Sharp sell-off in crypto, you can see there uh microstrategy stock. Bitcoin, though, continues to plunge hitting what was its lowest level since december of 2020.. Our next guest, of course, has made a big bet on that cryptocurrency, his company microstrategy, roughly four billion dollars, has been invested by it over the last two years. Uh that's uh, including about 2.4 billion dollars in debt at the company.

He is the chairman, and ceo of microstrategy joins us uh yet again and uh. His name is michael saylor, michael nice, to have you. They have about 130 000 bitcoins, currently down 1.1 billion, listen love to just start off on. We just said i think it's 129.

000, roughly a coin average price of 30 700 spent about 4 billion on it. Um one would anticipate if the uh, if the price stays where it is, that's going to cause a significant write-down overall. At least your auditors may ask for that. You know.

You've talked for years about the financial flexibility owning all that bitcoin gives you. I wonder if you believe it also works in reverse. No, i think it's been a net positive. We back tested our strategy against every other alternative and if you roll the clock back to august 10th of 2020, when we embarked on this journey, bitcoins performed 10x better than anything else.

Gold's down 10 nasdaq is flat. Bitcoin is up 86 since that time, over any time frame, two years four years, eight years, bitcoin's the best performing asset. I can't come up with a better idea. You, you can't come up with a better idea.

Does that mean that you would actually consider buying more? At these prices, yeah um, i think, uh, if you think about bitcoin. If your time horizon is one month, it looks like a volatile risk asset, but if your time horizon is 10 years, it looks like a risk-off store of value asset. So the the crossover point is four years nobody's ever lost money investing in bitcoin for four years, and if you win for four years value of the bitcoin network, it would be the four year simple moving average. The simple moving average of bitcoin over four years is about twenty one thousand six hundred eighty five dollars.

Uh bitcoin's only touched that uh that point a couple of times in its history and those are always been great, buying opportunities right. This is right: bitcoins we're touching that yeah we're touching that price right now. It's funny you should mention it. So is it a great buying opportunity, absolutely bitcoins, backed by the most powerful, secure computer network in the world? If i gave you a hundred billion dollars, you can't reproduce it and it's beyond a nation-state, attack or corporate attack.

So once you understand that and the fact that it's a singularity, there's nothing like it in the world, then yeah. This is an ideal entry point to get into this thing, all right, but you've also taken on debt in order to actually accrue that position uh, which does incur a certain amount of risk. Doesn't it i mean, i know you know, you've got uh, you know six and uh 1.25 senior notes they're, you know. 2028.

You've also got maturities that are out there, but there's concern in the market about margin. Calls about collateral calls. Certainly, on some of this debt, can you clarify for us exactly what those are uh under the covenants that you currently have and how they may impede your financial flexibility, yeah sure on a multi-billion dollar balance sheet, we've only got a 200 million dollar loan that we Have to collateralize and we're 10x over collateralized on that right now, if the market traded down by a factor of 10, we've got cash and we generate cash flow, so this has all been the margin. Call thing has much to do about nothing.

It's just made me twitter famous, so i appreciate that and the twitter trolls love to beat up on me because it gets them engagement. As for the company's balance sheet strategy, in general, we borrowed 2.2 billion dollars at a blended interest rate of 1.8 percent. Before interest rates doubled. Junk bond index is from 426 basis points to 820 basis points.

Mortgage rates have doubled if you had a chance to grab two billion dollars at one and a half percent interest. It seems like a reasonable thing to do and i'm glad we did it most of it is unsecured debt and 1.7 billion of it is unsecured. The 500 million comes due in seven years after we borrowed the money, so we feel like we have a fortress balance sheet, we're comfortable and uh, and the margin loan is well managed all right. Well, you mentioned being twitter famous.

I should uh add that you helped make me that as well, because we had an exchange in may of 2021. That was viewed some, i don't know 800 000 times. I want to play it for you, michael because it's instructive to get you to listen to it. Now and respond again to some some of the same things that you discussed then take a listen.

You do understand how much risk you're taking on here. Don't you there's something solid. There i mean bitcoin is an idea, that's worked, it might have been risky 10 years ago. But how long do you have to watch something spread like an idea virus before you decide that maybe it's uh it's going to be around for a while, so again, you're just you're comfortable, taking this continued risk that we can that we're talking about.

You know the the biggest idea here is bitcoin is the first and the only legitimate scarcity in the universe. Gold is not scarce. They just found 320 000 tons of gold in uganda, which would double the supply of all gold mined. Since the history, the beginning of man, you know mankind so bitcoin is is uh the ideal commodity, because you can't make any more of it.

You can hold it forever and it's programmable and, as i said before, if i gave you hundreds of billions of dollars, you can't recreate the network, so we see it as unique as a long-term store of value and it's a commodity and property. We couldn't do this strategy with a security like the s p index and it doesn't make any sense to do with single family homes which have underperformed as well so yeah. We stand by the decision and we think that 98 of the world doesn't understand the concept of a digital scarcity yet, but when they do they're going to think it's a magical thing michael, you mentioned this sort of four-year average as a proxy for some kind of Intrinsic value to the bitcoin network, these things only existed for a dozen years right, so i mean the four-year value uh. It doesn't seem like something that has some kind of statistical uh.

You know significance to it that we're going to rely on, i mean. Maybe it's worked on the chart, but to me to say that something like book value is a little tough well. The idea here is bitcoin's. A bank in cyberspace and people buy bitcoin to store their monetary energy forever.

Microstrategy put four billion dollars into the network and we got less than one percent of the network like 75 basis points or something. So if you think about how much money collectively has been invested by the bitcoin hodlers, it's looking like the the book value network's 450 billion. Or so. If you look at the daily deposits in the network day after day over the course of the last four years and uh and people tend to hold on to that forever, so i think it's a pretty good surrogate for the monetary energy invested in the network and Because there's it's unique and there's no other alternative network.

You can move it to people that have put that money into the network are committed for the long term. Um. I i guess the other question is you know. A lot of people have uh kind of looked at the price action and looked at the asset, attributes of of bitcoin and other crypto and said that's really kind of just um running in parallel to what's happening on the technology side.

So maybe there's no right or wrong price for the coins, but there's something underlying it. Uh, that's going to be the next version of the internet or whatever, and this is the raw material for it. You don't really seem to be in that camp. You just think this is the stuff to own, because it has the scarcity properties.

Look every commodity in the world has looked kind of good in a hyper-inflation environment, but the dirty secret is you can make more oil. You can make more silver. You can make more gold, you can produce more corn, you can even create more real estate bitcoins. The only thing that looks like a commodity that is scarce and capped, and in the crypto world look.

The crypto world is 19 868 likely unregistered securities. One digital commodity called bitcoin, and so this bitcoin is unique because of its provenance and because of the bitcoin mining network, backing it and and because of the protocol. There's nothing like it in the analog world and there's nothing like it in the crypto world, but to mike's point about the short shelf life, michael in the limited history. We have to go on.

What do you say to those who argue uh? It's been incubated in a period, a long period of cheap money and stimulus and money, growth and m2 growth, and that, if that era ends, why should the price appreciation have anything to do with its short history? The price is appreciating because there's a fundamental need for 8 billion people in the world to have a store of value of their economic energy. That is beyond the reach of a corporation or a government, and it cannot be debased by any individual institution or nation state and in the 19th century, that dream was the gold dream and in the 21st century that dream is bitcoin and you know it does. It's not hard to go, find someone on the street that wants to find a way to preserve their life savings without it being stolen by a bank or debased by a a government and so bitcoin meets that need nothing else in the world meets that need. Uh.

Michael, you indicated earlier that this is a good opportunity to buy more uh you bought. I think the company bought 4 827 coin in the first quarter. Do you have the cash flow to actually buy more now? If you really wanted to yeah, the company continues to generate cash flow and from time to time, as we have excess cash, we're going to buy more, our strategy is buy it and hold it and sweep our free cash flows into bitcoin yeah. What about buying your bonds? They traded a pretty significant discount that might actually get more for your bank for your buck.

Yeah. The securities market is very volatile. I understand that, but our strategy is uh, levered long bitcoin. So our investors, our equity investors, our securities investors.

They know that our strategy is to be long bitcoin with responsible use of leverage uh. We intend to be transparent and and committed to that strategy that makes us predictable and then all of our investors can decide whether they want to hedge their portfolio. Yeah i mean i wonder when it comes to transparency. Do you think, given the complexity, to a certain extent of what's going on right now, you're able to provide um that clarity uh, you know 20 years ago, i know you signed a consent decree to do that.

To make sure that things were, as you know, not opaque at all at microstrategy, does this period we're in sort of make it more difficult to do that? I don't think so. I think we've we've gone to great lengths to explain to our shareholders what our balance sheet looks like they have access to all of the notes, the details and all of the notes that converts the senior secured note the silvergate loan. I think that's well understood. It's posted on our website.

We have very detailed investor calls where we discuss that and answer questions and, finally, to the extent that you are sort of a leader in terms of proselytizing for for uh bitcoin and followed, as you pointed out very widely, i'm sure this interview will get a great Deal of views uh long after it's been concluded, i mean: what do you want to tell those people who perhaps bought bitcoin on margin because they've listened to you in the past and find themselves, obviously in a deeply negative position if not having to be completely wiped Out in their uh in their account where they have the bitcoin look, if your time horizon is less than four years you're a trader, i don't and i don't think you should trade anything unless you're a professional, you do it for a living. If your time horizon is more than four years, you can reasonably call yourself an investor and, and the bitcoin savers or maximalists have a time horizon of 10 years or longer. So my advice to anybody investing in bitcoin is unless you're a professional high-speed trader with proprietary software. You ought to hold it for at least four years and if you want to focus on something focus upon the four-year simple moving average it'll keep you from giving yourself anxiety and that helps you to understand where we are in the life cycle of the asset.

So you don't have any anxiety either right now. Look if your time horizon is three months. You should hold the currency that you have your cost in. If you want to be an investor, you can invest in stocks, but that's got its own risk.

If you've got money, you want to save for a decade then allocate that money to some scarce, desirable property. Real estate might work for you. Trophy assets might work for you, but bitcoin is scarce, desirable property available to everybody on the planet and is the most egalitarian utilitarian asset they have access to. So i'm proud to promote it.

That's michael saylor from microstrategy he's the ceo and founder of microstrategy ticker symbol. Mstr and basically, they plowed four billion dollars into bitcoin uh they own about 129, 130, 000 bitcoin recently with the sell-off in bitcoin they're down 1.1 billion. So it's like a tough hit, but as you heard, he has a very long time horizon and they are very upfront with all their investors about it. As i'm saying this live, bitcoin is trading at just below.

Actually now it's just above 21 000.. He was using the four-year simple moving average, which is at 21.5, where he's at he was asked like. Is this the time that you would invest and he liked it? I agree with a lot of the things he said: the eight billion people on this planet. I believe there's a way that we need to be able to store our wealth like outside of government, because we see that crazy stuff happens, but just purely what's going on with the fed and the stock market, i still think bitcoin's coming lower.

I love bitcoin, i'm heavily invested in it, but i don't know if i would personally buy right now and with michael saylor, like he's in a different world, i mean they have a multi-billion dollar loan 1.7 billion dollars that he doesn't have to pay back for six Or seven years so he's a little bit different than let's say the smaller guy like me or you for me personally, i'm gon na look to dollar cost average below 20 000, probably closer to 15, but still at this four year, simple moving average. He likes this, but i'm assuming he's going to continue to dollar cost average as it continues to fall like, let's just generically, say every thousand dollars, but he appears to be as bullish as ever and i'm sure that he's going to continue to move on just orange Pilling people uh when the times are appropriate, but that was michael saylor on cnbc a couple hours right before the fomc meeting, which will 100 have a huge amount of volatility in the world of crypto and also obviously equities.