What Bitcoin Did - Metaplanet, Strategy, and the Corporate Bitcoin Race | Dylan LeClair

Episode Date: July 30, 2025

Dylan LeClair breaks down the rise of Bitcoin treasury companies, why corporate adoption may be hitting a “gradually then suddenly” inflection point, and whether Michael Saylor’s lead is now insurmountable. We get into how Metaplanet scaled from a few hundred Bitcoin to 16,000+, what’s driving premiums over NAV, and why public capital markets are becoming the biggest buyers of Bitcoin. Dylan also explains Saylor’s latest innovation, “Stretch", and explains why this could transform corporate balance sheets and fixed income markets. In this episode: How corporate treasuries are competing in a winner-take-most market Why premiums to NAV compress - and when they could expand again The mechanics behind Stretch How liquidity, interest rates, and credit markets drive Bitcoin price action THANKS TO OUR SPONSORS: RIVER ANCHORWATCH IREN BLOCKWARE LEDN Follow: Danny Knowles: https://x.com/_DannyKnowles or https://primal.net/danny Dylan LeClair: https://x.com/DylanLeClair_

I think there's sort of like a gradually then suddenly inflection point. This is becoming a real discussion across, you know, corporate boardrooms. The asset is maturing. And this is a way, you know, if Bitcoin is going to eat the world, and that's what kind of a lot of us came to the conclusion of five years ago, then it's not going to be everybody just buying Bitcoin on cold cards. There's huge pools of money that can't access the asset. Equity on the stock market was just the first pool.

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And the last time we spoke was, I think it was like just around a year ago, Metaplanet had a couple of hundred Bitcoin on the balance sheet or something like that. Now you're at like 16,000 and a bit. What a wild year. How's it been? What a wild year indeed. I appreciate you having me on, Danny. It's been been a crazy year. You've managed to boot Peter off the podcast and take the reins.

Host our takeover. Yeah, congratulations on that. Yeah, it's been exciting. I don't even know where to begin, but I feel like the last time we spoke, the situation was a bit different. So a lot to catch up on. It was very different. And I know you're a busy person. I don't know how much you listen to the show, but I've been pretty skeptical about a lot of the Bitcoin Treasury plays.

And for full context, I think strategy is its own beast. That's different. I think Metaplanet again for a couple of reasons, one being super early and then also being in Japan, you're probably different. And I think there'll be a handful of others that do really well in it. but I'm kind of skeptical about these new treasury companies that pop up every week. I mean, it seems like almost one a day at the moment. What's your kind of read on the entire market for this? Yeah.

I mean, one is I think, you know, for the last four or five years, I would say I've tried to be a champion of Bitcoin, you know, no matter what the circumstance up, down sideways. So it's amazing to see, you know, the Bitcoin Treasuries.net, there was, I don't know, what's 10 companies, 20 companies a year or two back, and now there's like 200 companies around the world racing to announce and acquire Bitcoin. So, you know, this is, you know, I think it's unilaterally positive for our mission. Even if you are, you know, the cypherpunk sort of, you know, the cyphor punk minded Bitcoiner, you know, the crypto anarchist, if you will, you know, what did you think Bitcoin winning and taking over the, you know, the world looks like, right? Well, one of those

avenues is, you know, the public capital markets are going to embrace it. You know, it wasn't just going to be like a libertarian, you know, toy, right? But let me clarify, like, I'm not, I'm not dissing or putting away the cypher punk anarchist sort of view. They exist in parallel, right? You know, sailor leveraging the, you know, the preferred equity market, you know, with this Bitcoin collateral does not inhibit, you know, any of the other use cases or, you know, the lightning or lightning network or anything of that extent. So, I mean, I think that I've, I sort of naively in 2021 thought that this would happen really fast.

You know, Taylor adopted it. And, you know, Pierre was like 500 companies, NASCP 500 are going to adopt Bitcoin. And I was like, yes, like 100%. And so, you know, for me, I was a bit of, you know, I was in a bit of disbelief that I had the opportunity, even though, you know, Metaplanet was in the Japanese. market. I'd never been to Asia. I don't speak the language. I didn't know the first thing about Japanese public markets at that point last April. But the opportunity for me to work at a at a public company, you know, with the Bitcoin first, Bitcoin, you know, only vision was really exciting

because at that point there was, you know, it was MSTR and some miners and, you know, Coinbase. So, you know, a year out to see, what, 50 announcements in the last week or two, if nothing else it's vindicating because, you know, I think we had this vision as, you know, Bitcoiners and Saylor was out there tooting, you know, his horn about this begging companies to copy him. And no one did, right? And so I think there's sort of like a gradually then suddenly inflection point that we've, you know, whether we've passed it in the grand scheme of things or we're nearing that inflection point where, you know, it goes from, you know, sort of the gimmick, like, hey, we're doing this because we get attention and volume and liquidity, you know, in our equity to, you know, this becoming a real discussion across, you know, corporate boardrooms, right? It's like, okay, we're still going to have our business, you know, but at the same time, it makes sense to, you know, accumulate this and sit on a bunch of cash. What was it? Like Figma, right? Figma's going public. Yep. They casually had $50 million of Bitcoin on their balance sheet.

Yeah. No one at Figma is talking about Bitcoin. They don't have a dedicated, you know, Bitcoin strategy officer that I know of. But at the same time, they have $50 million of Bitcoin. Like, that's not a joke. That's a lot of money. Right. So I think that this is where this is all going. You know, in terms of the scale or, you know, the capacity for, you know, however many purpose-ded Bitcoin-only accumulation vehicles that are, you know, we'll see. You know, I think there's obviously going to be a dominant monopoly in, you know, each of the largest local markets, right? There's just, there's just economies of scale that, you know, there's a winner-take-all dynamic, even though the, you know, Bitcoin, it's homogeneous collateral, it's fungible, right? In theory,

one Bitcoin equals one Bitcoin no matter what company holds it. But in reality, I think, you know, in public markets, there's just a dynamic of size and liquidity, never mind, like, the passive indexation, right? So, so there is somewhat of a winner take all or winner take most dynamic, especially, you know, in the various public markets. So yeah, I mean, I think it's, it's all extremely positive. I've been really, really encouraged to see, you know, more and people, you know, whether it's reaching out to Metaplanet or there's been companies, I think there's now, you know, 10 or so companies in the Japanese public market that have a little bit of Bitcoin. And I think, you know, Metaplanet has certainly been, you know, kind of a driving force

there. So it's really cool to see it. And to be frank, I think we're still in the grand scope, you know, the grand scheme of history. I think we're still in the early innings of, you know, the Bitcoin corporate adoption story, even though, you know, all of the Bitcoiners, if you will, in our own echo chamber are like, oh, okay, guys, this is really frothy. The reality is, like, the rest of the world actually simply doesn't care. So I think it is pretty early, despite, you know, what everyone sort of believes is, you know, everyone thinks it's reaching a fever pitch. But I think if you step back, it's actually we're still, you know, and the huge pools of global capital were still, this Bitcoin story is still pretty small.

So when I've just pulled up the Bitcoin Treasuries.net website and there's like such a crazy drop off from Sayler at like 600,000 Bitcoin, I think the hundreds in the world right now is at 25. So like there's an enormous gap between those two things. But how much demand and how much of a market do you think there is for these Bitcoin treasury companies that trade at an actual premium to net asset value? Like something significantly greater than one. Because one of the things that I've been sort of trying to figure out is whether we're going to have a lot of these that trade basically just at par and then a couple that will be at two or three X. And like where do you think that that goes? Yeah. You know, I think there's it's a constant, it's a constant like fight with

gravity, if you will, you know, above 1x MNAV. You just think of the math and the mechanics, right? Like, if your stock's at, you know, a 2x premium and the stock price is flat and you buy some more Bitcoin, you know, your premium to nav goes down. If Bitcoin goes up, your premium to nav goes down, right? So in order to say, you know, stay at a constant 2X premium, if you will, every time you buy Bitcoin, you know, the share price has to ratchet higher, right? So it takes, you know, more and more capital. So that's why I think there's, there's a, you know, sort of a natural trend towards a winner-take most dynamic. Yeah. It's because, you know, the liquidity, the liquidity you need to, you know, sort of maintain a consistent premium, especially as, you know,

you scale a treasury ideally exponentially, right? Like, for instance, a 5x premium when Metaplanet was a $10 million company was $40 million of value. Or, you know, when we were a $50 million company or whatever whatever kind of math you want to do is really, really small in terms of the value. Right now, you know, Metaplanet's, I think we're a $5 billion company, right? So at a 3xM nav, you know, that's billions of dollars of premium.

Strategy is at a measly 1.8x premium, but the premium is like $50 billion of value, right? So in absolute terms, this is a massive, massive scale. And so everyone's like, well, the premiums as compressed as it's ever been. It's like, well, in Fiat dollar terms,

it's as large as it's ever been. So I think, you know, there's people often are like, and we've seen this with analysts, you know, kind of across the board in the treasury sector, people are comparing a company or companies that are two orders of magnitude in different size, right? And so I think, you know, the expectations have to sort of be set there where just the magnitude of like, okay, well, if you do your job and you execute well as a treasury company, you know, the scale quickly approaches billions or tens of billions, right, if you can if you can execute. And, So, you know, from that point on, maintaining, you know, that sort of premium, one, it requires a lot of liquidity. And two, it requires sort of a kind of a dominant monopoly or a near sort of monopoly on, you know, you say your markets, you know, liquidity, you know, the Bitcoin vision. Part of, I think, why we were so successful early on and I think still to this day is that Japan, there was no Bitcoin, there was no Bitcoin exposure, narrative, or story. or really, I would say, like, you know, visionary belief, right? Like, when Sailor bursts onto the scene in August of 2020, why did Bitcoiners rally around him, right?

Because we were, you know, sort of all in our own little echo chamber speaking the same language, and then some billionaire shows up on the NASDAQ and is like, there is no second best. And everyone's like, oh, my God, you know? And so I think there was somewhat of a parallel or like an analog there for us in Japan. there was no there was no one everybody if you if you believed in bitcoin or crypto you believed in

digital asset web three blockchain isms and and that's not what we stood for so i think that was that was part of the reason that you know we got such a a jolt of a start but you know in terms of like the u.s markets right how many billions of dollars of bitcoin exposure currently are exist in floating and that's a lot right and i think you know there's also like there's now sort of like private Bitcoin that is being taken public, right? Versus like with Metaplanet, we have 16,000 Bitcoin. That's 16,000 Bitcoin of demand that didn't exist prior. It was trapped in the equity market that couldn't, there was an exposure.

We raised $1.6 billion and bought $1.6 billion of Bitcoin, right? So I think that just because of, you know, the marginal sort of supply and demand, there's going to be, you know, amongst the hundreds of companies, there's going to be sort of a natural, you know, yeah, winter take most dynamic. But I think really the scale, ultimately, the real moat here, one is there's brand, right? There's a sailor premium, you know, in the same way that there's an Elon premium or there's a Steve Jobs premium back in the day. But the real moat here is, I mean, it's not just having a public company, right? Like a year or two ago or three, you know, if you were a public company in the Bitcoin or crypto space,

like that was a real, real differentiator. Now there's a lot of crypto companies. And I think, you know, it was the ATM, right, the ability to raise equity at the market. Like if you've operated in public markets, raising money is a grueling game. You know, it's like nonstop legal, regulatory, investor meetings, nonstop, no sleep, especially if there's like, you know,

sort of like, you know, a private placement or convertible bond process where There's like a three-day sprint window where it's non-stop meetings, roadshow, roadshow, like, it's just, it's grueling, right? And so, but the ATM, you get it live and then it's, I don't want to say it's smooth sailing, right? But you do the hard work up front, and then the process gets, you know, very much, it's easier throughout, right, than then constantly raising money. And so for a while, there was sort of a monopoly. A sailor was the only one in town doing this, right? And now I think there's, you know, too many to name that are selling equity at the market to buy Bitcoin. Now, increasingly, there's some crypto digital asset companies, which is interesting.

But I think, you know, that's the real moat here is, is not just issuing equity to buy Bitcoin. The real moat is, can you hit a scale in absolute terms of Bitcoin exposure where you can access to fixed income markets? And I think, you know, Sailor and MSTR, you know, to this point, the only, the only company that's hit that scale. Even convertible bonds, right? The convertible bond process is it's long, it's grueling, it's heterogeneous credit, right? So every convertible bond has a new process, has new terms, you know, and the investors don't actually believe in you, your story, or your company. Right. Like, the convertible bond investors, they'll woo you and they'll talk a big game and they'll talk about loving your vision. And then they short sell 60% of the money they put down to head.

You know, like they don't, they're not actually even net long at all. They're just, they're just farming volatility, right? So like, they're not your friend. And I, and I say that that's no, that's no diss, right? Like, that's their business. They're in the, in the, in the business of, you know, trading volatility. That's fine. But, you know, with this preferred stock, you know, I guess just with the preferred equities that sailors laid out, it, I didn't really see the, like, that vision wasn't clear to me until, you know, until. the first one rolled out, and then the second and the third. And then it's sort of like an aha moment, like, you know, convertible bonds were never the end game. Like I thought the magic innovation was, okay, you can lever your balance sheet with Bitcoin volatility and access zero percent cost of capital. But now it's really clear that, you know, that process was a bit clunky. And, you know, it's also like the relative pool of capital for convertible bond arbitrage. It's pretty small. Versus, fixed income, you know, broadly, I know that's a broad stroke term, but the fixed income markets, like the true fixed income markets are absolutely massive. And so, you know, when Saylor said,

we're going to go for every pool of capital, investment grade, junk, long duration, short duration. And now we're seeing, you know, we're seeing that take form. So I think that's really the, I mean, that's the really the only moat that exists for the Bitcoin treasury companies. And so I think implicitly, I don't know if anyone has, you know, sort of said it out loud, but really every other But strategy, I think, is in a race to hit that scale to be able to access that market. Because, you know, you can't issue preferred equity with $100 million of collateral on your balance sheet. Because that's not interesting because what? Okay, you issue $20 million of fixed income, preferred.

It's not worth an invest. It's like a real big investor isn't going to take the time to look into it, to trade it. It's not liquid enough, you know. So you have to hit a scale to be able to access that, you know, those capital pools. and I think that's the real monopoly. That's the real differentiator for the, you know, one company versus the 100th company. So I've got like a million questions from what you just said there. Let's start with you were talking about these companies that are taking basically private Bitcoin public.

There's obviously 21 and Blockstreams, Bitcoin Standard Treasury Company, I think, that are about to go public. Have they gone public? I'm not sure. They're about to go public. And they're bringing a lot of Bitcoin on, like 30,000, $40,000. It's significant. But they're still a long way behind Saylor. Do you think these companies have any chance of ever catching Sailor?

Well, let me clarify that it was no, you know, taking the private Bitcoin public statement, there's no slight at all. No, not at all. The more Bitcoin in public markets, the better. And I'm a huge, huge fan of both Jack and Adam. I spoke actually, coincidentally, I've had fireside chats in Amsterdam with both of them, two separate years, you know, before any of this, you know, unfolded. So I'm really close to them and it's really awesome to see your friends winning. With that said, I think that I think sailors reached escape velocity. I say that, you know, in the position of a public company, we have aspirations to catch strategy.

Is that feasible? You know, I guess we'll see, but I think. you know, 600,000 Bitcoin lead, more or less is, you know, pretty, pretty insurmountable. And so we will see. I think the beauty of it is Michael is welcoming the competition and cheering for them and retweeting them. And, you know, I don't think I've really, you know, I'm young, but I've thought pretty deeply about any sort of precedent where, you know, a Titan of industry is openly welcoming, cheering, and platforming all of their competition. And I can't find a parallel. So that's really interesting. But no, I think, you know, the higher the Bitcoin

price goes, the more the moat solidifies, the more they can access the fixed income market, repeat, repeat, you know, rinse repeat. So yeah, I mean, you know, the really like the only way that I, you know, it's probably not a Bitcoin industry incumbent, right, that if there is a potential challenger. Like, you know, if Mark Zuckerberg took the orange pill tomorrow, could he, could he get close? Well, probably. I mean, Facebook has, you know, Facebook makes $100 billion a year or something, right? So, or whatever the numbers are. So, yeah, I mean, that would be interesting, right? If Mark Zuckerberg took the orange pill, fired up an ATM and said, we're going to issue $10 billion preferred, you know, that, that's, that's an interesting story. But I don't think that's

happening. I think the incentives aren't there. Just to, you know, go all in on Bitcoin when so many other things are happening, right? You know, AI and everything else. So I think, you know, if I had to put my money on it, I would say overwhelmingly that MSTR is in the lead, you know, just probabilistically 10 years from now, but we will, we will see how it plays out. Okay, so I do, I definitely want to talk about this new product that Saylor's just launched. But let's just hold that for one second, because when it comes to the premium on Nav, like you say, sailors at like 1.8 at the moment, You guys were at three. You were, how high did it get?

Did it get like seven even higher potentially? Is that the only metric that really matters when it comes to this? Or is that too much of a simplistic way of looking at this? I mean, it's definitely a metric. It's probably one of the more important ones. But I think often people are looking at this, you know, in a static form, right? So, for instance, what was it, a few months ago, meta planets, you know, let's say April. Right. Metaplanet had a premium to net asset value of three. And the share price was, you know, $4. Right. Metaplanet now has a premium to net assets of three and the share price is $8.80. Right. So, you know, that's three months. And the stock was, you know, remarkably overvalued by the traditional analyst perspective. And, you know, now it's the same, it's the same valuation, but it's repriced, you know, over 2x higher. And so I think, you know,

I say instead of one snapshot, I give you two snapshots, and I would, you know, pose an analyst or someone that looking, you know, someone from Wall Street to say, okay, well, how did this happen? Right. It's, it's repriced twice as high, but it's the same relative valuation. And so, you know, there is somewhat of a forward looking aspect here. You know, the static premium to net asset value isn't considering, you know, all of the future that's baked in, right? Equity's trade at, you know, afford expectation, you know, afford expectation of future. you know, cash flows is traditionally what, uh, what it says, but it's really just forward expectations, right? You know, there's a reason why Palantir trades at, you know, 100x revenue and, you know, Amazon traded at a hundred times earnings for 20 years and, right, it's, it's pricing in the future, not, not the now. And so, you know, a bitcoiner looks at strategy and they say, okay, well, they've generated 10 billion dollars of BTC gain. And I, BTC gain, not as, you know, the price of Bitcoin has gone up, but, you know, they've, the BTC dollar gain metrics they've put out, or the BTC yield is saying, well, what value have you generated net, no dilution? So that's,

let's, let's, you know, if you issued $10 billion of common stock at a 1x MNAV, you would have zero BTC gain, right? There's, there's no, you know, no additional value is generated or accrued. And so, you know, if you have a company that's generated $10 billion of value, that's worth something. And so the equity market's irrational and they price, you know, they put a forward multiple on that. And so I think that, you know, there's an entire industry of analysts that are trying to figure out what this is all worth. But that's sort of, you know, the Bitcoiners at the same time that, you know, everybody's investing in these equities. It's going up against the traditional world that has always looked at forward expectations, not the now.

Right. So like, you know, meta planet, we've, you know, this is rough numbers. So don't quote me. but when we first spoke, we had 100, 100 Bitcoin, I think. And we had like, post, you know, split adjusted. It was like,

you know, I think we've four X-star share count and we've like 100 X-star Bitcoin, right? And so it's like, well, how is that possible? And so, obviously,

analysts are going to just, you know, if they believe in the management and the execution, right? This whole flywheel and the net asset, per share accrual, it can work in reverse theoretically, right? If you're selling equity at a discount to your fair value, your net assets, net asset value per share can go down, right? So then

the whole thing works in reverse. And so, yeah, there's a lot of ways, you know, if the company has too much debt or they don't believe in management or, you know, various reasons, you know, maybe it's a Bitcoin bear market, right? There could be many various reasons that the, you know, premium to net asset value closes, goes to one or goes below one, right? And then there's another toolkit there. But yeah, I mean, I think that it's not, it's, there's not going to be one uniform answer, right? There's the scale of the company. Are you, uh, microcap, small cap, mid cap, large cap? Are you in the mag seven? Um, all those things matter. You know, there's some really interesting analysts in Japan that have come up with the, it's like a, they call it an MNAV,

uh, that's like a theory of MNAV decay. And they're saying basically, okay, theoretically, if you had 21 million Bitcoin as a company, what's your fair value MNAV? And the fair value MNAV at that at that Bitcoin holdings is one, right? Well, how could you be worth more than 21 million Bitcoin in Bitcoin terms? And so then you take it to the other extreme, well, if you held one Bitcoin, well, what's your fair value MNAV? Right? And so the other room for growth. And so there's like sort of a spectrum, right? The larger you get, the harder it is or, you know, maybe mathematically, the market's saying, well, you know, if you have 11 million Bitcoin, doesn't make sense to have a 2xMNAV? Well, that would be 22 million Bitcoin. So maybe not, right? And so I think

that there's sort of a, you know, there's different phases of the maturation process. But yeah, I think it's company dependent on the, on the MNAV. One of my questions would be, if say, 120K is the top for this Bitcoin cycle, like what do you think happens to MNAV across the board in a bear market? Because last bear market, we saw Saylor go to a discount to MNAV. Again, like, I know there's kind of orders of scale here and maybe that won't happen again. But I assume you'll be more volatile, both the upside and downside in terms of MNAV? Like, how do you see the market playing out in a bare market? Yeah, that's a good question.

You know, I think that broadly the asset class is a bit more mature, so that, you know, the profile of the just Bitcoin trading has definitely changed, right? Like last, you know, last bull market we saw straight parabolic and then, you know, a crash and then a rift again in the, you know, the fall of 2021. And then it had this huge epic crash. And this time, it's like we sort of like slowly reprice, we chop for six months. nine months. You know, I think, you know, checkmate, fellow, fellow Aussie is like probably the best, you know, sort of analyst these days around the chop consolidation thesis, right? Of just like, hey,

we repriced, we chop for nine months, everyone gets bored, and then we do it again, and we do it again. So the terms, like, you know, the big secular bear market thesis of like, okay, we're going to, you know, 70% down, we're going to call it, we're going to all go home for three years, pack it up. I don't know if I put weight into that. I don't, I actually don't believe that will happen. It might. obviously, but everything's cyclical, right? So I think there will be a bear market. I think that, you know, during that period, there will be pressure on MNAVs as there's pressure on, you know, valuations of any company during, you know, sort of a secular bare market. But I think it, you know, it'll be case dependent on whether, you know, various companies can, you know, manage that decline.

One is, are you levered right now? How levered? With what sort of debt, right? Do you have secure debt where your Bitcoin's encumber? where if it goes, you know, you have to liquidate the Bitcoin. Do you have secured, you know, unsecured convertible debt, right? Do you have a debt due in one year, right? Like if you have a billion dollar, if you have a $2 billion treasury and a billion dollars is due in six months, well, you know, that could be a problem, especially if, you know, the credit markets freeze up and you can't access, you can't roll that debt, right? So it will be dependent. Part of the reason Sailor-Lust prefers is there's no debt maturity ever. It's just a dividend, right? So that, in terms

of your flexibility, like one of the biggest things that everybody, all the, you know, analysts, you know, or the, you know, commentators, if you will, would flood, you know, create fear, you know, certainty and doubt around is, well, okay, the converts are coming up. You're going to have to pay off all that and sell the Bitcoin. And so, yeah, with the press, like, no, we're not selling actually ever. And so, yeah, I mean, I also think, in terms of the discount that Sailor traded, the MSTR traded at last bare market, I think if, I'm not entirely sure, but I think if you looked at the enterprise value, so you factor in the, the debt into the market cap that if you looked at just face value market cap to Bitcoin holdings, it looked like it traded at a deep, deep discount. But the reality was like, you know, at the bottom, he had a couple billion of Bitcoin and a couple billion of debt, right? So in reality, the discount wasn't as severe as it looks. But it's still, you know, the conditions were pretty rough, right? So I think for us, you know, we're focused on staying, you know, keeping a pristine balance sheet, maintaining maximal flexibility. You know, we don't want to be put in a tough spot.

So we've kept the leverage pretty low. If I, you know, off the top of my head, I think our Bitcoin to debt, you know, our BTC rating, as the other calls it, is like 16x, I believe, right? So we have like 100 million of debt. And yeah, it's 16.5x is our BTC rating. So, you know, we have 16 bucks of Bitcoin for every dollar of debt. That's intentional. You know, and I think, you know, when the opportunity to rise is, we will look to, you know,

increase that leverage ratio a bit. But yeah, it's going to be, yeah, there's going to be companies that trade at a discount. There's going to be companies that trade at large discounts. There's probably going to be a sort of a, you know, acquisition merger season, if you will, right? There'll be opportunists, you know, clear off some debt, buy the Bitcoin at a discount. You know, that's a very familiar world for the traditional, you know, financial Wall Street world. And so I don't expect that to change.

but that's at least a Metaplanet, that's not our intended strategy. We're pretty laser focused on just BTC. You know, if someone else wants to do the acquisitions and all that, then have at it. Like one of the reasons I like talking to you about this is because you're definitely a Bitcoiner first. Like you, before you join Metaplanet, you were already like very deep in this world. I think there's a lot of people who are trying to copy this play, who are kind of cosplaying as Bitcoiners because they see kind of of a gap in the market. From your just like pure Bitcoiner perspective, what do you think of this cycle so far? Do you think we are out of the sort of traditional four-year cycles? And how much

does people like Sailor play into that in the sense that they're kind of a buyer regardless of price? Yeah, you know, it's interesting to kind of, you know, be a come from the Bitcoin world, if you will, and then sort of enter, you know, the traditional financial world and kind of see it through both lenses. Yeah, I mean, to be honest, I, I, I can feel you can see that there are certain people that are more convicted than others. Yeah. I think investors can see that too. You know, the fact that, you know, we can, I mean, Simon was in the, not publicly, but he, he, you know, had some Bitcoin ML, Gawks and, you know, saw the last 10 years of craziness, the good and the bad, right?

and, you know, I had sort of been talking about strategy and Bitcoin and everything else for the past five years. So it was a pretty natural fit plug-in-play at Metaplanet. It was just like, okay, let's go, you know, turbo, turbo, hyperspeed. Everything is 10010% Bitcoin. I think now it's like, it's sort of the opportunistic phase. And I don't think that's a bad thing. I think it's perfectly rational. The real conviction or test is like, can you eat the 70% paramount? Right. If it comes, right? whether it's 60 or 50 or 40%, who knows. You know, but that test your conviction, right? I mean, outside of the Bitcoin price, like in the 15 months since I've joined Metaplanet, Metaplanet stock has fallen 50, 60, 70%, like three times, you know, maybe four,

depending on where you're measuring from, right? So, like, we're speed running a Bitcoin cycle like every few months, you know, once a quarter maybe. And so I think that, you know, that sort of not test your confess, because we didn't change anything. We continued on unabated. Nothing changed. We didn't waver. But for the person from the traditional world, right, if you're just stepping into this new, you're opportunistic, you know, that sort of move will test your conviction, will test your will, test your kind of resolve. So, yeah, I mean, I think there will be some wipeouts. I mean, the reality is, like,

as I'm a diehard Bitcoiner, but it's naive to say that every company that adopts Bitcoin will be a success. There will be failures. I mean, it's like every company that adopted the internet didn't succeed. Like, there was failures. So there will be failures. There will be a bankruptcy. Like, there will be, you know, it's not all good. It's not all sunshine and rainbows. It's a brutal, competitive world. There's a lot of sharks out there and Wall Street and everything else. So, yeah, I mean, we're not, I'm not naive to that. So, yeah, I mean, the times are good now. Bitcoin's around the all-time high. There will be a cycle. And so, I think that's what we'll separate the men from the boys, if you will. But until then, I think that

yeah, we'll see what happens. But, you know, I think we're really focused on staying disciplined and, you know, managing risk responsibly in a Bitcoin, you know, in a Bitcoin standard, right? And for us, you know, managing risk means buying as much Bitcoin as we can, staying de-levered and making sure we can, you know, weather any storm. Yeah. And one of the most interesting things in this world that's come out in the last, well, a few weeks, really, is this kind of pivot from some companies to go to, like, crypto treasury companies. I think it was Bit Digital, sold their Bitcoin

and bought Ethereum and the share price tanked. What's your take on that? I mean, I think I know the answer, but give me your take on that. Yeah, I mean, I don't, not to say I don't agree with it, because, you know, you're free to do whatever you want, but, yeah, it's clear to me that it was going to happen. And I was surprised it took as long as it did.

But at the same time, you know, there's a reason that I'm a Bitcoin maximalist. You know, there was, I turned down a lot of, you know, financial and whatever opportunities over the years because it was crypto related, right? And not Bitcoin. And, you know, I'm focused on what I believe in, which is Bitcoin. And so, you know, the XRP treasury company, I mean, to be honest, it's not clear to me that a lot of these things are commodity. And so if you, I know the SEC has sort of rolled back some stuff, but, you know, if you are capitalizing on the security, there's a different set of rules, at least in the U.S. But, you know, I guess that's another question. For me, it's pretty simple.

It's just like, you know, chart any of these things. And even if you're not a, you know, an analyst or someone that likes to chart things, just look at any of the altcoins denominated in Bitcoin. Right? Like, it's pretty clear. Yeah. Right? The past couple days, I've heard, you know, on the Ethereum Treasury Company, someone, well, someone said, well, Dylan, you guys aren't getting a yield on your Bitcoin,

and they are. And I was like, yeah, well, you can get a yield on your Fiat. It's still underperformed Bitcoin, you know? So, like, you know, the point is, like these, the crypto companies or whatever, like, or the crypto, alternate cryptocurrencies, the altcoins, something like ETH staking yield, like, it's just recycled dilution. The reason that ETHBTC has gone down only since the merge with a dead cat bounce in the last week is because of, you know, people realize that there was like a fundamental shift in the

protocol. It's not nuclear weapons grade like Bitcoin is. And it's a, you know, it's a VC bet. It's a venture bet. It's a tech. It's like Tesla. It's a, it's a, it's something with, you know, a team in charge. It's not just, it's not a kind of an autonomous protocol like Bitcoin. So yeah, I mean, I wouldn't be comfortable doing, you know, building a lasting foundation on any on any, on any all coin and obviously you agree there but i think it's more so the you know there was obviously going to be some copycats it's funny that like the ethereum people in general or the crypto people you know religiously mocked michael for years you know like he's buying the top what is he doing he's averaging up he doesn't understand this and now they're all like it's finally after

looking into it all in the last two weeks they've realized that uh whoa the public capital markets you know. So it's a funny, you know, change of events, I guess. But I wouldn't say I'm shocked. Yeah, a 7% yield when you're down 50% on Bitcoin doesn't sound like a great trade. Yeah, yeah, enticing. What if you could lower your tax bill and stack Bitcoin at the same time? Well, by mining Bitcoin with blockware, you can. New tax guidelines from the Big Beautiful bill allow American miners to write off 100% of the cost of their mining hardware in a single tax year. That's right, 100% write up.

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is. Do you want to explain what stretch is? Yeah. You know, I, uh, I didn't see it coming. Um, I should have seen it coming. I, I, you know, I actually, I put out a few, uh, sort of thoughts or ideas the past couple weeks, um, you know, that I think the, if we were, if we kind of take a step back, people are, are talking like Bitcoin treasury companies are a new idea. It's a new model. The reality is, like, in the kind of the long arc of history, Bitcoin treasury companies aren't really that unique, right? Like, if we think of the model of like the central banks of the past or the banks of the past, right, what are you doing? You're capitalizing on a hard asset, gold, and you're issuing liabilities against that, right? And as, you know, fiat or, you know, gold-backed IOUs or whatever it was.

But if we think of all of the reasons that these, you know, financial institutions of the past, failed, you know, it was basically, you know, an asset, it was one, these are fractional reserved banks, right? So they, you know, they would issue all this, all this, you know, these liabilities and money they didn't actually have and just hope that they wouldn't get bank run. But also, you know, in that process, there, you know, they were a lot of these, the gold, you know, the gold banks of the past, they were issuing the liabilities were redeemable in gold, right? So not only were the liabilities callable at any one point, but they were were in the hard asset, right? And so when there was any sort of crash or financial crisis or

whatnot, all of a sudden, you know, and there was a rush to gold, all of a sudden your liabilities, you know, are much more valuable and, and there's a run on the bank and, you know, you're toast. So the reason we got to fiat in the first place was because, you know, the hard asset treasury companies of the past failed spectacularly over and over and over again. So like if you had to think, like if you were a monetary theorist of the past and you said, okay, well, let's design a financial institution that can't fit, you know, that solves every problem that we, you know, faced or faced today, you know, back, back 200 years ago. Well, you'd want the gold to teleport. You would want there to not be able to mine any more gold to devalue your assets. You would want

your liabilities to not be callable, to not be able to be run on your liabilities. You'd want them to be perpetual, you wouldn't want them to ever come due. And you'd want the currency your liabilities are denominated in to be printed forever. Right? Like theoretically, if you had to optimize like a perfect bank of the past on a gold standard, that's what you'd want. Right. And so when you think of what Michael is doing, if you think about what strategy is doing, they're capitalizing on Bitcoin, obviously. We know that. It's better than every way than gold. We know that. Bitcoin and talking point 101. But the real interesting thing is the, you know, the engineering and innovation on the liability side. You know, and they, and they've kind of tested this out all in public, right?

If you think about the maturation of their liability profile, they first, you know, MSDR first issued convertible bonds. They did a couple converts. They did a senior note. So just a straight bond. They issued that through a subsidiary. So they put, you know, 100,000 Bitcoin in a subsidiary. They issued a bond against it. It was encumbered collateral. You know, that Bitcoin was, you know, first claim before all the equity was secured, right? They went to Silvergate and did an over-collateral. Lowe Lone and everyone in the bottom of 2022 is saying, Seller's going to get margin called. He's going to get margin called.

You better sell your yacht, Michael. Right. So they tried everything, right? And they, you know, did more converts in 2024. And, you know, the perpetual preferreds now, I think this is sort of kind of the final evolution of what theoretically, the best liability profile for a hard asset treasury company financial institution looks like, right? You have the perfectly engineered asset Bitcoin, but on the liability side, you want something

that's perpetual denominated in a bad money relative to what your asset's holding. It's going to devalue forever. That can't be cult. Right. And so, you know, strike and strife were interesting. You know, strike is essentially a tokenized convertible bond. Strife is, you know, a perpetual Bitcoin dollar swap that has a duration of, you know, a thousand years.

But, you know, stretch is really interesting, right, because, you know, everybody. there was that report from like Bernstein, I think six months ago. And it was like strategy wants to become a neobank. And everybody interpreted that like, oh, they're going to, you know, acquire a bank. And they're going to become, you know, get a commercial banking license and, you know, service deposits. What they did is actually much, much better. Being a bank is a total nightmare. You know, infinite regulatory hurdles and red tape.

There's a limit to what you can do on the balance sheet. There's, you know, it's just, it's a total nightmare. And so instead, you know, it's like the stretch is essentially they're issuing a stable coin. It's a, you know, sort of a neo stable coin. That's perpetual, right? That's, and, and so I think that it's a pretty genius feat of financial engineering. I think that, you know, the total addressable market for stretch is huge. It's like every dollar in money market funds.

I understand that money market funds are a technically different thing from a regulatory perspective. And maybe there's just a lot of. of money that's siloed in those accounts that won't leave to go to a brokerage account. But like, how many, you know, how many bitcoiners do you know or people you know? We just, our conversation just before this, right? You're talking about, oh, if you have extra cash in a brokerage account, what do you do with it? Right. You know, stretch is short duration. It's a cash equivalent essentially. I understand it's technically different, right? But yeah, it's, you know, the theory, there's this trilemma problem in international economics. I posted about it yesterday.

I saw this tweet. Can you explain this trilemma? Yeah, so essentially this is a sort of kind of an international economics problem, you know, theoretical, where you can only have two of three. You can have an open capital account. You can have a fixed exchange rate currency or you can have control of your interest rates. You can't have all three, right? And so, you know, like for instance, the U.S., we have an open capital account. we control our interest rates, but the dollar floats, right? You know, something like China. They, you know, I guess it's debatable whether it's, you know, they truly have an exchange rate peg. They have bans, right? But they

control their interest rates. They control their, the kind of the price of their currency, but they have a closed capital account. Right. And so strife, strike, and stride are essentially, I know this is not a, you know, they're not a sovereign issuing their own money, but if you can sort of, you know, pick up what I'm putting down, you know, these are monetary instruments. And so, right, obviously there's free capital mobility. And in terms of monetary, what monetary autonomy means is, are you setting your own interest rate? And so with Stri to Strike, they set their own, they set the interest rate. It's fixed, right? The dividend is, it's fixed in perpetuity, but the exchange rate floats. And so what's, what stretches is, is they just decided to flip it.

And they said, okay, obviously there's an open capital, there's, you know, free capital mobility. But we're going to fix the exchange rate at 100 or, you know, between 101 and 99. And we're going to let the interest rate float, right? And so this is a, this is basically a market, you know, there's a, they're going to decide the stretch rate every month. But essentially, this is going to be a free floating, essentially currency that exists. And I think it'll be, you know, it'll have a premium to. T-bills because the U.S. is a money printer. But yeah, I mean, this is

quite, quite the financial engineering instrument. I mean, it's really, really impressive. But with all their products, they're covering every side of this triangle. Yeah. Well, not C, right? They always have an open capital account

or, you know, capital mobility. You know, but like for another example of this at the sovereign level is, you know, Hong Kong, right? They have an open capital account, right? And they manage the price of their money, right? It's pegged to the dollar. But they don't have monetary autonomy, right?

They follow whatever interest rates are set by the Fed. Right? So this is sort of kind of an age-old question or theoretical choice for sovereign nations. And so, yeah, it's interesting that I don't think, I think people like, like, your checkmate and Odell. and kind of they said, oh, well, yeah, you know, Saylor will create a stable coin. You know, Chuck and I had a conversation in 2022 where we said, you know, really the, from an engineering point of view, the biggest, you know, the golden goose of crypto generally, like what all of the Ethereum defy engineers were chasing for all of this time, you know, for years was, okay, how do we make a stable coin that's, you know, decentralized? you know, that that's not, you know, and I understand that this is centralized. It's listed on the NASDAQ by a, you know, Delaware, a Delaware company. But, you know, the interesting thing is that no one can really figure it out. I understand it's not a decentralized oracle and it's not this like, you know, Cypher crypto anarchist, holy grail that, that, you know, they were intending for. But, you know, all of crypto has been spending a lot of time to try to figure out how do we make a stable coin.

that's not, you know, some T-bills or money in a bank account that's, you know, sitting in circles vault or tether, right? Like, how do we do this? So they tried die. They tried all these different options and none of them caught on. And, you know, Saylor just listed on the NASDAQ and none of the crypto people that have been trying this for 10 years have even said anything about it. No one even knows. So, yeah, I mean, I think that stretch might be the most in-demand product of the preferreds, right? Because with strike and strife, there's a very high interest rate, but you're taking what's called duration risk, right? And so it's like the reason that if, you know, this is just sort of some finance jargon, but, you know, if you have a one-year bond or a T-bill,

or you have a 30-year bond, right, a 1% change of interest rates for a one-year instrument, doesn't change much, right? Interest rate go from 5% to 4%. the value of your money doesn't change much. You get less interest, but the value of your money stays pretty much the same. If you put money in a bond, you know, at 4%, and it goes, or, you know, let's say 2%, and it goes to 3% or 4% the yields, the value of your money you put in collapses. This is what we saw in 2022, right? The whole, you know, the Bank of England and the, you know, all of these bond markets were imploding because interest rates went from 1% to 4%. And the bond market got cut in half. And, you know, non-financed people were like, what do you mean? The bonds fell by 50%?

That makes no sense. Right? But that's just kind of, how do these things work? So, you know, with strife and strike, these are long, long duration instruments. So, you know, people last week, they bought at 125 and now it's at 116, you know, and obviously long-term investors, they understand this and they understand where this is all going and they're not too worried about that, right? But the beauty of stretch is that there's no duration risk. I mean, I don't, not to say no duration risk, but there's minimal duration risk. It's a perpetual instrument, but because this interest rate's floating and not fixed, it's going to be a stable price. At least, you know, this is the target for Sailor and team. So, yeah, I mean, I wouldn't be

surprised if we saw a huge, huge demand for this instrument. They're starting, you know, they intentionally priced the interest rate at nine. I think they know that that's extremely attractive. And so, yeah, I mean, another tool in the arsenal and, you know, money market mutual funds and, you know, cash equivalents and stable coins, that's, you know, that's the real, that's a real big game, you know, it's also, I think it's a bit ironic and a little funny that the, you know, the sort of the meta of crypto, the crypto industry has been stablecoins, right? Everyone's, what's the real use case for this? Okay, yeah, Bitcoin, but that's for boomers, that's boring. What's, what's the real use case? Where can I make money on this from this industry,

you know, none of the Ethereum, Mercilanas, or none of this is interesting, but stablecoins have a real use case. And, you know, Circle's IPO was a huge success, and now everybody's sort of looking, okay, well,

where's the next sort of opportunity here? MSTR dropped a stablecoin at 5 p.m. and no one even said anything. It's just the Bitcoiners on Twitter, right? So it's pretty ironic, in my opinion. It should be much, much bigger story than it actually has been so far. especially when Circle and Tether have both been told they can't offer yield on their stable coins

and then Saylor comes out with this product that is offering at least at inception 9%. I would like to get your opinion on where that dividend rate will go. But before we do that, we've talked a little bit about this. But for anyone who's not been following this closely, who didn't see Saylor's presentation, like how does he retain the peg to close to $100? Yeah, so there's a few options. You know, above 101. I mean, one, they don't have it yet, but they're going to tap any,

TM to this, meaning that if the price rises, they're just going to issue more securities. They're going to print more stretch, STRC, and they're going to sell it on the market so they can drive the price down. They also, they have a call in this at 101, right? So they are legally, they're allowed to basically, you know, take your stretch and give you $101 and in return at any point. And so with these other preferreds, I mean, so the preferred market's interesting. right because for bonds you know there's five-year bonds 10-year bonds 20-year bonds preferred equity is

interesting because there's a concept called there's perpetual instruments right and so it's perpetual means forever right and so you know in the history of finance this perpetual preferred instrument isn't used much or too popular but if it was issued at all right there was always a call in it meaning that if I'm a company company A and I want to issue preferred equity and I do and I issue perpetual preferred equity with an interest rate right that means I'm on the hook for it forever so any rational CEO or a management team says okay well if the price rises or you know our conditions change and we don't need the financing anymore we want to call it in right and so perpetual preferreds were always perpetual in name but not actually right and sailor's

innovation was like no no no no we want to make this the best credit instrument possible and we're accumulating bitcoin and our belief is bitcoin appreciates relative to fiat forever so we're not going to give you where there's no call, right? And so this, like, sort of melted a lot of, you know, Wall Street minds when they said, no, no, no, we don't want the call, right? Because the call hinders the value of the call option and strike and everything else. But with Stretch, unlike the other preferred, they do have a call. So they can call it in at 101, right?

So that's, they have ways to sort of, you know, kind of manage the upside. They can also lower the interest rate, right? So if you, if Stretch is at 101, 101, 102, it's constantly, you know, higher and, you know, they are not selling the ATM for whatever reason on stretch, they can lower the interest rates and they can do this once a month. Conversely, on the other side of this, what if it falls, right? The real worry by some is, you know, creating sort of a synthetic stable coin as well, the downside, right? What if, what if, you know, there's sellers or short sellers or people get scared and I'll dump that once? And there's a few tools. One is, you know, the people that are comparing

this to like previous Algo stable coins or whatever, it's just, it's just, total joke. Like, it's totally, totally different. One, because if the price of stretch falls to $95 or $90, they're not selling any Bitcoin. There's no, there's no, like, force-reedeme function here where everybody's going to all panic at once and take all of the collateral. Like, it's, like, that's not going to happen. They don't, they're, they're not going to sell the Bitcoin. There's no redeemability for the user or for the owner of the preferred. They can't just take the Bitcoin and run like you could with some crypto, you know, science experiment. The second is that, you know, if it falls, they're just going to raise the interest rate, right? And then that,

if their intention is just keep it at 100 and you have that, you know, sort of trilemma, right? Well, they said, you know, we have open capital account and the exchange rate's going to be fixed at 100 or whatever. So if it falls and they said, you know, they acknowledge, hey, we're going to raise 500 million in the IPO. If we sell it at 100, it's going to be a 9% instrument. If we sell it at 95 or 90, it could be a 9.5 or a 10% instrument. So that means, like, it could IPO. I expect it to be at 100, but it could, like the previous preferred instruments, it could open below the IPO price.

It could open at 85 or 90 or 95. That's not out of the question. So what does that mean? It means that, you know, in a month, they're going to raise the interest rate to 9.25% or 9.5% or whatever they raise it to, right? And theoretically, that will draw in capital. So, yeah, I mean, I mean, I think that there's a, you know, there's a ton of runway for these preferreds.

I think strategy is really looking forward to. They mentioned it in the presentation to let these converts roll off. And then you have really like a pristine, pristine capital structure. I mean, it already is a pristine capital structure. You have 70 billion of Bitcoin and, you know, 10 billion or so have combined liabilities. But 50% of those converts are already through the strike price. It's already basically quasi-equity that hasn't converted yet. Right. So, yeah, I mean, there's a ton of runway for these preferred. I think there's a huge, huge, untapped demand for, you know, dollar equivalents backed by Bitcoin.

Unlike previous sort of Algo Stables, if you will, or synthetic over collateralized stable coins is probably a better term. You know, this is like 7x over collateralized. It's like, you know, okay, you issue a few billion dollars preferred, but it's 7, 8, 10x over collateralized. You know, that's unlike anything that's ever been tried and tested in crypto before.

Why? Well, because if you wanted to make a 7X over collateralized stable coin, it's super capital and efficient. Like if you're familiar with crypto defy or whatever, the Ethereum defy complex created die. Die, D-A-I, right? And so decentralized autonomous something. I forget exactly. But that whole idea was, let's create a stable coin backed with crypto collateral. And they first did it with ETH. But the problem was, nobody wanted to put their eth idle to back a stable coin for no reason, right? And so like, it was really capital and efficient.

So what ultimately resolved, what ultimately happened with die, the product? Well, it ended up being like 50% collateralized with USDC. The decentralized algorithmic stablecoin on Ethereum was backed by the centralized stablecoin because it was more capital efficient to just back it one to one.

Yeah. Than to like take a bunch of Ethereum, and, you know, and so, like, if you wanted a real, real safe stable coin on Ethereum, you could have theoretically backed it 10 to 1 with ETH for every, you know, every dollar of the stable, but nobody wanted that because it was capital inefficient. So there was no product market fit for this. And so that was the same sort of problem with all the other synthetic stable coins, you know, that existed.

Strategy is saying, no, no, no, you know, this is going to be senior to the common equity, senior to, you know, two of the preferred instruments. And ultimately, once these converts roll off, it'll be the second. in the capital structure, right? So you have a supremely over collateralized stable coin that's probably going to be paying you, you know, five, six, seven percent interest. And so, you know, while the rest of crypto

tries to sell you on, you know, holding a stable coin with no interest, right? So that's the, you know, I think it's not really a close competition. And, you know, it's also, it sort of inverts the model. All the stable coin companies are issuing stable coins, not paying you interest, and then collecting the interest for themselves.

Strategy is saying, no, no, no, no, we want the liability, and we're going to buy Bitcoin because that's what we believe in. Which I, you know, if you had to say, Dylan, would you rather sit on, you know, would you rather sit on a bunch of cash that, you know, other people have a claim to, but you collect the interest, or would you rather be levered long Bitcoin forever? I would choose a second, right? I would want to be levered long. So I think it's a much superior model.

Never mind, we're not even talking about the nightmare of compliance and KYCAML and money laundering and blah, blah, blah, blah, blah, blah, that you have to deal with as a stablecoin issuer. So, yeah, I mean, it's like the best of both worlds. It's like you, you know, it's sort of an entrance into the quasi banking system slash stablecoin world without servicing any, you know, true like, I mean, they're servicing customers. They're not servicing customers. They're servicing investors, right? And that's, you know, that's a much, much better world to operate in, in my opinion.

Yeah, I totally agree. And I assume this is going to be massively, the demand is going to be huge for this. What happens to the interest rates there? Because I assume the Fed's fund rate basically sets a floor that it likely won't go below. But do you see this trading down to like 5, 6 percent? So the beauty of it is the floor is actually the Sopher rate. Okay. So the lowest interest rate will ever go is actually the Fed funds rate.

But yeah, I think it'll be market-driven. to be honest, I think that, you know, there's, I believe, and I have to read the documentation more clearly, but I believe the lowest, the most they can lower the rate per month is 25 basis points. It's like that difficulty adjustment. It is, right? It is like the difficulty adjustment. And so, yeah, there's, you know, once a month they're going to declare the stretch rate. They're going to pay the dividend. You know, I think that, you know, and also anybody that's like, you know, making a fuss about the dividends, you know, they have to pay is like, you know, you know, totally just missing the scale of this all, right? You know, they can raise, they have raised the dividends they need to pay for in a quarter in an afternoon of trading and no one noticed, right? Like strategies, common equities, supremely liquid. So that, you know, that doesn't worry me at all, to be frank. But, yeah, I think the interest rate on the, on stretch probably, I mean, ultimately settles, you know, just right above the risk-free rate, probably in the long term,

with a bit of a spread just for the the you know any perceived credit risk um but yeah i mean right probably i would i wouldn't be surprised to see six percent in the you know or like like you know 200 basis points above the fed funds rate in the near term you know or the short medium term um but you know probably should be lower than that you know to be honest right there's not there's not another issue where a fixed income that's this over collateralized that's this transparent um you know everyone else that's borrowing money doesn't have it i guess you know the big tech companies have the money and they're just borrow it to get some leverage. But most of the borrowers in the corporate credit market are companies that need the money that don't have it.

Right. And they don't have collateral. They have, you know, future discounted cash flows to pledge. Right. So, yeah, that's a, that's the real innovation is that they have the money. They don't need it. They're just doing it to get some operating leverage. And the collateral is transparent and homogenous. So, yeah, it should be a pretty low interest rate, to be honest. And, yeah, short duration, too. You know, we're not even talking about what happens 12 months from now when, you know, sort of a patsy Fed chair is put in. That's if it takes 12 months.

Yeah, true, right? You know, and a Fed chair resigning from, you know, decree of the president or prime minister is sort of what happens in Banana Republics. And I would implore anybody to sort of look at what happens to, like, the bond market in those scenarios. You know, ask someone from Turkey what happens when Erdogan fired their Fed, their central bank chief, you know. So, yeah, I mean, this is all very, very pro-BTC. I say that, you know, not like not political or social or whatever, but just purely from like a flow's fundamental standpoint. there's a lot of people in finance that are saying, oh, well, if that happens, then I really

wouldn't want to own bonds. It's like, well, yeah, no kidding. Like, where have you been? So all of this is, you know, it's that the tailwinds are supremely bullish for strategy and for, you know, for Bitcoin and for Bitcoin treasury companies. All right. Last question on Sailor, because when I was watching his presentation of Stretch, he was talking about something else that I thought was interesting, where he was talking about equitizing the convertible nodes. Why would he do that? Is that purely just to de-leverage the company?

I think it's because they're sitting senior to the preferreds. So right now the preferreds, you know, outside of the fact that the convertible bond guys are sort of, I guess it depends where the strike is. But, you know, a simple model is when the price of your stock goes up, they're shorting. and when the price of your stock falls, they're buying, right? And so there's never been a serial issuer of convertible bonds like MSTR, partly because there's never been a collateral

or abuse of proceeds as strong as Bitcoin, but more so because, you know, you do a convert or two or three. And, and I mean, it's basically like, you know, I guess the equivalent, I could, this isn't a perfect metaphor analogy, but it's like, it's like, it's sort of like, you're squeezing the volatility out of your stock, right? It's like that, that's what their job is. is, you know, they're, they're gamma trading, which not to go into the weeds, but they're essentially, like, neutering the volatility. They're, they're dampening the volatility intentionally, right? And so, strategy's business model is like, we want to be hyper volatile. And so part of it is, one, I think for the converts is there's a maturity cliff. So if your stock isn't high enough,

then you have to come up with the money or, you know, refinance and do another convertible bond. So that's, that's annoying. It's like sort of a flood talking point. Two is, the gam, you know, they're, they're gamutrating it. So they're stripping the volatility and dampening the volatility. And then three is, it sits senior to the preferreds. Right. So, so there's a, you know, strategies come out with a risk model that says, okay, Bitcoin has a volatility of, of, you know, X, and we expect the return profile of Bitcoin over the next 10 years to be Y. And, you know, there's, you know, this much collateral, there's 10 times the collateral as there is the debt. And so what's the probability of, you know,

your debt position being under collateralized. So if you own this preferred stock, what's your probability of us having less Bitcoin, you know, than we have of debt outstanding, right? Or, you know, not insolvent, but, you know, you're in a bad position. And so when you do the math now, those converts, you know, those $8 billion converts, it means that there's a lot less collateral left for all the preferred equities. So I think when they want to equitize the convertible bonds because it basically allows their preferreds to be that much more collateral. And, you know, essentially it creates a more runway to issue more preferred is, is really what the unlock is there. That makes sense. Okay, cool. So then to kind of close out with this, what do all these products that strategy are now issuing mean for the other treasury companies? So like for you at Metaplanet, do you see this as we have to do something similar or we get left behind?

You know, that's an interesting question. I mean, I think what it means is that, you know, for Bitcoin in general is that the asset is maturing. And this is a way, you know, if Bitcoin is going to eat the world, and that's what kind of a lot of us came to the conclusion of five years ago, then it's not going to be everybody just buying Bitcoin on cold cards. There's huge pools of money that can't access the asset. And so, you know, common equity, just, you know, equity on the stock market was just the first pool. And, you know, really the bigger market in terms of exposure is the credit markets, right? So the preferred equity, there's debt, you know, the sovereign bond market is much, much bigger, right? And so if Bitcoin is going to entrench itself in the financial system, it has to get to all these, you know, different pools of capital. So I think that's the bigger idea. In terms of like the competition between the treasury companies, I mean, the preferreds, not only just having preferreds authorized, never mind having them issued, but having them be issued, liquid. and a sufficient scale is a whole other story. And I think that, you know, kind of circling back to what we said earlier, like that's really the, not the only true moat, but one of the strongest, right, is, you know, I think of preferred as, you know, for strategy is in two ways. One, it's sort of, it's offensive, right? We're levering the balance sheet.

We're buying more Bitcoin. We're increasing Bitcoin per share. We had the potential to buy back our stock. It's Saylor said, hey, if MNAV gets to. one or below or maybe even above one. I'm not sure if he said that, but we can buy back, we can issue stride and buy back our stock. He said that, right?

And so if you're a short seller and your thesis is, okay, well, they're just, you know, they're sort of dribbling in stock every day and let's just front run them and, you know, play this end up compression game. And all of a sudden, even if, like, you know, strategy scale, even if sailor goes and buys back 100 million of stock, which is not that much for strategies $150 billion scale, right? But all of a sudden, those flows go the other way.

And so someone like a short seller has to unwind and get out, right so it's it's the the preferreds are both like a offensive tool and it's defensive right like i i think of preferreds is like it's like an mnav defense mechanism right it's like okay well if if if the you know the short sellers and the you know the the the arbitrages are really really trying to short sell like like jim chanos right his whole thing it's like if you listen to jim chanos he's not he's not just a a belligerent hater of bitcoin or sailor far from it he's just saying he's like actually I get Bitcoin or I don't know how much he you know quote unquote gets it but he's like look I get the trade

I'm just you know playing the spread game right and kind of like dancing in and out and so with the preferred it's like it gives it gives sailor or you know the operator sort of an option to okay we're going to continue to stack Bitcoin every week because that's our mandate and that's what we said we're going to do and that's our business but at the same time we're not going to put the pressure on the common shareholders you know, one of the kind of the misconceived notions that, you know, people had is the convertible bonds, right? Like, people see the leverage as something that's positive for the common. And that could be true, right?

You know, increase the leverage, you know, a billion dollars of Bitcoin, especially, like, you know, a couple years ago, makes a material difference in the market. So there was all these reasons it was supportive. But under the hood, you know, when they came out and says, okay, we're going to raise a billion dollars of convertible bonds. under the hood, you know, someone like myself a few years ago or, you know, analysts or commentators would be confused because the stock would drop. It's like, wait, they just raise a billion dollars

to buy Bitcoin and the stock went down. I was like, well, yeah, the convertible bond desk just shorted $500 million of stock after trading, you know? And so the reality was like it's sort of paradoxical. It's like, okay, well, we're going to lever up because we don't want to sell some common, but essentially it's like you're selling 50% of the stock.

You know, it's like, it's like a, It's like half the sell pressure as you would get by just selling straight equity. So the preferreds are totally different. It's a it's basically, it's a completely different profile of investor, right? And so, you know, they're on the journey with you. They're, they're, contributing. They're aligned with your, you know, your worldview and, you know, the 20-year vision. The convertible bonds are not the same. So I think the preferreds, you know, how I think of them, in the treasury space, I think it's definitely, you know, the credit market, Bitcoinizing the credit market is a much, much, much bigger, you know, bigger fish than equit, you know,

Bitcoinizing the equity markets, right, or equitizing Bitcoin. It's just a much, much bigger game. The pools of capital are huge, never mind, long duration and short duration, right? And so, yeah, I mean, I'm a big fan, you know, I think from a financial, engineering perspective, it's absolutely fascinating and historic. And I think that, you know, that's the real, you know, yeah, that's the real golden goose is can you get those figured out? Can you get those live? Can you get those liquid? And can you hit a scale, you know, where whether it's your local market or globally, that, you know, you can, you know, sort of really carve out a, I don't know, maybe a monopoly or a quasi-monopoly, you know, in one of these.

markets because I think, you know, anyone especially in the U.S. that's saying, okay, like, now we want to issue preferred stock, you're going to have to issue it at a spread to sailor, right? Because sailor has more Bitcoin, it's more liquid, he's more established, this seasoned issuer, he's been on the NASDAQ for 35 years. He's been at this game for five, right? So, like, if you want to issue perpetual preferred like a strife and you're in the U.S. on the NASDAQ, well, you got, he did it at 10. You got to do it at 12, right? So I think there's, like, this is the benchmark. This is like almost like the Bitcoin risk. rate, if you will. And, you know, obviously all those instruments are different. But, yeah, that's

how I think about it. I think, you know, the fixed income markets in general are, you know, definitely in need of a revamp or, you know, kind of a revitalization, you know, and Japan notwithstanding. So it's an exciting time. It really is. That's really interesting. I've not heard this described as, like, an MNAV defense mechanism. That makes a lot of sense. I think I've been mid-curving the Treasury plays to a certain degree. This has definitely helped me. I've really enjoyed this, Dylan. Thank you for giving me the time.

Where do you want to send anyone to find out more about you and MetzPlanet? Yeah, you can, well, one, Danny, I appreciate you giving me the platform. It's been too long. So it's great to catch up. We have to do it in person next time. For sure. But, yeah, you can just, you can find me on Twitter or ex-Dillan Lickley. underscore or you know for meta planet we also on X or you can just go to metaplanet.jp.jpany

japanese domain if you want to you kind of see what we're doing. So yeah that's I think that's that's all I got. All right cool. Thank you Dylan and definitely in person next time. I'm sure I'll see around at one of the conferences at some point soon but I appreciate you man. Thank you. Indeed. Cheers.