← The Wolf Of All Streets
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- [00:00]
A
You've always said, never sell your bitcoin. You floated the idea to at least let them know that it's there to be sold. In theory. How much unencumbered bitcoin do you have?
- [00:08]
B
It's all unencumbered. It's 818,000 bitcoin. If we were to say we're never going to take advantage of that liquidity, then we're impairing the asset which 98% of the company is built on. We might sell 20 basis points of bitcoin in a month. We'd probably buy 5x or 10x that much in the same month. So stretch represents a bank account that pays you 11.5%. We found a consistent way to buy tens of billions of dollars of bitcoin with credit market capital. I say I'm buying the top forever. I'm happy to buy at 60,000. I'm happy to buy at 80,000. I'm happy to Buy at 120. I will be happy to buy at 200,000. 500,000. A million. 2 million. 4 million. 8 million. 16 million.
- [00:53]
A
That's DOP. So we're here at Consensus in Miami. You're giving a keynote this afternoon. Can you give us a preview of what that's going to be about? Because I think it's probably a topic worth discussing.
- [01:18]
B
Well, we've created digital credit and we think bitcoin is digital capital. And we think the killer app of digital capital is digital credit and stretches digital credit. So Bitcoin is a 40vol 40ar asset, and we have stripped most of the volatility and most of the risk off it. And we extracted about 11% yield with about 3 volume, we think that's the gateway to get to digital money. Because if I can strip 40 Vol 40 AR down to 11% or 11 and a half percent yield and 3 volume, the next step is 0 volume, 8%. And so if you want digital money, the ideal money is like a stable coin or a bank account that pays you 8%. And right now people are developing those. Those yield coins, zero volume, 8% money. And they're doing it with digital credit. So I'll be speaking about how we created digital credit, which has exploded. It's gone zero to $8.5 billion in eight months and is growing 350% a year. So I'll speak about that phenomenon. I'll talk about why that is spreading through the tradfi ecosystem, and then I'm going to talk a bit about digital money and digital yield, how you can take Stablecoins and defi protocols and loop that credit 3x5x. So you either get a stablecoin or a yield coin that pays 8% or maybe you create a 25% 3x levered or looped digital yield token or digital yield fund. And so I think what's fun right now is digital credit is bringing the capital gains and the power of bitcoin to the the crypto and the digital assets ecosystem in the form of yield coins and defi. And we're merging what we're seeing the two hemispheres of the industry, crypto and bitcoin come together. So instead of having capital and crypto that never finds bitcoin and capital and bitcoin that never goes into defi or crypto, now the capital flows in, it flows the yield coins, it flows to digital credit, it flows to bitcoin, it loops back and it invigorates the entire industry.
- [03:33]
A
How does this work structurally? Is it still backed by bitcoin or are we really taking a departure from that and utilizing all the other benefits of crypto, as you said, and kind of creating an ecosystem that flows back and forth? It's obviously a departure for many bitcoiners to think about using stablecoins and earning yield and defi and things that kind of foreign to them.
- [03:53]
B
Well, you know, there was always this mythical, wouldn't it be great to have a bitcoin backed stablecoin that page.
- [03:58]
A
I've never understood how those stablecoin exploded on bitcoin.
- [04:02]
B
Yeah, yeah. And the issue is it's very difficult to go from 40 volume to 0 volume like that. That's a massive, massive shift. How do you strip all of the volatility off of bitcoin and get to perfectly pegged to the dollar and extract a yield? What we discovered is you need that intermediate step. And the intermediate step is digital credit. So the idea behind Stretch or digital credit is you're converting a capital gain into a dividend, you know, a credit dividend. So if I, if I expect 30% returns on Bitcoin capital, I can just strip the first 11% and pay it as a credit dividend. So the way we created Stretch is we created a preferred stock that's a monthly variable rate preferred and we pay like 11.5% right now. And the way we fund that dividend is through investing in bitcoin and then capturing a portion of the bitcoin capital gain, monetizing it. And so the first step to creating digital money and yield coins and putting yield into the defi ecosystem which powers it. It's like electricity jacked into defi. The first step is create digital credit. And we were uniquely able to do it because we inadvertently built a $50 billion equity stack when we built strategy. And so we have about an $85 billion enterprise value now. We've got about $58 billion of equity. And for every dollar of equity, you can maybe sell 20 cents of credit. You know, you want to be 5x over collateralized. So we took our bitcoin and everybody said, what are you going to do with the bitcoin? How do you generate yield on the bitcoin? And we thought, well, we're not, we're going to actually sell the credit to generate the yield. So we discovered stretch, we created it, it exploded, it started growing 3 to 400% a year. You know, in the month of March, we sold about one and a half billion dollars of it. And in the month of April, we sold $3.2 billion of it. So, you know, multiply 3.2 times 12 and it's a horrendous, you know, incredible, terrific run rate. So that was the first step, you know, taking digital capital, making it digital credit. And people think, you know, you're crazy to pay 11.5% dividend yield. But the point is, it's a perpetual swap. We're basically swapping you SOFR plus a credit spread forever, and we're getting back bitcoin return forever. And that's very different than a bond that's never coming due. And the company has the option to lower the dividend of sofr falls and the company has the option to compress the credit spread over time, as people get more comfortable, bitcoin rallies. If they like the business model. As bitcoin gets more institutionally adopted, as the credit rating agencies start to embrace digital assets and the banks embrace digital assets, we expect the credit spreads to come down. And so that's how we create digital credit. We were fortunate enough to have a massive set of equity investors that support our stock. We trade billions of dollars in equity every day. We're lucky enough to have a bunch of tradfi derivatives traders. We have about $40 billion of open interest in the options market. And yesterday, if you're watching cnbc, at the end of the day they said the number one biggest options trade in the entire United States today is strategy. Some, some options trader is laying on a multi hundred million dollar options bet, which surprised me. So the point is we have options traders, derivatives traders that are supporting us. We have equity Traders supporting us, we went into Stretch with a bunch of hedge funds. And then the hedge funds started arbing Stretch and Stretch became the biggest preferred stock in the world, and then it became the most liquid preferred stock in the world. And that all happened in about eight months. So stretch exploded to be about 350 to 400 million dollars of liquidity a day. And here's the cool news, Scott. We didn't really understand the defi space and we weren't heavily steeped in stablecoins and defi and crypto. We were always focused upon bitcoin and Tradfi. But a bunch of digital assets, innovators like Apex and Saturn and Pendle, they all started thinking about this and they built yield coins and they built tokens that were backed by Stretch that generated yield. Because from their point of view, they're saying, am I going to power yield with a real world asset like a T bill which pays you three and a half percent, or am I going to power my yield with digital credit that pays 11.5%? So in essence, we're offering 11.5% yield into the defi space as the starting point. And it's exogenous. It's basically backed by our 80 billion, you know, 58 billion of equity or $85 billion enterprise value. And our, our bitcoin stack, which right now is almost 4% of the Bitcoin supply. So that becomes a competitor to other forms of yield and defi. They started building that and that entire complex went from zero to $300 million in a matter of weeks.
- [09:30]
A
That week.
- [09:31]
B
It's just doing this and there's going to be a thousand interesting things to do there. And it's very creative and it's very forward thinking and progressive and they move about 20 times faster than tradfi.
- [09:46]
A
It's so interesting to me because we've had this trend in crypto of massive bubbles explosion and then you actually find a few legitimate use cases out of those ashes, right, that rise. And we saw the algorithmic stablecoin idea, which, you know, I think would be the first iteration of these yield coins, but they were backed by nothing or they were backed. We even have some that are successful that are backed by Ethereum staking or something, but that's 3 or 4%. You're talking about basically taking that idea, taking its capital markets by something that's backed by a multibillion dollar asset that's yielding safely 11.5%. So that conceptually it actually made a lot of sense. They were just doing it with the
- [10:24]
B
wrong backing, you know, isn't it? It's a beautiful thought that for 10 years people worked out all of these techniques and all of the math behind it on various forms of yield. And now we come along and we feed this digital credit into it and they're already ready because they've already got the technique and the technology and they've been thinking about it. And so it's a really good partnership. I feel like some of the most radical innovations are when you're an engineer, you take three components that were lying on the table and you put them all together and you create a magical product. And so, so we didn't invent Defi. Defi has been here. If you look at Stretch or digital credit, we took return of capital tax accounting, it's 100 years old. We took preferred stocks, they're 200 years old. We took publicly listed stocks, it's 100 year old idea. Then we took bitcoin, we plugged that in and that made, you know, we created the world's best preferred stock by plugging in digital capital. And then we took that digital credit. And if you look at Stretch, the tradfi investor says, okay, well I can borrow money on Robinhood at 5% or 4% and I can start with one share and I can loop it once, maybe I can lever it up to 2 shares and I stop, I get a 2x lever and I can't get any further because Schwab or Robinhood or Tradfi prime broker dealers aren't going to give me any more credit. And there's Reg T which keeps you from getting too much leverage. But on the defi side it's like I can go and I can get 5x leverage. And if you would 5x leverage a Bitcoin which is 5x lever of 40vol asset, which is degenerate. Right? Or 10x lever of 40vol asset. Well, I mean that I don't condone. But on the other hand, if we have a two volume asset and then you 10x or 5x lever a two volume asset. Okay, now I'm looking at 15 volume but I'm extracting 35 or 40% yield. This is actually not irresponsible. So I think the idea was the right idea. The asset you. There's no point in levering a T bill 10x if the cost of capital is 4% and the return is 3.5%. You see, that doesn't work.
- [12:44]
A
I just think it's funny because if you ask the average crypto person they would tell you that 5x leverage was low and extremely responsible when we have 100x perpetual swaps. And if you look at the 4x markets, people trade with 50 or 100x leverage just to get enough volatility for it to make sense. So it's not a foreign idea to use slightly higher leverage on low volatility.
- [13:03]
B
And now I'll give you the interesting idea which is revolutionary for tradfi and for DeFi and is this. The Sharpe ratio is the risk adjusted return. So I take the yield, I subtract the risk free rate, I divide by the volume stretches, had a sharp ratio of two and a half. Digital credit is two and a half. And we've got a proposal in front of our shareholders to cut the dividend to double the dividend frequency. And if we double the dividend frequency, we think that the volatility is going to fall further and the Sharpe ratio is going to move north again. So let me put that in perspective. A 2 1/2 Sharpe ratio is higher by a factor of 5 than every credit instrument in the world. Maybe a factor of 10. It's higher than every equity. Like you know, the highest MAG7 Sharpe ratio is Nvidia, it's 1.7. Every other equity is 1 or less. It's higher than every asset class. The Sharpe ratio of the S and P or Bitcoin are 0.8, 0.9. The Sharpe ratio of gold.05. It's higher than every hedge fund strategy, every hedge fund where you're playing 2 and 20 and you've got lockups. If they could get a sharpe ratio of 2 or 2.2, they could raise infinite money. Okay, we've created an instrument with a Sharpe ratio. Two and a half, three or so. And there's no fee, it's liquid, anybody can grab it. And that means that you put that in a token. You tokenize it. You're saying to yourself, what's the instrument that I would like to plug into 10x leverage? And the answer is you want something with an extremely high Sharpe ratio. Because when you 10x2 volume, that's only 20 volume, that's just the S and P. Right? You know. And so we've created, I think with digital credit, something which is really good for bitcoin. We found a consistent bid, a way to buy billions, tens of billions of dollars of Bitcoin with credit market capital. And we've also created something which is really good for defi and really good for crypto because now we can power the entire DeFi and the entire crypto complex with something which has got 3x the energy of a T. Bill, have
- [15:19]
A
you done the math? I'm sure you have on what the Sharpe ratio is? If you added stretch to a 6040 portfolio, what it does for the entire portfolio, not the asset itself, you know,
- [15:28]
B
I mean, stretches like a universal financial sweetener, it's going to improve the performance. And the Sharpe ratio of every portfolio.
- [15:36]
A
Yeah, I'm just curious. I've always seen the, you know, add 2% of Bitcoin, your Sharpe ratio increases by this. At 5% of Bitcoin, your Sharpe ratio. But there's a cap.
- [15:45]
B
Well, bitcoin's a sharpe ratio of 0.9 stretches a Sharpe ratio of two and a half. And again, it's, it's a simple idea which is I over collateralize the instrument 4 to 1 or 5 to 1 and I just strip out the first 11% because I'm highly confident that I'll get more than 11.5% over a decade. And we've got 50 years of capital, right? We, as a company strategy, we can absorb the volatility, we can absorb the weight, the duration risk, we can absorb the credit risk, we can absorb you know, the, you know, capital risk, all of those things, because we just have the stack of nearly $60 billion of equity and we're just creating that first clean stream of 11% that goes into any portfolio. So you can almost say we're like providing hodling as a service.
- [16:38]
A
I mean, obviously anything you do or anything anyone does at the size, you have critics and there's people who have been very critical of STRC stretches, structure. I mean, is that the answer that you give to them? The one that you just did? I mean, you know, obviously people think it's unsustainable. And you point out the math of how long you can sustain this and the price that Bitcoin can go to and you would still be able to pay the yield. So why do you think that?
- [17:03]
B
You know, I'm famous, I'm famous for this quote, you know, never sell you Bitcoin. And I think the first year or two years, the way that we grew this business is we would fund the credit dividends by selling our common equity. Well, what we're really doing is we're funding credit dividends by selling a bitcoin derivative. Mstr. But to a casual observer or a skeptic or troll, they would say, well, you're just feeding. You're paying the dividends of one type of equity with another type of equity and they don't like that. I think it's very important that we break that cycle and illustrate what we're really doing is we're selling a credit instrument to buy a capital asset. We're selling credit to buy capital. The capital asset is bitcoin. It's like you're selling credit to buy real estate. The real estate appreciates. You sell the appreciated real estate to
- [17:58]
A
pay off the credit dividends tail as old as time. That's what I was going to say. I mean that's a proven strategy to accumulate wealth.
- [18:04]
B
Right. You could boil it down to capital gains fund credit dividends. If you think about the theory of asset backed credit, if you think that the capital investment's going to appreciate at 10% a year, you can pay a dividend of 5%. If you think the capital investment's going to appreciate 20% a year, you can pay A dividend of 10%. If you think that real estate's going up 7% a year, you can payA dividend of 3 or 4 or 5. We think Bitcoin is going up 30% a year. We have no problem paying a dividend of 11.
- [18:39]
A
But you don't need it to.
- [18:41]
B
We don't need it to. We're so over collateralized that the way it works out is if it goes up 30%, you know, when we sell a billion dollars of strc, if bitcoin goes up, you know, 11%, we'd make a billion dollars in net income. Our bitcoin gain, if it goes up 22%, we'd make double that. We'd make $2 billion, a billion upfront and a billion over time. If it went up 30%, we'd make a billion up front and 2 billion on the back end. It's screamingly profitable for the equity investors. But on the other hand, if all bitcoin has to do is go up our break even level, which is 2.3% for us to pay the dividends forever.
- [19:21]
A
So we, and that's on average. That doesn't mean you can't have a down year.
- [19:25]
B
Yeah, on average over forever. We need 2.3%. And if we don't get that, if we get 0%, we have about 50 years, 40 to 50 years to figure it out. So people, you know, the knee jerk reaction is oh well, they borrowed money 11.5%. But what they don't understand is that no, we're never giving the money back. We sold equity and so we sold equity at a variable credit spread over a long Period of time. We really just need bitcoin to go up 2.3% to create value for the common equity. And if it goes up, if you believe that bitcoin's as good as the S and P, this is a no brainer to do it. And if you believe that bitcoin's better than the S and P, this creates massively amplified bitcoin returns for the equity investor. So we found an extremely low risk, almost, you know, I'm not going to say risk free because the lawyers go nuts, but it's excessively low risk. Way to swap the standard overnight funds rate for the bitcoin return. And you know, even the US government, you know, they get the standard overnight funds rate but they have to pay the money back. We're saying we're going to give you the standard overnight funds rate and we're not going to pay the money back but we'll give you a credit spread, we'll give you a premium and that makes it very interesting for a credit investor. But if you're a bitcoin investor and you want to buy a lot of bitcoin and hold it for 100 years, hold it forever, then this is the way to do that most intelligently and most aggressively.
- [20:55]
A
When STRC was relatively new, we sat down in Vegas and you laid out the case. It was at Money 2020. So a TradFi audience rather than a bitcoin or a crypto audience for who would be interested in buying this and how it would benefit them. You talked about the massive increases over March and April. So obviously you were right. The interest came in and is continuing to grow. Who do you think is buying it and why? Can you see that or is it?
- [21:19]
B
I mean the most important point is the bitcoiners go why don't you just buy bitcoin? And the answer is if you want to get on a 40 Vol 40 ARR roller coaster and hold the money for 4 years and not touch it, you should buy bitcoin. But only a small percentage of people have the conviction to do that. The people buying stretch are retirees. 65 year old guy wants to live off of his retirement income. If you know they're conservative investors, they're corporate treasurers. Like I need the money back in six months to pay taxes. I need the money in a year to pay my kids tuition. I want to get paid double or triple or quadruple of money market but I don't want to risk my principal. So if you think about people that need, they need principal Protection. And they want to compound their wealth in a low risk, low anxiety way. They want to preserve their wealth while they compound it faster than inflation. That's a lot of people. And so, you know, stretch represents a bank account that pays you 11.5%. And if you walk down the street and you say to people, do you want to buy a highly volatile equity, do you want to buy a highly volatile crypto asset? Or do you want a bank account that pays you 11% that you don't have to pay tax on for the next decade? You do the poll. It's not complicated. There's a lot of people that will say no to the first two and they'll say yes to the third. But here's one more point. Even the people that would say yes to the first or the second, like if you're willing to bet half of your net worth on Bitcoin or half of your net worth on Nvidia, you still have money that you need to pay the mortgage, taxes, your kids, tuition, or you have working capital in your corporation. And that working capital is what I'll call short duration capital. You know, you can, you need it back in the next three years and you can't afford for it to be worth 30% less on a, you know, on a drawdown. And so everyone has working capital. And digital credit is a really good fit for working capital needs of people in the crypto economy. And then it's really expanded the entire universe because it's drawn in all of these non crypto investors, non bitcoin investors, non vol investors. Scott, I've gone and I've pitched bitcoin to corporations. It takes you hours and hours. You got to go to the board of directors and spend an hour or two hours in front of the board of directors. You have to convince the cfo, the treasurer, every member of the board of directors. And if one member of the board of directors goes, you're done. I'm not sure. Okay, we'll wait for you. On the other hand, if you go to a corporate treasurer or CFO and say, hey, I have something that yields 11.5% tax deferred, do you want to buy? Put 5 or 10% of your working capital into this instead of holding it in money markets. That's like the treasurer talks for a few minutes with the cfo and if the CFO likes it, okay, it's done. They may or may not whisper in the ear of the CEO, but it's not a board level decision, it's an operational decision. The Finance department and a lot of people, retail investors, other sorts of investors, they have the same view, which is someone else. What do I want? I want someone else to take the risk, take the stress, deal with the vault, make the volatility go away, and just give me a return greater than the inflation rate. And like, do I have to trust them? Sure. Just like, you know, you trust Apple, like you trust Google, like you trust Boeing. You know, the world's full of corporations that we trust to provide a service that we need. And so this is a security. You have to trust the issuer, you have to accept risk to Bitcoin. But, you know, Bitcoin falls 80% tomorrow, the credit still collateralize and you're still getting paid. Whereas if you put all your net worth in Bitcoin and it fell 80% tomorrow, you lost 80% of your money. So it's a very different risk proposition. And what we found is it's 100 times easier to explain and it's 100 times more compelling because everybody wants something that's 3x as good as the money
- [25:53]
A
market and allows you to massively compound the Bitcoin that you're buying, which is a nice side effect, obviously. So you mentioned obviously, the open interest and how much interest there is in trading these or in purchasing them for that reason. How much of this do you think is the carry trade? Because obviously you've got to imagine, I've even seen it all over Twitter, right? You're getting 11 and a half on STRC, even for the average person who can go to Schwab or Robinhood or something and take securities loan margin, 5%, that's a 6% spread. Put that 5%. Not saying anyone would recommend this. And then you can obviously buy more strc, effectively increase that yield. Seems like that's what hedge funds would be doing.
- [26:34]
B
You know, I think there's three, three trades that I can put my finger on right now. There's the retail buy and hold, you know, so you can live comfortably on your assets. 80% of STRC when we did our last survey is held by retail accounts, 80% of the shares. So by and large, the number one trade is I'm using it as a bank account or a money market because It's. It pays 11 and a half.
- [27:03]
A
That's me. Yeah, I buy Bitcoin for my savings and I have a position in SDRC that's earning me yield.
- [27:09]
B
And, you know, you live in New York. That's a bank that pays you 24%. Okay, so that's the big trade, the second trade is there are hedge fund arbs. They buy it a few days before the dividend record date, they sell it afterwards, and they kind of want to capture 20 or 30 cents per share by holding the instrument for one day,
- [27:30]
A
buying below par, selling above par, do it again, and now it'll be every two weeks instead of every month.
- [27:35]
B
What they're doing is they're buying it at par and they're collecting a 90 cent dividend and they're taking a 60 cent haircut and they're capturing 30 cents for eight hours of capital.
- [27:47]
A
Right, okay, makes sense.
- [27:48]
B
And that's fine. And that creates liquidity. And so that's a trade. The carry trade is harder to execute in Tradfi because you know, you've only got an advance ratio of 50% and you know they won't give you 5x leverage or 2x leverage very easily. So a lot of people that want to do that carry Trade went into DeFi. So I think the rise of the carry trade, the exciting how do I take a, you know, how do I take this asset and lever it 5x or 3x and get to 20, 30, 40%? You know, I think that's coming out of the DeFi protocols and it's not a majority of the capital, which is fine. It's, you know, it's like zero to, you know, a few hundred million and it's starting to come to life. And I think that'll be a good thing. But there's a race between people that want to do that, people that just want to hold it, and the corporates that are coming in. And also the credit index investors like BlackRock and VanEck STRC is the number two holding in the PFF index and it's a number two holding in the Vaneck preferred index. So there's a lot of different pools of capital that are coming in and it's unclear to me which one will grow the faster. But it is pretty clear that the exciting thing for the normal person is I either swap my money from a money market into a digital credit or I go off and I borrow money at 5% and I lever the thing 3 to 1 and I go from a 11% yield to like a 25% yield. And what's 3x leverage on a 3 volume asset is 9 volume, which is still less than holding the S and P index. So how about I get principal stability and I get better than the S and P return and I'm using capital intelligently. I don't know how I feel about 10 to 20x leverage, Scott. I haven't worked it out yet, But I think 2 to 3x leverage is rational. And, you know, I've said this for five years. It's like if you can borrow money cheap, if sofr goes to 300 basis points or 200 basis points, and you can borrow money at 3%, heck, I have a mortgage at 275 basis points. I used to say, you know, you could borrow money at 2 and a half or 3% and buy Bitcoin. And people thought that was crazy. But I think that if you can borrow money at 3% and you can buy something that gives you 11.5%, and if an $80 billion public company says they will handle the volatility and they will absorb the risk, why wouldn't you?
- [30:38]
A
Yeah, I agree. And obviously, as you said before, you've always said never sell your bitcoin. You floated the idea in your earnings call, said, you know, inoculate the market to it, which I think is just an evolution, in my opinion. Right. Because you have to at least let them know that it's there to be sold. In theory. How much unencumbered bitcoin do you have?
- [31:00]
B
It's all encumbered. It's 818,000 bitcoin. The real key there, Scott, is, is we own about $65 billion of Bitcoin. If the market thought we would never sell it, the credit rating agencies would say, well, then I guess it's not an asset. And there's 20 to $100 billion liquidity in the bitcoin market that is not correlated to our equity or to our credit. If we were to say we're never going to take advantage of that liquidity and we're never going to use that asset, then we're impairing the asset, which 98% of the company is built on. It's pretty important for us to send the signal that if we need to, we can. Now, that's not the same as decrease our bitcoin stack. The truth is, we might sell 20 basis points of Bitcoin, like 0.2% of Bitcoin in a month. We'd probably buy 5x or 10x that much in the same month. So people are getting caught up on that. But if you sell $100 million of Bitcoin in the same month that you buy a billion or $2 billion of Bitcoin, we're still net buyers of bitcoin. We're still net holders of bitcoin. But the benefit to being able to fund with bitcoin is we have the option to never sell a share of stock again. And that really rips the faces off of the shorts. That's good, right? And then we also have the option to capture the tax credit because we have billions of dollars of tax credits that if we were to simply sell the high basis bitcoin, we would capture the tax benefit and we could fund the dividend. And then with strc, we're selling so much strc that we'll buy back 10 bitcoin for every 1 bitcoin we sell. And if you can do that, I would recommend you do it too. It's not a bad business.
- [32:48]
A
I mean, it's just mechanics.
- [32:49]
B
It's not selling bitcoin, it's not reducing your bitcoin.
- [32:54]
A
Right, right. Makes perfect sense. I've just found it fascinating to watch the evolution. How fast do you think the yield coins will become popular and I guess become accepted? There's always that moment where people are skeptical and then you have this sort of Cambrian explosion of interest we saw with sdrc.
- [33:13]
B
You know, I'm watching Apex and they're adding sometimes a million dollars in TBL an hour. Like I'm watching a, you know, I'm watching the same with Saturn and they're taking up millions of dollars a day. I wouldn't, you know, I wouldn't be surprised if we don't go through a billion dollars of capital, you know, in the yield coins in the next four to eight weeks. And then I think it could accelerate. It's a, I think this year is going to be, it's going to be a multibillion dollar industry within the next few months. It's growing very, very rapidly. I mean, stretch is growing 350% a year right now.
- [33:52]
A
So isn't that.
- [33:53]
B
Watch the next 90 days.
- [33:54]
A
Isn't that conservatively, I mean, I know you can't extrapolate March and April forward to December, right. At the same growth rate per month, but it could happen.
- [34:03]
B
Yeah. I think we're in hyper. The bottom line is we're in hyper growth stage. And it's kind of simple. It's a simple idea which is do you want to collect 3.5% yield and pay tax on it and collect 200 basis points after tax in your money market? Or would you like to collect 11.5% and defer the tax for the next decade? Okay. And the answer is. Well, that sounds too good to be true. What's the catch? Of course I do. Okay, that's what's going on in Tradfi right now with digital credit now in defi. Would you like to buy a stablecoin that pays you zero? Or would you like to buy a. And why don't you loop that 10x? Like, what is 10x levered zero? Or would you like to buy something that's backed by a Treasury that pays 3%? Well, what's the effective net yield on that? If you loop it 10x and you pay 3% cost of capital and collect 3%, that's nothing. Or would you like to actually buy a yield coin that pays you 8 or 10 or 11% and not loop it? Okay, well, a stable coin that pays me, you know, yield coin pays me 8%. Well, why wouldn't I want that, right? Why wouldn't I buy 10, 20, 50 billion of that tomorrow, right? It's just, well, do I trust the issuer? It all comes down to do I trust the issuer? Do I trust that they've got their security protocols right? Do I like the team that's doing it? And it's like when the bank sets up and they pay 8% and every other bank pays zero. The money will move or the capital will move when the investors trust the bank. And so this is really an exercise in education and execution and trust building. And it starts slow and then it goes faster, and then all of a sudden it explodes.
- [35:51]
A
I think we've virally, we had 29 seconds left. Is there ever enough bitcoin? Do you ever stop?
- [35:58]
B
No. I think our view is our job is to power up the network. So I say I'm buying the top forever. I'm happy to buy at 60,000. I'm happy to buy at 80,000. I'm happy to Buy at 120. I will be happy to buy at 200,000. 500,000. A million. 2 million, 4 million, 8 million, 16 million. And people will make fun of me for doing it. But bitcoin would be trading at 16 million a coin. And they can make fun of me all they want for us. The key is for us to just be steady. The rest of the market will set the price. We will buy 10, Bitcoin might sell one Bitcoin, buy 10 more, sell one more grind up. And I think it's just good for everybody in the ecosystem. Everybody's winning.
- [36:43]
A
Thank you, Michael. Appreciate your time as always. This podcast is sponsored by Weeks and was recorded live at Consensus 2026. You can find out more about what they have to offer by clicking on the link down below in the description. Thanks to Weeks for sponsoring.