C (4:21)

We'll still be streaming at 5.

A (4:23)

Make sure you stretch. We've got a lot going. I mean, we could stream all, all day, all night, but we're going to jump into this. We're going to talk about income versus balance sheets. I'm going to give everybody a free business idea. We'll bounce that around and talk through it. I think it's really fascinating what you can build on top of digital credit here. And I think we're just at the tip of the iceberg of what can be done. So we'll hit on that and then we will talk a little bit just about cash flow and we'll kick it around and, and go from there. So first thing I'm going to do, I'm just going to start off with the asset update and I'm going to share my screen. We're just going to look at this because this is crazy. These statistics are nuts. This is the strategy balance sheet. We look at this every week to show the health of the balance sheet and how, how much it's improving over time. So BTC held 780,000 to 815,000 the assets on the balance sheet over the last week. Obviously we got some tailwinds from bitcoin, but the assets went from $58 billion to $63 billion. And oh, the preferred stock, this needs to be updated, but I think it's about 13, 3, 5, 5, boom. So the assets went from $58 billion to $63 billion. That is a 5 billion dollar increase. Jump in.

C (5:50)

Yeah, it's there now, right?

A (5:54)

Oh, yeah, we're here, we're here. So the, the reason I'm showing week over week is like we got, we got a lag on grain, A little bit of a lag. I think it's my, maybe it's my screen. Okay. We're good.

C (6:12)

The window's lagging a bit.

A (6:14)

The reason I'm showing this week over week, $5 billion week over week is there are 4,000 companies that are publicly traded that have a $5 billion market cap or less and the assets on the balance sheet just increased by $5 billion in a week. That is the power of putting bitcoin on your balance sheet. That is what a bitcoin powered balance sheet can do for you. Looking at the debt to asset ratio, the leverage ratio looking around 9,9% total amplification around 33% despite issuing $2 billion of perpetual preferred equity. Again, some tailwinds with the price of bitcoin there, which is anticipated. As they are issuing stretch, they're able to put more bitcoin on the balance sheet which thinking about a fixed supply asset, should push the floor price of bitcoin continuously higher. So the bitcoin price in order for needed for the assets to be worth less than the debt is $10,127. That number keeps dropping. So a percent drawdown needed for the assets to be worth less than liabilities on the balance sheet, about 87 drawdown. Think that is incredibly unlikely. So yeah, that's, that's it. Big week. Big week on SCRC volume. Maybe I'll pass it around to you guys and just get a, get a sense check. Like it seems like sentiment shifted. It feels like the bottom's in. Bitcoin's hitting $78,000. And maybe we'll just do a quick around the horn. We'll start with you, Mason.

B (7:37)

Oh, I'm feeling good. I'm gearing up for gate for Vegas. I'm excited for Vegas next week. And yeah, I think the biggest story in the past week and Jeff, you've already touched on it, but is stretch going to semi monthly dividends. And I think it's just a reflection of the continuous innovation on the capital markets front from strategy. And I'm really curious to see how, how you guys will respond. Jeff, with, with, with seda and of course you can't speak on that right now, but it just, you know, there's a lot of different participants in the market who are trading it and, and I know some people were initially upset saying hey, this kind of ruins the, the trade where you rotate into seda. But I'm, I'm sure, and I think I've, I've kind of seen this from Matt Cole already. You, your guys, you know, you're obviously paying attention on this feedback and that's definitely going to influence how you guys might position SATA into the future. So I'm just excited to see how the, the market shifts from here and, and then obviously I think this is like incredibly positive. It's going to be lower volatility. I think it's a great narrative, right? Getting, getting paid twice a month, like a paycheck. I, you know, as like narrative wise, I don't think it gets any better than that. And it's just an incredibly unique financial innovation. Right. There's only so many companies who do once a month dividends and this is the first ever to do twice a month. So I think it's, it's really exciting and I'm curious to hear whether or not you guys think this is kind of the final innovation for Stretch. I, you know, it might depend on kind of the, the NASDAQ rules. I, I think that was one of the influences here where you need a 10 day settlement. So maybe if those change in the future we could get daily dividends or, or something even more, you know, something even faster. You know, with stable coins it could be a constant flow. Like things can get crazy. But I really see this as for a long time. I think this is the model going forward and it's exciting to see.

C (10:07)

My reply to that post was just do daily and get it over with. But I didn't realize the regulatory stuff with the settlement.

A (10:16)

Yeah, I mean a lot of innovation can be built on top of it, right. Just the fact that you've now got by providing more liquidity, by increasing the number of payment dates that actually increases or reduces the amount of risk buffer theoretically that you need to hold on any instrument that's built on top of it. So right. You think about Apex and Saturn and some of these other instruments that are creating a derivative on chain and doing the tokenized thing. They have to hold a risk buffer in order to facilitate liquidity on the instrument. And it's like, okay, well now if you're getting paid multiple times a week, that risk buffer probability, it actually improves and you can, you can start to reduce that risk buffer probability thinking about how it integrates with ETFs, whether that, you know, different designs of ETFs. That's interesting as well because it just improves the construction and just how those, how those instruments are operating. But yeah, I mean, great point. Dan, over to you. What do you, how you feeling? But you're, you're on strike right now. What's going on with strike? What's going on with the rest of the press?

D (11:26)

Yeah, I think it was a big, It's a big week generally. Obviously MSTR IBIT ratio is expanding, which has preceded many rallies, and it's expanding pretty aggressively. The, that one got Mason excited. The, the M Nav has been expanding as well. And I think I did a little post the other day. It's really interesting to think about if strategy is raising capital with Stretch, which is kind of one to one, you raise capital at $100 and you invest capital at $100 and then obviously you have the 11.5% annualized dividend outlay that you have to pay back on the capital. If they're raising MSTR capital at a positive MNAV to pay those dividend payments, they're actually selling bitcoin at a higher price than they purchased it right off the rip. So that's the advantage of having a positive M Nav And I'm starting to really think it's going to trade at a, you know, sustainable long term premium moving forward. And I think that that blip to 11 times m nav at that 60k bitcoin valley was not going to be seen a lot.

A (12:34)

Yeah, yeah, yeah, I completely agree. Over to you, Grain. And do you get a word in on Peter Schiff and how are Spaces? Yes. No, you're good? Yeah.

B (13:27)

Hold on. Chat saying you're muted.

A (13:30)

Yeah. Oh, people can't hear you. Maybe, maybe jump back. I. I can hear you. Maybe jump out and jump back in. Okay. Okay. Well, Grain was talking to Peter Schiff and Peter Schiff agrees on. The thing is Peter Schiff is like, he's basically a bitcoiner. Like he, he agrees like the debt is unsustainable. Right. We've got 120% debt to GDP ratio. That ratio is increasing at 3% compound annual growth rate. Right. Like 10 years from now, 15 years from now, it's going to be 170%, 200%. The fiat currency is more Ponzi like than anything than any of these instruments. I think he's probably pretty frustrated because bitcoin's just harder money than gold. And he should have been the one that had identified and found and started Stretch and all the prep equities. That was his opportunity. But he just failed to identify the harder money. And now he's like bitter and butthurt and can't, you know, wrap his head around it. But like the. Yeah, it seemed like I listened in for a few minutes after the complete debacle on spaces. Spaces are completely horrible. I just can't. I can't understand how people will spend time on those all day. But the, the, like, the fundamental thing that a lot of people really miss is that the common stock is an expression of Bitcoin. So do you think that the demand for leveraged Bitcoin is going to disappear? If you think the answer to that question is yes, then the market has a problem. But historically, what we've seen is that answer is absolutely not. And the volume is incredibly high. Like, why would you want amplified Bitcoin? Why would you want a pure expression of leverage Bitcoin? Well, you would want a pure expression of leverage Bitcoin so you can hedge it in both directions. Like, if you're taking a bitcoin position and you needed leverage or you wanted to hedge a position, you could go long, you could go short, you could buy the equity, you could buy calls, you could do so many things on the equity. And because you understand the issuer and because you understand the clarity of the instrument, you can trust that things are going to go the way that Saylor thinks it's says that things are going to go. And you could see it, it's playing out. I think strategy as of today, I mean, I don't have the numbers right in front of me. I was looking earlier, the stock, the common Stock traded like $3.9 billion in volume. IBIT traded 1.6 or 1.7. So it was like massive, massive, massive volume and interest in the common stock. And the fact is, Bitcoin moves. Like, Bitcoin just moves. That's what makes this whole thing work. Bitcoin just continuously moves. And the common stock is a function of the value of the Bitcoin that's held on the balance sheet. And what does that do? That makes people hedge, that makes people dynamically change their position. That makes people go long, that makes people go short, that makes people speculate, people get off sides, people get underwater, et cetera. And then people get long, and it just creates interest in the stock. And it's very apparent in the, in the volumes traded. So when you look at the relative amount of capital that strategy needs to pull in the door based on the volumes on the common stock, it's just so small. It's so tiny. I think their annual interest obligation is over a billion dollars now. They traded almost $4 billion of stock today. They traded $8 billion of stock last Friday. You got to raise a billion dollars in a year, and the stock traded $8 billion on Friday. That's insane. Like, that's, that's a function of why this whole thing works is because there are algorithms, and the computers run the market, and the computers are the ones that are moving and dynamically hedging. But I'll pass it over to you. Grain. Are you muted still? Let's. Let's check on grain. I can hear you. Can everybody else in the chat here.

C (17:20)

We can hear. What's the chat?

B (17:23)

There's a little bit of delay, so we should wait until there's confirmation.

A (17:27)

What do we got? You're clear.

C (17:32)

Yeah. You look great. You sound great to us.

A (17:35)

Okay, let's check it out. Just. Just rip it. Just rip it. We'll see that.

B (17:44)

Still muted. Still muted

A (17:48)

next week. Grand. That's because the spaces, man, I. I don't know.

C (17:53)

Nothing. Nothing stops this train except the mute.

A (18:00)

I don't know. Jackson, that. That's on. That's on our team behind the scenes.

C (18:03)

Yeah. Late join. Penalty. Penalty box.

A (18:07)

Well, green. Give it a breath. Give it a breather. Come back in like half an hour. Go get a Diet Coke.

B (18:19)

All right. They can't hear you, man.

A (18:22)

All right. Adrian, Adrian, what's going on in your neck of the world? What. How. How are you feeling? What are you thinking about?

E (18:31)

Well, so. Well, first thing, can everyone hear me? That's. That's what we should probably hear.

A (18:34)

You

C (18:36)

sound good. Does.

E (18:39)

What was I gonna say? So, yeah, I actually, when it comes to Stretch, I was talking about how they could do a. I was saying bi weekly back in March on a podcast. I had a post about it, and I was, you know, theorizing about they can do like a series A and a series B of Stretch, and it turns out that they just reappropriated Stretch and made it the first semi monthly preferred offering. So it was. It was very, very. One, satisfying to see that play out and to see how quick, quickly they did it. And three, that just tells me the demand for stretches, as we all know, is, you know, it's crazy, right? So also, the. One of the things I've. I've been getting a lot of DMS about and I've been talking to a. People, a few people about in person is that there are a lot more people that are retirement age. So in Scottsdale, as you know, Arizona is a pretty big old people town, right? So there's a lot of retirees here with a lot of money, and people have seen me on True north, they've seen me on podcasts, and I've had people actually ask me about Stretch in person, which was kind of fun, actually. If I had to be fully Honest with it. But the. The appeal seems to be growing and it seems to be growing at a rather swift clip. And I think that it's very strange to me that the same individuals that in the same conversation I try to talk to them about bitcoin, I lose them. But when I talk to them about, when they hear about Stretch and they hear about a preferred offering, they want to hear about a third offering, want to know what it is. They want to know about the dividend payment and so on and so on and so on and so forth. They have no interest in bitcoin, though. They don't really have interest in strategy, but they are interested in Stretch. And I think that's something that the market is going to play out and it's going to give them what I like to call, you know, before they're price agnostic and now I think they're market agnostic because we're in a relative bear market and they're still raising tons of money to buy bitcoin. With Stretch, we had a bit of an uptick in the last couple of weeks and they were able to do some more with mstr. But Stretch has been relatively stable in the last few months. And I think that's going to knock on wood. I think that's going to continue and I think it gives them the ability to grow their net asset value regardless of market conditions. So that when the market turns and the multiple starts and sentiment shifts and the multiple starts to pick up, they're going to get a disproportionate benefit out of that.

A (20:59)

Yeah. I mean, like, this is what happens on the back end, right? You've got somebody that was maybe a little bit skeptical about it and buys the instrument and starts getting paid dividends for a couple months and they can't stop talking about it. Like, you go tell your buddies, right? Just like everybody here, when we all found bitcoin, you're like, I can't stop talking about it. And you get everybody to YOLO in at the top and then bitcoin crashes on them and you lose a couple friends. You're like, well, damn it. But you're like, I'm still long this asset. And there's a lot. And they're like, man, you're in a cult. And everybody just stops talking to you. This is completely different. This is completely different. You're like, okay, this thing's stable. It's paying you 11/2% yield. It's beating everything else. And you got it in your account. And you talk to somebody that's like near retirement age. And, and they're saying, oh this is great. This is fantastic. This is exactly what I was looking for. And that is, it changes how people interact with money. It changes how people think about their retirement future. If you're talking about getting a couple hundred basis points over and above everything else you're getting on the rest of your portfolio, even if it makes up 5 or 10% of your portfolio, an extra $500 a month for somebody at retirement age is huge.

C (22:06)

Right?

A (22:07)

That's huge to a lot of people and that can be really impactful even thinking about businesses. Right? An extra, you know, a couple thousand dollars a month that like that's an employee. That's an employee or a contractor to help you, you know, work your business or grow your business. So I mean, yeah, these, these tools are changing how people live well and

E (22:26)

that, that's the thing about it. So it, the conversation I was at the country club, that's about a mile away from me me there was an individual talking about dropping like a million bucks into it.

A (22:36)

Yeah, yeah,

E (22:39)

but, yeah, but the thing is he still didn't want to hear about bitcoin. That's the thing that's throwing me off the most. Like when I, when I try to talk to people about bitcoin in person, they, there's nothing but the whole notion about getting a dividend, the whole notion about the preferred offering and being able to earn yield on your idle cash is what is, is what the, the hot topic is. And I think that strategy kind of hit a. Hit the hot spot with the month. And now I think semi monthly is going to be huge too. But I think the monthly was something that really got market interest. And now the semi monthly, I, I'm joking around saying it's like a bitcoin welfare shack. That's what I'm calling it. And people are really, really interested in it, but they're all they care about is the dividend. As long as the dividend is paid and as long as it keeps getting paid, that's all they care about. I, people still at this time don't seem to care too much about declutter the being bitcoin backed. They don't really care about bitcoin itself. They just care about the viability of the offering. And the more strategy pays it out and the more long term success it has, the more capital is going to get. But for me, having someone talk to me in person about stretch and not about bitcoin is weird, but they have a winner.

A (23:52)

I Think, Yeah, that's a great place to drop a quick ad on our True north event that we're having in Vegas. So we are going to be hanging out on Tuesday, 8pm, 11pm at Gatsby's in Vegas. Please grab a ticket if you're around. Come hang out. And we will be checking that people have signed up at the door. So please, if you're interested in coming, hang out. And you want to talk about this stuff, you want to talk about Stretch, you want to talk about SATA, you want to talk about everything happening in the market, come hang out. It'll be a lot more fun than, you know, maybe a month ago when the bitcoin price was like $61,000. And, yeah, look forward to seeing everybody there and, yeah, appreciate the support.

D (24:35)

Mason's going to be running the door.

A (24:39)

Of course. Of course, Mason.

B (24:41)

I take bribes, so.

A (24:43)

That's right. Okay. I mean, Adrian, you hit the nail on the head. And the, the funny thing is a lot of the bears say, like, oh, you know, it's not a debt instrument. I'm never going to be able to get my principal out. And you're like, Adrian, you just gave an example. Like, people may want to hold this until they die.

E (25:04)

I mean, it's possible. That's. That's what's so, like, weird about it. I think, ironically enough, bitcoin's growth trajectory is going to help strategy. It's going to help Stretch. But simultaneously, people are not really. We're going to have two entirely different cohorts in the market. We're going to have individuals that are focused on the instruments, and we have individuals that are focused on bitcoin and strategy that are operating on two ends of the spectrum. And it's just really weird what they're doing with the. Not weird. It's really powerful what they're doing with the financialization of bitcoin. And yes, people might want to hold on to this indefinitely because the, the two guys were retirees. They're retired. They're. They're not really looking for a lot of risk in bitcoin. They're not really looking for a lot of risk of strategy. They don't. They get AI, but they don't want to go max seven. They just want to have their money and something that's relatively. Am I going to say risk free but lower risk, but getting 10 plus percent on it? That's something that they just don't want to turn down.

A (26:05)

Yeah, yeah, yeah. Completely agree. Okay, over to you, Soleil. What are you thinking? Bro, give us the icebreaker. What's cooking?

C (26:13)

Yeah, so I don't know if you noticed, but cinnamon's pretty good right now. You know, bitcoin strategy. Strive been kind of doing a thing. And Monday when we were doing pre production for this show and you were going around, you're asking people, what are you thinking about? What do you want to talk about? And you remember what you asked me?

A (26:33)

No.

C (26:33)

You said, how are your covered calls doing? And you haven't asked me about my covered calls for 10, 11, 12 months. So why are you so interested now? Obviously they're in the red, right. So, you know, you, you're probably the guy that won't even let like a scab just heal and fall off by itself. You just got to pick it and like make it. Yeah, I could tell that right away. And yeah, so I'm doing the roll thing and trying to shuck and jive and see if I can, you know, roll out and up and, and, and try to keep them alive. But, you know, maybe this is what Sailor was talking about when he said that the, the shorts will buy when we want them to. So this might be a little taste of, of that action. So I'm here for it. Life's good and it's a good problem to have.

A (27:22)

Yeah. How you cover skulls, dude. Yeah, that's true. I haven't asked you in a while.

D (27:28)

Yeah, I had some on last week. I've been trading a small portion of the book just puts call selling, put selling calls. And if you like go back three years in MSTR's history, last week was, it was, I think the fourth largest weekly move measured on a Monday to Friday basis in history. And that's even or sorry for the past three years of history. And so that's, you know, even during periods of time when MSTR had a sub 10 billion market cap. So the magnitude of the move was absolutely massive, especially not only relative to history, but relative to its market cap size.

A (28:04)

Yeah. If you zoom back out to pre 10 shares or 10, 10 to 1 split, the, the price move was $1,380 to $1,700. Like that. That's a, that's a big move. It's a pretty big market cap move, I want to say. Yeah. Near 10 billion dollar market cap move in, in a short period of time. Yeah, that's a pretty big move. Nice to see, honestly. And I think it could potentially go a lot higher. Just sitting on my understanding. I've put together a dashboard thinking about earnings. Right. Like I Think earnings is an interesting topic, thinking about how do you value these? And we could talk about MSTR in a bit later, but based on my estimates as of right now, as of today, if the quarter were to end today at Bitcoin of $78,000, strategy would be sitting on about a $6.2 billion after tax net income, which is massive. That's a pretty massive net income. Granted, the last quarter was horrible, or the last two quarters were horrible, going from 126,000 down to 60,000 wherever Q1 ended. But that narrative will start to shift, right? You'll start to see the net incomes hitting the 10Ks or the 10Qs every quarter. And that will start to create buzz and narrative as this continues to grow and go the opposite direction. So, yeah, really fascinating to see how that changes and evolves. But obviously everybody's going to disagree on this because the income statement bulls are bulled up on income statements and I'm bulled up on balance sheets. And having capital I think is incredibly important moving into just with the, with the changing world that we're in. I know, Mason, you feel very strongly about that.

B (29:57)

Yeah, absolutely.

A (29:58)

Yeah. AI is incredible. I talked about this on a podcast I did a little bit earlier today. I'm spending four to six hours every single day on AI. I'm pushing this thing as hard as humanly possible. I'm running multiple different AIs at the same time. I'm running five different threads. I'm spending a lot of money on tokens and just absolutely trying to push my brain and duplicate my brain in five different ways. And like 10x the productivity. So highly recommend everybody to get into these. Perplexity has been my AI of choice. It's been absolutely incredible. Yeah.

B (30:29)

Jeff, one comment. Saylor did a spaces this week and at the end they did like A Rapid Fire 10 Word Word association game where somebody says a word and he does an association with it. And the word was treasury. And I think he said something along the lines of opportunity or untapped opportunity. And that's really the big idea here, is that I think increasingly in times of uncertainty, having a really strong balance sheet or having a really robust treasury, and of course bitcoin is the. The best for that is going to become increasingly important and it's a change in the philosophy of corporate finance for the 21st century, I believe.

A (31:28)

100%. Great segue because I'm gonna drop the business idea. Are you guys ready to kind of explore this? Because I'm super fired up about it and I can't stop thinking about it and it's probably everything I'm going to talk about next week at the bitcoin conference. So obviously we've got that strategy is a structured finance company. Strive is a structured finance company. We think about strategy is taking a raw commodity out of the Internet and proof of work, which is bitcoin. And they've created a structured finance product, right? They put a senior tranche that is digital credit and they've got the junior tranche which is amplified bitcoin. You could, you could throw all the prefs in there. But just to simplify it, you've got senior digital credit, junior equity, amplified bitcoin. Now I've got this slide. I'm going to share my screen. Okay, can you guys see this? Okay, so over on the left hand side, this is the current structure. You've got digital credit, right? BTC backed balance sheet, preferred securities, strc, seda. And you've got amplified bitcoin which is the leveraged bitcoin exposure. It's the residual claim, it's all of the excess risk return that the digital credit instruments, the people that hold the digital credit instruments don't want to hold. Now you can take this a step further. So I've got this titled as the Bitcoin the BTC development company capital structure. So what do we know about the marketplace right now? We know that retail has been incredibly interested in these products. There's been institutional demand, but it has been, it has been a little bit smaller. Why? Because these instruments are a little bit novel and they're a little bit new. Right? So they're backed by bitcoin. They're perpetuals, they don't have terms on them. So like getting a pension fund to buy these, they won't buy them because they're not structured, they're not rated. The issuer has a B minus credit rating. There's so many problems, right? S and P doesn't value any of the bitcoin on the balance sheet because of the Basel risk weightings. None of the banks are holding any bitcoin. So many problems. Now what this proposal is showing is how to solve that problem. And you can create a special purpose vehicle that is capitalized on digital credit. Okay. The entire vehicle itself could be the same structure of strategy or strive right now, but in a separate special purpose vehicle. Okay. I'm calling this the, the digital credit or the bitcoin development company structure. So you can take this pile of digital credit and you can tranch it out, right? So you can make a senior tranche and let's call this investment grade digital credit. Right? So you're doing the same thing we're doing with Bitcoin, but you're doing with digital credit. So you've got senior investment grade digital credit, let's say that's 70% of the exposure. And you can put a term, you could take this perpetual equity and you could put it, you could make it debt, convert it into debt and put a eight year term on it, okay. And, and then have like monthly rolling issuances of this debt. And the residual claim is amplified digital credit. So you think about investment grade digital credit, you're going to pay SOFR plus 215 basis points. SOFR plus 250 basis points, I don't know, something around 6.5, maybe 7%. Okay. But because you put a term structure on it and I've got in here a reinsured risk buffer as well. So how this works is the amplified digital credit, the equity takes first dollar loss, right? So if stretch or SATA de pegs, the equity takes first dollar loss, right? And then I put in a reinsured risk buffer here to take another additional 20% loss. So what I'm talking about is boxing in the risk into an instrument that the rating agencies can consume. Okay? You turn this perpetual into a term instrument, you've got an eight year term on it and you're going to wrap it with this reinsurance protection. Okay? And now you've got something that looks exactly like everything else that exists in the current market right now. Like this exact structure exists on like real estate development companies, business development companies. This is not a novel structure. This is just doing the same thing with digital credit backing. Now let's think about the, let's think about the structure for a moment. Let's think about the amplified digital credit. This is fascinating, right? You think about on the left hand side, the, the current excess risk return of digital credit goes to amplified Bitcoin. Well, the same thing happens with the investment grade digital credit. The excess risk return would go to amplified digital credit. So that amplified digital credit, that equity piece would be very attractive. You're looking at something that's like maybe 18, 20% potential yield the demand, like just understanding the demand for the digital credit instruments. The demand for an amplified digital credit instrument would be absolutely astronomical. There would be a ton of people that would be willing to underwrite the equity of a structure that looks like this. You're like, okay, the people that need the investment grade exposure, they just can't stomach the risk. Well, I can, I'm interested in that. Like I would buy this. I would buy Amplified Digital Credit all day, every day. I know several other people that would. Okay, now here's, here's a couple, here's a couple additional unlocks. The Amplified Digital Credit that, that equity piece can be held in a publicly traded vehicle. I'm gonna pause there for a moment. It can be publicly traded. You can put an ATM on top of Amplified Digital Credit and have the ability to bring additional capital into bolster the credit quality of the investment grade digital credit. AKA give you additional capacity to go issue more investment grade digital credit. So I think this is an enormous idea. I think this is like a 50 billion, 100 billion dollar idea over the next 10, 20 years. This is right like Saylor's talked about. Okay, hey, banks take all this digital credit and go make an 8% savings account. Amazing idea. This is an alternative idea. Go make, go do the same thing that we're already doing with Bitcoin, just go do it with digital credit. But you got to do a little bit more work because you got to structure it and put some risk around it. The other thing that's super interesting here, a couple things. One, you can contribute STRC in kind to this business model. So like if you're launching this business model, you can contribute STRC in kind. That's interesting. If somebody wants to exchange STRC for, in exchange for an equity position for Amplified Digital Credit, that's an interesting value proposition. I think there's 50 to $100 million of people that would be at least that would be interested in some sort of value proposition like that. Fascinating. The reinsured risk buffer I've got in here, I can calculate that, I can sell that. I, I literally have basically already calculated it. I've just got to like move it up in my calculations. I can sell that instrument. Why? Because I've back tested the history. I've run it on a forward looking Monte Carlo simulation. I can understand like the probability of loss in different scenarios and forecast it out. I've got all the math. I can sell that. And so, so thinking about the holistic structure here, this is a huge idea. There could be several of these, there could be 10 of these. Everybody could do it a little bit differently. Just like how strategy and strive are doing digital credit Amplified Bitcoin just a little bit differently. We have different capital structures, different ways of showing this. And so what this is doing, this is making private credit digitally. Like digital Bitcoin backed private credit, digital bitcoin backed private credit. You now are creating private credit that is transparent. That is huge. This is a huge idea. Like you're creating a private credit instrument, right? Like the investment grade digital credit instrument that's going to be 144A. You're going to sell that to insurance companies. There's $30 trillion of insurance capital that's just buying anything with yield on it. They would be incredibly interested in this if you could get a rating on it. So I'm going to pause there. It's a pretty big idea. I was, you know, walking around my house just like my head exploding. And this is, you know, the, with

D (40:25)

the help of AI Jeff, a few things here.

B (40:32)

Why, why do you think or, or do you think that this could get a credit rating on it before let's say Stretch does?

A (40:42)

Absolutely, absolutely 100 million percent? Because I've talked with the rating agencies, right? Like the, the rating agencies aren't, they're not giving the bitcoin capital value on the balance sheet, right? So like that, that's the biggest problem. Like nobody, nobody. You got two problems with the digital credit instruments in terms of rating agencies. Perpetual instrument goes on forever. They don't like that. Can't wrap their heads around it. Okay. The second thing is the bitcoin on the balance sheet. I can't value it because the banking standards say the capital is worth zero. And so the rating agencies aren't going to go out and go out on a limb and go create a bitcoin risk model and then blow up the entire world. That's just not their role. But if you take a senior claim on a balance sheet of a company that's transforming this instrument, it's already protected because it's senior claim. And then you put it into another structure and you make it even more senior. You just make that senior claim even more senior. So you're reducing the risk profile even further and you're going to put a reinsured risk buffer in there. You're damn near removing the probability of loss to just is so infinitesimally small, there's still probability of loss. Like all investment grade credit instruments have probability of loss. But like the whole point of it is like, you know, try, try to get all of the risk out of it as humanly possible. You want it to trade like super, super tight. But the fascinating thing here is there's so much additional yield that's spread that, that's spread. There's just so much additional yield. There's room for this to exist. Additionally, you think about this structure, amplified digital credit would be like an absolute home run. The demand on amplified digital credit would be astronomical. The amount of capital you'd be able to bring in the door would be huge. Now this structure theoretically would also be able to bring the cost of capital down for the underlying instrument.

C (42:53)

Right?

A (42:53)

Because you've already got the high yield. If the demand for amplified digital credit is really high, theoretically, especially if interest rates fall, you should be able to lower the cost of capital on the underlying digital credit commodity because of the demand from these other structures that are coming in the door. I think if you're able to get a rating on the investment grade digital credit, which I think is possible, like I, I can price this reinsured risk buffer. I've, I'm like damn near there. You can put a term on it. Like, that's not hard. You could like wrap it up in a piece of paper. The crazy part about this is you're taking this beautifully constructed, elegant product being the perpetual preferred equity, and you're putting a wrapper around it that makes it kind of shittier. But the rating agencies, but the rating agencies are like, I like this, it's got a term on it.

B (43:45)

You know, it's, it's, it's less too good to be true, right? You're, you're, you're stepping it, you're making the Diet Coke a little less sweet.

A (43:53)

Yeah, 100%. Let's just say you put like a six year term on these things and you issued them in $50 million tranches every week. I'm just imagining like a ladder of these instruments. So every 50 get $50 million that's expiring in 60 years. And the next week you issue 50 million and next week you issue 50 million. Then by time it comes due. Six years from now you're talking about, okay, well now I need to look now I need to liquidate $50 million of the security six years from now. I mean, what's the volume of this instrument going to look like six years from now? It's going to be, it's going to be insane, right? We're talking about doing 2 million, I don't know, $4 million in a week. What's it look like six years from now? Massive. I think the opportunity is just so incredibly large. I think the interest in this type of product is huge. This will not be easy. This is not an easy thing to do. Like there are a lot of, there's a lot of friction that you got to go through in order to do this. But that Being said, the reward for creating a structure like this is so high, like the management fees, having exposure to the amplified digital credit, the creation of the investment grade digital credit, the return that somebody can create by creating a private credit vehicle backed by digital credit is so high. I, I think, I think other companies should do this. I think other companies should do this. People should do this. This is a huge opportunity. Yeah, I, I know, Dan, you've thought about it, but I'm so late. Like, what's, what's your thoughts? Is this crazy? What, what's going on here?

C (45:31)

How many bitcoin do I need to get started?

A (45:35)

I think you just need some energy, man. You just, you go walk, you go talk to people. So that's the crazy thing is like, okay, so how do you do this? You do this by putting together a really good pitch deck. You understand the market, so go. The thing is with AI people that have historically never been able to do this, they could theoretically do this because you could go learn all of these things about the market. You kind of need some ability, you probably need to hire a couple people to go out to the capital markets and figure out how to communicate these things. But go, you got to go raise capital from, you gotta go raise, I don't know, 50, $50 million of $100 million of capital that might be interested in amplified digital credit to help you get, get you off the ground. Speaking with some of the rating agencies, talk about what's going on, you know, set up a, set up a board and a couple people that give you guidance and think about like the reinsurance and like it's doable, it's very doable, but it's not gonna be easy.

D (46:35)

Yeah, I think I've been thinking about doing this in other, other, you can implement this on chain pretty easily as well, which, I mean, it serves a different audience. But I think the idea of tranching risk on top of the, on top of stretch specifically, but actually the other preferred equities as well. Because like you think about with stretch, like with the bi monthly, the semi monthly dividend payments, the volatility is going to be taken down close to zero. And then, you know, in this structure, you're essentially the senior tranche is obviously investment grade because the junior tranche, the amplified digital credit, takes first losses. But with the other prefs, the real problem with them obviously is the high volatility that, you know, strife is right now, 26% annualized volatility. So if you were to create a senior tranche that absorbs a Senior tranche with a fixed return below the headline strife rate, for example. So let's say the senior tranche got 7% yield like Jeff was talking about. And the junior tranche was first loss absorption. The junior tranche would be amplified both directionally on the credit spread of something like strife and it would get the amplified yield, whereas the senior tranche was now, it's now stable strife with lower yield. So you know, actually I think creating these products on stuff other than stretch is going to have a big product market fit, even something like strike, right? If you were to create a senior termed structure and then a junior term structure, you now have a levered, levered coupon and a levered MSTR exposure product in the form of the junior tranche.

A (48:17)

You're proving it right now. Somebody could do this on a blend of all the products, right? You could do this on a blend of all the, you could even throw other shit in there. If you wanted to throw 10% hyg in there, somebody's gonna do that, right? You can construct this however you want, right? And Dan, you see the world completely differently. You should probably do this because you could think about the world in a different way and throw STRIKE in there, throw strife in there. The amplified digital credit piece would have a different risk profile. It might have different return or different upside. If you include STRIKE in here, that's interesting. Then you've got this. What is amplified digital credit in that point? You're like, well it's kind of got MSTR bitcoin structured upside as well. On top of it, on top of getting a high, in a high yield, maybe that's like, I don't know, 12, 13% high yield, I don't know. But that, that's the whole point. It's like you can have, you can have somebody come in and say like I only want to do this on the variable preferred instruments. I'm going to make it incredibly clean and incredibly clear. That's probably the, the most efficient route possible. Like the biggest thing is like if, if, particularly if you're going to have the equity tranche that's going to be traded and you want to have an ATM on top of it, you just want the expression to be very calculable. You want it to be very clear and have the ability to understand how is this designed, what is the risk profile of this instrument and that becomes very interesting. Alternatively, this is a bond example and I'm saying slap a term on it and make it a bond example. You could make this with prefs you can do the same exact structure and do it with prefs. You can make an investment grade pref, albeit you won't get an A rating, you probably get a triple B rating. But you could do the same exact thing like reinsured risk buffer. You could put a term like you can put turns on prefs. That's a thing. And then you have, then it's liquid. Now we're talking about just like blow this thing out of the water. Okay, maybe put an ATM on top of it. Maybe you don't even, maybe you don't even structure it and sell 50 million dollar tranches all the time. Maybe it's a, maybe it's a listed instrument. Maybe you've got, you know, different prefs every single week and maybe that's how you do it. Like ABC1, ABC2, ABC3. I don't, that's an idea. There's just so many different things that you could do on top. Like this is structured finance. I've done this. This is what insurance companies do all the time, like go to Bermuda, go to the Cayman Islands. Special purpose vehicles are literally everywhere. Like you go walk around and like any of the offices is be like, you know, forward read. You're like, what is that? It's a special purpose vehicle of this insurance company that's sitting in Bermuda and it just sits there and it's like the profit engine of the company. It's like they do stuff like this. This is common, this is common amongst rich people. And so you can create private credit fund that's transparent backed by digital credit. I think it's a huge idea. It already exists and I think it's like pretty, pretty low hanging fruit with high upside and significant impact on the digital credit capital that could come in the door on this stuff.

B (51:48)

Yeah, it's really interesting to think about what's going to be built on top of digital credit. And you know, digital credit is, is a bridge from traditional finance, traditional capital into Bitcoin. But I, I think what you're laying out here is that there's going to be different adapters for that capital that goes into specific pools with specific needs that maybe even you know, stretch and say that don't fill at this point because they're potentially too good or have too much volatility even though it's, it's very little or don't provide enough yield. So yeah, I, I mean I, I think there's going to be hundreds of, of things that can be built on, on top of it and it's going to Be fascinating to see what, what comes out first. I, I, I mean we've already seen the kind of the tokenized stretch, but I guess in the realm of maybe traditional finance or non crypto related pools of capital, what taps a big pool first?

A (53:00)

Yeah, yeah. I mean I love the things that are going on in the tokenized world. It's great to see. And unfortunately they're not super accessible to people in the US Right. Technically it's like a lot of international, so they're getting international demand that's interested in these products and it's like, well, okay, how do I get large pools of like what are the largest pools of capital? It's not international demand on a, on a yield product. Right. The largest pools of capital are insurance companies, pension funds, banks that hold these instruments for regulatory capital. That is who holds all of the money. The institutions hold all the money. And as much as the bitcoiners want to think that the whole world's going to break and everybody's going to move to bitcoin, it's just going to happen like overnight. It's not going to happen. It's just absolutely not going to happen. But there's going to be vehicles that convert that capital. These are the converters. Like these types of vehicles are the converters. So how do you take this super elegant digital credit instrument and start to structure it a little bit differently so you can turn on the spigot of investment grade digital capital coming in the door? We could wait. The alternative is we could wait and just hope that the banking regulations are changed and S P gets their shit together, probably not going to happen, and figures out how to quantify bitcoin risk weightings maybe. Or just I've talked to these people

B (54:35)

like they're morons.

A (54:36)

Oh my God. I've talked to these people. You know, I've talked to them about like, hey, have you looked into bitcoin? They're like, oh, you know, we looked at it a couple years ago, we haven't created a risk model for it. And you know, it might be on the agenda next quarter to like to think about it, to have it be a discussion about creating a risk model for it. Right.

C (54:56)

Like

A (54:59)

they're not even thinking about talking about creating a risk model for it. Like that's, that's where, and that's like, that's a conversation with the most aggressive rating agency. But that's, that's where we're at. So there's just opportunity for people that are flexible, that understand like how to, how to Interface with this market. Again, this is not novel. Like, you can go look at Stoneridge 2024 annual report. They launched a investment grade tranche of risk capital backed by these natural gas assets. What they did is they took these. Natural gas is really interesting when you shove a. I don't even know what it's called when you start tapping the natural gas to pull it out of the ground. Every natural gas well is different. You know that there's a lifespan on the natural gas well, but you don't know when the end of it is. So you have this, like when you tap a natural gas well, you have cash flow and the cash flow comes out in a stream, but you don't know when it's going to end. So it's a really good opportunity to create a structured vehicle. It's like, okay, let me create a senior tranche that's like, we're just going to make sure that the senior tranche gets paid. And then you've got an equity tranche that's taking on the risk of when the well runs dry. You can run the math, you can calculate that. So that's what Stoneridge did. They created a senior tranche and then they went to rating agencies and I think they reinsured it as well. And they said, here's this structured cash flow of this well that I tapped into the ground and they got it rated bbb, I think it was BBB plus investment grade. And guess what? It's now used as collateral in reinsurance transactions. So you took this commodity that is like natural commodity that comes out of the ground, you structured into a cash flow, and then they structure that cash flow into different tranches so they could get a rating on it. Like this happens. This happens all over the place. This isn't novel. So, yeah, I'm super fired up about it. I'm going to talk about it all next week. I'm going to try to drop this into everybody's little pocket. I'm going to say, hey, you should do this. Say, hey, you should do this. Hey, you should do this. Yeah, that's. That's where we're going. Cool. Any other. Any other thoughts, Adrian?

E (57:29)

Dan, I got a noodle on that some more. I think that's the novel idea. I think you definitely have a point that there's. There should be a market for it. I want to think through implications, but it's, it's just indicative of all the different products that are going to exist on top of Bitcoin, on top of digital credit, on top of the preferreds. I think that the market for it is so nascent that we just can't really project forward just how many different ways it's going to go. So you brainstorming through all this stuff kind of makes sense and I think that there is room for it. It's just a matter of how you implement it.

A (58:05)

Somebody's got to take the ball and run with it. I mean that's, that's what we're all, we're all trying to do. Like the world isn't going to change itself. Okay. I, I quit my job in the reinsurance world because I knew I had to go do this stuff. I was just like, I, I had to do it. I got paid really well. I took a risk, like I took risk to do this and you know, I haven't been happier by the way. It's been super amazing. But like the, the world is not going to change itself. And if you have skill sets or opportunities, like you should probably chase them because you know, thinking about like where the world's going and you know, if you're not utilizing AI and having the ability to go use, utilize AI should probably be looking at places where you can go utilize AI and start to push the envelope and change the world because it's going to move super fast. It's going to move super, super fast.

C (58:58)

Okay, any ideas over there at Strive, you're just giving them away for free now? I'm just giving them laying on the shelf.

A (59:04)

Yeah.

B (59:06)

Jeff, Jeff did just say here guys, Here, here's a 50 billion dollar idea. Take it.

A (59:13)

I'm just like, please don't have time for this.

B (59:17)

We're sitting on a multi trillion dollar idea. So you can have all the 5050 bill you want.

A (59:26)

Yeah, yeah, no, that's exactly.

C (59:27)

Somebody handle my light work.

A (59:31)

I mean if anybody's interested in doing this, like, let me know. That's like, I can, I can provide some information and guidance I guess, but

E (59:40)

it'll definitely be someone interested in it. It's just a matter of when and where and how.

A (59:43)

Yeah, I mean that's why we do this because you never know. There's five people that are watching this tomorrow and this may be what they, you know, the call that they needed. Right? Like who knows 10,000 people watch this and you get three people that are just like, well I wait, I actually have the skill set to do this. I want to actually go do this. You know, you just never know.

B (60:06)

Jeff. That's, that's, that's actually been my mind because you know, There is a, a subset of financial professionals who are bitcoiners. And I like. It's going to be those people. It was you, right? In, in many ways, but it's going to be those people who, who shape the future. And you know, I, those, I, I met one of them in the park. I think, I think I told you about it. The, the, the insurance guy. But it's, it's going to be those people who, who shape the world. And I, I think you're, you're exactly right. Like, those people at some point should feel motivated to, to step up and, and take this information that we're hopefully helping to disperse throughout the Internet and, and go use it in, in meaningful, impactful ways in your, your small section of, of the world. Of the world of, of the. The workforce of, of what you specialize in.

A (61:10)

Right. It can be applied anywhere. Like you, you could probably figure out a way to apply it in anything you interface with your daily life. Unless you just sit at home on the couch and you do collect royalties from, you know, your super uber wealthy parents. Then like even then just go to.

B (61:25)

Well, they, they, they. They might be using Stretch or.

A (61:28)

Yeah. You know, like your family will live on for even more years than they, they would have been. So it's like it could kind of be applied in so many different ways.

C (61:42)

You know what, we're at this weird crossroads and I should use your word, Jeff, and say an interesting crossroads where we've got some OG bitcoiners that maybe try to start companies but they don't know how to do it. So they kind of like mismanage. They're not doing some of these things well. But we're at a stage now where we've got people with skills and a certain level of intelligence and business savvy that are becoming bitcoiners and building on top of bitcoin in intelligent ways almost just kind of like reminds me of the, you know, the guy who gets drafted in the first round and gets a bajillion dollars and then squanders it. You know, some of these, these OGs like maybe don't know how to run a business, but now we've got like in very intelligent business people that are discovering bitcoin and are, you know, cleaning up these ideas and taking these ideas

A (62:38)

and running with it at the same time. That intelligence has never been cheaper and more accessible. Yeah, which is the crazy part. I sat on this idea last night like this, this idea was birthed Last night between 10pm and 12pm Pacific here I am the next day. And I've, like, my text is huge, right? Like, I've got. I was working on it for hours, and I'm just like, you know, pounding it, pounding it. I'm like, what about this? What about this? Like, how would this work? You know? And. But, like, the democratization of intelligence, like, this stuff has never been more accessible. And to your point, Soleil, you're like, okay, now you've got these. These new digital capital instruments. You've got these new credit instruments. You're like, well, what can I do with it? And then you go, and you can hit intelligence, and you could push your brain further than you've ever been able to push it before. Which is the thing that, like, I can't sleep because of it. It's. It's nuts because my brain just keeps going, and I. I have the ability to keep it going. Historically, friction would stop. And I mentioned this a little bit earlier. Like, I'd go for a walk and I'd have this idea. I'm like, oh, hey, maybe I should go look at MSTR's earnings per share for this quarter. I'm like, okay, maybe I'll do that when I get back. And if I have time, I'll sit down and I'll, like, look at the analysis and I'll run it through Excel. This was me six, seven months ago, right? Like, literally now on my walk, I whip out my phone, I plug it in there, and I continue my walk. Three minutes later, I check my phone. Analysis done. Here's your dashboard. Here's all this information. I'm like, holy. And I like, I. I look at it, and I'm like, okay, now my brain keeps going. Like, something that would have, like, stopped my brain. And now you can argue that's a bad thing because I probably should just enjoy my walk, which is happening. But, like, I mean, I'm experiencing this, like, intense euphoria of. Of, like, all of this intelligence at the same time. And I'm just. My brain is just able to, like, continue to push. I mean, it's just. That's addicting. It's, like, super addicting. But. But I. But that's, like, one example, and I could do it. I could do five things at a time. That's the craziest thing. So, like, that idea pops in my head, like, okay, what's the earnings per share per quarter? I like, boom, shoot that off. It's running. And I'm like. As I walk, another idea pops in my head, and I, like, toss it in. And boom, I shoot it. It's often it's running. I give it like five things going at a time. That's kind of where I'm starting to get to like a max capacity to have like five consistent ideas rolling at the same time. But you know,

B (65:27)

if you don't get to 10 ideas, you're not going to make it, man.

A (65:31)

I don't know. People are pushing the limit for sure, but man. Yeah, it's crazy times, crazy stuff. We got some time left you want to do? Should we talk about being bullish?

C (65:44)

Equity?

B (65:47)

Yeah. What's, what's left on the agenda?

A (65:49)

I didn't even know we kind of

C (65:52)

talked about all of it.

A (65:53)

But what is on the agenda?

C (65:57)

Let's take a look.

A (66:00)

Okay. Sending monthly dividends, check income statement versus balance sheet. We could hit on that. STRC is mainly retail. Oh, Soleil hit on that. Because that, we're kind of seeing this like this like bitcoin moment, right? Like I think the, there was a statement that STRC is something about 80% retail holds strc. Fascinating and staggering number. But keep in mind when we say retail, family offices count as retail. What is a family office? A family office is basically a hedge fund with a lot of money that's just like, runs one family's money. So like that's technically considered retail. So we say 80% retail. These are people really just at the forefront of like capital with have infinite flexibility on what they can invest in and they've got people that run their money. Right. If we're talking $6 billion of capital and you know, 5 billion of it is retail, that's. Those are basically like hedge funds that are, you know, managing, you know, family offices and stuff. But anyway, over to you, Soleil.

C (67:00)

Yeah, so I thought about this and it was like, you know what this is? This actually reminds me a bit about, of bitcoin where like the plebs got it first and then he got the best returns. And maybe if this seasons over the next few years and then institutions start to pile in by then, you know, maybe we have sub 10% dividend rate and you know, all the plebs got the best returns and, and kind of got to front run just like, just like the OG's got to front run bitcoin and the institutions will, will come in, come in at the last minute and, and pick up the scraps. But then you know, transition over to an institutional play after we already got the, the, the, the lion's share of the, the best returns because we were willing to take on that risk and, and saw something before these big companies that are not motivated because they've got their moats. And, and like you said, those meetings were like, oh, we're not even talking about talking about it. And it's like the 10th agenda item and the meeting always ends before you get to that item. So you just never cover it. Oh, we'll just do it next month. I remember those, those meetings very well. And so yeah, it was kind of funny when I, when I said that and you're like, well Matt Cole just said that on the, on the hurdle rate and so he gets credit for going live with it first. But it was pretty cool that, that we came from it from completely different directions and came to very similar conclusions.

A (68:36)

Yeah, it's a, it's, it's very, a very similar I guess origin. Right. It's seeing something that the rest of the market isn't seeing before. Okay, Bitcoin was created in 2009. We didn't have a Bitcoin ETF until well, I guess grayscale. When did grayscale come out? 17, something like that. Maybe 16. Yeah, 16 or 17. If green were here he would tell me the exact date that it came out. He's rode GBTC for forever. But yeah, it's like, okay, you don't get the institutional demand on real Bitcoin ETFs until 2024 for like, okay, there's a huge opportunity for everybody that's willing to front run that. And I mean look at the price of bitcoin. It's gone from a, you know, in that time it went from a $50 billion asset to now like what a $1.6 trillion asset. Like yeah, everybody front ran institutions, it's the same.

B (69:33)

Well, I think, I think the front running is still going. Right? Like if you look at institutional adoption of bitcoin, it's frankly not very much so. But, but, but yeah, I, I like Stretch is going to be adopted by forward thinking retail in the same way bitcoin was adopted by it. And it's, it's going to, it's, it's going to continue the, the, I guess the substantial gains that that bitcoin has created in its lifetime. It's going to continue that process and institutions will come into bitcoin at a million dollars a coin, if not higher and they'll come into stretch. My personal belief is I think interest rates are going lower but over 10 year time horizon it's really hard to tell. But I think the more I think about it, the Incentive is to keep the, the dividend rate really high here. And I don't think there's any reason that, that they need to, to come down. As long as Bitcoin is, is doing its thing, I think you keep it highly attractive. And if your M. Nav is, is pumping, it just keeps on lowering your, your cost of capital. So I just think there's going to be a, a separation here at some point where rates go down. And I don't know it, it's going to be, it's going to be fascinating to, to see what happens in that environment. And I think we're, we're beginning to see indications of that. I don't know if you guys been seeing. Walsh has been. Yeah, he's been doing the rounds and on CNBC today, he said, he was talking about AI. He said AI is going to make almost everything cost less. We're at the front end of a productivity boom. Economic growth won't be inflationary. We're in the early innings of a structural decline in prices. Fed calls for a regime change and I really think they're, they're going to use the, the COVID of AI deflation to lower rates. And the real reason that needs lower rates is the, the fiscal situation of the US Government, their, their debt to gdp. And, and they're, they're kind of in a box. And I, I think AI is kind of the, the perfect narrative excuse, believable narrative excuse to, to lower rates going forward. So.

D (72:11)

Yeah, and I think Mason, that's a good point. There's no incentive to lower the dividends on these things. And specifically because Bitcoin is a closed system. So theoretically, if you could keep, I mean there's a world like, let's take this to the limit, for example. Let's just say Strategy offered a 15% dividend and they owned 30% of the Bitcoin supply or something like that. If that 15% dividend beat every single other instrument in the market, then all the capital flowing into Bitcoin until hyper Bitcoinization would ensure that Bitcoin's CAGR was sustained above the dividend rate into perpetuity. And so that's a function of Bitcoin being limited in supply. Right? And then at a certain point, the fiat gets printed so quick that a 15% dividend rate doesn't matter anymore. But again, if this is like a pump from fiat into Bitcoin, then the idea that Bitcoin is a closed system, you could argue at the limit, could justify any interest rate on the prefs

A (73:15)

if, if done correctly, because it is the transition. This is a, this is a one way trade.

B (73:22)

Yeah, it's a one way trade.

A (73:23)

This is a one way trade. Interestingly enough, and we talked about this a couple weeks ago, there was, I think the guy's name is Stephen Mirren. He's one of the, I think he's like, he's not the chair, he's like, I don't know, he works at the Fed. He came out with a 54.

B (73:41)

It's like he's an advisor. Okay, he's Trump's advisor, right?

A (73:46)

I don't think so. But anyway, they've, the Fed has been forecasting everything that, that warsh is going to do. So like they're actually really transparent. If you, if you follow these people, maybe I'll retweet it. If you follow these people, you can see that they're forecasting exactly what they want to do. And part of it is reducing the assets that they've got on the Fed's balance sheet in order to reduce interest rates at the same time. So just a very, it's just a very tricky man. I couldn't imagine being in that role. Like you manage the Fed, you're like trying to balance a feather on a thumbtack. It's just if somebody breathes the wrong way, the thing goes berserk in any one direction. But yeah, I mean, it's just super tricky, super tricky position to be in, like understanding that AI is deflationary. The Fed's got a big balance sheet. You know, debt to GDP is out of control, you know, the, the mandate of stable prices. And it's just a really tricky place to be. I do not envy them.

C (74:51)

But yeah, the one thing about retail that you could say is a little bit of a risk is there they can't be trusted as well as the institutions to just buy and hold. They're a little bit more fickle about, you know, maybe taking some profits and, and moving from instrument to instrument. But you know me, I can, I can make any kind of comparison to, you know, Tesla. And it reminded me a little bit like, let's just say stretch goes on a run and we get all time highs or whatever, thousand a share, let's just say. And somebody decides to take some profits, well, they're not going to sit in, pause, pause.

B (75:30)

MSTR goes on a run. Or stretch goes on a run.

C (75:34)

No, no, MSTR goes on a run.

B (75:36)

Okay, MSTR goes on.

C (75:37)

Yeah, yeah, you stretch it. A thousand dollars a share, somebody. Yeah, somebody's covered calls are getting wrecked. Yeah. And so let's just say some retailer like, okay, I'm gonna take some profits. Well, they're not going to sit on cash because that's a melting ice cube. So what if they rotate into stretch? Well now it just reminded me of like the regenerative braking on electric vehicles where you hit the brakes and it starts to store some of that energy to recharge the battery. And so the money that they're taking out of stretch, okay, maybe that knocks the stretch or the strategy price down a little bit, but you put it in a stretch and then strategy just buys more bitcoin with it, which raises their net asset value and raises the floor that that correction might, you know, gravity drags it to. So it, you know, it was just a little bit of a reflexive kind of dampening to, to, you know, future corrections if retail does decide to, you know, do some profit taking.

B (76:36)

I, I, Lynn Alden posted a tweet. This is mostly months ago. And, and I, I basically said the same thing. I said, you know, what happens at a cycle top where people are taking profits and putting into stretch. I, I, I stole that idea from you then potentially.

A (76:56)

Potentially. But we've been talking about forever. It's like, I don't, I don't think,

B (77:03)

yeah, I, I don't think we saw that this cycle because there wasn't enough awareness of stretch. I think in future years, stretch in many regards fundamentally shifts the price action in bitcoin, alters the.

A (77:22)

Yes. So I see this as a little bit of, there's like countercyclicality of equity and credit on the bitcoin ecosystem because it's so volatile, Right. It's like it goes up. This concept you're talking about is like risk off when the price of bitcoin goes up. Right. So there would be in that idea, there's demand for the credit after the equity rips, goes the other way. Right. So people sell the equity, they go into the credit instrument. So you kind of think of them as like almost pushing. You know, they're going to go through cycles. Just like go look at anything has a business cycle, right? The world has a business cycle. Insurance industry has a business cycle, like all of it that has different periods of time where rates are high, rates are low, rates are high, rates are low. It's just a function of how the world and capital moves and flows. Same thing can happen here. The interesting thing is, and I've been thinking a lot about this, it's like, okay, how does the market adapt and evolve as the price of bitcoin goes higher. Well, in the scenario that you laid out, Soleil, one thing that's interesting is like, okay, if the price of bitcoin goes higher and you wanted to risk off, but you still wanted to be kind of long equity, you're like, I still want to be exposed here, but I want to be protected. The convert the convertible option looks really interesting because you're like, I can. I can now take risk off a little bit because I'm going to have a floor, but I still have, like, long equity exposure. So maybe I don't want to go forward full, like, low, no volatility. Maybe I want to go like, middle volatility. Because you're like, okay, I want to push the clutch in a little bit. Maybe I want to readapt and adjust, and I want the middle volatility. And then you're like, oh, I was right. Things are turning bad. Boom. I go. I sell. Sell the convertible, and I go, do it.

B (79:13)

Jeff, this is also a tweet of mine

A (79:19)

that's. I. I mean, it's.

B (79:21)

I mean. I mean, strike. Strike is an amazing instrument. If you think we're. We're at a peak, right? Yeah, it's amazing because it. It's still a call option, but it's like. It's like you're. You're. You're maybe getting to the point where you're 75. Sure, we're close to a top. That's. That's when an instrument like.

A (79:46)

Yeah. I think the most fascinating thing is at different points in time, they're going to issue different converts. Because let's just say strategy, the price blows out. Let's just say it goes like $4,000 a year. You're like, okay, the convertible strike is going to start trading like equity. It's going to trade almost dollar for dollar for what the equity is trading. And it's like the bond floor is so far below you. You're like, this instrument isn't attractive anymore. I'm just going to convert it into equity. I'm going to hold the equity. And at that point, they probably call it or whatever happens. But at that point in time, it might be interesting to re up and issue a new one, because you're going to get access to new capital. You establish a new bond floor. You're like, cool, here's a new convertible perpetual preferred equity. And there's going to be buyers. There's going to be people interested, especially if the price of bitcoin is peaking there's people that are going to want that kind of like I'm still kind of long equity but I want a bond floor but I don't want to go full risk off. And you know we're just getting started. You know we are just getting like dude, it is going to get so cool. I think the next like 24 months are just going to be electric. I think they're going to be totally electric. I think there's a lot of opportunity for anybody that wants to go like try to spin something up or you know, start a $50 billion business idea. Go for it. Go for it.

D (81:14)

Tom Lee said as much, right? Best, best 18 to 24 months coming up in history.

A (81:21)

Did he say that?

D (81:22)

Yeah, he said that on cnbc.

B (81:24)

Wow.

A (81:24)

I, I like I think I'm, I'm pretty sure I agree. Like it, it could be incredibly electric here. I mean just think about right it. Okay. We break in back into all time highs. I posted this the other day. Actually you know what, I'm share this because this is. We'll do some moon math I guess. Let's go into this.

B (81:44)

I, I was telling Dan's day there's zero reason why bitcoin couldn't instantly just go to 120 right now.

A (81:51)

Right. Like, like gaps up.

B (81:54)

Yeah. Like did wasn't silver at a similar market cap when it just did a 5x?

A (82:01)

Yes.

B (82:02)

In like two months it can move.

A (82:05)

So like we know this can move fast. Strategy went from a billion dollar market cap to a nine billion dollar market cap. Like when they first started in four months, I think four or five months they went from a billion to nine billion. All they did was buy bitcoin and they got a little bit of debt, like convertible debt leverage on the bitcoin. We're in a completely different regime. These products are better. We know the market better. The infrastructure is better. There's bad actors are gone. Everything is so much better. The setup is so much better. Strategy's balance sheet incredibly healthy. Our balance sheet is incredibly healthy. There are a ton of people that are interested in putting bitcoin on their balance sheet. All of this stuff is advancing all at the right time. Interest rates potentially coming down. AI is accelerating very fast. Interest in ARB trading is moving quickly. Tokenization is moving forward all at the same time. We're going into a huge midterm election where there's all the incentive in the world for the economy to be absolutely ripping with a business minded, equity minded oriented president. Just like the setup here is just absolutely insane. But Draw my attention over here to this fair value calculator. This, I was trying to back into this concept of the strategy's net income can be tracked every single day, effectively every minute, and it gets updated every week based on the underlying bitcoin holdings in the balance sheet. So you can see with FASB fair value accounting that the unrealized net income on the balance sheet can be counted as net income. I think that's fascinating. So then I wanted to look at, okay, well what is a PE ratio? And if you take a forward looking PE ratio based on this net income that they've got as of today, so you just take it and you multiply it by three to get four months of earnings. The, the PE ratio as of the price today is around 2.8. The PE ratio, average PE ratio of, you know, top 20 companies in the S&P 500 is around 30, 31 to 32. The average PE ratio of the S&P 500 in total is around 28. So the market is paying $28 for every dollar of earnings. Obviously they're thinking about, they're looking into the future of the income and of the companies and their ability to continue to generate that income and to hold the pole position of the technological mode that they have. Like it's all about the income, but it's also about the technological moat and storing that value. So one thing I looked at is like, okay, Bitcoin price is back to 126,000. They have zero additional digital credit that they raise. And the digital credit cost of Capital is 11 and a half. I've got a fiscal year 2026. If the year ended with Bitcoin at 126,000 and they raised zero additional digital credit, they would have a $66 earnings per share at the end of the year. Now if that goes to, you know what, 175,000, you're looking at $140 diluted earnings per share. And if they raise another $24 billion, let's just say $2 billion a month linearly, you're looking at, you know, a very, very large number from an earnings per share basis. I think that's fascinating. It's an interesting comparison and it draws a lot of questions. Again, I wrote this article. I think there's three questions that every investor should be able to answer. What is an equity actually worth? Why do people actually hold equities? Is there a moment when the regime shifts from growth of cash flow to growth of balance sheet? This is an article that I put out. It's available on tnort.com I put it on my X account as well. But the textbook will tell you that the discounted value of future cash flows gives you a perspective of what an equity is actually worth. So the real question is, what's the discount rate? And is the currency that this is measured in stable? I think both of those are broken. What discount rate should you use in discounted cash flows? Should it be, should it be Bitcoin? Like should Bitcoin be the ruler? Should it be strf? Like what interest rate should you use as your risk free rate? And then the currency obviously is a function of that. One thing I want to mention, because this has been top of my mind as well is everybody thinks of dollars as risk free. And because you've got FDIC insurance, right? Like if I put $250,000 into a bank account, I've got 200, I've got 255, $250,000 of FDIC insurance now. So effectively calling it risk free, right? The bank is like the US government is going to confirm that you get that $255,000. The, the part they don't tell you is that you are paying risk premium for that insurance coverage through inflation, right? If there's ever a point where there's a bank run and you can't go get your $250,000, they type the numbers into the fucking computer, they make it, they put it there. What does that do? That increases the money supply. So you are paying for the risk, you're paying for it via inflation. So it's not risk free, it's just insured via inflation. So that like we're thinking about Ponzi schemes like that. Like that kind of looks a lot like a Ponzi scheme. It's like it's a societal construct of risk free. Like the Fed has done a great job in creating this society that understands or believes in this risk free constant construct because there's insurance behind it. Because somebody can go plug in the numbers on a calculator in the computer and tell you that your money's there when it, when it shouldn't have theoretically been there. We saw this with Silicon Valley bank in 22. Super frustrating event in my opinion, because all these tech companies had all their money at Silicon Valley bank and there was a bank run and it turns out it wasn't there because the bank was taking aggressive action or they were taking aggressive investments and that the capital actually wasn't there and all of the losses the tech companies should have experienced tons of losses, but what is the government going to do? Completely chop the knees off of your largest and most profitable successful business venture in your economy. All of the AI we know today wouldn't exist if they actually let Silicon Valley bank fail. Like, do you do that? No, no, you don't do that. So what do you do? You type the numbers in there and you say, all right, cool, you're good. Your money's actually there. Just inflated the money supply.

B (89:17)

Yeah. Nominal versus real.

E (89:19)

Right?

B (89:19)

That's, that's a, that's a hard concept for people to understand, but it's, it's potentially the most important concept to, could understand when it comes to our money.

A (89:30)

Yeah, yeah, for sure. That's crazy world. And when you start seeing this stuff you like, you keep looking, you look over there and you're like, wow, that's crazy. That doesn't seem real. All right, we've been doing this for an hour and a half. Let's pass around final thoughts and let's rip it. Get out of here. See everybody in Vegas. I'm going to start with you. Soleil over to you, final thoughts.

C (89:54)

Yeah. When I was looking at your, your article, it reminded me of a friend of mine who got a personal trainer and the trainer told her with regard to losing weight, you can't outrun your fork. And that just, it reminded me of what you were talking about where they're just chasing income and if you, if you fall a little bit short, then, you know, it just looks bad and it's just constant treadmill of, of more income, more income, quarter to quarter, earnings to earnings. And it's the same way with, you know, eat too many donuts, you just, there's literally not enough energy and you can't run a marathon to burn off all of that. And so, you know, you, you broke Grok Voice with that one. Because I was, I was on my walk and I was like, you know, read this to me. And Grok Voice was like, this is going to take 20 minutes. How about I just summarize it for you? So good, good work there. I gotta, I gotta finish the rest of it. But that was my, that was my initial thoughts.

A (90:58)

Thank you, thank you. I did build it to be read with an AI as well, or like plug it into an AI. I think you could summarize it. I think there's a lot of AI slop out there, but I also think there's a really big market opportunity for people to create the complete opposite of AI slop and actually lean in and create high quality stuff with AI. And I mean, I'm not gonna lie, I used AI to help build this, but I also read through it and I like worked on it for hours and I put in context and I changed ideas and I like, you know, got different perspectives and like, I think that's interesting. And you know, grain you mentioned a lot of people are not going to read it and I think that's fine. But people can plug it into an AI. You could just easily go like, click the button and you're like, summarize this.

F (91:43)

Yes. So can, can you hear me?

A (91:45)

I can hear you. Okay, can the chat hear green? Let's find out.

F (91:50)

Can they hear. Testing, 1, 2, 3. Can they hear me?

A (91:52)

We'll find out. They'll tell us in a minute.

F (91:53)

They'll tell us in a minute because there's a little bit of a light lag. So. So look, using AI is great. I've been listening to your whole show. Great show tonight, Jeff. I'd love to talk to you about all the different, you know, the product you came up with, the ship structured bonds. I think it, think it's awesome. But getting back to this, look, I think a couple things, I think the narrative has shifted. Michael Sullivan has done this great analysis on sentiment and he. And when you tag something STRC and then you could then track it and see over time how this narrative shifts. And he tracked Michael Saylor, he tracked True north, myself, other people, Brian Brookshire, big pain and so forth. And so the narrative has shifted and that's where strategy getting to a million bitcoin is important because it's simple and easy to understand. And when we talk about on the space, the investment grade podcast, this is some pretty complex information sometimes income statement versus balance sheet, Sharpe ratio. I mean there's all kinds of things that we talk about that are complex, but some of the most simple things are, hey strc, it's 11 and a half percent and I get paid monthly. And now I'm going to get paid hopefully semi monthly. And if you offset it with SATA, you can get, you know, right now you get paid every, every two weeks because they're offset. Those are simple concepts that people understand. And I think that the more they get adopted, the more important it is. The other part I want to say is the bond math. I am constantly explaining that there's a PAR value of 11.50 which it's 11 and a half percent of the hundred bucks and if the price were to drop in half, right, to $50 the effective yield becomes 23. And Sailor doesn't have to change it. And people are like, what the hell are you talking about? It's not a bond, but it's bond math. As the price goes down, the yield, the effective yield goes up, or the dynamic yield goes up. And I'm constantly.

A (93:45)

Strategies perspective, though not from strategy's perspective.

F (93:48)

Strategies.

A (93:48)

People can't wrap their head around that.

F (93:50)

They can't wrap their head around this. And I've spoken. I can't say this. People I've spoken to over the past two weeks privately, they're like, people don't get this. I'm like, no, they don't. And it's bond math. And people just don't get bond math. Now, on the flip side, if the price goes up, then the yield goes down. But sailors, in that case, strategy, strategy or strive will just continue ATM and buying the magical bitcoins. So I think that this, this has really worked out well. And the narrative has shifted and I think that people are finally starting to catch on. It takes time for these things to sink in. And when it hits par, multiple months in a row. And there's these. Now we have the countdown timer for a million bitcoin. And there's multiple sites. This ecosystem is built for the stretch calculators. There's what we have our own. And there's four other sites that can count this down and how much are they going to do? So this is where I think things have shifted. I think that's good. Yeah, I'm bullish.

A (94:51)

Yeah. A hundred percent. One hundred percent. The.

F (94:56)

Hey, I just want to ask you guys want to have a party in Vegas on Tuesday?

A (94:59)

Yeah, absolutely.

F (95:00)

How about Gatsby's?

A (95:02)

Yeah, we talked about it. We brought it up.

F (95:04)

I know you brought it up.

A (95:05)

And bringing up 8 to 11 at Resort World Grant.

B (95:13)

Have you been chilling on spaces?

A (95:16)

Of course I've been shit.

F (95:17)

That's my job, guys. I. I have like. I have like two jobs. One is to ride my motorcycles and cars. Drive my cars. And two is to shill bitcoin. Mstr Strive And. And. And a party that we're gonna have in Las Vegas. That's my two job. I'm a podcaster.

A (95:35)

Yeah, Your job is to join spaces.

F (95:37)

My job is to join space. I ran my own. I did a pre game tonight before this one.

A (95:42)

I saw that. Yeah. You're an animal Grain.

E (95:45)

Right?

F (95:45)

Well, I'm very excited.

A (95:46)

I'm tired. I've been up for a long time and I'm. I'm ready and Totally fried. I'm going to pass it over to Mason for final.

B (95:54)

Yeah, I'm also exhausted. I'm, I've, you know, I've just been really liking the price action of both, both MSTR and Strive. Specifically Strive. I, I think that's a, that's a really good indication of what the market is feeling and it's looking incredibly bullish. It seemed to me like there was some ATM action on both potentially today. And I think, I think it's going to be a great summer. The by bi monthly dividends kick in in June. If it, if it passes, if you have the opportunity to vote, you should definitely vote. I'm sure we'll cover how to do that when it gets to that point. And, and yeah, I mean bitcoin's looking really solid here. If you work in finance, think about how to integrate digital credit into your, into your life, into your work and let's build the future.

A (96:59)

Let's build the future. Absolutely. And yeah, come hang out and come hang out in Vegas. We'll be there. The and grain. I kind of want to go back to this. You mentioned the other, the other prefs and bond math. Right. I think one of the reasons they've kind of leaned off of the other pref instruments and ATM ing the other pref instruments is because the market's not mature enough yet for that. They don't get, they don't get them yet and they probably, they probably see them as underpriced, mispriced. And when they do get priced accordingly, the price of them will probably rise and the rates of them will probably drop the effective rates of them, which makes them a more attractive ATM insurance. Basically. They've got the, like, they've got the playbook already built. It's ready to go for any scenario. They're going to have all of these instruments and access to these, all of these tools at any given time. But right now the market wants a marquee flagship product and that is stretch. And for us, that SATA. That's all we have. That's all we've got.

F (98:00)

I totally agree. So I'm going to give my final thoughts and this is going to seem like it's out of left field, but everybody could check this or I could show on my desktop, Josh Mandel has chickens and he posted this. He has 10 little chicks. This is totally true. And Fong Lee of Strategy CEO has decided to comment on Josh Mandel's chickens

A (98:28)

that he's also a chicken tender, which

F (98:30)

is a chicken tender. And I I previously at my previous house I had chickens and we. And I post a picture of my chickens and my eggs. So what am I trying to say? I think that having Fong track with Josh Mandel being positive on MSTR and other, other. On. On potentially other bitcoin treasury companies, I think that's a good thing. He has a 150000 followers and I just want to say I am very bullish. I think other people are bullish and you could see this publicly and I think that's. I can't wait to see everybody in Vegas. That's about it. Mason.

A (99:06)

I'll build up.

F (99:07)

I'll see you there next week.

B (99:08)

I'll see you there.

F (99:09)

Are you old enough to drink yet?

B (99:11)

I'm getting close, man.

F (99:13)

You're getting, you're getting close? Okay.

C (99:15)

Yeah.

A (99:19)

Mason doesn't like the attention. Give it over to Dan. What final thoughts? What do you think about?

D (99:24)

Yeah, I think specifically so Bitcoin is digital capital that will be around for 100 years. So by nature of that, these instruments that are just coming online over the past 18 months, that being strategies preferred stocks and now strives preferred equity, will be around likely for a long, long time, our entire adult lives. And there'll be more products on the market. So it's interesting not only to think about the next 12 months, next 14 months, but you know, these are going to be products that we're talking about and building new structures for in 10 years time because they're built on a durable collateral asset that's much different than fixed income instruments backed by cash flows that are uncertain in a, you know, a highly uncertain world.

A (100:11)

Bingo. I mean you're, you're thinking exactly the way I'm thinking. Build on top of digital credit, build on top of digital capital. There's so much market opportunity, certainty.

B (100:20)

Bitcoin is certainty.

A (100:21)

Yeah, it's funny, it's like it is the risk off asset, it's the insurance. And it's funny how it happens too. You're like, oh, I want a little bit of this. You're like, oh, I kind of like it. And you're like, wait a minute, I want all of it. I want every. Actually everything over here. I want this entire pile of stuff. Yeah, everything's moving quickly. The market cap of bitcoin is rising. It's great to see 1.6 trillion dollar asset. I mean, it's larger than JPM Morgan and Visa combined. I keep saying that statement to people that may not understand bitcoin. I'm like, okay, the US is our largest and oldest bank and the payments company combined. Take the market cap of those two. Combine them and bitcoin's larger than that. That's the power of this network. If you're not paying attention to that, you are falling behind. Charles Schwab comes out with a video. It's like a two minute video about risk on bitcoin where where they talk about volatility, which volatility is not the only component of risk. It is one like price volatility is one component of risk. But the fact is they were talking about it and having an allocation to volatility and how you can start to think about it. It's like that's Charles Schwab, right? Charles Schwab has been around a long time. And by them coming out and saying that they're effectively putting everybody on notice that if you do not have an allocation to this, you are short it. You are short Bitcoin. If you think about bitcoin as its relative component or the relative size relative to the entire market, maybe it makes up 1% of the entire equity market. Something like that. Maybe you can think of it like that. And so if you have less than a 1% allocation you are underweighted relative to the rest of the market. I think that's an interesting way of looking at it. So it'll be interesting to see how this evolves. The incentives are aligned for Morgan Stanley to go absolutely, you know, rip the laces off the baseball and go sell the out of this Morgan Stanley product. I bet you know everybody's gonna be front running the having that's coming up. We've got another like the having will happen. That will be another narrative on the horizon.

B (102:34)

I mean many reasons doesn't that's. I forgot to mention this strategy has more bitcoin now than you know the the rest of of the bitcoin to be mined by the times the having right right now, right now over 800000 Bitcoin. 830000 Bitcoin. And when it's 2028 there will only be or the 2028 having there will only be 800000 Bitcoin left to be

A (102:59)

mined for eternity till the end. 2140, 2140. Let's end on that.

B (103:08)

Let's end on that.

A (103:09)

That's a good stat. All right, we thank you everybody. Please like and subscribe. If you're watching and following that helps us a lot. We'll just keep amplifying the message and you'll see us a lot more. We're going to be pushing out some clippers. Come see us in Vegas. We've got an event in Oregon. We're doing bitcoin for business. If you're in the Pacific Northwest or you're remotely interested in coming to that, check it out. That's on our website as well. And yeah, we will catch you. Not next week because we'll be traveling, but maybe the week after that. And we'll catch you later. Thanks for joining.

D (103:40)

Thanks, guys.

C (103:41)

Night.

B (103:42)

Peace.