Interview with Michael Saylor: I Did Say I'd Sell Bitcoin, But It Will Never Be Net Selling

Source: David Lin 

Compiled by: Odaily (@OdailyChina); Translated by: Azuma (@azuma_eth)

Editor's Note: During last Monday's earnings call, Strategy mentioned for the first time that it was "prepared to sell Bitcoin if necessary to pay dividends," a statement that immediately sparked intense market debate about an alleged "abandonment of faith."

In response, Strategy Executive Chairman Michael Saylor recently provided an in-depth explanation of the logic behind this decision during an appearance on David Lin's podcast. He emphasized that he merely said they "would sell," not that they would be a "net seller." Saylor also noted that Strategy is leveraging Bitcoin's extremely high appreciation potential as "digital capital" to arbitrage by issuing digital credit instruments like STRC, thereby ensuring continuous net growth of its holdings. Below is the full transcript of the podcast (with edits), compiled by Odaily.

Podcast Interview

David Lin (Host A): It is a great honor to co-host this exciting interview with Michael Saylor, Executive Chairman of Strategy, along with my co-host Bonnie Chang. We'll start with Strategy's recent announcements and Michael Saylor's social media posts. Bonnie, let's begin.

Bonnie Chang (Host B): Last week, you made an announcement that shocked the market.

Michael Saylor: Well, I assume you're referring to our statement during the earnings call — that we are prepared to sell Bitcoin if necessary to pay dividends on the STRC.

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 capital gains from Bitcoin can be used to fund credit dividends. When we sell $1 million worth of STRC credit products, we turn around and buy $1 million of Bitcoin. Our expectation for Bitcoin is annual appreciation of around 30%, and in fact, it has been appreciating closer to 40% annually. We can strip out the initial 11% of that capital gain and pay it as a dividend.

The market has been confused about what we would use to pay dividends. For most of our history, we paid dividends by selling common stock (MSTR equity). MSTR equity is a derivative of Bitcoin, usually trading at a premium to Bitcoin. So we were selling Bitcoin derivatives, but some worried we wouldn't be able to sell equity in the future.

Then came some bearish narratives, saying we had to sell equity; other narratives said the company would never sell its Bitcoin. These morphed into — "Well, if they're not going to sell Bitcoin, then Bitcoin must have no value, they can never sell it. If they can't sell it, then we can't count Bitcoin as an asset on the balance sheet."

It's not good when you own something worth $65 billion and people want to value it at zero, right? We don't want credit rating agencies to think the company has zero assets. We want them to think we have $65 billion in assets. Additionally, some "haters" online constantly complain it's a Ponzi scheme because we fund preferred stock dividends by selling equity.

What we want to do is strengthen this business model — sell credit to invest in Bitcoin; over time, the investment appreciates faster than the cumulative dividends; then we realize the capital gains and pay the dividends.

We believe the best way to clarify this is to state unequivocally that "the company never needs to sell common stock"; we can simply sell the significantly appreciated Bitcoin to pay dividends. This is essentially using capital gains to pay credit dividends.

I think of it like a real estate development company. They raise funds through credit instruments, buy land at $10,000 per acre, develop it to a value of $100,000 per acre, and then realize that capital appreciation. You can sell the land at $100,000 per acre, lease it after full development, or refinance against it. No one questions a real estate development company that invests capital using credit income. We are doing the same thing with Bitcoin, and we need to ensure the market understands this.

I became famous for saying "never sell your Bitcoin," which is why the internet blew up when news broke that we might sell. But if I were to be more precise, it should be "never be a net seller of Bitcoin." It's just that "never be a net seller" doesn't sound as catchy or roll off the tongue as easily.

I believe in these times, even if we sell 1 Bitcoin, we will buy 10 or 20 more. So, you're really talking about a "buy 10, sell 1, net buy 9" situation. Once people understand this, it shouldn't be an issue, but for now, it's a controversial topic.

Bonnie Chang: Could you explain how you can sell 1 Bitcoin while buying 10?

Michael Saylor: Yes. Strategy's primary engine for accumulating Bitcoin is STRC. We sold $3.2 billion worth of STRC in April, so we bought $3.2 billion worth of Bitcoin. The dividend is around $80 to $90 million. So, in a month where we raised $3 billion, we only need to use $80 or $90 million to pay the dividend — essentially, you are buying 30 Bitcoins while selling 1.

Our "breakeven rate" is roughly 2.3%. This means if the credit debt we issue equals 2.3% of our Bitcoin holdings, we will always be a net buyer of Bitcoin, even if we sell some to pay dividends. Another point is that if Bitcoin appreciates by 2.3% annually, we can permanently pay dividends and continuously create value without selling any common stock.

In the first four months of this year, we sold approximately $5 billion of STRC. At this pace, the issuance rate for the year will be 15% to 20%. As long as the company is growing, it will buy more Bitcoin than it sells. I expect that in every future month and quarter, we will be a net buyer of Bitcoin.

Bonnie Chang: I have another question. Many investors adhere to the near-religious principle of "never sell Bitcoin." Do you think they should still follow that advice?

Michael Saylor: Yes, I believe you should be a "net accumulators" of Bitcoin. When I say "never sell your Bitcoin," I mean that if you need to spend it to buy something, make sure you replenish it as you spend it.

There are many crypto or Bitcoin believers who say they want to use Bitcoin to buy things. I tell them, fill the gap after spending. Don't be a net seller of Bitcoin, because Bitcoin is capital. At the end of every year, you should have more Bitcoin than you started with.

To use an analogy, if Google invests $1 billion in building data centers and makes $10 billion, they net $9 billion. This doesn't cause the dollar market to collapse, right? No one exclaims, "Google sold dollars to buy data centers!" The dollar is fine, and it doesn't shake Google's business model. They spent $1 billion to invest in their business; it's normal and rational. Sometimes you spend money to make more money.

So, if you spend 1 Bitcoin to earn 10 Bitcoins, I think it's good for Bitcoin and good for the company... When the equity capital market is less liquid than the Bitcoin market, we want to be able to utilize that market.

Whenever a company deprives itself of optionality by saying "we will never do X," whatever that is, the end result is usually regret. For example, if we said we would "never, ever buy back our own stock, only sell it," bears would short our stock into the ground, driving it down to $1. If we can buy back stock when the price trades at a huge discount to net asset value (NAV), those bears will lose money. By exploiting their irrationality, we can make a lot of money.

So, what we really expressed on the earnings call is that we will exchange STRC for MSTR, BTC for MSTR, and pay dividends with BTC or MSTR. We will do whatever is in the best interest of the company. But over time, we expect to be a net accumulator of Bitcoin. This doesn't change how we trade assets daily. Whether we sell credit debt, equity, or Bitcoin capital will depend on market conditions and pricing errors.

Another thing we said yesterday is that we are prepared to buy back our bonds. Currently, our corporate bonds are trading cheap and are undervalued, so it makes sense to buy them back, not sell them. We won't sell undervalued assets; we buy undervalued assets and arbitrage any inefficiencies. If the market knows we will do this, it will give all these assets a fair valuation. This benefits investors in all these instruments, and ultimately, it's our fiduciary duty.

David Lin: One of your biggest critics, Peter Schiff, wrote this morning: "Yesterday, Saylor admitted MSTR would sell Bitcoin if needed to pay STRC dividends. I think this promise is meant to keep the so-called Ponzi scheme going longer. But I suspect when that moment comes, he'll choose to suspend the dividend and let STRC crash, rather than let Bitcoin crash." What's your response?

Michael Saylor: Peter thinks Bitcoin is a Ponzi scheme. Peter doesn't really like anything in this space. Bitcoin is "digital capital," and by selling equity and credit instruments to buy this capital, we are creating a digital finance company. I think Bitcoin will endure because it represents global economic wealth in tokenized form with complete property rights.

On top of this, we built a credit instrument, STRC, which simply strips out volatility, reduces risk, and extracts or "distills" yield from digital capital. If you don't acknowledge Bitcoin as legitimate, you will never acknowledge any derivatives built upon it as legitimate. But for those who believe Bitcoin can store economic wealth in tokenized form, what we are doing is very straightforward.

STRC uses an overcollateralized model: for every $5 of Bitcoin, we sell $1 of credit debt, and that $1 of credit debt has a clear yield. Many people who believe Bitcoin is a legitimate asset just can't handle its volatility. They don't want to put the money they need for their child's tuition next fall into Bitcoin because they have to pay the bill in 12 weeks. For them, digital credit makes a lot of sense because the principal is protected and more stable. Additionally, through STRC, they can get returns 3 to 4 times higher than the money market. This is exactly the characteristic of Bitcoin being superior to other capital assets that allows us to pay this high dividend yield.

David Lin: This is a theory I want to ask you about, then I'll hand it back to Bonnie. Some traders noticed that whenever STRC pays a dividend, the ex-dividend price trades below par for a period (maybe a day or two). Once it reaches par, that's when Strategy goes to buy Bitcoin. So, they started "front-running" by buying Bitcoin just before STRC reaches par, betting that you and Strategy would buy Bitcoin at par. Can you comment on this?

Michael Saylor: What happens around the dividend date is that demand for STRC is enormous because there's a dividend of about 90 cents coming after the record date. So, billions and tens of billions of dollars of STRC trade before the record date. The day after the record date, its price drops by 60 or 70 cents, and then it gradually recovers to par over the next week or two.

So that's normal. Those people are arbitrageurs. Their idea is to capture an annualized return of roughly 42% by deploying capital for only about 12 days a year. They have their own calculations. That's fine, it benefits us too, as it creates liquidity and participation. This situation will continue.

As for the second idea, can you front-run the Bitcoin market? The Bitcoin derivatives market has a daily volume of $50 billion. So, I don't think anyone has enough capital to move that market.

In my view, Bitcoin is a bit like "tech capital squared." The factors driving the Bitcoin market are trade wars, hot wars, foreign policy, national situations, and the situation in Iran regarding the Strait of Hormuz, followed by currency wars — like whether we expect SOFR to drop to 200 basis points, or if the yield curve is being distorted. You can see that we are currently in a fairly tight monetary environment, so these macro factors are the primary drivers for Bitcoin.

I can tell you a fact: we bought $100 million of Bitcoin in an hour, and it didn't move the price; we bought $200 million of Bitcoin in an hour, and it didn't move the price; we bought $200 or $300 million in an hour and then stopped, and the price went up instead.

So, no one has enough power to influence Bitcoin's price performance... Well, maybe if you plan to inject $30 billion into the market in one afternoon. But I've spent a lot of money; we've bought more Bitcoin than anyone I know, probably acquiring around $62 billion worth. I believe it's a global market with its own momentum.

So, those claims that we can influence the price are flattering, but I don't think so.

Bonnie Chang: Why do you say the price barely moved when you bought so much Bitcoin?

Michael Saylor: Because the market is extremely liquid. Even if I were to buy $1 billion today, that's just 1/50th of the $50 billion trading volume.

If you ask traders, they'll say spot market volume on a single day can be $20 billion, and derivatives market volume can reach $80 billion. In such a deep liquidity market, what is $100 million? That's what's special about it. On a weekend, if you want to take a $1 billion position with 20x leverage, you can do it in the Bitcoin market; if you want to get a $1 billion credit line within an hour, you can do it in the Bitcoin market.

I do believe macro factors drive Bitcoin, and sometimes Bitcoin has a life of its own. Micro factors also drive it — I mean industry factors like the formation of digital credit, bank credit, and investor sentiment towards Bitcoin assets. These all drive the market. But I think Bitcoin is bigger than all of us, and that's precisely why we have confidence in it — because no single participant can support it or hinder it.

David Lin: If the Strait of Hormuz remains closed for the foreseeable future, several forces will intertwine. First, some say inflationary pressures will persist; second, the Federal Reserve may eventually need to cut rates because they are trapped by high inflation. So, what ultimately happens to liquidity? If the Fed remains trapped, what happens to Bitcoin?

Michael Saylor: I think when you face tight monetary policy, high global trade tensions, and high geopolitical tensions due to foreign policy or wars (whether in Ukraine or Iran), all of these are somewhat constraining and act as headwinds. I believe when these factors reverse, they will become tailwinds.

But regardless, Bitcoin will grind up. This is because the annual organic supply from miners is only about $10 to $12 billion, only 450 Bitcoins per day. You can do the math yourself. Then, every time we raise another $10 billion in capital, we buy up the entire annual supply. So, if a bank creates $10 billion in credit, that's "one turn of the wheel"; if we sell $10 billion in STRC digital credit, that's "the second turn of the wheel"; when $10 billion flows into IBIT (BlackRock's Bitcoin spot ETF), that's "the third turn of the wheel."

So, capital flows, digital credit, digital capital packaging instruments, and bank credit are all driving the market fundamentals, and they are all positive. Regardless of the macro factors, you will see continuous adoption. The macro wind simply determines that when we might grind up 30%, tailwinds push us to surge 50%, while headwinds slow our pace to some extent.

David Lin: Has your thesis on Bitcoin changed?

Michael Saylor: No. But I will 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 people are wondering, what is the killer app for a $1.5 trillion asset class with hundreds of billions in daily trading volume? The answer is using it as collateral for credit. Since digital capital is the best-performing capital asset (and indeed it is, outperforming the S&P 500 by two to three times), it logically follows that we can create the best-performing credit assets on top of this capital asset.

What we have seen over the past year is that STRC is the most liquid credit instrument; it is the most liquid preferred stock in the entire