MSTR shareholders question Michael Saylor: What to do when an investment of $73,000 is left with only $20,000?

Source: Strategy

Compiled by: Wu Says Blockchain

On August 17, 2026, Michael Saylor, founder and executive chairman of Strategy, and CEO Phong Le participated in a live Q&A session for investors hosted by Natalie Brunell, host of the Coin Stories Podcast. (This interview took place before the market recovery, and some information may be outdated.)

During the interview, they responded to investor questions regarding MSTR stock price pullbacks, common stock issuance, STRC buybacks, Bitcoin sales, and cash reserves. Michael Saylor stated that Strategy's current most important task is to repair and expand its digital credit business, rather than paying dividends to MSTR shareholders or prioritizing the buyback of common stock. He believes that Strategy is currently in a Bitcoin bear market and needs to prepare for a difficult period lasting several months to one or two years, but the company will continue to accumulate Bitcoin and maintain a long-term bullish outlook.

Additionally, they discussed Strategy's digital asset classification framework, the possibility of MSCI removing Bitcoin treasury companies from its index, institutional adoption of STRC, the impact of AI on Bitcoin custody security, and why the company will not pay Bitcoin dividends.

Bitcoin is Digital Capital, STRC is Digital Credit

Natalie: Alright, we have many questions to answer, so let's get started. The first question comes from multiple investors and is directed to Michael. You recently posted a chart on X listing a spectrum of digital asset currencies, including digital capital, digital credit, digital currency, and digital money. What exactly are the products you classified as digital currency? Also, do you disagree with the statement that "Bitcoin is money"?

Michael Saylor: If we adopt the theoretical definition of "money," you could say that money is a value storage tool that does not rely on sovereign issuance and is based on ownership by the holder, like gold. However, this is the classical Austrian school view of money.

The current mainstream definition considers money to be fiat currencies like the dollar or equivalent assets that maintain a pegged relationship with fiat. From this perspective, I believe that 99% of the world's people understand money as fiat currency, and money market instruments are fiat-like tools that generate returns.

I think about 1% of the world's population belongs to the Austrian school, believing that gold is money; some believe silver is money, and others believe Bitcoin is money. But I think this is an academic debate that does not need to be deeply engaged in, as currently only about 0.1% of the global capital or economic value is truly invested in the Bitcoin network.

In other words, 99.9% of the capital, money, and valuable assets in the world remain outside the Bitcoin ecosystem. A large portion is equity capital and real estate capital, along with metal capital like gold, and there are also credit assets amounting to trillions of dollars.

Therefore, if we want the Bitcoin network to expand tenfold or even a hundredfold, we must attract capital from the traditional financial system. This means attracting equity capital, credit capital, or money market funds.

For those who have not yet purchased Bitcoin, and whom we hope to serve, they view money as a medium of exchange, a unit of account, and a store of value. In Japan, they would consider the yen or yen money market instruments as money; in the United States, it is the dollar or dollar money market instruments; in the European Union, it is the euro or euro money market instruments.

Thus, "money" in the context of traditional finance or Keynesianism refers to fiat currency or yield-generating fiat equivalents. The chart I presented shows the classification system of digital assets.

We believe Bitcoin is capital, meaning digital capital is Bitcoin. Bitcoin's competitors include gold, real estate, equity capital, credit assets, money market instruments held as capital, and art.

To reiterate, 99% or even 99.9% of global economic value and capital is not Bitcoin. To attract this capital, we must explain why Bitcoin is superior to gold, art, real estate, equity assets like the S&P index, or gold bars.

STRC is digital credit. We have extracted a credit tool from capital. It has a certain volatility, less than Bitcoin but greater than fiat currency. The next step is to create something that looks like "digital currency" based on STRC. This digital currency can be understood as an idealized, Bitcoin-backed stablecoin. It maintains stability with fiat, whether it's a stable dollar, stable yen, or stable euro, while also paying yields.

Digital Currency Should Maintain Stability and Provide Returns

Michael Saylor: The difference between digital money and digital currency is that digital money usually refers to stablecoins, such as Tether, Circle, or other digital stablecoins. Regardless of which currency system they are tied to, digital money itself does not pay yields.

In the crypto ecosystem and digital asset ecosystem, digital money has become the winner in terms of medium of exchange. I know some Bitcoin maximalists or early participants do not want this, or have always hoped it wouldn't turn out this way. But by 2026, we can see that almost all prices worldwide are denominated in fiat. If I say 99.9%, I might be underestimating; there could be many more nines after the decimal point.

In other words, the medium of exchange is still typically fiat currencies like the dollar. Including stablecoins, they still do not pay yields. Therefore, stablecoins are suitable for making change and settling transactions, but they are not very good stores of value, or can be said to be weak stores of value.

The concept of "digital currency" is to combine the best aspects of digital credit and digital money to create a tool that is relatively stable compared to fiat while also paying yields.

If a stablecoin-like tool can generate yields, it would become a much better store of value. The asset I listed in the chart is one of the first, and possibly the first, attempts to create a digital currency asset in the market.

It stabilizes the asset price around $1 while allowing the asset to generate yields, with this yield coming from digital credit.

I expect that people will eventually establish dozens or even hundreds of different types of currency assets. The asset in the chart is not the only option. As far as I know, there are currently about a dozen institutions in the digital asset ecosystem developing digital currency assets.

I also do not believe that digital currency will only exist in token form. The U.S. may see the emergence of digital currency funds established in ETF form, while other regions of the world may see ETPs and publicly traded funds listed on various exchanges. There will also be private equity funds. Today's money market funds already have non-public trading private forms, as well as products traded publicly in ETF form; stablecoins are currency tools linked to fiat.

We believe that to grow Bitcoin tenfold or a hundredfold, we must create channels for capital inflow into the credit market and money market.

Currently, if there is no STRC and no newly developing digital currency tokens, then the fiat capital flowing into the stablecoin market is still entirely supported by fiat assets like the dollar; the funds entering the capital market can support BTC, but the capital from the credit market and money market has not entered this ecosystem.

If we create quality credit, we can further establish currency tools on top of that credit. Companies like Strategy and Strive that create digital credit also have their own equity, which will attract capital inflow, subsequently flowing into Bitcoin. Companies that create digital currency tools will also have equity, and their products built on digital credit will attract more capital into the ecosystem.

Thus, we believe that if we can create credit tools, currency tools, monetary tools, and equity tools, and have them supported by BTC or connected to the Bitcoin ecosystem, the entire economic system will grow. The product in the chart is just the first case among many digital currency tools I believe will emerge in the future, not the only case. I am certainly not endorsing this product or suggesting anyone invest; it is a type of security investment. However, I believe it is a groundbreaking event, much like the first emergence of money market funds and the later appearance of ETFs supported by money market funds, both of which are significant events.

Strategy Will Not Pay Dividends to MSTR Common Stock Shareholders

Natalie: Let's turn to equity and discuss common stock MSTR. Rob asks, "I have three children, and out of confidence in MSTR's long-term potential, I invested $73,000 for each of them. Now, each $73,000 investment is only worth $20,000, and the so-called long-term potential has turned into whether I can break even. MSTR common stock shareholders seem to be your lowest priority. You maintain STRC, issue new shares through MSTR's ATM to repay convertible bonds, while the so-called BTC earnings per share do not help my children much. I have a ten-year investment perspective, but I worry that you will issue a large number of shares through the ATM, causing the stock price to never return to $325 per share. Have you considered paying dividends to MSTR common stock shareholders to do something tangible for them, at least in the short term?"

Phong Le: I'll answer first, and Michael can add. Rob, first of all, thank you for being a shareholder and for investing in MSTR for your children. MSTR common stock shareholders are certainly our most important priority. Creating value for MSTR and increasing the stock price is our top task. How do we do this? By ensuring MSTR outperforms Bitcoin.

Since we began incorporating Bitcoin into our balance sheet in August 2020, Bitcoin has risen by 32%, and MSTR has risen by 41%, so in the long term, we have outperformed Bitcoin. I understand you entered the market later and have not seen this outperformance. Over time, when Bitcoin rises, we typically rise more because we hold more Bitcoin per share. In the past, we achieved this through leverage, and recently more through amplification mechanisms.

But this also means that when Bitcoin falls, we typically fall more, which is what you have experienced. Bitcoin has pulled back 50% from its historical high, while MSTR has pulled back about 75% from its historical high.

Since Bitcoin is our underlying asset, when Bitcoin rises, increasing the Bitcoin held per share will increase MSTR's value; correspondingly, MSTR's decline will also be more severe.

So, how do we increase the Bitcoin held per share? In the past, we relied mainly on leverage, including convertible bonds. Recently, we have done this more through the digital credit Michael just mentioned and the amplification mechanism achieved through STRC.

Ultimately, if we want the common stock to rise, we must increase the Bitcoin held per share; and increasing the Bitcoin held per share means we must make STRC successful. That is why we seem to be primarily discussing STRC now and how to bring STRC back to par value. In the long term, this will drive the increase in Bitcoin held per share and MSTR common stock.

We will not pay dividends on common stock because it is not the best use of capital. For us, the best capital allocation is to ensure STRC operates normally, purchase Bitcoin, and put Bitcoin on the balance sheet. This is the ultimate goal of the company.

So, if you believe in the underlying asset Bitcoin and believe it will rise again due to the various characteristics Michael has previously discussed, then MSTR will ultimately rise over time as well. That is the company's goal.

Natalie: Michael, do you want to add anything?

Michael Saylor: If you want dividends, you should buy our preferred stock. For example, STRD has an effective yield close to 15%. If you want to hold a relatively stable tool that can pay dividends, you can consider STRC or STRK; they are designed to pay dividends and provide some upside potential.

If your investment horizon is less than four months, you might want to hold money market instruments. If your horizon is between four months and four years and you want to recover your principal and achieve decent investment returns, then you are more like a credit investor and can consider some credit instruments.

If you are investing in equity, you should at least have a four-year time horizon, ideally seven to ten years. Bitcoin reached its historical high about a year ago. When we are in a bear market, what you get is an amplified Bitcoin exposure. If Bitcoin drops 50%, we might drop 75%; and in a bull market, we expect to outperform Bitcoin.

So, buying MSTR gives you an amplified Bitcoin exposure. Buying Bitcoin itself is like riding a roller coaster. Since you chose to ride the roller coaster, you should use a four-year comprehensive metric to measure it. When analyzing Bitcoin, we look at the 200-week simple moving average, observing its trading position relative to the four-year average.

I believe MSTR's volatility will be greater than Bitcoin's because the nature of equity products is to provide an amplification effect. If we were to pay dividends on common stock, it would actually weaken the value proposition of equity and also weaken the value proposition of credit products.

The reason equity is so volatile is that we issue credit products; we strive to build a balance sheet because the company's future is built on the credit business.

If we can sell $10 billion of STRC each year, and BTC's performance exceeds our threshold yield, currently about 10% to 10.5%, then this $10 billion credit product issuance, from the perspective of common stock shareholders, would gradually resemble net profit. In this way, credit product sales can achieve valuation multiples. Without credit product sales, there is nothing for the market to assign multiples to.

Therefore, the most important thing is to stabilize the credit business and build a credit business that is as sustainable and high-quality as possible. The returns on equity will manifest later.

Strategy May Need to Endure One to Two Years of Difficult Times

Michael Saylor: We are currently in the investment phase, needing to establish the credit business first. Short-term actions that benefit equity may not benefit the long-term value of equity; conversely, short-term actions that benefit the credit business will ultimately benefit equity.

Ultimately, the company's product is credit. The better the credit products, the more valuable the company becomes. We believe that as long as we make the credit business, especially STRC, successful, the company will be very valuable.

This is a long-term investment, somewhat like Netflix or Amazon. When Amazon was building Amazon Prime, it provided cheap or even free delivery services for a long time, and people thought this was not good for equity; but later, consumers nationwide subscribed to and used this service, and Amazon won the market.

Our view is similar. We want to win the digital credit market and ultimately create the highest quality credit products globally. If we can do that, the biggest beneficiaries will be common stock shareholders. I myself am a major shareholder, holding over 19 million shares of common stock, so I understand your pain.

However, we must be prepared to endure difficult years. It could be one year or two years; we believe it will not last four years, but we may have to endure several months, a year, or two years before things start to develop favorably for common stock.

Strategy Currently Will Not Prioritize Buybacks of MSTR

Natalie: Several investors pointed out that you recently sold Bitcoin and also repurchased STRC. Do you have plans to repurchase MSTR?

Michael Saylor: If MSTR is trading below mNAV (market value relative to the net asset value of Bitcoin assets), or if repurchasing is in the best interest of the company, we are willing to repurchase MSTR. We evaluate these options weekly and daily.

Currently, STRC's trading price is below par, so repurchasing STRC is a fairly obvious choice; MSTR is not currently trading below mNAV. If in the future it is needed, and MSTR has a significant discount relative to mNAV, you may see us take similar actions.

But this is not the company's current highest priority. The most important thing we can do right now is to repair the credit business. If the credit business is repaired, the equity premium should expand, which will benefit common stock.

If we take capital that could have been used to repair the credit business to repurchase common stock, it will negatively impact both equity and the credit business. Once the credit business weakens, even repurchasing stock in the open market will weaken the fundamentals of the stock.

The fundamental question is, is this credit business worth $100 billion or $1 trillion? If the digital credit business cannot be established, the answer is zero; if it can be established, the debate is only about whether it is worth $50 billion, $100 billion, $250 billion, or $1 trillion.

So, our most important job is to make the credit business successful. Currently, our capital is allocated around this goal.

Issuing MSTR Will Not Necessarily Dilute Bitcoin Holdings Per Share

Natalie: So, in other words, repairing credit will repair equity. Phong, the next question comes from Johannes Schmidt. You once viewed JPMorgan as a reference for Strategy's development of the digital credit business. However, the concept of Bitcoin was from the beginning to replace the centralized, trust-dependent banking system represented by JPMorgan. Doesn't building Strategy's business, including STRC, by referencing JPMorgan contradict the decentralization principles established at the inception of Bitcoin? How do you reconcile pursuing a JPMorgan-like corporate structure while remaining true to Bitcoin's founding ideals?

Phong Le: I will answer. However, I want to add to the previous question because there is a misunderstanding that issuing equity will necessarily dilute shareholders.

If we sell the digital credit product STRC and then issue equity to pay dividends, this will actually significantly enhance shareholder value.

If we issue equity at a price above 1x mNAV, we are currently about 1.07x mNAV, and use the proceeds to purchase Bitcoin, it will also enhance shareholder value because it will increase the Bitcoin held per share.

If we issue equity and then repurchase STRC at a price below the issuance price, it can also enhance shareholder value. For example, if STRC's issuance price is $100, we issue equity when MSTR is above 1x mNAV, and then repurchase STRC at $95, this will also enhance the value for common stock shareholders and increase the Bitcoin held per share.

That is the key. I want to ensure everyone understands this. Many people see Saylor using ATM issuance and think it must dilute shareholders; but from the perspective of Bitcoin held per share, this is not necessarily correct.

Michael Saylor: There is also a scenario where if we sell equity at a price above mNAV and exchange it for dollars, this can also enhance shareholder value. All the transactions we conduct are enhancing value, strengthening the company's balance sheet, making the company more robust, and improving the company's long-term prospects.

Strategy Aims to Become the JPMorgan of Digital Assets

Phong Le: We do not want to become JPMorgan; we want to become the "JPMorgan of the digital asset space." There is a significant difference between the two.

JPMorgan has many aspects worth learning from. It is the most valuable bank in the world, and we hope to become the most valuable digital asset company globally. JPMorgan has a high level of trust and significant equity value; we hope to gain the same level of trust and equity value in the digital asset world.

JPMorgan is also one of the largest participants in the repurchase agreement market and a bank that the U.S. federal government seeks assistance from when necessary. We hope to achieve a similar level of trust and scale in the digital asset world.

But we are not copying JPMorgan's business model. The analogy means that we want to be the largest and most important participant in the digital asset world.

The first step is to become the company that holds the most Bitcoin in the world. Currently, the amount we hold is about 4% of the total Bitcoin supply. After that, we will build products on top of Bitcoin. MSTR is digital equity, STRC is digital credit; further down the line, other participants in the digital asset space will build new products on top of our products, such as the digital currency Michael mentioned earlier.

We believe that as the largest Bitcoin holder, we can achieve an industry position similar to JPMorgan, but that does not mean we are copying its business.

It's like Michael saying "STRC is our iPhone moment." We are clearly not trying to run the company like the iPhone or Apple; this analogy is simply because the iPhone is the most successful product in world history, and we believe STRC can become the most successful digital credit product globally.

STRC Fundraising Can Be Used for More Than Just Buying Bitcoin

Natalie: The next question comes from X user @GrainOfSalt. Can Strategy sell STRC and use the proceeds to build cash reserves and repurchase MSTR, rather than just buying Bitcoin? This approach was proposed in the first quarter earnings presentation and is it still a viable option?

Michael Saylor: Absolutely. We can do many things with this capital; we can exchange STRC for MSTR, dollars, or BTC, or for other outstanding debt instruments or credit tools. There may be other uses as well. We are very open about how to utilize this capital.

MSCI Exclusion Affects About 3% to 4% of MSTR Float

Natalie: The next question comes from Garrett. How do you view MSCI's recent proposed rule adjustment to exclude Bitcoin treasury companies from its index? What impact do you expect this will have on the stock prices of related companies?

Phong Le: I'll answer the second part first. The stocks currently held by MSCI index funds account for about 3% to 4% of our float. If we are excluded from the relevant index, it may create some selling pressure for a period of time. But this is not significant for us. 3% to 4% is not enough to cause a substantial change in stock price over a longer period, so I would define the impact as "not material."

If we also consider the Bitcoin we hold, the related impact is even smaller, possibly only 0.1%.

More importantly, I believe MSCI's actions are inconsistent with the U.S. government, global markets, and other indices. This is its second attempt to handle this matter, and it has taken another approach by redefining what constitutes an operating asset. I think this is somewhat inappropriate. The SEC and FASB have already defined what constitutes an operating asset for Strategy, and Bitcoin is clearly our operating asset, but MSCI does not see it that way. It seems to be taking a position that contradicts U.S. Generally Accepted Accounting Principles and the SEC's stance.

We will submit a response to try to further understand why it has taken this adversarial approach to Bitcoin as an asset class. I believe MSCI will consider our and other responses and handle it constructively, hoping it will not advance the latest proposal. Even if it does advance, I do not think it will be very important for us.

Strategy Will Maintain a High Dollar Reserve Long-Term

Natalie: Sergio asks, is it possible for Strategy to primarily build a cash reserve of $20 billion to $30 billion through STRC to conduct large-scale deployments in future bear markets? Would a higher cash buffer also help MSTR be included in the S&P 500 index?

Michael Saylor: In the future, we will always hold a large amount of cash. Over time, we expect our dollar reserves, Bitcoin reserves, and unrestricted operating cash to continue to grow.

These funds can be flexibly used to repurchase credit instruments, repurchase stock, repurchase debt, or purchase Bitcoin, as long as we deem it reasonable. Strategy's capital allocation choices are increasing. At this stage, we expect the company to continue to expand and have more trading options than in the past.

Phong Le: Regarding the S&P, we need to distinguish between the credit rating of the S&P and the S&P index.

In terms of credit rating, Strategy currently has a company rating of B-. Increasing cash reserves may help with this and improve the rating over time. But ultimately, what truly affects the rating is whether rating agencies view the Bitcoin on the balance sheet as capital.

Currently, they do not view Bitcoin as real capital, assigning it a value even below zero. If this treatment changes, our rating will rise. This is more important than increasing dollar reserves. As for whether we can be included in the S&P 500 index, I believe it is not directly related to the scale of dollars on the balance sheet.

Strategy is Not a Short-Term Bitcoin Trader

Natalie: Jerry asks, will Strategy focus long-term on increasing Bitcoin held per share through financing, or will it engage more in opportunistic Bitcoin spot purchases to support liquidity and price discovery?

Michael Saylor: Our main business is to create digital credit products that can strip away most of Bitcoin's volatility while extracting yields, and STRC is one of them.

Currently, the digital credit market is about $15 billion. We believe this market can grow to $100 billion, then to $200 billion, $400 billion, and ultimately reach $1 trillion.

The transactions Strategy conducts are essentially betting that Bitcoin's long-term performance will exceed the company's threshold yield, which is currently about 10.5%, and this data is updated every 15 seconds on the company's website. The company's duration is about 33 years, so we are betting on the next ten to thirty years, not trading Bitcoin daily.

Investors buying MSTR should not do so because they think we are good at trading Bitcoin. If you think you have found someone who is very good at trading Bitcoin, you should invest in their private fund.

The reason to buy MSTR is that Strategy has about $60 billion in capital and may create $5 billion, $10 billion, or even $20 billion in digital credit each year. If Bitcoin's performance exceeds the capital threshold, then the company could create about $20 billion in value each year, growing at a rate of 30% annually.

From a practical standpoint, Strategy will hold more cash. If Bitcoin has a very high premium relative to the 200-week moving average, after we sell credit products, we may prefer to hold cash; if Bitcoin has a low premium relative to that moving average, or even trades at a discount, we may allocate more funds to Bitcoin.

Therefore, the position of Bitcoin in the cycle may affect the ratio of cash to Bitcoin allocation, but Strategy is essentially not a short-term trading company.

Many people overlook that in a bull market, MSTR's equity premium typically expands, the market demand for common stock increases, the demand for credit products also increases, and the associated credit risk decreases. Thus, both equity and credit businesses will expand rapidly, and more capital will flow into Strategy.

In a bull market where Bitcoin prices are rising or at high levels, more capital will flow into the company, so we typically buy more Bitcoin. In a bear market, equity premiums contract, credit products weaken, and the demand for equity and credit decreases, so the Bitcoin we purchase in a weak market is usually less than in a strong market.

However, if we use common stock issued at a high premium to purchase Bitcoin, then the specific purchase price of Bitcoin is not the most important issue. As long as we exchange Bitcoin for stock with a higher premium, this transaction can still enhance shareholder value.

For Bitcoin purchased using credit tools, the real question is not short-term pullbacks, but whether Bitcoin's performance over the next ten years can exceed the cost of credit. We are long-term thinkers, not short-term traders.

The scale of Strategy's allocation of dollars or Bitcoin, as well as how much capital market activity to engage in, is ultimately determined by the capital markets. The Bitcoin market determines Bitcoin capital, the credit market determines the demand for STRC, the equity market determines the demand for MSTR, and the derivatives market will also have some impact. These markets change independently every day and sometimes interrelate, and we participate in them daily.

Strategy Will Not Acquire Other Cash Flow Businesses

Natalie: We are about halfway through the Q&A session. The next question comes from live audience member Tim Fiaka. How do you view acquiring cash flow businesses supported by Bitcoin treasuries? Is it possible for Strategy to adopt some cash flow business model in the future? What benefits could cash flow bring to MSTR?

Michael Saylor: We will not do that. For other companies, this may be a completely reasonable business model, and there are other companies and investors specifically acquiring cash flow businesses.

But Strategy's business model is to create digital credit. If we deviate from this direction, it will distract us or dilute the company's focus and bring various operational complexities.

This would also weaken the value of equity because it would make it more difficult for investors to accurately assess and trade MSTR. Currently, MSTR investors mainly need to build a Bitcoin valuation model. If we acquire a large number of different businesses, investors would have to separately evaluate each asset and business we hold.

This would also harm the derivatives market. The market for MSTR call and put options is worth hundreds of billions of dollars; if Strategy begins to diversify into various cash flow businesses, related investors will also be affected.

At the same time, this would weaken the credit business. Currently, we can recalculate the company's credit risk every 15 seconds; if we add other businesses, we would need to establish a heterogeneous credit model to assess how the new business would impact the existing company's credit risk.

Therefore, we believe this would be a disruptive dilution for Strategy. We will continue to focus on our existing business model because we believe this is the business model best suited for the company to execute.

STRC's Recent Pullback and Recovery Will Strengthen Dollar Liquidity Reserves

Natalie: Let's discuss some questions specifically related to digital credit. What lessons has management learned from STRC's recent pullback and recovery? How will these lessons be used to further increase STRC's adoption rate?

Michael Saylor: Phong, would you like to answer first?

Phong Le: The biggest lesson is that we must hold enough dollar liquidity on the balance sheet to ensure dividend payments. This is why we currently hold $4.8 billion in cash.

In the future, when we raise funds through STRC, we may allocate part of the funds to dollar reserves or other forms of dollar liquidity assets to support dividends and enhance institutional investors' confidence in STRC.

Michael Saylor: I believe we also recognize that the company must be ready to buy or sell any asset at any time.

To ensure Bitcoin is fairly valued, Strategy must be able to both buy Bitcoin and sell Bitcoin. If we are unwilling to sell Bitcoin to fund dividends for credit products, it will negatively impact the credit business. Therefore, we must be able to trade BTC.

If we want to stabilize STRC, we must also be able to sell STRC and repurchase STRC. In the past, we were very good at issuing STRC at $100, and we were also good at buying Bitcoin; now we have proven to the market that Strategy can also sell Bitcoin and repurchase STRC.

It's like a car cannot only turn in one direction. We cannot only have a right hand; we must also have both a left hand and a right hand.

As Phong said, we must also prove that the company can dynamically manage reserves, including dollar reserves, unrestricted cash, restricted cash, and Bitcoin. All of these are very important.

We also recognize that we must continuously monitor and improve our capital structure. If we want to expand the credit business, we must always pay close attention to the quality of the capital structure.

STRC's Institutional Investor Share Has Increased from 20% to 30%

Natalie: Phong, when we were at the Bitcoin conference in Las Vegas, you mentioned that about 80% of STRC holders were retail investors at that time. Stewart asks why retail investors were the early adopters of this product? Why are institutions starting to enter now? What is the current holding ratio of both?

Phong Le: Whenever a new product category emerges, retail investors are usually the early adopters, and digital credit is no exception.

For products like digital credit, institutional investors want to see a track record of dividend payments and price performance for one to three years, so they often enter later.

Currently, the retail and institutional holding ratio of STRC has changed from 80% and 20% to about 70% and 30%. This does not mean retail investors have decreased; in fact, retail holdings have doubled, but the growth of institutional investors has been more significant.

We have seen the institutional adoption rate begin to rise. I believe Strategy's digital credit capital framework has enhanced institutional investors' confidence.

Retail investors are certainly very important, but institutions typically have longer holding periods and use less leverage, so an increase in institutional adoption will help STRC maintain stability over time.

Strategy Currently Has No Plans to Change to Daily Dividend Payments

Natalie: Several investors want to know if STRC could switch to daily dividend payments like SATA? Will other preferred stocks change to monthly or daily dividend payments?

Michael Saylor: Currently, we have no plans to change the dividend payment frequency for other preferred stocks. STRD, STRE, STRF, and STRK are primarily aimed at institutional investors, and institutions holding these products have always been able to accept quarterly dividend payments, so we expect this arrangement will not change in the foreseeable future.

We are actively observing SATA's daily dividend model, but currently, there are no plans to switch to daily payments. Strategy's main focus right now is still on improving STRC's credit quality and strengthening the company's balance sheet.

Phong Le: No, that's basically it. Daily dividend payments are an interesting concept, and we will continue to observe SATA, but the current arrangement of paying dividends twice a month has already proven to be quite effective for our investor base.

Strategy Currently Will Not Prioritize Buybacks of STRK

Natalie: Several STRK investors have raised questions, and one live audience member wants to know if you would consider repurchasing STRK.

Michael Saylor: Currently, our focus is on getting STRC back to a healthy state. You can expect that we will be highly focused on this task. We want STRC to remain stable and grow in a predictable manner.

After STRC stabilizes, we will evaluate whether we should take appropriate actions regarding other products and investors.

For investors in STRK or other Strategy securities, the best thing the company can currently do is also to restore STRC to health, as measures that benefit STRC will typically also benefit STRK.

Strategy Will Not Allow STRC to Trade Significantly Above Par Value Long-Term

Natalie: John Lee Dumas asks, under what circumstances would Strategy allow STRC's trading price to remain significantly above $101 for an extended period without taking action to bring the price back near par value? What strategic rationale is there for allowing such a premium to persist?

Michael Saylor: We will not do that. The target trading range for STRC is around $99 to $100, and we are not interested in letting it trade significantly above $100.

One of the most important value propositions of this product is that when the price reaches $100, investors can sell at $100 without worrying about missing out on a higher price; at the same time, investors can buy almost any desired quantity near $100.

If we allow the price to fluctuate significantly, it will cause the market to stagnate. Investors who were ready to sell at $100 might wonder if the price will rise to $101 or $102, so a decision that could have been made in 15 seconds might be delayed for a long time.

If STRC trades between $95 and $105, people might take three months to make a decision that could have been made in three seconds. On the other hand, if STRC's price is $100.50, investors worried it might drop back to $100 might place limit orders and wait for days.

Imagine if a bank told you that when you withdraw, it might randomly only return 99% of the funds, but sometimes it might return 1% more; this uncertainty would trouble everyone.

The core value of Strategy lies in stripping away the product's volatility and extracting yields. Just as the name of Standard Oil comes from standardized kerosene, its value lies in the product not suddenly becoming dangerous. If one gallon out of every 100 gallons of kerosene could explode, even with a disclaimer on the can, this would not be a product that is just 1% off; it would be a product that is 100 times off.

Therefore, we are striving to create the highest quality credit products achievable.

For investors, Strategy's value proposition is that the company will provide the required liquidity as close to par value as possible. If someone wants to purchase $1 billion worth of STRC, we will not ask them to pay $110 per share; instead, we will try to provide the product near $100.

On the other hand, sellers also want to confirm that selling at $100 is not a mistake. If STRC drops to $95 or $90, the company will use available resources to try to bring it back to the target trading range and near par value.

If the company is ambiguous about this, it would be equivalent to breaching a promise and undermining STRC's value proposition. The goal of STRC is to become the lowest volatility, highest liquidity, and most predictable credit tool in the digital credit market.

Strategy Will Not Sacrifice STRC Stability to Combat Short Sellers

Michael Saylor: Some believe that Strategy should allow STRC to rise to $101, $102, or $103 so that short sellers would be unwilling to short it.

But we will prioritize the interests of about $10 billion in credit investors over the interests of about $300 million in short sellers. We operate this product for investors who buy and hold credit products, not to worry about short sellers.

Even if someone shorts STRC at $100, we believe this is beneficial for Strategy, and we welcome this behavior. If someone is willing to pay about 12% in dividend costs to short STRC and contribute their balance sheet and liquidity to help build the digital credit ecosystem, this could actually be a good thing.

If someone shorts a $10 billion product when STRC reaches $100, we will gain $10 billion in credit funds, while the other party will pay about $1.2 billion in dividend costs each year, helping STRC grow into a product managing $20 billion.

Therefore, we see no reasonable justification for not strictly managing STRC and striving to strip away its volatility. The lower the volatility, the higher the liquidity, and the more likely STRC is to become the best credit tool. The better the product, the higher the demand, and ultimately, higher demand will also benefit common stock and the entire company.

If investors want a product that may trade between $95 and $105, we already have STRF. It is actually lower risk, has a higher collateral coverage ratio, and a longer duration, and is designed for long-term credit investors who hope the product may trade above $100.

However, the demand and liquidity for STRF are significantly lower than for STRC. If STRC were allowed to fluctuate freely like STRF, the product demand could decrease by an order of magnitude, liquidity would shrink, and market confidence would decline. Therefore, I believe STRC's price should not be allowed to fluctuate randomly.

Michael Saylor: Strategy is in a Bitcoin Bear Market

Natalie: Michael, you previously stated that if Strategy holds 5% of Bitcoin's total supply, Bitcoin could reach $1 million per coin; if the holding reaches 7%, the price could reach $10 million. Considering that Bitcoin's price is currently below November 2021, when Strategy held only about 120,000 Bitcoins, have your long-term price expectations and related assumptions changed?

Michael Saylor: We have not made precise predictions about when these prices will be achieved. We only know that, directionally, the more Bitcoin Strategy purchases, the better it is for Bitcoin.

We are currently in a bear market, so the market environment is more challenging, and moving forward is more difficult. But we will continue to buy Bitcoin and maintain a long-term bullish outlook on this asset.

If you are trying to predict short-term prices, you belong to the trading category, and I do not have much useful advice to offer. My advice is, unless you are prepared to hold for more than four years, do not invest in Bitcoin; ideally, you should hold for ten years.

We believe that the more Bitcoin we purchase, the higher the price will be. We still maintain a long-term bullish outlook on this asset.

Strategy Begins Using Cutting-Edge AI Models to Check Security Risks

Natalie: The next question comes from William. Phong, perhaps you can answer this. Cutting-edge AI models have been able to discover security vulnerabilities in various software systems. How does Strategy assess the threats this technology poses to Bitcoin custody? What measures is the company taking?

Phong Le: Strategy uses three of the largest institutional-grade custodians globally. We regularly communicate with these institutions to review their security measures in software, hardware, personnel, and automation processes.

These institutions also provide custody services for most Bitcoin ETFs globally, so they undergo many different institutional reviews.

We have always supported these custodians and the entire open-source Bitcoin community in using cutting-edge AI models. Some institutions are already using these models to test their software, and Strategy has begun to do so as well.

Rest assured, aside from Bitcoin capital planning, Bitcoin security and custody may be the company's most important work, and we take this very seriously.

Strategy is also a member of the Bitcoin Security Alliance. This alliance brings together some of the largest Bitcoin custodians, issuers, exchanges, holders, and banks globally. We are working with these institutions to pool resources to research related security issues.

Strategy Will Not Use Bitcoin to Pay Dividends

Natalie: This question comes from Jim, and I would like Michael to answer. Do you believe in the idea of Bitcoin separating currency from the nation, no matter how long it takes to achieve? Is it possible for Strategy to use Bitcoin instead of dollars to pay dividends?

Michael Saylor: The value of Bitcoin lies in its nature as a non-sovereign value storage tool similar to gold. Therefore, it can indeed separate capital and currency from the national system. The larger Bitcoin's scale, the higher the proportion of global capital stored in non-sovereign digital assets, which is also why we are so passionate about it.

However, we have no plans to use Bitcoin to pay dividends. Currently, about 99.9% of the world's currency is still fiat, with Bitcoin accounting for only about 0.1%. A more reasonable transaction is to issue credit products, use fiat to pay dividends, and then purchase Bitcoin.

If Bitcoin appreciates about 30% annually, and we expect it to outperform the S&P index in the long term, while the cost of credit is far below this level, then we would prefer to pay a 10% cost of credit while gaining 30% appreciation in Bitcoin.

If we were to pay dividends in Bitcoin, it would be equivalent to paying out an asset that may appreciate 30% annually while only receiving about 10% in returns. The problem with this approach is that the cost of liabilities will be determined by the strongest currency.

It's like promising to pay a 30% return while investing the proceeds in a bond from a country that only yields 4%. If you reverse the direction of the transaction, you will ultimately go bankrupt, so I do not recommend anyone do that.

The correct way is to borrow dollars or yen and then invest in Bitcoin to capture the correct directional spread. Moreover, the scale of dollars and yen that can be borrowed globally is about 1,000 times higher than the scale of Bitcoin that can be borrowed.

Therefore, issuing fiat credit instruments and purchasing digital assets like BTC is reasonable, while the reverse does not align with economic and financial logic.

STRC's AI Advertising Increased Retail Investor Adoption

Natalie: Anthony asks, earlier this year, Strategy ran several AI-generated STRC ads on the X platform, including a video of a retired engineer vacationing on the beach, content mimicking "This Is Spinal Tap," and simulated scenarios of traders discussing STRC. What effects did these ads achieve? Is the company satisfied?

Phong Le: The metrics we focus on include views, click-through rates, the number of visitors to the Strategy website, and time spent on the site. From these metrics, the ad performance has been quite positive.

I believe they have also driven STRC's adoption among retail investors. Exploring various capabilities using AI is also interesting, and these ads have established a narrative, so overall, I am satisfied with the results.

However, if Strategy believes that institutions are the more important target investors for STRC, then these types of ads may not directly prompt institutions to purchase the product, but at least they can raise their awareness of STRC.

Michael Saylor: I Also Make Bitcoin AI Videos in My Spare Time

Natalie: Let's end with a lighter question. Jay wants to know how you usually relax. Do you play video games, participate in sports, or have other hobbies?

Michael Saylor: We create and publish AI videos promoting Bitcoin. The most interesting thing recently has been making videos of me speaking in Korean, Japanese, Italian, and French.

Natalie: That's right. I remember you once said in a program or interview that a picture is worth a thousand words. These images can sometimes reach more people than a quarterly earnings call or a book. You don't even need to say anything; the video or photo itself can convey the message.

Phong Le: I still do some relaxing things; Michael basically just works. I have three children and enjoy traveling with my wife and family. I play basketball, cook, play video games, and occasionally watch shows that don't require much thought.

However, I try to strictly protect my time and avoid spending too much time on things that do not create much value.

The content of this article does not constitute any investment or financial advice. Readers should strictly comply with the laws and regulations of their location. The views expressed by guests do not represent Wu Says' views and do not constitute any investment advice; please strictly follow local laws and regulations. Audio transcription and translation were completed by GPT and may contain errors.