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BTC212: Jack Mallers on Bitcoin 2025 Expectations and Strike's New Features (Bitcoin Podcast)
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- [00:01]
Preston Pish
You're listening to tip.
- [00:03]
Jack Mahlers
Hey everyone. Welcome to this Wednesday's release of the Bitcoin Fundamentals Podcast. This episode is brought to you by river, the place that I personally go to securely invest in Bitcoin with confidence and with zero fees. On this week's episode, I have back Bitcoin OG CEO and founder of Strike, Mr. Jack Mahlers. On the show, Jack and I discussed the current market setup going into the end of the year. His thoughts on everything happening in the space from sovereign interest to corporate treasury strategies, his new product launch at Strike, which allows a person to make payments using Bitcoin with super slick and easy to use tax basis assistance and much more. So without further delay, here's one of the best people in the world to be talking about Bitcoin that makes it understandable and accessible. With Jack Mahlers.
- [00:52]
Preston Pish
Celebrating 10 years, you are listening to Bitcoin Fundamentals by the investors podcast Now Network now for your host, Preston Pish.
- [01:10]
Jack Mahlers
Hey everyone. I'm here with the one, the only, Jack Mers, some known as Jack Ballers based on CNBC interviews. Jack, welcome back to the show.
- [01:19]
What is going on, brother? Thank you so much for having me. I'm a fan, you know that. People should know that I'm a fan of your work and I'm honored to be here. Let's do it.
- [01:27]
I love this. All right, so here's where I want to start. I'm frustrated. I'm frustrated with these coins that I see going on to Coinbase that are coming out of the U.S. department of justice account or wherever. And I put a post on Twitter today and I'm just like, hey, in Congress, if you're in the House Finance Committee or the Senate Finance Committee, stop the madness. And I don't even know that they're selling them. I know they're making the deposits on Coinbase, but I'm just, I'm frustrated because we're at such a critical moment where we gotta protect these things, any country. And I'm not even just talking to us. If you're in your country and somebody in your country is trying to sell your Bitcoin, you need to stop the madness. Like, this is totally insane. What are your thoughts? Am I wasting my time yelling about this or what?
- [02:13]
Well, I mean, you might be trying to convince government is. One of the reasons I became a bitcoiner is when voice is no longer sufficient, exit is the more powerful expression. And for the first time in human history, we do have a paralleled financial system, a monetary system that We've built open source distributed so that you don't have to convince government of anything. You can just opt out and store your time and energy and your effort and your labor in something totally independent that's protective of you as a man and your labor and your effort as a human. So that's for one. But if you were to convince government, I mean, listen, mathematically it's been incorrect to have ever sold bitcoin. That's, you know, if you're a fan of data and of truth and you like to operate in binaries as much as possible because no one should permanently live in a world of speculation, what are the facts? The facts are bitcoin's the best performing asset. It's the hardest asset of all time. It's the scarcest asset of all time. And over the last 15 years, if you've parted with bitcoin, you've been wrong. And so as government, I think it's in our financial interest to own this thing. And I've gone on TV recently and made the pitch that I also think it's pro technology, it's pro growth, it's pro freedom. But just from a fiscal standpoint, I think the US Government right now is in the business of owning things that are hard, owning things that go up, owning things that can back our future promises and our deficits, and starting to work on our fiscal situation. So it doesn't surprise me that this administration might be dumping, I don't know, is it maybe out of spite? It gives me a lot of comfort that I don't have to convince them of anything. I could use bitcoin on my own merit, on my own terms. That's part of the real groundbreaking innovation, is I don't need to go march outside the White House and say, stop dumping stuff. I could just open my phone and hop on the bitcoin standard myself. But I do think it, if they are selling bitcoin, I think it's a monumental mistake that hopefully the next administration corrects, which they claim they will. But no one should be selling bitcoin. And if you have in the past, you've been wrong, unfortunately.
- [04:14]
This is my sense of frustration, though, is I see people in the comments and maybe this is my mistake because I'm paying attention to the people in the comments.
- [04:22]
They're there.
- [04:23]
Don't even waste your time talking to the politicians. If you're making good decisions you can vote yourself out of. And it's like, no, I got that. I'm fine. I'm good. I've been in this bitcoin thing for quite a while, and I'm very happy with my decision and everything that you just said. And it's to the point where I'm saying, is it okay to just ignore. And I'm as apolitical as they come. I don't even like talking about politics. But when I'm seeing such a blunder of them just selling off bitcoin, when it's pretty much the only thing that's going to maybe alleviate some of the tax burden that I've got to deal with later on in my life and same with everybody else in this country. And I'm looking at the decisions they're making. I'm saying, I don't want to pay more in taxes. I want them to have sound financial footing as best as they can. And it's like, so should I just not say anything and just opt out with bitcoin, or is it worthy of people's opinion and their voice to try to influence and shape things? I'm just curious to hear your thoughts.
- [05:19]
Yeah, no, I'm. I'm in the same boat. I'm an open and vocal advocate for the strategic bitcoin reserve. And listen, I'm 30 years old, man. And that, to me, is relevant in two ways. One, I've grown up with millennials. A lot of my age group and my friends and my peers are at that point in their life where they're trying to become homeowners. They're trying to find a way to finance a family and reproduce. They're trying to fall in love. They're trying to justify expenses and build a future and a life that they deem is worth living. And trying to understand how to finance that is increasingly difficult because of all the debt, because of all the burden, because of all the inflation. And then on top of that, I myself, the only. Only dream I have that's greater than being a bitcoiner and being the CEO of Strike is being a father. And I think about the fact that I'm going to be raising kids someday. And so the relevance for me is, you know, one, I. For the people that I love and care deeply about, I'm seeing a lot of pain in kids. Well, we're not kids anymore. But people my age, they aren't close to owning a home, aren't close to exiting the debt that they've accrued in their life, aren't close to having a sustainable lifestyle, aren't close to being able to have kids with the people they're falling in love. With and I'm thinking about where I would want to raise my kids. Preston?
- [06:34]
Yeah.
- [06:35]
And so for me, I think that what I've communicated to the public and to the US Government and whoever's been willing to listen to me is this. The bitcoin strategic reserve, in my opinion, is one of the biggest economic announcements to come out of the United States of all time. I think it's on par with Nixon in 71. What I think is different is that it's positive. And I really want to hang my hat on that one in that the U.S. made a really big economic announcement in 1933. But what was it? It was that we're confiscating all your stuff and we're going to really threaten the idea of property rights. They made a really big one in 1971. But what was it? It was, we're divorcing ourselves from the gold standard. We're not going to be governed by the laws of mother Nature and the physical realities of the universe. We're going to be able to PR. They made a really big one in 2008. And what was it is we're going to bail out a lot of the mistakes on Wall street and correct the wrongdoings and not let the free market and the business cycle complete. If we make an announcement 2025 and lean into bitcoin, it's not defensive, it's not reactionary, it's progressive, it's positive. To me, supporting bitcoin is pro technology, it's pro innovation, it's pro freedom. I think bitcoin carries a lot of the American ideals that the country was founded on. It's equal rights, equal coming and going, equal and opining. There's rules with no rulers. It's land of the free, home of the brave. It's where dreams come true. It's where you migrate towards to have future prosperity and a future you can believe in. And that's, that's my messaging to the public and to the government is this is the most pro American money we've ever come across. And it's pro all the ideals that I consider American and why I want to be in this country. I think that it can go to, it will help aid all of the issues that active 30 year olds, my friends and my peer class deals with in closing the deficit, strengthening the balance sheet of our country. And it will give me a lot more confidence in raising my future kids here. And so I think it's well worth getting that rhetoric out and that messaging out and just drawing the contrast to that economic announcements in this country have been defensive and have been against the best interest of the public. And we're talking about an economic announcement that is addressing problems, arguably the biggest problem we have, aiding towards the quality of life. Like, let's get something straight. The governments around the world only own 2, 3% of the outstanding supply of this asset. So who owns it? The public, the people. So it's an asset that acts in the best interest of the public that everyone has access to. Satoshi Nakamoto did not go to Goldman Sachs and say, hey, I created a new money, I'd like to take it public. It wasn't uneven, fair distribution. He used mining, he used proof of work to make sure that the public and the people have access to this asset. So for all of those reasons, I think the US government supporting this is not only acts in my best interest as a bitcoiner and I think acts in their best interest in regards to the deficits. I think it's very pro American and addresses all of the fundamental issues that all of us Americans are feeling. All of us 30 year olds are like, I'm never going to be a homeowner, I'm never going to be a dad, I'm never going to exit debt. And whatever KPI and metric you care about to subscribe yourself to that thesis, listen, divorce rates are going up. At one point, life expectancy was going down. Suicide rates are going up. I mean, obesity rates are going up. What human KPI would you correlate to a degrading society? And I think all of this is a function of broken currency, broken money. And I think the US supporting new technology that addresses that and the fastest growing technology on our balance sheet is just pro America. So I'll end my rant there, but I think that's, that's been my stance and I think it's well worth the energy and the time to be vocal about that.
- [10:08]
Pump this into my veins, dude. Wow. Okay, so let's talk about the past four years because this has been brutal with respect to the choke point 2.0, which Nick Carter really was kind of spearheading a lot of the discussion. Caitlin Long was spearheading a lot of the conversation. But I think even they were a little bit worried in this, like operating inside of this past administration and calling some of this stuff out. But now that it's looking like it's going to shift in a drastic way, it seems like a lot of the zombies and the skeletons are coming out of the closet and it's getting Aired out. I'm curious if you have any firsthand accounts or any types of stories that you can impart on the audience as to what this was like in this past administration, what operation choke point 2.0 is. Let's just define that up front and then any type of stories that you have. And then the third thing, I'm sorry, three point question. This is terrible. But the third thing would be your thoughts on holding people accountable. Accountable that had their hands all over this stuff and like, how would they even go about something like that?
- [11:14]
Yeah, I think. Well, firstly, I've had plenty of experiences with the Choke Point, and I. I don't even subscribe myself to just 2.0. It wasn't me directly, but it was my family's. Was in the cannabis business at one point and so ran a company entirely on cash. Yeah, Used to have to pay armed guards and Brinks trucks to deposit and withdraw physical cash because the cannabis industry was not allowed to be banked. But then also, as Andreessen mentioned on the Joe Rogan podcast, all of that was true is you're effectively sanctioned as if you are Russia or Iran. So it wasn't only an inability to have a checking account, but you couldn't also process credit cards. There was no way to connect with your customer or with the outside world financially, outside of some bear instrument like physical cash or a gold commodity coin or something like that. So the cannabis industry, and my parents included, ran that business entirely on cash. So that was absolutely true. And I think that's being described as operation choke point 1.0. And then me as their son, being a Bitcoin founder, I got caught up in operation choke point 2.0 for sure. My favorite story is when we were founding Stripe, when I was in, my chief of staff is my best friend. We walked into a Chase bank here in Chicago and said, hey, we're starting a company. We need a bank account. We were closing a venture capital round. We needed an account for the money to be wired into. We didn't have a bank account. And we walked in and they said, oh, cool. Very exciting. Congratulations. What do you guys do? So we're in Bitcoin. Super cool. And the guy, the bank teller said, take that back, pretend you didn't say it and try again. And I said, well, I don't know. You asked me to lie. I'd be super uncomfortable lying to a banker. And he said, well, listen, I can't bank that, but if you're in technology, then I can open an account. And I said, Cool. I mean, that's not a lie. I'm in technology. And he opened the account. And that was in April of 2020, February of 2021. I was in El Salvador. Everyone knows what I was doing there at this point, but at the time, nobody did. So I was in El Salvador and I got a phone call from an employee that said, we have two days to get off Chase. They're closing our account. I had closed the funding round, I had hired employees. And so at this point in my adulthood, in my manlihood and as a founder, you take on the responsibility of processing payroll and people have sacrificed and put their family on the line and their life on the line to commit to your vision. And I was like, how am I going to process payroll? How these people are going to pay rent? And Chase, we asked, is there anything we can do? What did we do wrong? Nothing. Nothing. And at the time too, I mean, everyone knows at this point, my rhetoric. I've, I've gone on live television and called Jamie Dimon. I've referenced him as Epstein's banker. I think it's really important the world doesn't need any more politicians. I think the world wants authenticity and truth. And so I've never shied away from that. And we were confused at the time. Was it something I said? Was it something we did? Was this all in the cards the whole time? Because they found out we are Bitcoin and technology and not just a technology business. But Chase refused to tell us what we did. We never got a firm answer. And we had 48 hours to find a new bank account so I could process payroll for my employees. And that was one of the many stories we ended up encountering. I mean, I was a Silvergate customer at one point and I've got the most respect for Alan and. But I had a front row seat into what he went through. I've also had plenty of bouts.
- [14:44]
And Jack, just for us. No, just for. Just for reference, for the listener, for. So Silvergate was forced to declare bankruptcy, even though it's come out very clearly now that they weren't illiquid at that point, that it was being forced upon them by the government, which I think is another really, if anything was egregious in this choke point 2.0. It was really the Silver Gate situation where how big was this bank market cap wise? I mean, we're talking tens of billions, right? They're big size, very, very large bank. And the US government just came in and be like, yeah, no, we got it. You think you're still solvent and they were, according to the books and everything that's come out, you're going to declare bankruptcy now. And it's like how in the world can the government do that? But go ahead. Sorry, I just want to put a little context on that.
- [15:32]
No, absolutely it's helpful. And listen, if you zoom out far enough, I think Silvergate, compare them to Silicon Valley bank is where my mind goes because what did we see? We saw an influx of deposits in a zero interest rate world that was able to innovate and serve a budding new industry that was seeing a lot of growth, which is technology and quote unquote crypto and bitcoin. Right. Like a lot of these older banks, Wells Fargo, Citi Chase, they weren't able to innovate and upkeep a lot of growth that was coming out of Silicon Valley. A lot of the venture industry and you saw new up and coming banks that were able to be dynamic, meet customer needs, innovate, build technology. Silvergate built the Silvergate Exchange network at the time, which was a simple product, but was an innovative product that addressed a new growing markets problem. And they saw a lot of growth in deposits, as did Silicon Valley Bank. Now Silicon Valley bank mismanaged their balance sheet, they bought a lot of long duration instruments, they thought never in a million years would the Fed hike as fast as they did and they rendered themselves insolvent, but Silvergate didn't. And I think that that's what you want out of an American banking institution is someone that's fiscally responsible, that's able to manage their balance sheet and innovate and meet the demands of new budding business in the American economy. They met the demands and innovated to service a new customer group that Chase and the other bigger banks didn't. They won a lot of business fairly and they managed their balance sheet appropriately. And the fact that they were shut down in the most unamerican way possible, therein lies the outrage that we're seeing right now. And so not only was it unjust and you're absolutely correct, but I think acknowledging the fact that they're innovated and solved a market problem that wasn't being met and won a lot of new business morally and ethically and in a free market manner. Like people were using them because their products were great and their service was great and their intent to support our industry was great. So yeah, anyway, I had a first row seat into that one as well and we had to kick rocks in a short term manner. For sure. And I mean, even on a personal level, I won't get into some of the IRS stuff, but I'm not a foreigner to pretty extensive audits. I don't know if that extends to Operation Chokepoint or if that's targeted at all, but you hear stories all the time of big exchanges like Coinbase or Kraken or customer information dating back 10 years ago is requested by government agencies. And then do those government agencies then go and aggressively audit and harass a little bit some of the early bitcoiners? Maybe. Yeah, I don't know. Let's take a quick break and hear from today's sponsors.
- [18:08]
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- [20:37]
Jack Mahlers
Do you think there's going to be accountability for this in the new administration as they look back, or do you think it's just going to get swept under the rug and we're just going to move forward?
- [20:45]
Listen, I hope there's accountability. I, like you, am not a politics guy. I don't consider myself left, right, blue, red, green, yellow. I'm it's so beyond me. I'm a bitcoiner. I'm orange. And I think the best way to affect change, especially again my age group when I was born, I've never seen a politician do anything net positive in my life. I've seen open source code work, right. I've seen technology work. So that's the color I am. I'm orange. What I think we want in this country is free speech. I think the information needs to be made public and accessible. I want people to have access to the information necessary to think for themselves and make their own decisions. Now, how it's going to work with politics and Congress and the judicial system and what punishment looks like and if people go to jail and who gets to pardon who now that we're watching Biden Pardon, son. Right. Like that's so beyond me. And I mean that in a way that I'm not an expert enough to have a speculative opinion that's even worth hearing. But what I am encouraged by is the new energy around free speech and accessibility to information. I would love for us to deeply understand how that came to reality. Who was involved so that we can improve and be better. At the end of the day, I think the story of humanity is engineering a better world. And that's really what my interest is. If we found ourselves in a state that we don't want to revisit again, who was involved? How did we get there? Just for the mere fact that I don't want to be involved in that again. I want the US to be successful I want Bitcoin to succeed and solve problems and help people. And that's my interest. And I do expect that. I expect a lot more transparency into the situation.
- [22:26]
All right, Jack, you have said that you are all in on Bitcoin. You're living your life on a bitcoin standard. You are just basically retaining everything that you make in Bitcoin. You're paying your bills this way. Talk to us about how are you doing this? What does this look like? And then I also think that there's something, there's an interesting development that you have at Strike that you have recently rolled out that helps enable this lifestyle that you've, that you're designing for yourself. So talk us through this.
- [22:56]
Yeah, well, get the announcement out of the way. We're launching a product that allows you to pay bills with Bitcoin, which was a missing piece for me, which I'll explain. But the product's available to everyone in America and it works effectively. It's like a bitcoin checking account. You get an account and routing number, you can get your direct deposit to it and you can pay bills from it. And so it functions and works exactly like you'd expect. But instead of holding your capital and your money in a currency that's actively debased and being inflated, you get to hold your capital and money in a currency that's actively appreciating 60 some odd percent year over year for the last decade. And this product was born strictly out of my own habits and my own desire. So one of my favorite ways I run Strike is I'm one of Strike's biggest customers. And I think that that's really useful for someone building a product that they want to resonate with customers is to be one yourself. And so the story for me, it's actually pretty simple. And I find the product really intuitive. It's just breaking down a lot of mental barriers that I think comes from the FIAT world and growing up in a world where you're almost programmed with certain economic opinions. So I think it all started with me when I realized that inflation metrics as measured by things like CPI aren't real. Yes. And when I noticed that and I realized, well, wait a second, the government CPI metric isn't what housing is, it isn't what gold is, and it especially is not what Bitcoin is. And when you realize that inflation is something to be measured on a per instance basis, then I sat to myself and I said, well, what's my inflation metric? What do I care about? Because then that's how I'll define inflation. And I don't need someone else to define inflation for me if it's on a per instance basis. And I was like, well, bitcoin's my, you know, SATs are. My inflation rate is how much bitcoin can I get per dollar? And when I thought about that, I, like everyone else, had a rainy day fund of cash. Of course I did. I had whatever it was, 12 months of operating cash, or in case I had an injury cash, or just to make sure I can call it, cover my college tuition cash. And I watched that cash get murdered in the inflation rate of bitcoin. Bitcoin had gone up like 200, 300%. And I had gone from this is a nice amount of bitcoin worth of cash to this isn't even one bitcoin worth of cash. And I realized that I was just actively being debased by storing my money in dollars. And my life was getting perpetually more expensive by owning dollars, depending on what I wanted. If I wanted gas, it's getting marginally more expensive. If I wanted eggs, it's getting a little bit more expensive. If I wanted a house, it's getting a lot more expensive. If I wanted bitcoin, it's getting unaffordably expensive. And then when you sit and you think to yourself, well, what are the things you want in life? These things are getting a lot more expensive only because the money that I'm choosing to store it in, that was my. And mind you, I'm a kid at the time. But that was like my fundamental aha moment is I was like, it's not because I'm bad at my job. It's not because I sleep in and hit snooze on my alarm. It's not because I'm not going to the gym enough. It's not because I'm a mean person. It's not because my teacher doesn't like me. It's simply because when I contribute time and energy and effort and labor and work into the world, I'm choosing dollars instead of something else. And then I decided to myself, I'm going to own none of these things because from a first principle basis, why would I own any of the currency that only goes down, right? I thought, like Preston, if you have a currency that only goes down historically, how much of it do you want to own?
- [26:31]
Yeah, you don't.
- [26:32]
Zero. And then I thought to myself, well, I'm an advocate and have been experienced in a currency that only goes up. How much of it do I want to own, I thought to myself as much as possible. And then I had like, an almost spiritual experience where I was like, well, why? Why do I own any dollars? What's stopping me? Is there a technical reason? And the reality was I didn't have the tools to do it. I tried to live on gift cards and live on bit refill, or I've tried to only go to the coffee shop that accepts bitcoin. And the reality is it's a lifestyle that I don't necessarily want, like, different strokes for different folks. But I don't want to live on gift cards the rest of my life. And I don't want to have to go an extra five miles to a coffee shop that only accepts lightning. I support these businesses, and gift cards are great, but I like my amex card. I like my Chase Sapphire card. These cards are giving me 3% cash back in free flights to hold Hawaii and free Napa Valley wine. Like, these are great products. And so anyways, that's what I built for myself, which was I want to be able to own only bitcoin, which is going up 63% year over year over the last decade. I don't want any dollars. I want to get my direct deposit and paycheck converted into Bitcoin. And then I want to just spend on credit cards, credit cards, an amazing product because I can spend dollars without ever having to own them. So I just run up a bill on my amex, on my Chase Sapphire, on my Fidelity credit card, and then I have an account routing number with bitcoin in it that just pays the bills every single month. And over the last year, for example, Bitcoin's up over 100%, which is a fancy way of saying it's doubled in value, which is an even fancier way of saying my life has gotten half off. So it really hits you in this profound way where you're like, wow, if I own dollars, my life gets more expensive. If my checking account is in bitcoin, my life not only gets cheaper, but half off. So every house, every grocery bill, every gas bill, every vacation is 50% discounted for me. And that's what we're finally rolling out to people. But I don't know, People find it revolutionary and almost dumbfounded that I live my life that way. But I really got there pragmatically and really simply of like, wait a second. Inflation is in cpi. Inflation is measured differently. Wait a second. The dollar only goes down. Wait a second. Why do I own any. Wait a second. Why don't I only own bitcoin? Wait a second, why don't I run the Michael Saylor playbook personally, which is dollar denominated debt, to own more bitcoin? Wait a second. I have a life hack and my checking account goes up 63% a year for doing nothing but being smart.
- [29:07]
When I tell people I'm on a bitcoin standard and the prices for everything that I buy just keep going down, they almost laugh at me and don't think I'm being serious. But I'm being serious. When a person hears this Jack, they're immediately thinking of the tax ramifications. So they're saying, okay, so you got this bitcoin account, but now my life just became a disaster at the end of the year when I'm trying to pay my taxes and I'm trying to figure out what my basis was and when it was converted and all this stuff. How is Strike handling that?
- [29:34]
Yeah, okay, so this is part of the big innovation. So when I came across this idea, I was like, okay, this is so plain obvious. I have to build this as being in the business of bitcoin financial services. But the work is one getting licensed and regulated and partnering with a bank to facilitate all this stuff. And then a lot of the software work and the user experience work is the taxes piece. And that's another of what we've built. First, fundamentally, for the mental barrier, I think there's a fear of taxes that is not grounded in first principles thinking. So I had this problem with myself. I was like, man, you're telling me I'm going to live on bitcoin, I'm going to have to pay the government so much in taxes. But what you realize is bitcoin is taxed as capital gains. So you're only paying tax if you have a capital gain, which means if bitcoin goes up in price since you acquired it, meaning that you can either pay the government a fraction of your capital gain or you can pay the ultimate tax, which is just being debased by sitting in the currency that they print. And that was an aha moment I had, which is paying a capital gain is a good thing because it means I made money. Now, the fact that I have to share my profit with the government, we can have ethical and philosophical conversations about that all day long. But I'd rather share some of the gain with the government than get debased entirely and watch my wealth and hard work be inflated away. And so once I got over that mental barrier, I realized this is just a software problem. Someone needs to build the software that does all the taxing and the accounting in a way that doesn't get in the way of the user experience. And so that's what Strike does, is we deliver you all the tax and accounting work so that you can hand it to your accountant or plug it into your tax software and say, hey, I lived on bitcoin this year. This is all the buys and sells and the capital gains and the accounting for it and it just works. And that's when we started to invest in a product, is when I realized this is a market opportunity where we could build a product. What does everyone in America want right now? They want a bank account that's resistant to inflation. That's how I think about it, is like, what if I can give you a bank account that makes all of your gases and your groceries and your house and your rent go down in price instead of up? That's fundamentally what it is. And I know the mental barrier is steeper than that, but from the highest level possible, that's what it is. And software will do the accounting and the taxes and the user experience and all of the friction points. That's my job, to reduce those. That's the product I'm selling effectively. So yeah, once I got over the fact that if I owe taxes, that means I had a capital gain and that's a good thing, that means I avoided the ultimate tax, which is debasement, all I needed to do was build the software in a way that enables me to comply with taxes without degrading my quality of life.
- [32:15]
Another question I think the audience might throw at you as they're hearing this is they're saying, well, bitcoin has a lot of volatility. Of course, we all know what the four year horizon looks like. It's going up and to the right. But if a person has, let's say they don't have a lot of savings and they are kind of just making it month to month with their current salary. Wouldn't using Bitcoin as your checking account introduce volatility and maybe their inability to meet their monthly expenses if they're just barely breaking through. So talk to that person who might have that question.
- [32:50]
Yeah, listen, I think bitcoin, at least for me personally, has taught me a lot, lot of life lessons, honestly, in the sense that the way I operate my life is I do not spend more than I make. And so a lot of my concerns or problems are eliminated because I don't exceed my paycheck. In expenditures. And sometimes that's not totally obvious to people because they have access to really long credit lines with their credit cards. But rule number one for me personally is if I make $5,000 a month, I don't spend more than $5,000 a month. And it doesn't matter, you know, if bitcoin's jumping around a bunch, is that as long as my paycheck's denominated dollars and my expenses are denominated in dollars, then it's just kind of like, don't go get bottle service. Don't go to Louis Vuitton. Reign in your expenses. Only own and acquire what you need and increase your savings. And so the other piece of advice I have is, obviously, have a buffer of savings and think of bitcoin as savings. In that way, it's capital that you don't need. It's not operating capital. It's capital that you don't need to live your life. And that's what I've done with myself is I talk openly about this. I only own three things in my life. I own the house I'm sitting in now. I own my company, and I own Bitcoin, and that's it. I'm a really frugal guy outside of that, like, the shirt's 10 bucks or whatever. And I cook my own food. I just eat steaks and eggs. And again, my bank account effectively appreciates 50 to 100% year over year, on average. And I've placed a huge premium on my future versus expending capital now. So that would be my advice. And listen, if you're a person that needs to spend a lot today and needs to take on a lot of debt now, I would not recommend my product. And I also would question the life that you've either inhabited or grown into, because it sounds dubious. I think a solid life that you can build a better future on is someone that's making more than they're spending, that's prioritizing their future, that's found themselves with an ability to save. And if you're not that person, not only do I think you probably shouldn't use my product, but I think you should probably make lifestyle changes that allows you to make sure you're having a better life tomorrow than today.
- [35:09]
Your comment reminds me of this article, this Wall Street Journal article that had Michael Goldstein quoted. And I don't know if you remember, this is a little bit of bitcoin history for people. If they're not familiar with this, this is probably what, 2019, 2020 I don't know, somewhere in that timeframe. And for people that don't know, Michael Goldstein, he's good friends with Pierre Richard. They stood up the visit the Satoshi Nakamoto Institute. And anyway, so he was quoted in the Wall Street Journal and he says, I don't know what to tell you. I outperform Wall street every year. I just sit around, I eat steak for breakfast and I own bitcoin. Basically the quote in the Wall Street Journal. Anyway, speaking of Wall street, is Wall street finally paying attention? Are they finally waking up? What are your thoughts on traditional finance as they're looking at everything that's happening in the space, the election, what's being said at bitcoin conferences? Are they paying attention? Are they finally getting it?
- [36:12]
I would say so. I mean, I think this goes back to the age old of people that are upset. Like, how are we not in hyper bitcoinization yet? How has Wall street not adopted it yet? What's going on? What's wrong? You're like, well, this is an open source project that's been around for 15 years and it's surpassing $2 trillion in asset market cap. So is that slow? So it kind of goes down to that age old. What's your context? What's your timeframe? What are your expectations? And that guides the conversation more so to me, Wall Street's getting it, but what does getting it mean? Is getting it mean that they all ditch bonds? Well, that. No, not yet, but kind of more so than they were two years ago. I mean, for me, it's pretty simple. It's that whether you look at domestic debt to gdp, global debt to gdp, there's a hole, there's a loss that needs to be realized, right? There's an excessive amount of borrowing from our future that has happened here in America and globally, and there's not enough growth to pay it back. And so who's going to realize that loss, right? Like, governments have been spending excessively on stuff and overpaying for it. The growth in the production from the spending hasn't computed. And so there is a loss that needs to be marked down and realized somewhere. And the game is like a game of musical chairs. Who's realizing the loss? Is it the collective populace through inflation? Is it the wealthy elites through bonds? Like, who's losing? Because if money is time and energy in an abstracted form, you can't just like throw it in the trash and erase it from your computer. It's a real loss that has to be realized somewhere. Someone has to lose. And so what I think is happening is those that own Treasuries and bonds and these instruments that haven't been performing are starting to wake up to the reality that they might be the losers and they want to de risk that. So that's my opinion and that's what I see like when I see BlackRock selling their IBIT product. That's what I'm reading between the tea leaves is, hey, this is something in your portfolio that is not necessarily correlated to all the other things that has high upside. That's pro technology, but a place to almost de risk yourself from owning these bond things. That's what I see when I look at Michael Saylor and MicroStrategy and how oversubscribed their instruments are and now Mara I guess as well.
- [38:30]
Yes, this is where I want to go. So when you're talking about Bitcoin eating fixed income, we look at MicroStrategy's recently issued convertible senior notes that were oversubscribed by a billion and they were couponless. Mara Then just today I saw this announcement or yesterday this came out that Mara did the exact same thing. They were also oversubscribed. I don't know by how much was it, Was it also a billion?
- [38:55]
2 I think they close a billion net but it was 815 with or 850 with a 150 option I think is the details but a billion net. Let's take a quick break and hear from today's sponsors.
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- [41:37]
Jack Mahlers
All right, back to the show.
- [41:39]
I mean, this is crazy. And I think this, if you're on Wall street and you're looking at this and you're a fixed income guy and you're saying, how in the world are these companies that for all intents and purposes, don't really have a lot of net income for their market cap size at all, they're going out and they're issuing these notes, these convertible notes, and they're doing it with no interest expense. It's just the pure convertibility into the equity that is making them oversubscribed. And then I think this is the other part that's not even being discussed. Michael's previous convertible notes that he issued back in 2020 are the best performing fixed income instruments on the planet. So I don't know, are we just at the infancy of this becoming a major theme on Wall Street? Is this still going to be nuanced in this obscure corner of financial security analysis for the next four years, or is it about to break through as a major type of issuance across any type of publicly traded company around the world?
- [42:41]
I think it's interesting. It reminds me of after El Salvador when everyone would ask me, well, who's next? Are we going to. This time next year, we're going to have 50 countries. And the real truth and answer there is so nuanced because El Salvador was a very unique situation. It had a forward thinking president, but also it was a dollar based country that had lost their own currency in a civil war. There was a lot of things that had to go right for that to happen. And there's a lot of countries like you know, people, Argentina and you know, all these bigger countries that have their own currency and their ability to forgive the money. Printer is not the same situation El Salvador was in. Similar ish in the micro strategy sense. It's kind of directionally the same in that, you know, you're talking about Michael Saylor who has openly said his operating company was dead in the water. It was going to be considered a scratch off failure if he didn't do something. And that something was by bitcoin. So you have a guy that has an operating company that he's effectively marked at zero, that he's willing to say for all intents and purposes, I'm going to lever to save its life, which creates this thing that gives you 150, 200% bitcoin exposure. So even if Microsoft buys a little bit of bitcoin, owning Microsoft is not owning 150, 200% exposure to Bitcoin, it's owning 2% exposure to Bitcoin, 98% exposure to Microsoft software. So you have a guy that had a debt operating company that needed to save its life, that levered it up against a bet on Bitcoin that's now created market capitalization of a hundred billion dollars so that he can move at the size and weight in which he is. I think that's a really unique situation. I don't think you'll see many other hundred billion dollar companies that can go 150% exposure to Bitcoin because in order for someone like Microsoft or Facebook to do that, they'd have to say screw our operating company, it's worth basically zero to the world. And us, we care more about bitcoin. And none of these big tech companies are going to do that because their companies aren't worth zero to the world. And so I think Saylor is unique in that sense. And that's why I think it makes sense that the other adopters have been like similar scientific. These are tiny medical companies with cash flows in the tens of millions of dollars a year that are tapping into the similar thing. I think Mara and Marathon is interesting. I haven't heard this said publicly, but listen, I mean if you're in the business of mining bitcoin and you have access to free cash, theoretically you could mine it cheaper than you could just buy it. If not, then you shouldn't be in the business of mining, you should be in the business of buying bitcoin. So I kind of find it funny that it's almost a self admission that mining isn't working, which I don't know if anyone said that or if I'm incorrectly reading that.
- [45:26]
I think it's interesting from this. I love this point. It's interesting that if you're a publicly traded company and you're being capitalized at these crazy pes because the money printer had gone brrr for so long and compressed fixed income yields down to nothing percent and everything, all the equity is priced off of these risk free, quote unquote risk free rates that access to public markets is maybe just as valuable and maybe even more valuable than their capacity to actually mine bitcoin. Their ability to mine the bitcoin that's already been out on the public market, that anybody can buy a spot market and because they're publicly traded allows them to buy that cheaper and maybe more aggressively than actually going out there and mining the real stuff with mining rigs.
- [46:15]
Totally. Yeah. What I was really trying to arrive at is maybe this is a company that is less bullish on their operating business and more bullish on their ability to meet demand. And bitcoin meets fixed income. And that's what Saylor was as well. So long, long way of arriving at. I don't think you're going to see a Mag 7 go 150% exposure to Bitcoin. And mind you, it's really important that there's a distinction there because if Facebook or Microsoft or Google buys a little bit of bitcoin, they're not going to win the shareholder base away from MicroStrategy because MicroStrategy is selling a very unique product when it comes to their equity. They're selling you overexposed bitcoin. If you really believe in bitcoin, it's the product to own. So anyone that can over lever themselves even more than Saylor, Saylor would consider a competitor. Microsoft and Facebook. These guys can't compete with them. And I don't think Semler Scientific can compete with them either because Semler Scientific is worth worth a 200 of what MicroStrategy is worth. So I really think Saylor is genius in that respect. It's really difficult to replicate like when the public market talks about the nav and the premium. I don't Think people understand the escape velocity and how difficult it is to compete with the products he's selling. I think he's almost uncompetable. Like you cannot sell an equity that's as attractive to his shareholder base. So I don't know if we'll ever see another micro strategy in that sense. And in that regard, I think that he's won the market as far as I can tell for now. And I would expect the follow ons to be companies that either see their operating company devaluing in real time and slash or small cap businesses that see, you know, a way to join a trend that's growing faster than their own business. Right. Like strike is is unique in this scenario is we're growing as an operating company as fast or faster than Bitcoin because we sell bitcoin and we're in bitcoin. But if you're selling medical software and it's not growing 63% year over year, how do I join that trend and drive that value to my shareholders as a small cap? I do the bitcoin thing right.
- [48:20]
Just to put some really simple basic math on this, just to show people how crazy this past month has been with microstrategy. Very rough. Michael's bought about $10 billion worth of Bitcoin somewhere in that ballpark. And if his operating net income, which is the profit that he makes after tax is call it 100 million. And again, we're very round numbers here. It would take him 100 years to come up with $10 billion to buy all that bitcoin based off of the operational net income profit of the business. That'd be 100 years. And he did this past month through the sale of common stock and through convertible debt issuance that has zero coupons, so he doesn't have to pay any interest on it, but it can be converted into more common stock. So the debasement of the shares and you get into this idea of accretive dilution, the fact that he has more bitcoin per share as time has marched on, as he's done this strategy now, yet the future is yet to be told. But I'm pretty sure that it's going to continue to be accretive for him. It's an idea that when you issue more stock in traditional finance, it's just like the share price goes down almost immediately every single time because it's dilutive. But this is very, very different. And just I think the numbers are so mind blowing that it's lost on a lot of people that this is like a hundred years worth of profits that he basically deployed through this strategy just in the past month.
- [49:48]
Yeah, I think so. Just to expand on a few of those. For one accretive dilution piece, I still don't think people get that for the audience. Think of it this way. If I were to go out and raise a classic venture capital round, let's say Strike goes out and raises 10 million bucks. And because we're going to launch a product or we're going to launch in a new market, we're going to hire a bunch of people and do something new, the bet is that I'm taking on dilution. By raising the money, I'm owning less of the company, I'm inviting in new shareholders, and the bet is over the hopeful near term future, I'm able to make that dilution accretive by building something new, launching a new product, doing something interesting that grows the business where the new growth is accretive against so is more valuable than the dilution we took on. And that's an active bet that I make as the founder by raising venture capital around and inviting new investors on the cap table. Owning less of the company, but making the company more valuable in the future. That's the classic example. And that's risky to say, well, are, you know, are we actually going to make the company more valuable? Is this dilution? Are we going to regret it? In hindsight, Saylor found a clever way to make dilution immediately accretive by this sats per share. And so for one, hopefully illustrating that is useful to people at home is understanding what classic dilution is and how a company then has to place a bet on itself to execute. There's risk in the future. You know, part of being human is no one knows the future and so there's risk there. Where Saylor is like, there's effectively no risk or very little risk. I can't say words like that. There's a lot smaller risk in just diluting against and taking the money to buy Bitcoin. So it's immediately accretive by funneling it into Bitcoin, which is growing so fast. And then on the 0% Preston and how oversubscribed these instruments are, you know what I think people aren't talking about enough. There's a lot of debate on, you know, are microstrategy bonds going to perform like they have in the past? Okay, Bitcoin's valuable, but is it that valuable? Is it 0% valuable? But what I hear, not enough conversation is, you know, the age old, if you don't have a problem, don't fix it. But someone's fixing something, right? That's what I don't think is being talked enough about is if they weren't going into microstrategy, they'd probably be looking for something else because they clearly aren't happy with the instruments that they've had historically. So unhappy that they're willing to go in at 0%. And so yes, we can debate how valuable is bitcoin? What's the future of growth in micro strategy. But what we're not talking about enough is you have a class of investors that are trying to solve a problem. What problem are they trying to solve? Who are these people? And if you realize that, I think that unlocks a lot of direction that is most important to understand within the market and less about speculative microstrategy predictions.
- [52:39]
A lot of bitcoiners in fixed income that haven't had a vehicle to whet their appetite. And now there is one, right?
- [52:48]
Yeah.
- [52:48]
And the oversubscription, it's funny because it's like I don't think you. I think you keep it couponless at 0%, but maybe you just adjust the strike or the convertibility at a much higher price price and bringing in at the number that you were shooting for instead of the over subscription. Because like you were saying earlier, you're kind of selling your equity for cheaper than maybe you needed to. Now, if you wanted to raise the bigger number, well, then make it that bigger number. But I think the oversubscription of a billion on that last one kind of tells you he could have done it at a much different strike or convertibility than what he did it and got. All of it.
- [53:21]
When people argue about micro strategies multiple and how to value the business, I mean, listen, how do you value a company that's the best in the world at acquiring and selling financial instruments on the best performing asset of all time? What's that worth? And I think the free market is trying to figure that out. When Saylor does his BTC yield in his year to date and he's denominating it all in bitcoin. But if you take the bitcoin and you multiply it by the spot price, this guy's talking about driving value to shareholders in tens of billions of dollars. But if you were to strip away the bitcoin and the sailor piece and you were to say there's this operating company that's driving, you know, $10 billion of shareholder value just with the Operating company alone, like, what's that worth? Right. Like coinbase is an $80 billion company. I think its net operating profits is like 2, 3, 4 billion. So Saylor's putting multiples on top of that. So just without the capital base of the bitcoin. But my point is, listen, no one else is able to sell 150, 200% exposure to Bitcoin in the form of the equity. No one else has a capital base as big as him and a market cap as big as him that's 200% exposed to Bitcoin. And so he's unique in this position and he's the best in the world at this. And this thing is the best performing asset of all time. And so I think the free market's going to have an interesting time trying to figure out what that's worth. But I don't think it's incorrect that the journey of figuring out what it's worth has started. I'm curious where the free market arrives, but the fact that people think it shouldn't trade at anything outside of its net asset value to me is ridiculous because the operating company is performing something. Clearly, if you just like, do the math.
- [55:00]
Yeah, you and me both, sir. I'm very excited. Okay, last question. What are you excited for in the coming year?
- [55:07]
I mean, a lot of what we talked about, to be honest, I think we are in the early innings of a bull market. I've been on record saying now, not to toot my own horn a little bit, but I think in all the media I've done earlier in the year, I said, I think 2024, we ended around 100k and 2025, I think 250 to a million. And in that range, and I know that's a big range, but anyone that's been in bitcoin for a while can appreciate kind of where I'm coming from there. But I'm excited to service my customers through that bull run. I'm excited for all the bitcoin only companies to continue to take market share and serve a growing set of bitcoiners. I think the ETH BTC chart is very validating for where I think the world is going and the growth in our company and the growth in bitcoin. And so I'm excited about the strategic reserve. I'm excited by the fact that there's an underlying bid in the bond market for bitcoin. That's another way to translate what Saylor's doing. And I think this becomes a 5 to $10 trillion asset fairly trivially in the next 12 months and could very well play a role in stabilizing American deficits. So, I don't know. I used to in the past. I'm really excited about this Lightning Network feature. I'm really excited about launching in this country. For me, I'm just excited to be an entrepreneur in America right now. I see a reversion to the means of what's real in many aspects of life. You know, people were eating beyond beef burgers at one point and saying that was healthy. And now everyone's like, well, wait a second, let's just all eat rib eyes, right? People were talking about how government spending excessively was a really good thing. And now all of a sudden, there's Doge and there's people like, wait, we should probably just buy some bitcoin. Bitcoin, right. And so I see a reversion back to reality, a reversion back to being governed by the laws of mother Nature, a reversion back to capitalism and to building and innovating and supporting entrepreneurship in America, leaning back onto the ideals that founded this country. And so I feel really grateful and excited to be 30 and healthy and an American citizen that founded a company in bitcoin where I think we're going to see a lot of growth and I can service a lot of customers.
- [57:12]
Amen, sir. Amen. Man, is it a pleasure having you on the show, Jack. Not too many people can let it rip like you do, sir. And, man, it's always a pleasure. It really is. If people want to check out Strike, give them a hand off. If they want to check out the new features and try out the things that you were talking about earlier.
- [57:30]
Yeah, well, Jack, Milers is my real name, so that's Twitter and Instagram. I think, whatever, you guys can Google it and you can find your way for Strike you download. If you want to get your paycheck in bitcoin or pay bills with bitcoin, you could do it in the app. It's pretty straightforward. And we're in over 100 countries now. And we pride ourselves, yeah, we pride ourselves on being there for bitcoiners and focusing on bitcoin financial services. We've had a lot of success in that we do not sell any other coins. We focus solely on bitcoin and allowing bitcoin to improve your life, like making it half off on average every single year. So give it a try. And if you have feedback for us, we're actually here to listen. We'll pick up the phone.
- [58:14]
Love it. All right, folks, we'll have all that in the show notes. Jack, thank you for your time. Sir. Always a pleasure.
- [58:20]
You're the man. Thank you, buddy. Appreciate you.
- [58:22]
Preston Pish
Thank you for listening to Tip. Make sure to follow Bitcoin fundamentals on your favorite podcast app and never miss out on episodes. To access our show notes, transcripts, or courses, go to theinvestorspodcast.com this show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by the Investors Podcast Network. Written permission must be granted before syndication or rebroadcasting.