Original video title: Michael Saylor: 'We're Prepared To Sell Bitcoin' - What's Next Is Historic
Original video source: David Lin
Azuma, Odaily Planet Daily
Editor’s Note: During last Monday’s earnings call, Strategy mentioned for the first time that it is prepared to sell Bitcoin to pay dividends if necessary, sparking intense market debate over whether it has "betrayed its principles."
In this regard, Michael Saylor, Executive Chairman of Strategy, recently provided an in-depth analysis of the underlying logic behind this decision during an appearance on David Lin’s podcast, emphasizing that he only said he “would sell,” not that he would “net sell.”
Saylor also mentioned that Strategy is leveraging Bitcoin’s exceptional appreciation potential as “digital capital” to generate arbitrage opportunities through the issuance of digital credit instruments such as STRC, ensuring continuous net growth of its holdings. Below is the full transcript of this podcast (edited), translated by Odaily Planet Daily.
Podcast interview
David Lin (Host A): I’m honored to have Michael Saylor, Executive Chairman of Strategy, join me, with Bonnie Chang as my co-host. We’ll begin with Strategy’s recent announcement and Michael Saylor’s recent social media posts. Bonnie, let’s get started.
Bonnie Chang (Host B): Last week, you announced something that shocked the entire internet.
Michael Saylor: Uh, you're probably referring to our statement during the earnings call—that we are prepared to sell Bitcoin if necessary to pay STRC dividends.
Bonnie Chang: I believe that was a well-considered decision—what was the thinking behind it?
Michael Saylor: The most important point is that we want the market to understand that Bitcoin’s capital gains can be used to fund credit dividends. When we sell $1 million in STRC credit products, we immediately reinvest that same $1 million into Bitcoin. We expect Bitcoin to appreciate by approximately 30% annually, but in reality, its appreciation has been closer to 40% per year. We can distribute the first 11% of these capital gains as dividends.
The market has always been puzzled about what we would use to pay dividends. For most of history, we paid dividends by selling common shares (MSTR equity). MSTR equity is a derivative of Bitcoin and typically trades at a premium to Bitcoin. Therefore, we were selling a Bitcoin derivative at the time, but some have expressed concern that we may not be able to sell equity in the future.
Then some bearish statements emerged, claiming we must sell our equity; others claimed the company would never sell its Bitcoin. These statements escalated into: “Well, if they don’t plan to sell Bitcoin, then Bitcoin must have no value—they’ll never be able to sell it. If they can’t sell it, then we can’t count Bitcoin as an asset on the balance sheet.”
It’s not great if you have something worth $65 billion, but people want to value it at zero, right? We don’t want credit rating agencies to think our assets are worth zero—we want them to recognize that we have $65 billion in assets. Also, there are some online critics constantly claiming this is a Ponzi scheme because we fund preferred dividend payments by selling equity.
What we aim to do is strengthen this business model—selling credit lines to invest in Bitcoin; over time, the appreciation of this investment outpaces the accumulation of dividends; then we realize the capital gains and pay dividends.
We believe the best way to clarify this is to explicitly state that "the company will never need to sell common shares"—we can simply sell our significantly appreciated Bitcoin to pay dividends, effectively using capital gains to fund dividend payments.
I think it’s like a real estate development company that raises funds through credit instruments, buys land at $10,000 per acre, develops it, and then realizes the capital appreciation by selling it at $100,000 per acre.
You can sell the land for $100,000 per acre, lease it out after full development, or refinance it. No one questions a real estate development company that makes capital investments using credit income—we’re doing the same thing with Bitcoin, and we need to ensure the market understands this.
I was once famous for saying “Never sell your Bitcoin,” which is why the internet exploded when they heard we were selling—but if I were more precise, I’d say “Never become a net seller of Bitcoin,” because “never become a net seller” just doesn’t sound as catchy or as easy to spread.
I believe that during these periods, even if we sell 1 Bitcoin, we would buy back 10 to 20. So, what you're talking about is essentially a situation of "buying 10, selling 1, net buying 9." Once people understand this, it shouldn't be an issue anymore, but right now it remains a controversial topic.
Bonnie Chang: Can you explain how it's possible to sell 1 bitcoin while buying 10?
Michael Saylor: Yes. The primary engine for Bitcoin accumulation in our strategy is STRC. In April, we sold $3.2 billion worth of STRC, which allowed us to purchase $3.2 billion in Bitcoin. The dividends amounted to approximately $80 million to $90 million.
So, in this month where we raised $3 billion, we only need to set aside $80 or $90 million to pay dividends—in essence, you're buying 30 bitcoins while selling 1.
Our breakeven rate is approximately 2.3%. This means that if the credit debt we issue equals 2.3% of our Bitcoin holdings, we will always remain a net buyer of Bitcoin, even if we sell Bitcoin to pay dividends. Another key point is that if Bitcoin appreciates by 2.3% annually, we can pay dividends indefinitely and continue creating value without selling any common shares.
In the first four months of this year, we have already sold approximately $5 billion worth of STRC; at this pace, this year’s issuance rate will reach 15% to 20%. As long as the company continues to grow, it will buy more Bitcoin than it sells. I expect that in every subsequent month and quarter, we will remain a net buyer of Bitcoin.
Bonnie Chang: I have another question. Many investors fervently believe in the mantra “never sell Bitcoin”—do you think they should still follow this advice?
Michael Saylor: Yes, I think you should become a net accumulator of Bitcoin. When I say "never sell your Bitcoin," I mean that if you spend it to buy something, make sure you replenish it at the same time.
Many crypto or Bitcoin believers say they want to use Bitcoin to buy things; I would say, make up for the gap after spending. Don’t become a net seller of Bitcoin, because Bitcoin is capital. At the end of each year, you should have more Bitcoin than you did at the start.
For example, if Google invested $1 billion in building data centers and earned $10 billion as a result, they would have netted $9 billion. That wouldn’t cause the dollar market to collapse, right? No one would cry out, “Google sold dollars to buy data centers.”
The dollar will be fine, and this won't shake Google's business model. Spending a billion dollars on business investments is normal and rational—sometimes you spend money to make more money.
So, if you spend 1 bitcoin to earn 10 bitcoins, I think that’s beneficial for bitcoin and beneficial for the company… when equity capital markets are less liquid than the bitcoin market, we want to be able to leverage this market.
Whenever a company eliminates its own options—say, “We will never do X”—no matter what X is, the result is always regret. For example, if we said, “We will never repurchase our own shares, only sell them,” short sellers would aggressively dump our stock, driving it all the way down to $1. When the stock price trades at a significant discount to net asset value (NAV), the ability to repurchase shares would cause those shorts to suffer losses. By exploiting their irrationality, we can generate substantial profits.
So, what we really conveyed on the earnings call is that we will exchange STRC for MSTR, exchange BTC for MSTR, and pay dividends using either BTC or MSTR—we will do whatever is in the best interest of the company. However, over time, we expect to be a net accumulator of Bitcoin. This will not change how we routinely trade our assets. Whether we sell credit instruments, equity, or Bitcoin capital will depend on market conditions and pricing inefficiencies.
Another thing we mentioned yesterday is that we are ready to repurchase our bonds. Currently, our corporate bonds are trading at a low price and are undervalued, so repurchasing them makes sense, while selling them does not. We do not sell undervalued assets—we buy them and arbitrage any inefficiencies that lack transparency. If the market knows we will do this, it will assign a fair valuation to all these assets. This benefits all investors in these instruments, and ultimately, it is our fiduciary duty.
David Lin: One of your biggest critics, Peter Schiff, wrote this morning: “Yesterday, Saylor admitted that MSTR (MicroStrategy) would sell Bitcoin to pay dividends on STRC. I think this pledge is meant to prolong what I consider a Ponzi scheme. But I suspect that when the moment comes, he’ll choose to suspend dividends and let STRC collapse rather than let Bitcoin collapse.” What’s your response?
Michael Saylor: Peter believes Bitcoin is a Ponzi scheme. Peter actually doesn’t like anything about this space. Bitcoin is “digital capital,” and we created a digital financial company by purchasing this capital through the sale of equity and credit instruments. I believe Bitcoin will endure because it represents global economic wealth in tokenized form, with full property rights.
We built on top of it a credit instrument called STRC, which strips away volatility, reduces risk, and extracts or "distills" yield from digital capital. If you do not recognize Bitcoin as legitimate, you will never recognize any derivatives built on top of it as legitimate; but for those who believe Bitcoin can store economic wealth in tokenized form, what we’ve done is very straightforward.
STRC employs an over-collateralized model: for every $5 of Bitcoin, $1 of credit debt is issued, and this $1 of credit debt carries a defined yield. Many people who believe Bitcoin is a legitimate asset cannot tolerate its volatility—they don’t want to invest money meant for their child’s tuition in the fall, since they need to pay the bill in 12 weeks. For them, digital credit is highly meaningful because the principal is protected and more stable. Additionally, they can earn 3 to 4 times the yield of money markets through STRC—this is precisely the characteristic that makes Bitcoin superior to other capital assets, enabling us to pay such high dividend yields.
David Lin: This is a theory I’d like to ask you about, after which I’ll pass it back to Bonnie. Some traders have noticed that whenever STRC distributes dividends, its ex-dividend price falls below par (Par) for a period—possibly one or two days. Once it reaches par, that’s when Strategy buys Bitcoin. So, they’ve started “front-running” by buying Bitcoin before STRC reaches par, betting that you and Strategy will buy Bitcoin at par. Could you comment on this?
Michael Saylor: What happens near the dividend date is that demand for STRC becomes extremely high because there is approximately a 90-cent dividend after the record date. As a result, billions, even hundreds of billions of dollars worth of STRC are traded before the record date, and the next day after the record date, its price drops by 60 or 70 cents, then gradually recovers to par over the following one to two weeks.
So that’s normal. Those people are arbitrageurs; their strategy is to tie up funds for about 12 days per year to capture an annualized yield of around 42%. They have their own calculations, and that’s fine—it benefits us too, as it creates liquidity and engagement, and this situation will continue.
As for the second idea, can you front-run the Bitcoin market? The Bitcoin derivatives market has a daily trading volume of $50 billion, so I don’t believe anyone has enough capital to move that market.
My view is that Bitcoin is somewhat like "technology capital squared"—the factors driving the Bitcoin market are trade wars, hot wars, foreign policy, national situations, and Iran’s stance in the Strait of Hormuz, followed by currency wars—such as whether we expect SOFR to drop to 200 basis points or whether the yield curve is being distorted.
You can see that we are currently in a relatively tight monetary environment, so these macro factors are the main drivers of Bitcoin.
I can tell you a fact: we once bought $100 million worth of Bitcoin in one hour, and it didn’t move the price; we once bought $200 million worth of Bitcoin in one hour, and it still didn’t move the price; we once bought $200 or $300 million and then stopped, and the price actually rose.
So, no one has enough power to drive Bitcoin’s price performance… well, maybe if you plan to inject $30 billion into the market in a single afternoon. But I’ve spent a lot of money—we’ve bought more Bitcoin than anyone I know, and we may have already purchased $62 billion worth of Bitcoin. I believe this is a global market with its own momentum.
So, those claims that we can influence prices are actually flattering us, but I don’t see it that way.
Bonnie Chang: Why did you buy so much Bitcoin and say the price hasn’t moved at all?
Michael Saylor: Because market liquidity is extremely abundant. If I were to buy $1 billion today, that would still only be 1/50th of a $50 billion trading volume.
If you ask traders, they’ll say that daily trading volume in the spot market can sometimes reach $20 billion, while the derivatives market can surge as high as $80 billion. In a market with such deep liquidity, what’s $100 million? That’s what makes it special. On weekends, if you want to open a $1 billion position with 20x leverage, you can do it in the Bitcoin market; if you need $1 billion in credit within an hour, you can also achieve that in the Bitcoin market.
I do believe macro factors drive Bitcoin, and at times Bitcoin has its own momentum. Micro factors are also driving it—I’m referring to industry factors such as the formation of digital credit, bank credit, and investor sentiment toward Bitcoin assets, all of which are moving the market. But I believe Bitcoin is stronger than any of us, and that’s exactly why we have confidence in it—because no single participant can prop it up or hold it back.
David Lin: If the Strait of Hormuz remains closed for the foreseeable future, several forces will intersect. First, some say inflationary pressures will persist; second, the Federal Reserve may ultimately need to cut rates because it is trapped by high inflation. Then, what will happen to liquidity? And what will happen to Bitcoin if the Fed remains trapped?
Michael Saylor: I believe that when you face tight monetary policy, high tensions in global trade, and elevated geopolitical tensions due to foreign policy or war—all of which, to some extent, act as constraints—they are headwinds. I think when these factors reverse, they become tailwinds.
But regardless, Bitcoin will slowly grind up, because miners' annual organic supply is only about $10 to $12 billion, or 450 bitcoins per day. Do the math yourself.
Then, every time we raise another $10 billion in capital, we buy up the entire year’s supply. So, if a bank creates $10 billion in credit, that’s “one full rotation of the axle”; if we sell $10 billion in STRC digital credit, that’s “the second rotation of the axle”; and when $10 billion flows into IBIT (BlackRock’s spot Bitcoin ETF), that’s “the third rotation of the axle.”
So, capital flows, digital credit, digital capital packaging tools, and bank lending are all driving market fundamentals, and all of these are positive. Regardless of macro factors, you’ll see continued adoption. The role of macro trends is simply this: when we’re supposed to climb 30%, a tailwind can push us to 50%, while a headwind may slow us down to some extent.
David Lin: Has your logic regarding Bitcoin changed?
Michael Saylor: No change. But I would say it’s now clear that Bitcoin is “digital capital,” and over the past 12 months, one thing has become very clear—one of Bitcoin’s killer applications is digital credit.
Many are wondering: what is the killer app for an asset class worth $1.5 trillion, with daily trading volumes in the tens of billions of dollars? The answer is collateral for credit. Since digital capital is the best-performing capital asset—outperforming the S&P 500 by two to three times—it follows naturally that we can build the best-performing credit asset on top of this capital asset.
Over the past year, we have seen that STRC is the most liquid credit instrument, the most liquid preferred stock in the entire market, and the largest preferred stock by market size. It has the highest Sharpe ratio. We have successfully created an instrument with a Sharpe ratio of 3 and a dividend yield of 11% to 12%.
The stock with the highest Sharpe ratio is Nvidia, at approximately 1.7; the S&P 500 is around 0.9... none exceed 1, and even the top hedge funds you can find have a Sharpe ratio below 2.2.
Therefore, digital credit actually offers better risk-adjusted returns than any other financial strategy or publicly traded instrument in the public capital markets. Twelve months ago, I couldn’t have told you this. But now the logic is clear—if bitcoin is the best-performing capital, then bitcoin-backed convertible bonds become the best-performing convertibles, and credit instruments like STRC become the best-performing preferred shares.
By the way, do you know what percentage of the preferred stock market we held this year?
Bonnie Chang: I guess over 70%?
Michael Saylor: This year, we issued 60% of all preferred stocks in the United States. Last year and this year, we were the largest credit issuer in the country. We revitalized the preferred stock market, and STRC experienced explosive growth.
So, I believe the novelty lies in the concept of "digital capital driving digital credit." As you saw in the show, digital credit is a stepping stone to digital currency. Because a large number of stablecoins pegged to the U.S. dollar, offering yields of 8% or 9%, have emerged—Apex created one that grew from $0 to $300 million in 8 weeks; Saturn created another that grew from $0 to $110 million in 6 weeks.
A surge of innovation driven by digital credit is unfolding across digital assets, cryptocurrencies, and traditional finance—and Bitcoin is the foundational element that makes digital credit possible, which may be the most exciting development this year.
Bonnie Chang: Final question. Was Have Space Suit—Will Travel what inspired you to go to MIT? Let’s go back before MIT, back to that book and before Bitcoin. What would you say to your younger self?
Michael Saylor: Did you know that when I was in first grade, my parents wanted to motivate me, so they told me they’d give me 10 cents for every book I read? I was addicted to comics, and I remember comic books cost 25 cents each. So the math meant I had to read two and a half “real books” to get one comic book—and I was highly motivated.
That summer, I read about 100 books; I would go to the library and borrow 10 at a time. Later, I discovered science fiction and found Heinlein, Clark, and Asimov—I read The Moon is a Harsh Mistress and Have Space Suit—Will Travel before third grade, and by third or fourth grade, I had gone through them all.
I would say that reading these science fiction novels drove my intellectual development. Boys in elementary school are very impressionable. I remember in "Put on Your Spacesuit and Travel," the protagonist was an alpha male—he repaired a spacesuit, was picked up by a spaceship, traveled through space, and saved humanity from the "worm-eye monsters."
What was the reward for saving humanity? He received a full scholarship to MIT. I thought to myself, if MIT was good enough for the hero who saved humanity, then it was probably good enough for me too. So, no matter what happened, I was going to get there.
David Lin: If Musk invited you to Mars, would you accept?
Michael Saylor: That depends on what kind of vehicle he provides to take me.
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