can right so it's super unique it's really not understood even by like very very smart respected you know Finance uh Pros um so I think there's there's still a ton of opportunity and remarkably it's still like you know only like the third Inning here you involved with metap Planet which is a uh japan-based uh company that is pursuing something very similar but what's unique is that Japan's borrowing environment is
uh is a little bit different than in the United States describe maybe the parts of the micro strategy story that can be replicated by other companies like metaplan SAR scientific Etc um and then also what are some of the ways that people can take this kind of corporate Finance strategy and maybe add their own flavor like as you guys are doing in Japan um according to the environment the geography or or maybe the business strategy yeah so I mean we you know metap planet is no doubt and we don't we don't shy from it was
inspired by the micro straty story I I joined the company in May um about a few weeks after the the Bitcoin uh standard was announced um and and kind of the implementation details were still being Figured out um I think you know the point is there's going to be a lot of different flavors of this right there's going to be you can think of the spectrum of like there's no Bitcoin and then you know mstr is is 130% levered BTC and they've you know and they're they're they they're deluding as fast as they can and
they're issuing all these dead instruments in the traditional sense which is is risky right but there's a spectrum it's not binary it's Not zero or mstr um you know someone like a square or block is you know just is taking like x% of their of their profits 5% and just dcing into Bitcoin right so every quarter they're going to announce a little bit more Bitcoin but I don't think they had the buying from shareholders to Triple their shares outstanding to buy Bitcoin for someone like metap planet right metap planet was a legacy Budget Hotel company
that got basically you know completely wiped out During covid um rest structured the entire balance sheet and was essentially you know and don't shy away from this like a zombie um in in 20 in 20203 and 24 um and so the point is you know Japan offered a really unique opportunity where there's no Bitcoin exposure anywhere in the equity markets there there's no miners there's no ex you know coinbase or micro strategy there's no ETFs and the tax rate on crypto right now in Japan is like the highest in the World um it's treated as
miscellaneous income so it's up to like 55% uh but listed Securities are 20% so there was never mind the the interest rate in the currency story and the debt to GDP so there was a there's like a bunch of stars set of line that made this a really unique interesting opportunity um and so you know so far metop planet has has gone from you know 11 million shares outstanding to to 36 million in in six months right um and And you know has right now we have metap planet has five times the amount of Bitcoin
on its balance sheet with no debt as the market cap was six months ago um so the point is we're you know the scale the scale is obviously like multiple orders of magnitude smaller than like say a micro strategy to start um but this the the the Playbook and the story is is similar and we and we openly state that right like micro strategy adopted BTC yield as a kpi a key Performance indicator we're not trying to reinvent the wheel right so we we said early on in in April we said you know we want
to increase our BTC per share um but you know when you read micro strategies disclosures they're saying here's our fully diluted shares outstanding here's what they are here's our converts you know it's like full it's like overly transparent right and so we're like you know I think um we're we're going to do that same thing and We've you know micro strategy openly is saying we want we we don't want to we're not gatekeeping this we want this to be the standard we want our transparency and we want our you know our kpi this BTC yield
to be the standard and so we adopted that and and now our you know our our measure of whether we're doing you know a a good job for our for our shareholders for our partners is whether the bitco our total Bitcoin per fully deleted Shar is going up and if it's not Then we're not doing our job right and so I think that you know this is still super super early days um but you know I would imagine right we you know pump we've had 20 conversations just me and you you've had 400 500 podcasts
on bitcoin alone you we think think both of us all the time on on on what this world looks like on the other side of like this Bitcoin Event Horizon right and I think what's what was a little fuzzy but is now coming more into focus is like Okay if we if we go to the furthest extreme of what this Bitcoin ice world looks like right and Bitcoin is like The Benchmark for Value then what is the me what is the uh you know a measure of performance or or Excellence look like in in in
that world for finance right and I think what it what it it's clear what it looks like is well per share on a per you know on a relative basis is your bit is your Bitcoin Holdings going up or down right Because you can you can increase aggregate Bitcoin Holdings um while duding your shareholders right but Bitcoin per share is going down right so like you know a lot of the miners have a lot of Bitcoin right but mining is a really tough business and you know there's many things in as6 depreciate so a lot
of these miners have way more Bitcoin than they had four years ago the public miners uh but their Bitcoin fully diluted share has gone down right and I Understand you know they they're building sites and they're they're doing much more than just buying Bitcoin right U but the point is that that you know that's kind of the true cut through the noise Benchmark of of what success looks like or or at least to some right and so for us we've we've tried to imp we've you know openly stated that we we are inspired by micro
strategy and looking to implement that as well and I think you know that's if I had to to guess I Would you know say that there's going to be five and then 10 and then 20 and then 100 companies that are you know using this as a benchmark per uh for performance um but for a variety of reasons you know BTC yield is a benchmark right it sort of it sort of pigeon holes you into into one thing right because if if you're using BTC yield as a benchmark and then all of a sudden you
want to go make an acquisition right or if you you know you Are a tech company and you want to go buy out to start up or well all of a sudden if you use shares to do that your BTC per share goes down right so if your shareholders only want one thing and they only want Bitcoin right that that you know introduces an interesting element so there's pros and there's cons but I think for us this is you know this is the story and you know that's our that's our one goal we want to
be we want to hold as much Bitcoin as Possible and I think you know the interesting thing is that for the first time um not for the first time but in in a way that wasn't as clear and transparent and quantifiable as it is today dilution can be nearly instantly a creative right you can dilute your shareholders and and almost near instantly your your you know uh per share value incrementally ratchets upward and it's just a new Dynamic right I mean if you're a real estate public Company or whatever and and you you delute shareholders
to make an acquisition or to you know to invest in a new property it takes a few years to figure out whether that was a good acquisition or if the real estate portfolio is you know giving you a positive Roi you might never know with Bitcoin you know you you know in in 3 days right so like the the the investment cycle if you will is is a lot faster um so yeah there's a lot of Interesting elements and and things to pick at but I think you know the moral of the story is that
this is a one-way train in terms of Bitcoin adoption in terms some more companies adopting it um but it won't I don't think you should expect every there there to be you know 2,000 micro strategy copycats exactly as they are you know there's going to be 10 there's going to be a lot of them but I think a lot more companies Maybe a big tech company maybe Microsoft they're G I Mean Microsoft could buy $10 billion of Bitcoin and it's irrelevant to their balance sheet right and like that's a lot of money um but relative
to their three trillion dollar market cap they're not a Bitcoin proxy right so that's where sailor that's where micro strategy story is unique I think for us that's where we're we're unique where we're not focusing on anything else um but for an established corporate conglomerate right that's not going to you're not going to Go all in right relatively it's going to be quite small even if your absolute position size is Big so I think it comes in all flavors all shapes and sizes but you know it's a one-way uh you know Street for adoption micro
strategy has announced a $42 billion kind of capital raise it's both equity and debt uh part of that Equity raise is the largest ATM in history for those that don't know uh ATM is like an at the market offering where You basically are selling shares into the market to raise Capital uh from the business they can do so when they choose to do it once the at has been improved and they can choose to do it on you know good days bad days anywhere in between um what is the significance of this ATM that micro
strategy has announced and do you think that uh more and more companies will realize that these ATMs which the Bitcoin miners have been using pretty aggressively uh to fund growth uh Is the path and the kind of lowest hanging fruit to be able to raise capital and then go buy Bitcoin for themselves today's episode is brought to you by Gemini the future is being built today and the future of currency isn't dollars Euros pounds or Yen it's crypto and Gemini thinks that's a great thing because a future where money is decentralized inclusive and globally accessible
that's a future that we are anxious to be a part of Gemini teamed up With futurists technologists and designers like award-winning artist Matt Griffin known for his illustrations for Dune to craft a vision of the future with crypto at its core the creative theme go where dollars won't emphasizes exploration growth and the crypto Market's Limitless potential whether it's going on that Martian Safar to capture an unforgettable photo of a herd of woolly mammoths grazing the red planet or using Bitcoin to pay for your Lift pass to go strata skiing down the mountain peak of a
breathtaking Comet whatever Adventures we'll be living one thing is for sure in a future this fantastic the limits of traditional currency simply cannot keep up Financial Innovation will usher in this new frontier and so go where dollars won't with Gemini go check them out at gemini.com slgo where dollars won't again go check it out at gemini.com go where dollars won't yeah I mean I Think you know for a lot of these companies the the first entrance right like if you think about a company that you know what what you could choose any company in the
world if if they just instantly just kind of jumped on you know the the next earnings call or they released an 8K and they said hey uh we're deluding shares by 10% to buy Bitcoin and uh you know here's your first time hearing about it it wouldn't go over well right um especially if You're big corporate like you just can't do that you can't just bring that upon your shareholders you know it's it's kind of a process of like hey should we do this okay here we're going to take a we're going to take one%
stake a 5% stake that 5% stake grows a 10 hey maybe we should buy more um hey maybe we should increase Bitcoin per share how do we do that well we could issue new shares look at what this company did right they've done it they've done it Eight separate times um so I think that's kind of how how it'll look um but yeah like right if you think about the you know you because of the interest rate in bu because of even even during from like say 2000 to 2020 before you know the inflation wave
that that hit after Co there was there was still a prolonged period of negative real interest rates you know the the interest rates were zero and um you know the the inflation Rate was say 2 3% in CPI terms you know the the real hurdle rate and say like the S&P 500 if you're measuring that or or Bitcoin was a lot higher but let maybe you could you could say M2 but let's just use CPI right like you have a netive -2 3% real interest rate in that world so why would a corporation ever hold
cash and the the the fact of the matter is the Smart Ones didn't right the Smart Ones are are borrowing as much money as they can long dated and they Were buying back their stock right like the you know post Steve Jobs like Apple's biggest Innovation is the I buyback and that's and that's fine I think the the important thing to recognize is that you know it's a it's just a matter of incentives they're not doing anything wrong it's it's you know it's what most anybody else would do in their shoes um right like that's
how you return value tax efficiently to shareholders in this World right because like with a with a dividend you know both sides are getting tax with a buyback you know it's just it's just you know kind of increasing the valuation of your shares not it's not a taxable event directly until you sell um and so that world right it's like you're DEC capitalizing your balance sheet you're getting rid of capital as fast as you can because Capital you're that cash assets a liability which is like in you know it's Like how's a cash a liability
well it is in a world where it decreases in real terms every single year it's a liability um so Bitcoin you know the the idea that that Bitcoin Capital again can be an asset and that volatility itself is an asset right which is like wait what say that again and and the the real crazy thing and and micro strategy just stumbled into this was you know they bought a bunch of Bitcoin and the Bitcoin went up and the Bitcoin became a Bigger and bigger percent of their market cap and all of a sudden you know
micro strategies like realized volatility had doubled right so so and and for the CFO right like the most you don't want balance sheet volatility you don't want stock volatility these things are scary and you should avoid them right Wall Street why would you ever buy Bitcoin it's volatile it's way too risky stay away um but the the real crazy thing you know the egg that was cracked With with micro strategy is that this volatility is an asset that's being leveraged um so so you know micro strategies is you know as of volatile are now twice
as volatile as Bitcoin well because of this they can borrow for basically you know free for four five six years um because how how do they do that well you know if I if I if you pull up the you know options on on E trade or Robin Hood or interactive brokers or Schwab or whatever brokerage you use and You just look at you know Tesla stock and you go to the furthest out and you want to buy a call option not for for out of the money just for today's price you want to buy
Tesla for today's price 5 years from now well like that's that option cost a lot of cost a lot of money even buying it say you have to pay a pretty fat premium to buy it 50% higher than the price is today five years from now well why because that optionality is really worth is really valuable if the Stock you know doubles or triples right and the more volatile of a stock the more uncertainty there is the more you have to pay the the F the fatter that premium is right um and so volatility in
the world of options is is value and so a convertible note is just a dead instrument and a and a basically a a call option on a company wrapped into one instrument and so so this you know this this option this micro strategy common stock option is the hottest is The hottest thing in debt markets um right because you know traditionally you know a convertible node on on Burkshire haway or a convertible note on you know just like a stock that barely trades isn't there's almost no value there I guess it depends where the the
conversion Price is Right but Micro strategy saying hey 40% out of the money five years right well that you know plug that those values into a black and trolls model you know it's basically a Fair value of kind of the expected distribution and kind of a bunch of mathy stuff but the point is that the volatility is valuable to them um and so they've they've leaned into it and they said okay we want we want more volatility more returns we're going to manage this in the way where we're not going to be forced to sell
right I think they learned less micro strategy learned lessons in 21 and 22 on you know the size of their their their debt versus Their assets you know kind of fine tuning this to the point where they can bitcoin's going to draw down by what 50 60% at some point 70% we you know you've been through a few Cycles right like we we we know that at the point where we think this is hyperbitcoinization and no it'll never go down again you know we'll get we'll get a nice 50 60% pullback and so the point
is that they're they're structuring it out where the liabilities are not going to be forced to sell uh They this you know this ATM this $21 billion ATM they're going to be in the market every single day and the and the point is like micro strategies volume has gone from I actually don't know what it was pre um pre- Bitcoin but right now it's about5 billion dollar a day right and so that's that's the same as the you know the Magnificent 7 that's the same as Nvidia or Tesla or meta or Amazon right but those
are those are trillion dollar companies micr Strat is 50 Billion right so like the the micro strategy options are the hottest the the the most you know the biggest options chain in the US markets so the point is that they can they can delute because of the volume because of the volatility because of the uncertainty because of the Traders and speculators and arbitragers their financing options for you know today compared to four years ago is is otherworldly you know the options chain In micro strategy in 2020 was 3 million and now it's it's like 25
billion right so so that like that's it's just the the the volatility and uh you know that uncertainty paradoxically opens up a lot of doors and so when you know particularly for leaning into this Bitcoin strategy um in a way that you know really isn't comparable to anybody else at this phase um you know they they have figured out almost an engineering uh feat right in financial markets that Has never been seen before and so that is basically completely opposite completely in inverse to the the current meta right the current Corporate Finance meta of get
rid of capital no volatility buy back your stock right like they they want the opposite they want High volatility they want more capital and and and they want you know higher performance because of it so I think you know that that world is uh it's a new idea it's a radical idea and I think It's one that makes a lot of the you know if you would never read that in an efficient market hypothesis textbook right you would never learn this in a Harvard MBA right so a lot of the people in you know the
sea sues right like you're a SE Suite executive you're a CFO at a public company you like you you have a four-year term you you vested stock options like you just don't want to rock the boat right there's no incentive like Sailor he's like founder he's got over 50% of the voting shares he's like we're doing this right but for others you know that you who owns your shares well Fidelity and black rock and Vanguard and State Street and and you know four other pen and you know we each we each own 1% of the
share so like we're not going to do a Bitcoin standard because we don't want to blow this up um but I think that's changing right the the career risk has really been been diminished I Wouldn't say it's fully wiped out yet in the minds of everybody but I mean the results speak for itself micr strategies have performed every company in the S&P 500 by a long shot um four years you mentioned something that I think is worth elaborating on which is the US dollar is actually a liability and this is something that may be popular
and known in the Bitcoin Community but I think most people in finance uh most entrepreneurs um they Don't see that they don't understand what that means can you explain well yeah I you know I think if you can look in the past you can look in the last four years or 10 years um but I think really you know the especially the Savvy investors the Paul tutor Jones the Dr and Millers um you know they they're saying that these macro guys they're looking at the debt the GDP in the US and every G7 nation and
they're saying there's no way Fixed income bonds even short duration treasuries uh debt instruments have a positive Roi UMC you know because functionally like the these these countries these sovereigns are are insolvent um so so like traditionally there's you know there's two ways to go about this on a gold standard they you know confiscate the gold or revalue the gold higher it it diminishes the real value of the debts on a debt base system you know the only option is to basically You know print your way out the only option is to inflate your way
out which means by definition just you know simple arithmetic the the the year-over-year percentage change in inflation has to be higher than the interest rate right so that's the way to devalue the real value of the debt is is financial repression inflation above interest rates um so in that world okay great your treasury earns 4% right but your treasury earning 4% while inflation is six means you're Losing losing value in real terms so like the this entire Finance world is baked around you know forward projections and multiples and and you know you're saying okay well
the company makes this amount of cash or this amount of earnings or cash flow this year so we're going to Value it you know on our 10year projection and I think you know basically because of the the there's a lot of second order effects but because of this this Mass monetary experiment Because of this fiat currency induced you know malaise almost uh the the investing world is no longer I mean there's there's many that are doing this but but the the vast majority of investment Capital they're not going in and they're not putting up an
Excel sheet and saying well okay so here's the Deb and the the liabilities and here's the cash flow and here's you know all the things to look at and here's our model on how to Value this and the Stock's worth this no no no like the average person the average retiree the average you know corporate worker is o ing money 52 weeks a year into a basket of 500 companies or a basket of every company in the US at any price right and disproportionately it goes to the biggest companies but like passive the passive you
know zombification of of investing flows right that's that's came as a result of ETFs right I I think that that it's not a bad thing in a vacuum But the the reason that this has happened is because the the original instrument that's to be used for savings money no longer can can function as a store value right in a in a hypothetical world where the dollar you know your unit of currency whatever it is doesn't programmatically you know it's not politically programmed to lose value every year in that world investing as we know it becomes
much more of an of an active game you have to pick winners and Losers right it's a stock Pickers market right the last the last 20 years or let's just say you know 10 20 years it's not a stock Breakers Market it's a momentum market right the people that have won are the people that are chasing beta they're chasing Tech right they've outperformed they've outperformed you know the active managers the value fund guys and I think the the value investors you know the the reason they're underperforming the value guys is not Because they're dumb they're
not they're really smart you know these guys are waren Buffett disciples and they're getting performed every year by by teenagers punting QQQ right well why well it's not because they're dumb again it's because the thing that they're the denominator that that they're using for all this calculus there's an error term baked in there there's an there's an error the error is the the value of the currency Is going down right so so in a world where the money is you know debasing at maybe increasing rate well slap whatever multiple you want on all these tech
companies it doesn't matter they're they'll grow into it you know like that's and that's the world we're in right and a lot of people don't recognize that um and so whether that continues or not you know that's a that's a topic for debate I think it does I think we have to debase to get Out of this you know we had we had a biggest inflation shock in 50 years we were talking about it all of 21 and 22 the debt to GDP ratios didn't go down right the the point was in 2020 the FED
shares and everyone else was was clamoring for high inflation we need inflation higher we need to shock markets we we want you know just to let it run hot that's what they were saying right they did they definitely let it run hot inflation wasn't transitory no Matter how many times they said it the cost Goods now is you know the base effect it's 30% higher everything's 30% more expensive you know depending on average but a Deb to GDP didn't go down it's flat it maybe ticked up in places so the point is that the the
debasement is still guaranteed to come so so you know in in the world of investing um whether you're just a stock you know stock picker or you know investing in a Robin Hood brokerage or you're you're a CFO or you're a value fund CIO right like the the the implicit assumption is that that you make in all this financial analysis is that you know the the ruler is accurate and the ruler the dollar the ruler is a dollar on a one year five year 10 year 30-y year you know expected expected value but that in
the world where that's broken in a world where you know 10 years from now the the money is going to debase by by you know it's going to debase by 50% more than the Value you're going to get on on the interest rates in cash how do you what how do you measure things and I think the the bitcoiners are saying you know the crazy radical bitcoiners are saying well guys you're using the wrong unit right it's not clear to everybody that Bitcoin is the unit to measure because it's too volatile there's too much noise
you know it's too small um but increasingly right there's now one or two companies there's Now a small country there's now a few kind of radical people that are saying well guys we we've been telling you that this this is the new Benchmark BTC um but you know look around and so I I don't think we're there yet in the sense that everybody's going to finally say okay well we get it the money's broken um but this this can only this game can only go on for so long um I know it's politically polarizing there's
it's orange man it's it's blue team it's red Team the reality is it's structural um and so you know in that world where the Dollar's broken many things are in disarray um and and a lot of it gets fixed and the second and third order effects get fixed when that that you know that base error is no longer uh Gone AR Ray right so the dollar the dollar is ultimately broken um and you know a lot of people don't see it you don't see it with you know the CPI only going up 2% a year
but we really we all Know that the real inflation rate is higher than 2% right like there's just an implicit understanding that it's a lot higher so yeah I think that you know that the corporate Treasures of the world and the CFOs are still operating you know they're saying hey we grew we grew 6% year-over year it's like yeah well the you know in 2022 the inflation R was nine right so you didn't grow you you trunk right um so that's that's still you know not widely understood um Or at least not it's kind of
not spoken about but I think we all know it's it's happening what is this going to look like 10 years from now 20 years from now this kind of Bitcoin treasury strategy how do you think about this you know there's the guys uh that are doing the micro strategy True North uh podcast and content um there's people who are you know making large investments in these companies that that obviously believe it's going to be higher or better in the Future but like what what does it actually look like a decade or two from now yeah
I think you know the you're gonna have a lot of companies that are operating on on bitcoin standards you're going to have you know micro I think micro strategy truly is going to be one of the biggest companies in the world um you know they're going to be in the conversation of you know Ma mag seven right Fang mag seven whatever you want to call it um I Think you know micr strategy could timately be a 500 billion trillion dollar company um you know I I the I don't think you know how to Value like
how do you how do you value that growth how how does a market value a 20% increase in Bitcoin per share year-over-year in a forward-looking you know discounting equities Market no one knows um and so but but more so you you know the real big pools of capital is is fixed income right and so this these Convertible notes are the first the first ever it's not a Bitcoin Bond it's a it's a micro strategy convertible Bond um but it's implicitly backed by Bitcoin and so I think these this is the first you know it's the
first crack of the dam if you will right like there's there's all of this Capital that especially in the long end not the short end you know okay the the the FED funds rates 5% and inflation six okay it's fine it's one year your short duration cash who cares The real pain and there there was already been the biggest you know treasuries bare Market in in in the history of of modern Finance in 22 and 23 right the long end already repriced from 1% to 5% but now the the I think the the realization the
bond market is now coming to especially with maybe a higher chance of a trump term or really either candidate is that you know the long end's going to be kind of Quasi sacrificed right we have to onshore all This manufacturing we have to re we have to get out of this this debt bubble in relative terms we have to devalue all right well we're going to pin this long end and you know we're going to kind of just let it rip and so in that world where does all this Capital go well you can't like
there's there's a hundred trillion dollars of fixed income Capital you can't they can't buy Bitcoin on coinbase they can't buy the Bitcoin ETF they can't buy micr strategy stock they Can't buy Apple or Google stock they have to buy bonds and so I think the point is that uh you know all these banks are coming to the Bitcoin World um they you know not yet but they're all going to want to custody Bitcoin they all seen what happened with ibit I think there's the realization that that Bitcoin is collateral is is perfect collateral if Done
Right segregate the collateral no rehypothecation you know yada yada yada Um that you know someone like caner coming out in July and saying you had a a great podcast with Howard by the way um you he's a big big big Bitcoin bull um they have a two2 billion Bitcoin collateralized loan facility and so you know that that's a big signal to the trafy world right um and so all of these companies or all of these banks are going to say well you know Bitcoin is is wait this is perfect collateral it trades 247 365 we
can over collateralize It it's a no loss loan business okay yeah I mean let's let's put the Bitcoin you know the Bitcoin borrow the borrow rate against your Bitcoin at sof for plus 100 basis points right like there's no reason that I should be able to borrow against my Apple stock or Tesla stock or whatever stock at Goldman or JP Morgan at 75 basis points higher than the FED funds rate but Bitcoin is 500 basis points uh you know above the FED funds rate right now for Bitcoin back Lending like the problem isn't the Unchained
capitals and the hoddle huddles and the caner fitzgeralds of the world Being Greedy the problem is like the credit the private Credit World the the fixed income world hasn't understood the Bitcoin story yet you know Bitcoin is perfect collateral so I think there's a two-prong kind of approach there's there's the world of fixed income is realizing the power of Bitcoin coin now which means that stuff like msgr Convertible notes Bitcoin treasury company convertible notes I would say we you know we're we're metap planet is following in the steps so we're going to we're we're branding
as a Bitcoin treasury company um U and so I think that that that world right there's going to be convertible note issuers you know backed by BTC that risk profile is very very different right you want 5% of the Bitcoin downside but 50% of The Upside that's a pretty strong risk profile you Know corporate BTC company Big B coin treasury company convertible notes well on the other side you have all these Banks right that are just going to begin to custody Bitcoin we think in in 2025 well what are they going to do you think
they're just going to custody it no banks the banks are in the business of lending right so once Bitcoin as it gets entrenched into this world of of Finance you know the the hyperf financialization of Bitcoin is Hyperbitcoinization right it you know getting Bitcoin on the asset side of the global balance sheet you know sufficient in sufficient tying it to the global you know the the the waves of liquidity this this is hyperbitcoinization um and so you know it's I think like we're we're 12 months in if that to maybe nine months into to the
institutionalization like we we had 2020 to 2024 but that was it was still not touchable to like the the the suits Wall Street you know you're wearing a suit but the the point is like I think that you know the big money right the trillions of dollars of capital are now finally at the gate right and so you know Bitcoin it was crypto highflying you know kind of hot money it we did we had kind of four years of crypto Bitcoin equities coinbase the miners micro strategy we're in the early stages of Bitcoin and fixed
income and that's the biggest Capital pool in the world right So you're going to be able to use Bitcoin to get a mortgage you're gonna be able to use Bitcoin to borrow at JP Morgan you're going to be able to you know there's going to be Underwriters of Bitcoin convertible notes like all these things have yet to come and uh you know I think it's profoundly bullish um so that's kind of how I view it 10 10 years out is that you know we're going to have a bunch of companies on a Bitcoin standard I
think BTC yield is a Benchmark for a lot of Bitcoin forward companies um it's it's clear that the the the fixed income world has an insatiable demand for this and I don't think that stops anytime soon uh and so yeah I think that's you know that these are the big leagues and you know it's still it's still early days in 30 seconds or less tell us what is the metaplan pitch metaplan pitch is we are the only Bitcoin treasury company in Japan and um You know we are doing everything we can to increase uh BTC
per share so Q3 we Bitcoin per fully deluded share was 40 41% and and Q4 so far is 155% um so we are you know we going to dud as fast as possible to accr Value to shareholders and uh We've uh I think we're we're early days of the execution so we're excited that is fantastic and Dylan where can we send people to find you online yeah I'm I'm mostly active still on Twitter so at Dore um doing Stuff with metap planet and uh a few other things so um yeah I I appreciate appreciate coming
on pomp it's been it's been a while at least a year um so appreciate your time and uh yeah it's early days excited to uh maybe maybe you guys talk to the talk to the team at Hut and uh you know the energy dealer role turns into a Bitcoin role as well I uh I think that um you're all over this I think that you are on the right side of history and uh I feel like you and I are Going to be talking a lot more as as all this starts to uh get exciting
here in this bull market so I appreciate the time and we'll definitely do it again soon appreciate it B cheers what's up guys I hope you're enjoying this episode but I got a quick message for you I just released my very first book it's called how to live an extraordinary life in this book there are 65 life lessons that I've picked up over the years these lessons will teach you about money Investing relationships work health happiness and much more in this book I wrote letters to each one of my children and I tried to share
those life lessons with them if you pick up this book there's three things that I can promise you the first is that it is very concise the audio book is only 3 hours you can listen to it on a long drive or on a rainy afternoon the second thing is that you're going to learn something it's worth the price of admission just for The lessons themselves and then the third thing thing is it will make you think more deeply about your life and how you try to live it so go pick up how to live
an extraordinary life today it's a quick read it's very impactful it's very concise and it would mean the world to me for the support go check it out today on Amazon Barnes & Noble or wherever you buy your books hard cover audiobook it all works thank you so much for the support and I'd love to hear What you think about the new book
