Strategy CEO reveals the company's approach to selling bitcoin
00:00 Speaker A On the Q1 earnings call, you alluded to using the full range of capital tools and that included the disciplined sale of Bitcoin. and I think uh, you know, Sailor famously said that he would use a small sale of Bitcoin to inoculate the market, right? 00:16 Speaker A You said you were going to do it weeks before you did it. You sold a simply 32 Bitcoin, a very small amount which obviously was bought back in much greater size immediately. 00:26 Speaker A But you planned it, but the, I guess naysayers are saying that it was a forced sale that indicates that you will continue to be a forced seller. So how do you dispel that myth? 00:37 Speaker B We said we were going to do it, right? We have $52 billion worth of Bitcoin on our balance sheet. At some point in time, we have to put it to work. 00:44 Speaker B Uh and to put it to work, one option is is to sell it, right? And so we sold less than 1% of 1% of our Bitcoin. 00:53 Speaker B Uh and we thought two and a half billion dollars or two and a half million dollars, 32 Bitcoin was a reasonable amount. Um, why did we do it? One, to inoculate the market. 01:01 Speaker B What does that mean? is is to indicate to all classes of shareholders and stakeholders a strategy that we're willing to sell our Bitcoin, right? 01:09 Speaker B Two, uh to test our processes. and three, to to give ourselves the opportunity for future tax loss harvesting. Right? It's really that simple. 01:18 Speaker B Uh, we did not sell it because we needed to sell it to meet our cash dividend obligations of $100.5 million. If we did, we would have sold a lot more than two and a half million, right? And and so there there's there's talk out there, they did it to satisfy the dividend. 01:32 Speaker B No, we didn't do to satisfy our dividend. We did it to to one, inoculate the market, two, test our processes, and three, be able to capture future tax loss losses. That's the reason. 01:43 Speaker A I mean, isn't satisfying the dividend like $1.6 billion a year or something? You sold 32 Bitcoin. 01:49 Speaker B Yeah, it's $1.7 billion a year. We sold 32 Bitcoin. By the way, $1.7 billion a year sounds big to most people, right? 01:57 Speaker B Our equity, which is primarily how we satisfy our dividends, trades about $2.7 billion a day. Right? 02:05 Speaker B So, it would take about four hours of full selling into the market of our equity, right? Obviously, we didn't wouldn't do it in a four-hour window, but that's four hours of a day of trading volume to satisfy our $1.7 billion cash dividends. So, it it's really not, you know, I I don't, I don't lose sleep at night wondering how are we going to pay our dividends. 02:24 Speaker B That that's like sort of really low on the list of risk to the company. 02:26 Speaker A Right. and you've still built a USD reserve up that at one point gave years of dividend coverage and I think the same critics are screaming loudly because you closed one of those convertible notes and that uh cash reserve went down, even though you raised another 100 million this week. 02:40 Speaker A So, is this something you're doing to batten down the hatches? Is it a signal to the market? Do you need a cash reserve or is it just something the market's demanding? I mean, why the cash reserve? 02:51 Speaker B Yeah, so so first, why the cash reserve? Mathematically, I do not believe I need a cash reserve for the reasons you mentioned. 02:56 Speaker B Now, from a risk perspective and to satisfy those sort of four different stakeholders, our common, our preferred, our Bitcoin and our debt holders, especially our debt holders, right? And our shareholders, they feel that it's less risky to have a cash reserve. 03:09 Speaker B Right? Like what if Bitcoin was to crash by 90%? We would have two and a half years or whatever it is, right? 03:14 Speaker B So, we took the $2.25 billion down to north of 700 million. Why did we do it? Because at that point in time, that was the best way to buy back our converts of one and a half billion dollars. 03:22 Speaker B Look, we've also said we're going to bring it right back up, right? And we've done it $100 million at a at a time so far last week, right? Uh, and by the way, we also bought $100 million of Bitcoin last week right after we sold 2 and a half million. Nobody talks about the purchase of a million, 100 million. 03:36 Speaker B They talk about the sale of two and a half. But it's a, we'll bring the cash dividend, well sorry, we'll bring the cash reserve back up and refresh it over time because it satisfies our debt holders and our shareholders. 03:47 Speaker A The criticism there has been that this one week's action has been dilutive to strategy shareholders, but if you obviously zoom out over any meaningful period of time, you know, that that number has only gone up. So how do you address that? 03:58 Speaker B Every year since the be in and look, I, we take week-to-week actions, but we think strategically year-to-year and really long-term we think in four or five year time horizons, right? And and so, are we increasing Bitcoin per share every single year? 04:10 Speaker B The answer is yes. The best year was 2024, we increased it 77%. Last year, we increased it 30, 23%. This year year to date, we've increased 12%, right? And we went from 13% down to 12%, right? 04:21 Speaker B And and so there will be weeks that we're going to be taking actions that reduce Bitcoin per share and weeks that we increase. The big question is, you know, every single year are you increasing, right? 04:29 Speaker B Like if you look at the capital outlays of a company, right? Like that's why you have capital investments and operating expenses, right? Like if you were to, if you look at a cash flow of a highly capital intensive company, you'll have weeks and months where the cash flow dips, weeks and months where it increases. But the question is over the course of the year, are you cash flow positive? 04:47 Speaker B And really for them, maybe you're making a capital investment that's $500 million in one year, right? And you see returns of one and a half billion dollars over three years. That would be accretive. 04:57 Speaker B Now we're talking about a week to week, you know, and we choose to disclose this week to week. We don't have to. That is a voluntary disclosure. What we have to do is disclose quarter to quarter. Uh and with the weekly disclosure and the greater transparency, we get more scrutiny. 05:13 Speaker B And and I think over time, hopefully more maturity from all of our constituents.
