Strategy Aktie

Good afternoon, everyone, and thank you for joining us for Strategy's Third Quarter 2026 Earnings Webinar. I'm CJ, Head of Investor Relations at Strategy. Joining us today are Andrew Kang, Chief Financial Officer; Phong Lee, President and Chief Executive Officer; and Michael Saylor, Founder and Executive Chairman.

We'll begin with approximately 60 minutes of prepared remarks, starting with Andrew, followed by Phong and Michael. We'll then move to a 30-minute live Q&A.

Before we begin, I'll briefly cover our safe harbor statement. Some of the information we provide in this presentation regarding our future expectations, plans and prospects may constitute forward-looking statements. Actual results may differ materially from these forward-looking statements due to various important factors, including fluctuations in the price of Bitcoin and the risk factors discussed under the caption Risk Factors in Strategy's quarterly report on Form 10-Q filed with the SEC on August 3, 2026, and the risks described in other filings that Strategy may make with the SEC. Except as required by law, we assume no obligation to update these forward-looking statements, which speak only as of today.

With that, I will turn the call over to Andrew Kang, CFO of Strategy.

Thank you, CJ. Q3 was an exceptionally strong quarter across all parts of our business. We now hold 848,517 Bitcoin and recorded a record $21 billion fair value gain on our Bitcoin holdings in Q3. MSTR share price increased 76% during the quarter, and our market cap rose to $62 billion as of October 23. STRC's 1-month volume-weighted average price was $99.27 as of the close of markets on October 23. And as we speak today, we are just $0.01 away from par. Our combined Bitcoin and dollar reserves represent 49 years of interest and dividend coverage, strengthening the credit quality of our digital credit platform.

Q3 marked our 25th consecutive quarter, more than 6 years of building a consistent and ongoing track record of adding more Bitcoin to our balance sheet. Since Q3 of 2020, our holdings have grown from approximately 38,000 Bitcoin to 848,517 Bitcoin, accounting for 4% of all Bitcoin that will ever exist. Strategy remains the largest institutional holder of Bitcoin in the world. Our Bitcoin holdings exceed that of Bit, that of the largest nation states, other ETFs and all other major DeFi institutions. We aim to actively manage our holdings along with our cash reserves to benefit both our long-term common stock shareholders and our digital credit investors.

The sheer scale of our reserves gives us a market-leading advantage to actively manage our strategy and goals through both bull and bear market cycles. Our treasury assets have grown from approximately $54 billion at the end of Q1 this year to $74 billion in this comparison. That makes strategy the seventh largest treasury among S&P 500 companies when we include all cash and Bitcoin on our balance sheet. As you know, the #21 has a great deal of significance for us. We all know that there will only ever be 21 million Bitcoin in existence. And this last quarter, we recorded an approximately $21 billion in fair value gain on our digital assets in the third quarter.

We started Q3 with about 846,000 Bitcoin valued at approximately $50 billion. And during the quarter, Bitcoin's price increased from approximately $58,700 to close around $83,600, adding $21 billion in value. We also added a net 1,666 Bitcoin during the quarter. And as a result of the recent rally in Bitcoin price at the end of Q3, we recorded a $20.9 billion fair value gain on digital assets and ended September with over 847,600 Bitcoin worth approximately $71 billion.

For the third quarter, we reported a record $20.9 billion of operating income, $19.1 billion of net income and $44.75 in diluted earnings per share. This was the highest operating and net income for any quarter in the history of the company. This milestone achievement for the company highlights the resilience and strength of our capital base and balance sheet, which allows us to weather the storm through bear markets, but also readies us for exponential growth in bull markets.

Bitcoin per share has grown from approximately 56,600 stats at the end of 2020 to over 187,700 Sat as of October 23, reflecting a CAGR of approximately 23% over that same period. Year-to-date, Bitcoin per share is 3.7% lower as we effectively deployed and managed through our capital management framework with a focus on strengthening the underlying credit of our capital structure. As we enter the next stage of Bitcoin price appreciation, we will be further positioned with a stronger capital base and a more robust reserves to amplify BTC yield in the long term.

We raised approximately $5.4 billion of total capital during Q3, bringing the total year-to-date capital raise to $21.2 billion. We raised $22.6 billion of capital in 2024 and $25.3 billion in 2025, importantly, reflecting our effective and impactful access to the capital markets in both rising and falling Bitcoin cycles. During Q3, digital assets increased from $49.7 billion to $70.8 billion, reflecting Bitcoin price appreciation and the net addition of Bitcoin during the quarter.

Cash and short-term investments increased to just under $5.9 billion, including $5.8 billion of total USD assets at the end of Q3, which provides more than sufficient liquidity to meet our interest and dividend payments, strengthen our overall credit quality and provide liquidity for general Bitcoin treasury needs. Our preferred equity ended the quarter at $13.1 billion, down from the previous quarter with the execution of our stretch open market repurchase program.

Common equity increased to $55.4 billion, bringing total equity to $68.5 billion, up $23.2 billion or 51% during the quarter. Our treasury assets as of October 23 were approximately $74 billion, consisting of $68.9 billion of Bitcoin and $5.1 billion in USD assets. After taking into account $6.7 billion of convertible debt and $13.3 billion of preferred stock at their notional amounts, our net reserve is approximately $53.9 billion or approximately $67.3 billion net of the out-of-the-money converts.

Our NAV is currently 1.15x, amplification, 1.28x with a low net leverage of approximately 2.4% and our U.S. dollar assets provide 3.4 years of interest and dividends coverage at current payment obligations. We have approximately $6.7 billion of total convertible debt outstanding compared with the $69 billion of Bitcoin and USD $5.1 billion of U.S. dollar assets, representing a BTC rating of 42x. 4 of the 6 converts are currently trading above par for the 2 that are at the moment below par, the earliest put date remains significantly in the future and not until March 2028.

We have substantial asset coverage and the staggered put maturity schedule gives us ample levers to effectively manage these obligations in the future. We now have 17 equity analysts covering us, all of which carry buy ratings, an average MSTR price target of approximately $248 and an average published Bitcoin target of approximately $111,000. I am pleased to announce that our shareholder proposal to move our preferred equity dividends to daily record and payment dates has been resoundingly approved by our shareholders.

The final vote reflects 99.3% of approvals of votes cast in support of the amendment. Daily dividends for stretch will begin on November 1 record date with a November 2 payment date. Strife, Strike and Stride are scheduled to follow with a January 1 record date and a January 4 payment date. Dividends will accrue on every calendar day, including weekends and holidays with payment on the next business day. The overall annual dividend amounts remain unchanged and are not impacted as a result of this enhancement. Smaller, more frequent payments are designed to reduce volatility, improve liquidity, broaden investor demand and get cash to investors sooner. Calendar day accruals also make stretch and our preps better suited to the future of tokenized products and increasingly around-the-clock markets. Thank you to everyone who voted in favor of this change.

And finally, as announced earlier today, I will be stepping down as Chief Financial Officer effective November 5 for personal reasons. It has been an honor to serve as Strategy's CFO for the past 4.5 years and to be part of such an extraordinary period of growth and innovation. I am extremely grateful to Michael, Phong and the Board for their trust and support. And to all of our employees, thank you for your hard work, perseverance and dedication. To the entire finance team, a special thank you. It has been a privilege to work alongside each of you, and I am incredibly proud of what we have accomplished together. To our shareholders, analysts and everyone who has joined us over these last 18 quarters, thank you for your time, your engagement and your support. It has meant a great deal to me.

And for the last time as CFO, I will turn the call over to Phong.

Thank you, Andrew. We will miss you, and I do appreciate your 4.5 years of service to strategy. You've seen the company through great times and also through a couple of bear markets with a steady hand, and I wish you well in the future. The plan going forward throughout the course of 2026 is for myself to step back into the CFO and Principal Financial Officer role. Starting in January 2027, we'll split the CFO role between our software and our Bitcoin businesses, which are quite different.

Stepping into the Principal Financial Officer role covering our software business will be a long-time veteran of strategy, Reza Verosta, who currently runs operations reporting to me. and has previously been a part of the finance leadership team running FP&A. He knows our software business inside out and will do a great job overseeing that.

The Principal Financial Officer of our Bitcoin business will be myself, and also, I'll continue to be the CEO of the company. Looking forward to wearing those dual hats and looking forward to continuing to lead with strong folks in our Bitcoin business that you're all familiar with. CJ here, who runs Investor Relations and Product; and Shirish, who runs our Treasury will report to me directly. And I think for all intents and purposes, the transition will be seamless to our shareholders, our investors, our analysts and our employees. And I'm looking forward to a bright future for the company.

Speaking of bright futures, I will cover off on our digital equity strategy and our digital credit strategy with a recap of Q3 and 2026 year-to-date and why I believe we have a very bright next year ahead of us. And then I'll hand it over to Michael, who will cover our digital capital and Bitcoin overall outlook and just general strategy for the company.

So first, let's talk about digital equity. We had what I would consider to be and what Andrew mentioned, a very strong Q3. I'll start with MSTR, our common equity has amplified Bitcoin. We are built to outperform Bitcoin, and we did exactly that in the return to a bull market in Q3. Bitcoin increased 43% over the course of the quarter. MSTR increased 76% -- in addition, we added 176,000 Bitcoin since the beginning of the year. So through a bear market cycle, we were able to significantly increase our Bitcoin, and that's more than 3x the second largest Bitcoin treasury company in the world added all in the course of 3 quarters.

And it has allowed us to be the #7 ranked treasury in all of the S&P 500 peer set. As Andrew said, we raised $21 billion of capital year-to-date, another 21 number coincidentally. And we have the fourth largest issuer of capital in the U.S., again, in a Bitcoin bear market. We reduced our net leverage to 2.4%, down from 8.4% in Q2. our downside is really now well protected where Bitcoin could fall 78% to $18,000 before we are 1x covered for our liabilities by our Bitcoin value -- asset value. And our objective still stands. We're going to double Bitcoin per share over the course of the next 7 years, and we think we are on our way to that.

So I feel very strong about MSTR and where we're able to go on a go-forward basis. As a reminder, digital equity, that's MSTR is a combination of 2 things: one, amplify Bitcoin. We're going to increase Bitcoin per share; and two, digital credit. And you've seen, stretch, stream, strike, stride and potential future innovation on top of that, for example, daily calendar day dividends. Our cap structure is really a volatility transformer, right? What do we do? We take digital capital, Bitcoin, which has a ball of 36. We reduced that ball in our digital credit stretch down to what is about 10% right now.

We believe we can reduce that further down to potentially even 5% with a 12% dividend rate. And all of that excess ball and the excess returns gets accreted to our digital equity MSTR. That's basically the formula of the company and what we're able to do with Bitcoin, which is such a rare capital asset. We're the most -- among the most liquid stocks relative to our size and amongst the most liquid stocks in the S&P 500 universe.

You'll see here, if we take a look at our options open interest as a percentage of our market cap, we're #2 in the S&P 500 universe and our daily traded volume as a percentage of market cap is also #2 in the S&P 500 universe. What does that mean? That means there's a lot of interest in what we are, which is an amplified Bitcoin company. And there still is a lot of interest in Bitcoin despite all of the attention that is growing towards AI and other related stocks.

If you take away the market cap and don't look at us as a percentage of market cap, but just on total value, we are the #17 options open interest company amongst the S&P 500 universe, and we're #18 in terms of daily traded volume. And that's a pretty big deal for a company like ours, which has grown from about $1 million to over $1 billion to over $70 billion of market cap in the course of 6 years.

Last year, we were the #1 equity issuer in the world. A year before, in 2024, we were the #2 equity issuer in the world. And this year, year-to-date, we're #4, raising $21 billion in the equity capital markets. Three AI companies are ahead of us, AI and space, SpaceX, AI and Search, Alphabet, AI and semiconductors, Intel. What does this tell you? It tells you that in any Bitcoin market, we're able to access the equity capital markets. And it also tells you that there is still significant interest in Bitcoin and digital assets, and we see a bright future for the category overall.

If you take a comparison to the 2023, 2024 bull market, in that market, we outperformed Bitcoin significantly. That's the last real bull market we saw. During that 2-year period from 2023 through 2024, Bitcoin returned 454% MSTR returned 3.6x that, 1,897%. So as we believe we're entering another Bitcoin bull market, we believe because we're amplified Bitcoin, we have the potential to similarly outperform Bitcoin during the next year to 2 years. What's the difference between the previous bull market in 2023 and 2024 and what we expect to see in 2026, 2027 and beyond is we are a very different shaped company.

The last bull market, we had 132,500 Bitcoin, of which 37% were encumbered by Bitcoin-backed loans. Now we have 848,500 Bitcoin, nearly 7x what we had before, and 0% of that Bitcoin is encumbered by any of our debt or our preferreds. We added 18,000 Bitcoin in the last bull market. We have since added about 200,000 Bitcoin in this market. The Bitcoin floor in the previous market was $18,000. This time around is $17,000. Our BTC rating was 0.9x, which actually meant we had less than 1x coverage on our liabilities. This time, we have 4.6x coverage on our liabilities.

Our net leverage bottomed out at 110% in the past market, this time around 2.4%. And the USD duration that we had was 0. We didn't have any U.S. dollars on our balance sheet. And this time around, it's 3.4 years. So compared to the previous bear market to this bear market, we have strengthened the company significantly over the course of the last year. And what means as we exit the bear market into a bull market, we have a stronger balance sheet. And we think that creates even more opportunity for amplification and more opportunity for growth for our common equity over the course of the next couple of year bull run that we expect to see.

Our Bitcoin reserve, as I mentioned, was $132,000, now it's $848,000, $2.2 billion versus nearly $70 billion, $0 in U.S. assets versus $5.1 billion now, no digital credit versus $13.3 billion now and a net leverage of 108% versus 24%. So what have we been doing for the last year? We've been building a fortress balance sheet so that as we enter a full cycle, we think we can outperform the last full cycle that we went through. Since the Bitcoin all-time high, Bitcoin has fallen 35%, while our holdings of Bitcoin rose 33%.

So as Bitcoin price went down from $124,000 to $81,200, we've taken that opportunity to buy Bitcoin at a less expensive price and grow our Bitcoin holdings 33% to $849,000. So why do we think that there's an opportunity for MSTR to grow, not just because we believe that Bitcoin price is going to grow, but we think MSTR is the combination of 2 things, right? One is the net Bitcoin that we have on our balance sheet. And two, is the DTC dollar gain multiplied by whatever multiple you might attribute to that, which is really the functioning of our digital credit business.

So we can grow Bitcoin per share, and we can grow MSTR through 2 levers essentially. One is through increase of Bitcoin price amplified to our common equity and increase of our digital credit business, which increases the Bitcoin gain, which can be ascribed a multiple. And we think those -- both of those components will start to take effect over the course of the next couple of years. What else happens during a bull market? Well, what else happens during a bull market is we see MNAV start to expand, right? The 2021 bull market saw MNAV median daily MNAV at 2.28, 2023, 2.57; 2024, 2.60. We currently sit at 1.15, but we see the potential for that to also grow over the course of the bull cycle.

And as I mentioned before, ultimately, what is the goal? The goal is to double Bitcoin per share in 7 years through the use of digital credit. How does that work? And it's important to emphasize the interplay between digital credit and digital equity. If we can sell digital credit by selling stretch at $100 into the market, right, that generates amplification to the company, right? It means that we are able to buy Bitcoin and pay 12% on that digital credit and accrete all the benefits of a greater than 12% gain, which generates amplification.

The amplification increases Bitcoin per share and the increase in Bitcoin per share allows the common equity to outperform Bitcoin over time. What are the levers? Levers are lower cost of credit, which we look at very closely. The levers are higher digital credit sales, which we think we'll be able to turn on again soon. And third lever is a higher NAV. So let's talk about digital credit. I talked about MSTR, digital equity.

Now let's talk about digital credit and our 5 instruments that we have. The first, the ecosystem is scaling really fast. We're really still only 22 months into digital credit. We have 6 issuers, right, not just ourselves in a $16 billion market. Stretch is returning to health. It's trading between $99 and $100 per our commitment. And today, stretch closed at $99.99. We strengthened our U.S. dollar coverage. We've heard from our shareholders of our digital credit. That's important, grew the digital U.S. dollar assets from $2.5 billion to double to $5 billion.

And we're supporting our digital credit securities stretch. We repurchased $2 billion of stretch, and we have $957 million capacity remaining. And of course, yesterday, daily dividends were approved for stretch, which takes effect November 1 and Stripe, Strike and Stride, which should take effect January 1, and we're excited about that innovation. And we're continuing to improve our credit profile, which I'll talk through in a little bit.

So how do you think about digital credit? One thing to think about is digital credit is really a combination and alloy of Bitcoin in U.S. dollars. So much like when you take iron and you combine it with Chromium, we created an alloy stainless steel, which is stronger, which is lighter, which is better than the combination of the 2. Bitcoin with 46 years of coverage and dollars with 3.4 years of coverage creates a 60%, 40% alloy called digital credit. That's what digital credit is.

It's ultimately a better version for certain shareholders of Bitcoin and of U.S. dollars and the sum is stronger than the parts. This market, as I mentioned, scaled to $16 billion in 20 months, and it's still fairly nascent and early. It is a brand-new product never seen before in the history of capital markets, and we're pretty excited to see others come into the market. I'd mentioned our 5 IPOs that we did last year, and Strive has since IPO-ed Seta and recently SAS 2 great additional great products. MetiPlanet has announced that they plan to issue digital credit. BMNP, which is an Ethereum-based digital credit instrument was launched earlier this year.

Chad, which is the Solana-based digital credit instrument was also launched earlier this year. More was launched, and we'll see other products start to launch and Layer 2 products start to build on top of this. It is early, but it is very promising to see the digital credit ecosystem start to build out. And why is digital credit attractive? Well, if you look at the market today, there's been a lot of talk about AI private credit. Yields aren't bad at 10%, but they are opaque instruments, and they're not nearly comparable in terms of the yields that you can get on a tax equivalent basis with other forms of digital credit like the ones we've issued.

And of course, worse than private credit are junk bonds, bank preferreds, investment grade, mortgage-backed, et cetera, other instruments in terms of lower yields and different risk return profiles. As tax rates start to go up, both at the municipal level and the state level, you'll start to see that digital credit becomes even more attractive because it is a return of capital instrument. What does that mean? The return of capital means that the taxes on the dividends are tax deferred. So rather than paying taxes, it lowers the cost basis as long as you don't sell the underlying instrument.

And so you can have a tax deferred status for as long as 10 years. That compares to qualified dividends, which might pay a 20% to 35% tax. So $100 of dividends to stretch and digital credit stays at $100, $100 of dividends on a qualified dividend instrument becomes $65 to $80 and $100 $100 of interest in earnings on a taxable interest instrument like a money market becomes half of that when taxes are taken out.

So this is one of the reasons that we think digital credit is a superior instrument. We spent a lot of time thinking about after the downturn of Q2 to stretch and some of our digital credit instruments and how to improve our digital credit. And we put a capital framework in place, and we spoke about that at length on our previous earnings call. We built up a U.S. dollar reserve that is a minimum of 1 year of dividends and interest and now is 3 years of dividends and interest.

We said that we would monetize Bitcoin for the purposes of funding the U.S. dollar reserve, servicing our debt and interest obligations and repurchasing securities. We sold a little bit of Bitcoin as a result of that, but a fraction of the Bitcoin we hold. We began a digital credit repurchase program, and we spent about $2 billion buying back stretch, and we have $957 million remaining authorized. We put in an MSTR repurchase program of $1 billion, of which we have used none of it so far. And we said we're going to keep the stretch dividend right around 12%.

We're not really going to increase it because we don't think that it will drive more demand for the product in a material way. And we don't think it's best for our common shareholders to increase the dividend obligations associated with stretch. The sixth pillar that we added over the course of the last quarter is we added USD cash, and we added 242 -- which is currently at about $242 million. So what's the point of the USD cash? I'll start with the point of the USD reserve. It is designed to support the preferred dividends and debt interest.

In fact, it is reserved and set aside explicitly for the purpose of paying dividends and interest. The U.S. dollar cash balance about half a year of USD duration previously. Now we have 3.5 years of USD duration. And we think that's quite important. USD strength is a new metric that we put in place and USD strength is the USD duration as a percentage of the blended duration of our perpetual preferred instruments and our convertible instruments. And what you see there is the USD strength gives basically an estimate of how much USD we have to pay dividends over the McCoy duration of our instruments, and that's increased from 6% to 40%.

So we think these are both very strong metrics, and it shows the strength of our credit and the investment attractiveness of our credit. What else have we done? We've paid dividends, 40 dividends over the last 2 years. We intend to continue to pay all of our dividends across all of our instruments. We think it's important to do so to drive confidence in the digital credit instruments, which ultimately drives confidence in digital equity and MSR.

We introduced some of these metrics last quarter, and I want to reemphasize these metrics because they're quite important ones. And they're good ones to think about how does digital credit and digital equity interplay and how does Bitcoin ARR impact it. I'll first start with the hurdle ARR, 10.6%. You might say, why is it not 12% the same as the stretch dividend rate? Well, the hurdle ARR blends all of our instruments together. And as long as we see Bitcoin go up more than 10.6%, what that means that all of the accretion above the 10.6% goes to our equity, right?

And so that's what we saw happen in Q3 where Bitcoin went up significantly and the equity saw the accretion above and beyond the hurdle ARR. And that is one of the reasons we are able to produce amplified Bitcoin through our common equity. And then the second ARR is the breakeven ARR. This says that as long as we see 2.2% increase in Bitcoin price on an annual basis, we'll be able to satisfy our dividend and interest obligations. If we were to want to, just by selling the Bitcoin that we accrete the Bitcoin value we accrete the 2.2%.

And that means into eternity, we'll be able to continue to pay dividends and interest, which means that the digital credit works, but it may mean that the equity could underperform Bitcoin because we're not over our hurdle ARR. The last ARR is our floor ARR, 17.4% -- if we see Bitcoin going down at 17.4% a year, what that will mean is the ability to cover our credit and our debt goes down to 1x. And so at that point, the credit will get stressed below 17.4% ARR, and it means we may want to consider other different structures for the business.

So how do we think about these 2.2% breakeven ARR, 10.6% hurdle ARR, negative 17.4% Bitcoin floor ARR. If we look historically, and we look at every 4-year window back to 2015, Bitcoin has experienced a rolling 4-year ARR on average of 42.7%, which is pretty incredible, the returns of Bitcoin over the last 10 years. But more importantly, Bitcoin has beaten the 2.2% breakeven ARR in every single 4-year window during that period, right? So that breakeven ARR, our ability to pay our interest and dividends through Bitcoin increases historically has occurred every single day in that 4-year window.

And we put another metric in here, which is the expansion of the U.S. monetary supply, M2 supply, which has been 1.9% on a 4-year annualized growth basis. And it's interesting to see how Bitcoin 4-year ARR has moved roughly with that M2 monetary supply, as you might expect. We have 2 pages on our website that I thought would be useful to go through. If you ever go to strategy.com and go to the credit page, you can see these 2 analyses. And these are important analyses because what I would state is early on in the development of digital credit, people have a hard time understanding what is the risk, what are the credit spreads and how do these ARRs come into play.

And so let me explain the first page on our credit tab at our website, which really goes through the credit analysis of our different instruments, our convertible bonds and our preferred stock. So to analyze the credit, there are a couple of assumptions that we make, and you can change these assumptions on the page. First, we assume the current Bitcoin price right around $81,200 as of the end of last Friday. the U.S. dollar assets we have and then you enter 2 additional things, which is the Bitcoin volatility and the Bitcoin ARR.

Here, we decided to be conservative and put 10% in. Recently, JPMorgan released a study that ascribed a 10% Bitcoin ARR. So we thought that would be a reasonable input point and 40% Bitcoin volatility is what we've seen historically over the course of the last 4 years. When we enter those things in and we run the analysis, what are we looking for? First thing is we look at what is the BTC rating, right? What is the coverage that we have over the existing notional value of our preferred stock and our debt.

And if you go down to the most junior instrument stride, it means we have 4.6x coverage of Bitcoin over our preferreds and our debt. right? So what is the risk that, that BTC rating goes to 1? What is the risk that we will only have Bitcoin, right, to cover 1x all of these instruments. And the risk that occurs at the end of the McCully duration for our most junior instrument is 6%. If you want to play around the model and put a 20% Bitcoin ARR in there, you'll see it's quite sensitive to that.

And that actually takes the risk, the BTC risk of an instrument like SRD down to roughly 1.5%, right? With that risk, we can impute then a credit spread for each of these instruments. And you'll see the most junior instrument Stride has a credit spread of 86, stretch has 54 basis points. In all of these cases, they're investment-grade instruments with that level of BTC credit. right? And the last thing we provide here is the BTC floor, right? And this one makes probably more common sense. We're at $17,662, that basically means that our Bitcoin stack will be valued at equal to our cumulative notional of all of our debt minus our U.S. dollar assets and our price.

But the big picture here is if you look at these instruments on a Bitcoin risk and credit basis, they are very low-risk instruments. Then we have another page says, well, how do you equate this to a price, right? And what is potentially a reasonable modeled price or a derived price for these instruments? And you'll very quickly understand that if you take a look at the effective yield of these instruments, right, and you look at something like Stretch, which has a 12% effective yield, SRD, which has a 14.35% effective yield.

You take out the risk-free yield, you'll see a market spread for these instruments that is much greater than the BTC credit spread that we were able to, right? And if you were to take that differential, you might be able to derive a much higher price for these instruments. What's the reason for showing this model? The reason for showing this model is, one, Bitcoin risk is not well understood and not well modeled today. So we thought it would be good to provide a transparent way to look at this.

And two, probably more importantly, is we are early in the world of digital credit. Early in digital credit. We're a couple of years into the products. It will probably take another year or 2 years for the market to understand, but we think there's a lot of opportunity in digital credit. And if you just take a step back, right, Stretch is a 12% now daily dividend instrument, which is 4 to 5x collateral covered. And we think it's a great option for folks out there. It has shown the ability to go through a Bitcoin bear cycle, and we're fairly bullish on this market going forward.

So let me deep dive into stretch and talk a little bit more about that. Highlights of stretch as of October 2026. I mentioned a 12.1% effective yield, $160 million of trading liquidity. It is still the most traded preferred in the entire global capital markets by a lot. The volatility is starting to come down to 10%. I believe we can get it below 10%, potentially approaching and below 5%. And I mentioned the U.S. dollar strength.

Even after buying back $2 billion of stretch, it's still $8.4 billion of notional, very large liquid perpetual preferred instrument. And the $8.4 billion of notional is backed by $5.1 billion of U.S. dollar assets, $69 billion Bitcoin reserved, 46 years of dividend and interest payments between our U.S. dollar assets and our Bitcoin reserve.

Look, we recognize that stretch had a pretty significant dislocation at the end of June. The price went down to about $75. What I'd say is the company is committed to taking actions and we took actions to get it back within its target range. Not only did we get it back within its target range, we've got it back to nearly par $99.99, and we're committed to continuing to drive the instrument to trade at a range that we think is equivalent to what we think the product is valued at.

What did we do? We introduced a new capital framework. We raised the dividend rate to 12%. We went to semi-monthly dividend payments now to daily dividend payments. And we increased the U.S. dollar assets, and we started buying some stretch back. Interestingly, we started to understand a little bit more the investor base behind stretch. In the past, we've talked about 80% retail, 20% institutional ownership as of 3/17/26.

But we realized that part of this retail looks a lot more like an institutional long-time holder than a retail potentially fast money investor. High net worth individuals, meaning folks with over $1 million in stretch represent 24% of the total stretch investment base. And what we've seen happen over the course of the last 6 months, institutional increased from 21% to 23%, nearly doubled their holdings. But probably more interesting is the high net worth individuals increased from 24% to 29% and more than doubling their holdings.

And it's important for us to look at that and it's important for us to understand that market because we think that's where potential growth is and very solid growth. Speaking of institutional holders, we are now the largest holding in the largest preferred ETF in the world by BlackRock. We represent 3.49% of PFF. If we look at BAX, the sixth largest preferred index in the world or ETF in the world. We're also the largest there and 7.58% of the weight of the total index. Mike will talk more about this. People are building on top of stretch. So the ecosystem are not just owners of stretch.

It's not just ETFs, but it's an entire ecosystem of companies in the DeFi space, stable coins, in the tokenization space, funds and ETPs, cash and yield accounts and corporate treasuries who are building at top of stretch. And this is our market, right? The market obviously includes retail, but high net worth individuals, institutions like this are going to build products on top of stretch and will cause it to grow from $8.5 billion to tens of billions, if not hundreds of billions over time.

That's our objective. By growing a stretch, we'll be able to grow MSTR and the cycle, the virtuous cycle continues. As Andrew said, thank you to all of the folks who voted positively to move stretch to daily dividends. The calendar day accrual here is a pretty big deal, right? People will start to realize the benefits as digital credit and digital transformation of capital markets occurs. We think that's going to start happening this year, right?

Bitcoin already trades 24/7. We see equities moving in that direction. You're going to start seeing the NASDAQ move to 7-day trading towards the end of this year. Tokenization is going to accelerate that even faster, especially in the U.S. with innovation exemptions that have been put forth by the SEC. We expect that market to grow very fast, too. And what are you going to build on top of? What are your tokenized securities. Some of them may partner with or build on top of products like stretch.

Last thing I'll leave it with before I hand it over to Michael is Strategy World. 2027 is going to be back in Orlando next year, March 29 to April 1. And I invite everybody to join us there. We're going to have an awesome time. We'll run our Strategy Software Conference alongside our Bitcoin for Corporations Conference. alongside the True North conference, and it will be a great time. So we'll speak to you before then at our 2026 Q4 earnings call. But go ahead and register, and I hope to see you all in person.

And with that, I will hand it over to Michael Saylor.

Thank you, Phong. And I want to thank all of our shareholders for being with us today. I'm going to say a few words about Bitcoin and digital capital and the way the ecosystem is evolving. So we feel like we're entering a bull market. We bounced off the 200-week moving average. Bitcoin's dominance is growing. Institutional demand is back. the banks are embracing Bitcoin. We feel like digital credit and banking credit could absorb all the new supply. And strategy is leading on chain.

We're the most tokenized company in the digital assets ecosystem. This chart tells the story. Bitcoin has traded above a 21% premium for 78% of its history. So we look at the 200-week moving average as the base of support. And we've gone through about a 1-year bear market. We would think that we should see 2 or 3 years of a bull market at this point. We're only about less than 24 months, 18 months or so from the next halving. The halving will be a big deal, but there are a lot of other factors that are driving this.

One thing that's very auspicious for Bitcoin is that Bitcoin market cap dominance is growing consistently through the cycle. It's about 67% of the market cap of all the crypto capital assets in the world. And so Bitcoin is 2/3. Everything else is the last 1/3. It's pretty clear that Bitcoin is the digital capital network, the dominant digital capital network in the world. It will not be displaced. And that's an important thing we can build upon.

The structural catalyst for Bitcoin adoption, fiscal debasement, the money supply is going to expand, bank adoption, digital credit, capital flows from institutions, tokenization, the AI disruption, which ultimately is going to drive capital into Bitcoin. And as I mentioned, the Bitcoin halving coming up in 2028. Here, you can see the capital flows and capital returned to Bitcoin ETFs in Q3 to the tune of about $6.3 billion of inflows. We thought that was very auspicious.

This chart structurally tells a story -- and the story it tells is that the government is running deficit financing. And that being the case, the money supply is going to have to expand sometime in the coming few years. There's no reasonable opportunity to do anything other than monetize the debt. So we have cheaper sovereign debt that's going to be refinanced at a higher interest rate. Either the interest rates have to come down or the balance sheet of the Fed has to expand. We don't know when this will happen or how it will happen, but this chart illustrates that it's going to need to happen.

In the aftermath of the stall of the clarity bill in D.C., we got favorable regulations and favorable guidance coming out of Treasury, the SEC and the CFTC. The treasury guidance was very positive for digital currency. The SEC guidance was very positive for digital securities and the CFTC guidance was very positive for digital derivatives and digital commodities and digital exchanges. So this is all very digital assets positive news, and it's all happened just this quarter. We track banking adoption very closely.

We look at all the major banks and the degree to which they custody crypto assets, the degree to which they extend credit, whether or not they deal with Bitcoin derivatives or wrap Bitcoin or the actual native Bitcoin and whether they underwrite it and also their stance on it. And the stance of the banks has just turned positive and has been consistently getting better. If you look at this chart, we can see we're at a 9% banking adoption December 2023. We are 24% in December of '25. We're now at 34%.

We'll continue to track this, but the banks have all the money. And this is a monetary revolution. And the most important thing for Bitcoin success is that it be legitimized as a capital asset by the financial institutions of the world and that we create credit on top of it. If we take a look at the major banks, we can see very positive moves by Morgan Stanley, Citigroup, Deutsche Bank, Standard Chartered, Banco Santander, lots of broader digital assets momentum across the board as it relates to stable coins, tokenized securities and the like.

This has the effect of derisking the asset class, accelerating institutional adoption of the asset class, sending a signal to conservative and traditional investors that it's okay to allocate to the asset class. And all of those things are just very positive for Bitcoin. So how much capital do we need in order to drive the Bitcoin price? Each week, there's about $256 million of natural Bitcoin produced by Bitcoin miners available for sale. It's 450 Bitcoin a day, we're up about $37 million a day. If you have $37 million, you can buy it all.

After the halving coming around April of 2028, that $37 million a day of supply will become $18 million of supply. That means that right now, $13 billion a year buys all the Bitcoin produced in a matter of less than 2 years, $6.7 billion would buy all the Bitcoin produced. So if you imagine the impact on the commodity price, if you knew that the production of oil was going to be cut in half or the production of gold was going to be cut in half or soybeans or natural gas or anything, that would create a price shock.

If you look at the amount of Bitcoin that's produced and you consider that number, $260 million a week. And then you consider that U.S. banks are creating $17 billion of credit in the same time period. The banks are creating incredible amounts of credit. Largely, this asset class has been unbanked for its history. And you can see that as it permeates the banking system, as the banks create credit, then that's the equivalent of buying that much or taking that much Bitcoin out of production.

And so ultimately, the creation of bank credit is what drives the prices of equities up. Bank credit drives the prices of real estate up. Bank credit drives the prices of sports team franchises up and trophy assets like paintings. If the bank will lend against it, the prices will appreciate. When you have to pay cash, that depresses prices. And so the main cycle driver here is going to be the creation of bank credit. And you can see the order of magnitude here. And it just doesn't take that much credit in order to absorb the entire natural supply, then the price has to move up in order to find a willing seller at a higher price.

As I've said, tokenization is accelerating. Strategy is the most tokenized company on chain. We didn't do anything for this to happen. This happened because we just happen to have securities that are ideal for tokenizing, right, either amplified Bitcoin or digital credit. Both of those are correlated to Bitcoin, but you can trade them one way or the other against the Bitcoin 24/7, 365. So these are very valuable in the DeFi ecosystem and the digital asset system. And of course, one thing that DeFi does very well is it creates leverage and it allows you to say, lever something 2x or 3x or 4x under very flexible credit terms.

The thing that you would want to lever would be a stable, highly liquid, low volatility, high-yielding instrument like digital credit. Levering tokenized money markets at the cost of tokenized money markets doesn't really provide you much of an effective yield. But if something pays 8%, 9%, 10%, 11%, 12% and you can borrow money at 4% and you start to put 1, 2, 3 or 4 turns on it, then you can create digital income. And so digital credit is a building block for digital income.

And by using anywhere from 2 to 4x leverage, and using stablecoins and the global marketplace, you can see how you could create a fund that pays 5%, 10%, 15% or 20% in yen, euros, pounds or dollars as you like and you can just program up and program it down. And so clearly, tokenization is interesting and the market is very innovative, and we expect to be participants in it. This gives you another snapshot and explains why tokenization is so powerful.

When you tokenize a security, it starts to trade 24/7, 365. It also starts to trade globally. It's trading in Singapore or Hong Kong or Asia or Africa or South America. It also becomes programmable. And so you can tranche it, slice it, amplify it, deamplify it. The settlement goes from T+1 to nearly instantaneous. You can apply your artificial intelligence, your agentic finance to it. Agents want to do 1,000 things in the weekend, whereas your bank doesn't want to do anything on the weekend. And generally, high-speed trading in a TradFi world is moving money around once or twice a week. And of course, in the tokenized world, that might be once or twice an hour. And who knows, it might become faster than that.

You can also -- it's also possible to compose very interesting different products. So product innovation accelerates. -- tranching risk, creating yield, converting currency, hedging, plugging into perpetuals, -- all of these things are interesting. And a lot of traditional finance markets, you can't innovate at all. It's just literally not allowed to create many of these financial products. In other cases, it would take 6 months to 3 years to get approval to issue the product.

And so TradFi markets are crippled and conventional and slow and inefficient -- and they're also beset with all sorts of capital controls that slow down the motion of money. In the tokenized markets, these -- to say this stuff happens 10x as fast is probably an understatement. Innovation can happen 100x to 1,000x as fast and the money can move 1,000x orders of magnitude quicker. And of course, what does this mean? It means the tokenized economy is delivering better financial products, like who in Japan is getting an offer of 15% yield in yen, nobody, right? You can deliver better financial products with different characteristics, orders of magnitude quicker and you can make them easier. to deliver.

And so we actually think that the nexus of innovation is going to be in the tokenized economy. And we think a lot about how do we optimize our securities to be ideal for tokenizing. One obvious thing is you make it pay a daily dividend because people can actually take action every day of the year, including holidays in the tokenized economy, they can't in the TradFi economy. Why does on-chain Capital gravitate toward us? Well, stablecoins offer 0% yield. STRSC, right, has a par value of $100. It is targeted to be stable versus the dollar, and it is 12% dividend.

And of course, Bitcoin holders are seeking upside, but tokenized MSTRs amplify Bitcoin. A lot of people ask about AI. Anyone that's used it know that it's disruptive and transformational to just about everything in the world. It's eroding moats. So AI will erode moats. What moats? Well, clearly, it writes software faster. It delivers services better. It creates media. It's going to provide legal consultation, education services. It transforms services. It transforms operation. It transforms the products themselves. It makes the products better and more intelligent. It changes the nexus where you deliver products.

Lots of industries are affected. Some are extremely affected. On the other hand, what is it that the robots and the bots can't create -- they're not very good at creating land. They're not very good at creating an acre in Palm Beach. They're not very good at creating commodities, especially scarce commodities. And of course, the scarcest of all commodities is Bitcoin. Bitcoin is the greatest of commodities, and it is the great and the only digital scarcity. So as the market evolves and absorbs AI, what you can expect is lots of companies are going to get dematerialized and demonetized and degraded by AI.

Lots of products and services will be transformed. Many will go away. There will be magical products that will emerge, self-driving cars, intelligent robots, -- you will see web -- someone will probably figure out how to provide medical, legal, accounting, financial advice to 1 billion people for the -- a little bit more than the cost of the compute. So lots of things will transform. -- lots of wealth will be created, but that wealth has to flow somewhere. It's going to flow into trophy assets, trophy real estate, products that you can't manufacture with a robot or a bot.

And of course, if I do want to transfer and preserve capital, move it across time and space, then the best way to do it is with digital capital, and that's what Bitcoin is. So we see Bitcoin as the winner. We see lots of chaos and disruption everywhere else in the economy. But ultimately, the world will be wealthier. There will be explosion in productivity. And the quality of living of the consumer should increase over time. There'll just be massive disruption in careers, products, services, corporations as we get there. This chart really shows a very important idea. if you're buying semiconductors that provide intelligence, they're 650x cheaper this year than they were 3 years ago.

So there's a -- so semiconductors are a depreciating asset. We learned this in the Bitcoin mining business, where it turned out to be a much better idea to buy $1 billion of Bitcoin than $1 billion of Bitcoin mining rigs. And that's because there's a massive -- a very rapid depreciation cycle on hardware to provide any particular service, whether it's security or intelligence. So digital intelligence is going to increase abundance, but it's not going to increase the amount of Bitcoin. Bitcoin is scarce, lots of other things. Intelligent is not going to be scarce. Anything that you can create with intelligence is not going to be scarce. It's going to be quite abundant.

And so it makes sense to capitalize a company on Bitcoin, the appreciating asset, not the Bitcoin mining rig, the depreciated asset. It makes sense to capitalize on something scarce and not something which is depreciating. And so I think that the market will start to realize that. This is why, for example, digital credit backed by Bitcoin is a much better idea than private credit backed by high-performance compute data centers because you can see the hardware in the data center is depreciating. It's a very competitive market. It's going to continue to be competitive.

And on the other hand, Bitcoin is going to become less competitive. There's only 900,000 Bitcoin left to come in the next 100 years. And so even as we exponentially increase the availability of intelligence and everything related to it, we're going to exponentially decrease the availability of digital capital and everything related to it is just going to appreciate. People ask about quantum computing. Are we ready for it? Are we ready for AI hacks and the like? The answer is the industry takes all these things very seriously.

We have a Bitcoin security consortium. It has the major holders and the major businesses providing economics products and services related to Bitcoin in it. companies like Coinbase, like Anchorage, like Fidelity, like Galaxy, like Blockstream like Block, like BlackRock, like Arc. We meet regularly. We support Bitcoin-related security research. We coordinate. And our focus is on making sure that we contribute to the stability and the security of the overall protocol. We'll continue to do that. There have been dozens and dozens of things people have been concerned about with regard to the network over the past 15 years.

Over the coming 10 or 15 years, I'm sure there'll be another few dozen things that will pop up. as they pop up, some of them are real, some of them are just FUD. And as they evolve in consensus forms that it makes sense to address them, then we're ready and able to do so. And I think this is functioning in order to provide comfort to any Bitcoin investor that all the companies in this industry take security seriously, and we're engaged and coordinating.

Future outlook. Bitcoin is 10 basis points of the world's capital assets. You can see it's de minimis 0.1%. We expect over time that it will grow to be 1%, and then it may grow to be a few percent. But you can see Bitcoin only needs to be a few percent of the world's assets to be extraordinarily successful. And the thing that's going to drive that growth is institutional adoption, Bitcoin, the legitimization of the asset class, the creation of credit, the creation of equity and other instruments on top of Bitcoin, the applications of Bitcoin.

We're headed toward a $100 trillion industry. That's where we think we'll get to. And $100 trillion when we get there, may still only be single digits of global wealth. And so it will be a part of the capital structure of the world, but $100 trillion is a lot of money. What are the applications? Bitcoin is digital capital. Digital equity built on top of it is the second application. Digital credit instruments, as we've talked about, is a third application. Digital debt, debt instruments based on Bitcoin, a fourth application. Digital currency, stable digital assets that are backed by Bitcoin will be a fifth application.

Digital money, something that's a stable currency equivalent that's paying you yield is another major application. Digital derivatives, perpetual futures, crypto derivatives, all flavors of options and perpetual contracts, another application. And then digital collateral, the capital that we embed into our robots that we embed into our agents that we embed into exchanges that we use as financial infrastructure for all digital commerce. All of these are very compelling applications, and they all require digital capital and therefore, Bitcoin in order to function effectively.

I think it's reasonable to consider 2 other industries when we look at the way the Bitcoin industry will grow. If we start with oil, the oil industry had a first application, it was kerosene and people use kerosene for light. The original application of oil was reading lamps at night. And it provided a utilitarian value to the middle class such that they could afford light at night. because before that, you're looking at whale oil and whale oil was absenely expensive compared to kerosene. Eventually, though, that light application was displaced by electricity.

It was obsolesce and the oil industry moved on to gasoline and then fuel oil and then heating oil, jet fuels. of course. And of course, it fueled cars that didn't exist when it was invented. It fueled planes that didn't exist when we first discovered kerosene. And then we saw plastics and fertilizer and asphalt and then we had lubricants and synthetic and then we had fabrics, nylon and polyester and licra. And then it became a feedstock to pharmaceuticals and cosmetics and even food and coatings.

And so if you think about all the applications of oil, they're everywhere, all around us, and they all started with kerosene. And the entire industry was a bunch of very innovative companies that figure out how to crack a barrel of oil into all of those different things and sell it to all of those different downstream manufacturers or service providers. Now we take electricity, it's a similar story.

The first application was the electric light bulb that was the killer app. But eventually, electricity drove motors and factories and refrigerators and air conditioners and radio and television and telephones and computers and Internet, data centers, electric vehicles. And of course, now it's AI, things for us. And when they started with a light bulb, nobody ever thought that eventually we would have Starlink and the AI to be thinking for us. But it's a very logical evolution. And when we look at Bitcoin, the first application was peer-to-peer cash. okay, how do I buy a pizza with 10,000 Bitcoin or buy 2 pizzas with 10,000 Bitcoin.

But it's a mistake to think that the industry stays mired in that one first use case. That would be like electricity just sticking with light bulbs and oil sticking with kerosene, right? What we see evolving is digital capital, digital equity, digital credit, digital debt, digital currency, digital money. That creates digital income. You want 20% in yen, euros, pounds, dollars, pick your currency, digital derivatives, a 10x perpetual, right?

Digital collateral. How do I actually put this collateral into my prediction market exchange, into my commodities exchange? How do I -- it's an ideal collateral to fuel every financial application in the world. Digital identity. You can use Bitcoin to create digital identity with public-private keypairs. Digital authentication follows next and then digital commerce. And so Bitcoin is the basis of a whole set of digital applications, great ideas, outgrow their first use case. We won't be a $100 trillion industry based upon swapping Bitcoin for pizza.

We will become a $100 trillion industry based upon hundreds or thousands of products created by thousands of companies, all to solve a different problem in the world of digital finance and digital commerce. And we're very enthusiastic to be part of that, but we expect many other companies to follow in our footsteps. And that takes us to Bitcoin treasury companies. There are 4 issuers of digital credit right now. They've issued 13 securities that are all based on Bitcoin. Those BTC treasury companies like Strive, like MetapPlanet, like Smarter Web, those treasury companies have acquired 220,000 Bitcoin this year. That works out to 165% of all the Bitcoin mined this year.

So the BTC treasury companies are buying 1.6 Bitcoin for every Bitcoin created by a Bitcoin miner. You see a supply shock forming. It's right here in front of our eyes. As the BTC treasury industry grows, their demand for Bitcoin grows, that drives up the price of the Bitcoin, driving up the value of their reserves, improving their credit, improving their equity, allowing to raise more capital. buying more Bitcoin, growing the industry, allowing them to create new innovative products like Seta, like SAS, like more, like Stretch Paying Daily.

There will be a continual set of new products. Those products will serve new investor bases. They will broaden the investor base that attracts liquidity, that legitimizes the industry that will legitimize digital credit, that will legitimize digital equity, that will legitimize digital capital. We're not competitors. We're cooperators. We're all cooperating in a virtuous cycle and a virtuous relationship in order to strengthen digital capital, digital credit, digital equity and every other digital product or service that is backed by Bitcoin.

And I laid out a dozen, there will be hundreds of thousands. We're very early on in this industry's development. You can see, if you look at this graph of issuers, multiple issuers just make the category more investable. There are a lot of investors they can only have up to 5% exposure in issue or 2% or 1%. So if there are 3 issuers, they'll have 15% exposure. But if there's 1 issuer, they'll have 5% exposure. So we need multiple companies in order to diversify the risk in order to allow all of the capital investors to comply with their mandates and manage risk per their risk models and -- and so issuers are critical to growing the industry, but also issuers create innovations.

The issuers -- like we're not in a position to create a digital credit instrument in pounds, but Smarter Web is. We weren't in a position to create a daily dividend, but Stryve was. And so new issuers will be able to do different things. MetaPlanet is creating new innovative instruments for the Japanese market. We're not in a position to do that. So all of us are working together in order to grow the global market. And as securities begin to get tokenized, then that will make it easier for all of the global players to participate in other markets and to innovate in a more rapid fashion.

I see this as very auspicious for the space. We can expect that AI is going to continue to push the boundary. It's pushing the boundaries of mathematics. It's pushing the boundaries of physics. It will push the boundaries of finance. We have designed all of our major credit instruments using AI. AI is critical for investors to understand them. It's critical to the models for pricing them. It's critical to solving the product design, the securities, the legal issues, et cetera. I think that the growth of AI is very auspicious to the growth of digital finance, and we just see this as a big plus for the industry in general.

So at this point, we have instruments for every time horizon. What I would say is if you don't need your money for 4 years and you're an equity investor and you believe in digital credit or you want amplified Bitcoin exposure or you have to buy an equity instrument, you would buy digital equity like MSTR. If you don't need your money for 4 years and you want to invest in something without counterparty risk, you would buy digital capital, you'll buy the Bitcoin. If you're willing or you need to buy it in an exchange-traded wrapper, you'll buy an ETF like Bid. That's fine.

There are many people that are credit investors. And if you're a credit investor and you have a long time horizon, like more than 4 years, maybe you want to put a piece of credit in a retirement portfolio or a trust, a family trust and you want to hold it for 30 years. Well, then we have instruments like Stripe, Stream, Strike Stride, SATS. All of these are long-duration perpetual credit instruments. They'll pay you a fixed dividend at par, whatever that dividend is 10% or the like. And you can lock in that yield for a decade or 20 years or 30 years. And that makes total sense if you've got that time horizon and you don't need the money back in the next few months or few years.

You will probably absorb a bit more volatility in order to get that duration, but it's like holding a 20- or 30-year bond, a government bond as opposed to holding a 1-month or 3-month T-bill. And so those perpetual instruments meet a need in the market. If you don't -- if you have money to invest for 4 months to 4 years, -- we would say you're a treasury credit or shorter duration digital credit investor and there are instruments like STRC, what we offer or SDA, what Strive offers. And that's for a shorter duration investor. If STRC falls off of par or breaks below par, then the company is going to use all of its capital and its best efforts to return it to par as soon as it can.

And I don't think we would ever represent, for example, that we could do it in 4 days or 4 weeks because that might be pushing the edge of the envelope. But you can see that here in 4 months, we've shown that we can -- and we think that it's a general reasonable expectation that the company will return STRC to par within 4 months if it were to lose or fall below par and out of our trading range. And we would do that by buying it back. We would do it by adjusting our cash balances.

We would do it by adjusting our capital structure, et cetera, whatever we needed to do that we thought was rational at the time. Now if you need your money back in the next 4 months, maybe you have money and you want to invest it to get some yield, but you need it back in 5 days. You're a money market investor, and we would recommend that you put your money in a money market. Right now, money markets pay SOFR or something like that. We don't have a digital credit product that is for people that want to invest money for 0 to 4 months.

But partners are generating and innovating. And in the digital asset space, people are creating digital money type instruments. And over time, I expect that Bitcoin treasury companies will create digital money type instruments that will meet this need. And so that's an opportunity for all of us that we're very enthusiastic about. What are we? Well, we are emerging as the Central Bank of the crypto economy. At this point, we're the best capitalized public entity in the crypto space. We have about $74 billion of capital right now. That would put us 56 against -- as the 56th largest central bank in the world.

And we're moving up these rankings at a rapid rate. We will continue to grow. And our job is to bridge the TradFi market with the DeFi market, the Bitcoin, the BTC market with the fiat USD type market. And so we will -- and we expect that we will bridge the gap between Bitcoin and stablecoins, between capital and credit, between TradFi and DeFi, and we will work to strip volatility from Bitcoin for people that don't want V, and we will amplify volatility for derivatives traders or equity investors that want more vol. We will extract yield, we will manage risk.

And we will convert currencies, right, converting BTC into a USD instrument or a euro instrument or something similar. So it's a very powerful business. We think that if you want to do this, you need a tower of capital, in this case, $74 billion. We think it's a big -- it's a very defensible moat if someone wanted to invest $100 billion or $200 billion or maybe even more than that in order to compete with us, they would have to buy that much Bitcoin.

And if someone went into the market and tried to buy $200 billion of Bitcoin right now, it's quite likely that our credit spreads would compress, demand for our credit would explode, our equity premiums would expand, demand for our equity would explode. The price of Bitcoin would appreciate, our reserves would appreciate. And our overall company would grow faster than they could buy Bitcoin, probably much faster. So it's very difficult for anyone else to displace us in this position because we've established this large defensible Bitcoin holding.

We intend to use those reserves substantial BTC reserves and substantial USD reserves in order to create the digital credit, which bridges all the global markets, the global credit markets, all the currency markets with the crypto markets, with other forms of capital and with the traditional finance markets. We think it's a great business opportunity. It needs to be done. And you can already see based upon our success raising capital in the TradFi market and our success tokenizing our securities in the DeFi markets that we're making great progress toward this ultimate vision.

And with that, we're ready for Q&A, and we look forward to answering your questions. Thank you for staying with us.

Thank you, Michael. I'd like to welcome all our Q&A guests and invite them to come on video. We look forward to hearing your questions. We go one at a time. I'll call your names and you can direct your questions to the management team. For the first question, I would like to invite Andrew Harte, Director and Fintech Analyst at BTIG.

Good work this quarter. So Slide 26 frames the stronger balance sheet today compared to the previous bull market. And Phong, you talked about the balance sheet enabling strategy to take better advantage of a bull market with increased optionality. So I would love to hear what exercising that optionality looks like? And what are the key differences in how you plan to manage the business in the next bull market versus the prior ones?

Well, I can start, and I'm sure some others can join in. The big difference is, one, our Bitcoin balance is almost 7x larger is fully unencumbered. We have U.S. dollar balance and all of those things allow us to issue additional credit, which we weren't able to do before, right? Before, we were relying on primarily leverage through convertible bonds. We've talked at length why we think that it is inferior. One is there's just a limit to the size of the market of convertible notes. It's a less liquid market. It's over the counter, means retail can't participate.

Amplifying the company through perpetual preferreds is far superior, and now we're able to do that on the back of nearly $70 billion of value in Bitcoin, which means that if we wanted to, we could raise $10 billion, $20 billion, $30 billion through perpetual preferreds, which if we pay 10%, 11% out at and Bitcoin goes up 30%, 40%, that creates amplification for the company and it grows the equity. So that's the big difference is we're a much larger company, and we have now a new strategy, which is digital credit.

And Mike mentioned, that's just issuing digital credit ourselves, then there will be companies in the DeFi space and the TradFi space building products on top of digital credit. No one is building products on top of our convertible notes, right? Now we've got DeFi. We've got traditional finance companies that over time will issue stable coins. They'll produce returns, putting digital credit behind it. So I think the opportunity is pretty tremendous over the course of the next 1, 2, 3 years.

Yes. The point I'd make is you need a lot of capital in order to create a lot of credit. And so if you have a lot of capital, like we could create $10 billion, $20 billion, $30 billion of digital credit right now with our existing capital structure without raising any more equity capital and without Bitcoin appreciating. So we have a lot of credit capacity on the balance sheet now. And of course, we can create different types of credit. Are you creating BTC 5-rated credit, BTC II rated credit, right? The amount of risk in the credit and the amount of volatility in the credit is important to various types of investors. So one type of credit we're very interested in is digital money. How do you create 0 volatility digital credit?

And of course, you need a lot of capital to create 0 volatility digital credit. You need a lot of capital to create of all 5. And so we think that we have -- we are using our capital as a very powerful asset, and we're positioned for the next bull run, but the company's optionality is quite powerful now because we don't have to rely upon Bitcoin to do the heavy lifting or the equity to do the lifting. We could use our balance sheet to do the heavy lifting right now.

And that means we can meet a certain credit obligation or we can sell a certain type of credit to a credit investor or we can create new forms of credit with different volatility and risk profiles and different liquidity profiles as well that will also tap in and activate new markets. And so we're excited about that.

Thank you, Andrew. Next, I'd like to invite [ King Hoi ], Founder and CEO of Treasury.

I have 2 questions, if I may, one about equity and one about credit. On the equity side, you sold more than $5 billion of equity this quarter through ATM and the majority of that went into raising the cash balance and into buying back SCRC. And it's clearly needed to stabilize the capital structure, which you've done. Now that is the case, I would love to get maybe some guidance or ladder even about how you think about where the equity ATM is accretive so where you would really switch it on again to buy Bitcoin. And on the other hand, if the MAV stays sort of where it is or lower, where at which point it would make sense to actually sell SCRC, assuming it goes above par again to buy back actually MSCR itself?

And then on the credit side, if I may, clearly, you've done a great job over the quarter, stabilizing SCRC, bringing back very close to par, below par. And actually, it surprised me a little bit why it hasn't been a bit stronger given the buybacks you've done, the cash you've raised. And I was wondering from your conversations with credit investors, institutional investors, what is it that would make them really buy this in size? Is it the coupon? Is it the cash balance? Is it some structural features? What would make it happen? And what would get us to $100 billion or $1 trillion kind of asset, right? Is there sort of a key feature that will allow it to happen from where we're sitting now?

I can start, and you put like 5 questions in there, King, so I'll try to get to all of them. The first question, what takes Stretch to stabilize at par? And why didn't it happen faster? First, I'll say is stretch went from a $2.5 billion IPO to $10.5 billion in the course of about 8 months. You might be able to argue that we overcharged it, right? And we brought in some capital that wasn't the most healthy. And so I think it overcharged, dislocated from par went down to $75, money exited, money looking for accretive principal growth entered, and we had to go through a cycling of the instrument. And so it ended up taking from June to now about 4 months to do. I think we'll be at par as to get par pretty closely. But I don't think 4 months is unreasonable in an instrument that grew that fast. So that's one.

Two, how do we want to buy Bitcoin. The primary way to acquire Bitcoin is by issuing digital credit, STRC or other instruments that start to grow over time or other digital credit instruments. And when we raise $1 billion to $2 billion a month on a stretch, I think one thing we'll likely do this time is we'll put some of that into the U.S. dollar reserve, and we'll use the remaining to buy Bitcoin. And then the idea would be to issue equity above 1x NAV or greater to pay the dividends and interest on the digital credit, right?

But the primary way to buy Bitcoin is by issuing digital credit, put into Bitcoin, pay a 12% dividend and get the returns on Bitcoin of 30%, 40%. Will we use MSTR to -- will we issue MSTR to buy Bitcoin, Perhaps, right, if the MAV starts to expand aggressively and we see an opportunity. But the primary way to accrete Bitcoin to the company to create amplification and increase Bitcoin per share is going to be through digital credit.

Thank you, King. Next, I'd like to invite [ Alex Thorn ], Managing Director and Head of Research at Galaxy.

Thank you, Michael, Phong and Andrew for having me on here. I also wanted to ask about your digital credit instruments. STRC and STRF have traded back towards their face value. Certainly, to some extent, with the help from your buybacks and your cashboard, I think very prudent. But STRD and STRK are still trading around 70. And in Europe, STRE is below 80 and it barely trades at all. What are your plans for these other prefs that aren't trading back to face value? And for the one in Europe, are you planning to push to get it uplisted to a major exchange?

We'd like them all to trade strong. The focus right now is getting stretched back to par. I think we're close to that. By the way, once it gets to par and maybe to add to my answer to King's question, I think that will create a lot of confidence in the instrument when they see something that dislocated and came back to par within 4 months and actually shows the resilience of the instrument on a go-forward basis. The other thing is I do think the calendar day daily dividends will help, right?

We've been told by some large institutions that want to invest large pools of capital that are currently undeployed where they might put it into a T-bill, earning 400 basis points, and they can put in something like this and earn 12%. I think all of those types of things will grow stretch, right? And so that's priority #1, get stretch to par, grow stretch so that we can buy Bitcoin, amplify the stock and accrete the common. So that's sort of priority one.

I do think as that happens, the stock goes up and as Bitcoin starts to grow again, that the other instruments that you're talking about, Stride, strike will start to grow. Stream will start to grow, right? Those are ones that are more sensitive to Bitcoin price. stretch is less sensitive to Bitcoin price. So we're not dismissing those products. We're focusing on stretch and then those other instruments will start to grow over time. And we have -- when you think about our buyback capability, it's not just limited to stretch, right?

We could consider if the price stays dislocated on those, looking at those too. And then Stream is the euro listed one is a little bit of a challenge, right, because it's currently on an unregulated exchange in Europe, which means that it can't trade with retail. And so we need to find a way to improve and correct that product over time. So we haven't forgotten about it. But the European regulatory environment, as many probably know in the capital markets is not nearly as easy to work with as the U.S. regulatory environment.

I think there's one other point worth making, Alex, which is all of those instruments dislocated when STRC dislocated. So they all recovered to a pretty similar level. I think they were all up like about 30%. So the recovery of STRC actually was correlated or led or it either dragged or it was comparable to the recovery of Stripe, stride and strike when it happened. So they all benefited from what we're doing. Right now, our focus is make sure that STRC trades well.

But then to Phong's point, we think we're entering a new regime. So once we get into a stable point of equilibrium and then we migrate them all to daily dividends, then I think that people will probably start to give all the other credit instruments a look or more of a look, and we're optimistic about their future. They do all represent optionality for us. And so -- and also, they all represent a good tokenizing opportunity for us. And so as they get tokenized and as the market becomes more fluid, we think that they could appreciate in value.

Next, I'd like to invite Pete Christiansen, Director of Digital Assets and Fintech Services Research at Citi.

Great to be on the call again. Michael, question is, as you scale -- as the business scales further, you're not just allocating capital into Bitcoin, but you're also increasingly creating new financial claims against Bitcoin. I'm just curious, how do you think about the risk that the strategy success accelerates the financialization of Bitcoin itself, introducing leverage, duration, counterparty exposure into an asset that historically has derived much of its appeal from having none of these characteristics. Just curious your views there.

I think I ran an analysis on institutional adoption of Bitcoin, and it was like 12.2% or 12% or something between the Bitcoin treasury companies and the ETF issuers. And if you roll the clock back about 5 years, it was like 3% or 4%. So institutional adoption has moved from like 3% marched up to 12%. But that means 88% of this is still either retail or native crypto. I think it's derisking the industry to go toward greater institutional adoption because that legitimizes the asset. It's a good thing for the asset that BlackRock holds some of it.

And every time an institution becomes engaged, whether it's Morgan Stanley or Wells Fargo or Charles Schwab or any time there's a company like ours, I think that derisks the asset because those institutions are all regulated, compliant, public, audited -- they represent hundreds of millions of beneficiaries, right, rippling through every institution in the world. So the way I look at it is if 100% -- if 95% of the asset was retail, not in institutions, then you don't have a lot of strong institutional benefactors and patrons.

And of course, it's the institutions that represent Bitcoin in Washington, D.C., and they represent it in Brussels. And it's the institutions that actually solve the legal issues, the accounting issues. It's the institutions that finance the more difficult development and the institutions are financing all the security issues. It's the institutions that have access to the frontier models, and they can actually do cybersecurity checks with the frontier models, right? So I think actually, it's a good thing, right, for institutional growth to progress.

And so I don't see it representing a risk at all. If anything, it's expanding the capital in the ecosystem. It's creating a constant bid. By the way, it's damping ball. The volatility of the asset was about 80%, 85% when we got into this industry in 2020 and institutional adoption was 4%. And today, the volatility is 40%, institutional adoption is 12%. And it doesn't take a rocket scientist to figure out like how you damp volatility? Well, one way you damp volatility is there's an entire options market that formed on bid. like a $30 billion options market.

So if you want to go and damp the volatility and sell the volatility and strip the upside and then strip the downside, then you need mature derivatives markets. And so the mature derivatives markets only exist. They exist because Coinbase is bringing the crypto derivatives market to the U.S. as an advocate. They bought DerBit. They exist because BlackRock advocated for Bit and then all of the derivatives on top of Bit only exist because of BlackRock. And they exist because MSTR created a very large regulated derivatives market and MSTR stocks and its equity. So I think that the institutional actors, both the funds -- really, there's 3.

There's like 100 funds that are very important actors. There's Bitcoin treasury companies, 100 of us, but especially a dozen that are very active that are important actors. And then they're are all the digital exchanges, right? And the more digital exchanges that -- if Schwab trades Bitcoin, that's good for Bitcoin. If Coinbase gets bigger, that's good for Bitcoin, right? What you want is lots of big regulated public companies in every market, right? You want them in Japan, you want them in Europe, you want banks, exchanges, brokers, corporations and funds, all of them to be handling the asset, they all solve a different problem.

They create legitimacy, they solve the compliance issue. They solve -- there I'm an investor and I live in the U.K., and I have money in a retirement account, and the only way to buy Bitcoin is by buying MicroStrategy stock in the year 2020 because that's literally the only legal practical way to do it, right? So we're all creating bridges to Bitcoin in a very complicated world where there's a lot of capital that's stranded, and we're solving problems like the accounting problem. There are so many different issues that have to be solved. And there -- and no one company can do it all, but -- but a retail investor normally struggles to solve these problems.

And so I think the asset class is growing up, and it's a good thing. And what it means is the vol will fall, the capital and liquidity will increase. The price will go up. The size of the industry will go up and the number of beneficiaries will expand and the number of companies participate will expand and the products and services will expand. And those are all good things. That's what you want. It's going like saying, well, in the electricity business, I'm really concerned, Mr. Edison, that other companies also want to create electric motors or use electricity. I'm really concerned, Mr. Rockefeller that other people want to actually build petrochemical products that use oil.

Doesn't that bother you? We only want retail people to have barrels of oil in the backyard. And of course, no industry is going to grow until you have thousands of companies that are doing very intricate things to add value to the base product. The base product is Bitcoin. And it's like oil got financialized, electricity got financialized and Bitcoin is getting financialized and it's not a bad thing. It's a good thing. right? And it will turn out to be a great thing. So I look forward to that.

Thank you. For the last question, I'd like to invite [ Scott Melker ], also known as the Wolf of Wall Street.

Thanks, CJ. Thank you, everybody. So Michael, you made a very compelling case earlier for 24/7 global programmable instant settlement on MSTR, STRC via tokenization. But in your own slide that presented that, it basically said these tokens are issued by third parties and not by strategy. So there's also an irony, obviously, which is that effectively, none of these products right now are even available to Americans. They're generally only available offshore. And they don't actually pay the cash dividend like STRC does. They generally rebase or reinvest in the underlying assets.

And to continue on, today, it's being reported that NASDAQ is actually urging companies not to participate in tokenization. So with all that in mind and knowing that we have a constant pendulum swing of a regulatory environment, do you have plans for a strategy to issue its own tokenized MSCR and preferreds on chain open to U.S. investors with dividends paid on chain? And if so, what would allow you to do that and when?

Well, it's an evolving industry. And I would say we're kind of like year 1 or year -- somewhere between year 0 and year 1, especially in the U.S. And we want to do everything we possibly can to support the industry. So it's -- we have been active participants in the offshore tokenization world, supporting companies like Apex and Saturn and cheering them on and enthusiastically watching what's happening there. In the U.S., that's an evolving situation where the protocols are evolving, the platforms are evolving, the compliance rules are evolving. It's not clear to me that every issue has been settled, right, as you rightly perceive.

So our view is there probably isn't a single path. There's not like a single token standard. There are going to be ecosystems that build on B and B on Ethereum, on Solana, on various open chains like that. There are going to be systems that probably evolve around more proprietary networks or closed networks or compliant networks, and there'll be flavors of compliance that will have more KYC and less flexibility. And there will probably be some walled garden token systems where you can tokenize it, but you can't take custody of it and you can't move it outside of the system.

My view, of course, is that the promise of tokenization is creating a free market in credit and custody and collaboration and composition and a completely free market. But you and I both know not everyone shares the same view of the benefits of a free market and where they draw the line on constraints. I think the short of it is you're going to have institutions like us, like BlackRock. Larry Fink has been a major advocate for tokenization, like he's literally been giving speeches every year for -- he's been on the forefront of this. There are going to be institutions like us and BlackRock, and we're going to be advocating for the most powerful progressive tokenization rules on a global basis and especially in the U.S.

I think that there's not going to be one particular platform or one particular approach. We're going to work with everybody as best we can. And then I think the market is going to pick a set of approaches it likes, but it will be a hybrid process where it will be a dialogue or a dance between the regulators -- and you'll see TradFi -- there's a TradFi view, which is more conservative. There is a digital assets view, which is more progressive. There are going to be progressive regulators in certain jurisdictions, and there are going to be less progressive or regressive regulators in other jurisdictions.

We're going to be enthusiastically working to polish our securities or to structure our securities to make them the best products we can possibly create. I can't tell you what kind of digital assets initiatives we'll take now before we take them. But I think you can be sure that we're studying the entire market in every way, and we're asking the question, what do we need to do? What kind of securities do we need to create that are optimal for to be tokenized. -- can we change existing securities to make them better for being tokenized? How can we support digital exchanges and innovators. I mean there's a whole industry of innovators, right?

There are the people that are tranching risk, the people that are trading tokens, the people that are trading them, they are the exchanges of the custodians. We're talking to all of them, and we're trying to figure out how we can best be constructive and supportive in a responsible fashion. If I knew the answer, I would give it to you. But I think that as soon as we have concrete offerings for U.S. investors, you'll find out from us. And meanwhile, this is one of those things where you grind the AI really hard and you have to find what's the right legal solution, the right compliance solution, the right practical solution and the right economic solution.

And then you have to figure out how to do it without fragmenting liquidity or creating fragility or new types of risk, right, or layered risk, and that makes it complicated. So we're enthusiastic and we're optimistic. But I really think the elephant in the room here clearly is that the U.S. capital markets have not converged on a tokenizing standard and a set of norms yet. And the market participants are all working their way through that. But I would also say in the next 12 months, I think we'll probably see a set of standards evolve and a framework and a structure. And when it happens, it will happen pretty quickly.

Thank you, Scott. That concludes the Q&A. I'd like to thank all the guests for the questions and all the attendees for joining in live. I believe we had over 50,000 people across various live streams. I'll now turn the call over to Phong for any closing remarks.

Thank you, CJ. Thank you to the guests who joined us today with your thoughtful questions. Thank you, Andrew, for your service to the company over the last 4.5 years. And thank you to everyone that joined us this evening for our Q3 earnings call. I look forward to seeing everybody again in about 3 months, and take care.

Hello, everyone, and welcome. I'm Natalie Brunell, author of Bitcoin is for Everyone and host of the Coin Stories podcast. And I'm very happy to be back moderating Strategy's second, live investor Q&A. We're live today on X and YouTube, and over the next hour or so, we will get to as many of your questions as we can. They were submitted directly by retail and institutional investors through the company's official question form and on X.

We received dozens and dozens of submissions covering a range of topics and my job today is simply to put those questions to the company's leaders and keep us moving so we can cover as much ground as possible. If you're watching live, you can continue submitting questions in the replies and my colleague, Alex Devani, will be looking out for new topics and angles that haven't already been covered by the submissions we received over the last week. And if you can't stay for the entire hour, don't worry, the full replay will be available on Strategy's platform along with mine.

Now before I introduce our guests, a brief disclosure: some statements made during today's presentation regarding future expectations, plans and prospects may constitute forward-looking statements. Actual results may differ materially due to important factors, including fluctuations in the price of Bitcoin and the risks described in Strategy's SEC filings, including its quarterly report on Form 10-Q filed on August 3, 2026.

This presentation is for informational purposes only. It is not an offer to sell or a solicitation of an offer to buy any securities and it is not investment, financial, legal or tax advice. Any offering of securities will be made only by means of a prospectus and additional information about Strategy is available at strategy.com.

So with that, let me introduce Michael Saylor, the Founder and Executive Chairman of Strategy; and Phong Le, Strategy's Chief Executive Officer, Michael and Phong, great to have you back.

Happy to be here.

Thanks for having us, Natalie.

All right. Well, we have a lot of questions to get through. So let's jump right in. The first one came from several investors and it's directed to you, Michael. You recently posted a chart on your X page, where you outlined a digital asset monetary spectrum. That included digital capital, digital credit, digital money and digital currency. What is SR-strcUSX, which you described in that visual as digital money? And do you disagree that Bitcoin is money?

I think if you're using the theoretical term for money, then you would say money is -- money is a nonsovereign, store-of-value bearer instrument like gold. But that's a classical Austrian economist view of money. The current conventional view of money is that money is a U.S. dollar equivalent or fiat currency equivalent asset like the U.S. dollar that holds its peg against the fiat currency. So I think that 99% of the world thinks that money is a fiat currency and a money market is a fiat currency that generates yield. I think that there's 1% of the world that are Austrian economists that think that money as gold, some of them take money as silver and money as Bitcoin.

But I think that's an academic debate and there's not much point in getting mired in an academic debate because about 0.1% of the capital in the world or 0.1% of the economic value in the world has actually invested in the Bitcoin network right now. 99% of all the capital, all the money, all the stuff of value is invested in stuff other than the Bitcoin ecosystem right now.

A lot of that's equity capital. A lot of it's real estate capital. Some of it is metallic capital like gold. Some of it is credit, hundreds of trillions of dollars of credit. So, I think that if you want the Bitcoin network to grow by a factor of 10 or 100, then you're going to have to attract capital from the traditional finance establishment. And that means attracting equity capital flows or credit capital flows or money market flows.

So for people that have not yet bought Bitcoin, the ones that we're actually working to serve, their view is that money is a medium of exchange, or unit of account, or store of value, and they would think that that's the Japanese yen in Japan or yen money market in Japan. They would think it's a U.S. dollar money market in the U.S. I think it's a euro money market or a euro in the European Union. And so the TradFi or the Keynesian view of money is, "money is a fiat currency or a fiat currency equivalent that pays yield." So the chart that I'm illustrating is the digital asset's taxonomy.

We think that digital -- Bitcoin is capital, and so digital capital is Bitcoin and Bitcoin competes against gold, real estate, equity capital or credit capital or money markets held as capital or art those are all the things that Bitcoin competes against 99 -- again, 99% or 99.9% of the economic value of the capital in the world is not Bitcoin. So if you want to get it, you need to compete against those things.

You need to tell people why Bitcoin is better than gold, art or real estate or equity like the S&P Index or a bar of gold. STRC is digital credit. We've extracted a credit instrument from capital. It's semi volatile. It's not as volatile as Bitcoin, but it's more volatile than a fiat currency. And the next step is to take STRC and create something that looks like a digital money. And digital money would be the mythical going back stablecoin. It's the -- it's a fiat currency stable asset, whether it's a stable dollar or a stable yen or stable euro, but pays yield. So the difference between digital currency and digital money is digital currency is deemed to be stablecoins. It's like Tether or Circle or any other digital stablecoin in whatever currency system is out there.

Digital currencies don't pay yield. So digital currencies are the winners of medium exchange in the crypto ecosystem and the digital assets ecosystem. I think that, that's -- there are some fundamentalist Bitcoin OGs that wish that wasn't the case or that they've been hoping it wouldn't be the case. But I think that at this point in the year 2026, we can see that substantially all the prices in the world, if I were to say 99.9999% of the prices in the world are in fiat currency, I might be understating the case. It's just to somewhere between 6 and 100 significant digits after the decimal place. All the prices are in fiat currencies, which means that the medium exchange is generally the U.S. dollar.

If you're holding stablecoins, they don't pay a yield. Though it makes a good medium of exchange, it makes a very poor store of value, or a weak store of value. The idea behind digital money is to take the best of digital credit and the best of digital currency and merge the two together and create something which is generally stable to fiat currency, but pays a yield. And so if you can actually create a yield on a stable currency instrument, then you've got something which serves as a much better store of value. So that particular asset that I put in my chart, that's the first example.

Well, one of the first examples, maybe the first example of someone creating a digital money asset. And they're creating a digital money asset by engineering a stable asset that actually has yield, the yield comes from digital credit and the asset is stabilized through some financial engineering to be stable to a U.S. dollar. I expect there'll be dozens, if not hundreds of different types of monetary assets that people build. So it's not the only one. I think there's about a dozen different organizations that are building digital monetary assets and the digital assets ecosystem.

And I don't think digital money be limited to tokens. I actually think that you'll see digital money funds created as ETFs in the United States and probably as ETPs and other types of publicly traded funds that trade on and exchanges all around the world. And I also think that we'll see private funds, just like -- there are money market funds that are private that don't trade publicly. There are money market funds that are public that trade as ETFs. And there are monetary instruments like currencies that are stablecoins.

So the thing that we think is really important is that Bitcoin is going to grow by a factor of 10 or a factor of 100, we need to facilitate capital flows from the credit markets and the money markets. And right now, what's going on, if you took away STRC and you took away the digital money tokens that are now starting to develop, then what you have is, fiat currency flowing into the stablecoin market, and it's all backed by currencies, by fiat currency, like U.S. dollars. And then you have capital flowing into the capital market that actually supports BTC. But there would be no capital flows from the credit markets or the money markets into this ecosystem.

If we create good credit, then we will be able to create monetary instruments on top of it. And the companies that create a digital credit like Strategy and Strive, will have equities and the equities will attract capital flows, which will also flow into Bitcoin. And companies that create digital monetary instruments, the instruments that will be on top of digital credit, they'll have equity as well, and they will attract capital flows into the ecosystem. So we think that the economy will grow if we actually create credit instruments, money instruments, currency instruments and equity instruments, all of them that are tied in or backed -- either backed by BTC or tied into the Bitcoin ecosystem. So that was an example of the first of what I think will be many digital money instruments. It's not the only one.

And certainly, I'm not endorsing that particular one as an investment. It's a security type investment. But I think that it's a seminal event in the same way that when people first created money market funds, that was a pretty important event. And when people created ETFs backed by money market funds, I think that's an important event.

All right. Let's turn now to the equity side, to the common stock, MSTR. We have a question from Rob. He said, I have 3 children, and I invested $73,000 each into MSTR, believing in the long-term potential. Today, that $73,000 is worth $20,000 and the long-term potential is now a function of getting back to breakeven. MSTR common shareholders seem to be your lowest priority. You defend STRC and pay down converts using MSTR at-the-market offerings. Achieving BTC per share yield doesn't do much for my kids. I have a decade-long perspective, but I'm worried that you will ATM so much that we'll never get back to [ $325 ] a share. Have you considered paying out a dividend to MSTR common shareholders simply to do something right by them in the near term?

I can start on that and Mike can add. And Rob, thanks for being a shareholder and investing some money into MSTR for your children. Of course, the common shareholders in MSTR is our most important priority and creating value and increasing the price of MSTR is our #1 priority.

How do we do that? We do that by outperforming Bitcoin. And since the beginning of our strategy, putting Bitcoin on our balance sheet, that was August of 2020, Bitcoin has been up 32%, MSTR has been up 41%. So we've outperformed Bitcoin over time, and I understand that you came in later and haven't seen that outperformance. What happens over time, right? When Bitcoin is up, we tend to go up more because we have more Bitcoin per share. And we do that via historically leverage, and we've done that more recently via amplification. What that does mean and what you'd experience is when Bitcoin goes down, we tend to go down more. So Bitcoin has seen a drawdown of 50% from all-time highs.

MSTR has seen a drawdown roughly 75% of all-time highs because Bitcoin is our underlying asset, increasing Bitcoin per share increases the value of MSTR when Bitcoin goes up, and we'll see sharper drawdowns. So how do we increase Bitcoin per share? We increased Bitcoin per share historically through leverage, through convertible bonds and more recently through what Mike talked about, which is digital credit and amplification through stretch. And so ultimately, if we want the common to go up, we have to increase Bitcoin per share and increased Bitcoin per share means making stretch work, which is why it may seem like we're talking primarily about stretch right now, getting stretch back to par, but that's what gets Bitcoin per share to go up and MSTR the common to go up over time.

We're not going to pay a dividend. That's not really the best deployment of capital, the best deployment of capital for us is to stretch to work to buy Bitcoin and put it on our balance sheet. And that's ultimately the objective of the company. And so over time, if you believe in the underlying asset Bitcoin and Bitcoin starts to rise for all the characteristics Mike had mentioned before, then MSTR will start to rise over time. And that's ultimately the goal of the company.

Michael, do you want to weigh in at all on that?

Yes. What I'd say is, if you want a dividend, you should buy one of the preferred stocks, like STRD pays like almost like 15% effective yield. So if you're looking for a stable instrument that pays a dividend and I would look to STRC or STRK, they were designed to pay dividends and give some upside. If your time horizon is less than 4 months, you probably should own a money market. If you don't need -- if you are making an investment and want the money back, and want to see a good return on investment in 4 months to 4 years, you're probably a credit investor and you want to look to -- you ought to consider one of the credit instruments.

If you're holding the equity, then you need a time horizon minimal of 4 years, right, ideal 7 to 10 years. Bitcoin was an all-time high about a year ago. So when we're in a bear market, you're going to get more amplified Bitcoin. So you got -- Bitcoin is down 50%, we're going to be down 75%. And in a bull market, we expect to outperform Bitcoin. So when you're buying MSTR, you're getting amplified Bitcoin when you're buying Bitcoin, you're getting on a roller coaster. So if you are going to get on a roller coaster, then probably you want to use a metric that's like a 4-year blended metric. So when we look at Bitcoin, we looked at 200-week simple moving average and that way, we take a 4-year cycle view, and we consider how is it trading versus the 4-year average.

I think that MSTR is going to be more volatile than that. So I think the whole point of the equity is to generate amplification. And so if we were to pay the dividend, we would be actually undermining the equity value proposition and we'd be undermining the credit value proposition. And the reason that the equity is so volatile is because we sell the credit. And the reason that we're working hard to build the balance sheet is because the company's future is based upon the credit.

If we can sell $10 billion a year worth of STRC and if BTC outperforms our hurdle rate, it's about 10%, 10.5% right now, then the $10 billion of credit we sold starts to look like net income to the common stock equity holders. So that being the case, you'll get a multiple on the credit sales. If there are no credit sales, then there isn't anything to multiply. And so the single most important thing is for us to stabilize the credit business and to build the most sustainable, highest quality credit business that we can. And so the equity will actually come later, right?

We're in an investment mode to build a credit if we do the things that are good for the equity in the near term, they're bad for the equity over the long term. And on the other hand, if we do the things that are good for the credit in the near term, that will be good for the equity. So ultimately, the product of the company is the credit. And the better the credit is, the more valuable the company is.

And we think the company will be very, very valuable if we make the credit, especially STRC successful. So we're making a long-term investment. It's not unlike Netflix or Amazon, when Amazon was building out Amazon and Prime, they were providing cheap shipping and -- or free shipping for a long period of time and people thought it was not great for the equity, but at the point where everybody in the country is subscribed to the product and they all use the product and Amazon won the market.

And our view is the same. We want to win the digital credit market, and we -- ultimately, we want to create the world's best credit. And if we do that, then the primary beneficiaries will be the equity holders, of which I'm a big one. I have more than 19 million shares of the equity. So I feel your pain, but I think we have to be prepared to have difficult years. It might be 1 year, it might be 2 years. We wouldn't think it would be 4 years but we might have to actually ride through some number of months or a year or 2 in order to get to the point where things start to work to the benefit of the equity.

Multiple investors pointed out that you recently sold Bitcoin and you recently purchased back STRC. Are there any plans to buy back MSTR?

I think we're open to buying back MSTR if it trades at a discount to NAV or if it's the right thing for the company to do. We evaluate all these programs week by week, day by day. Right now, STRC is trading at a discount to par. So it's a pretty obvious thing for us to do. And MSTR is not trading at a discount to NAV. So we're prepared to do it at some point if we needed to, if MSTR's trading at a very, very deep discount to NAV, then probably you would see us do something like that.

But right now, it's not the highest priority of the company. The best thing we can do right now is fix the credit. If we fix the credit, the equity premium should expand and that will be good for the equity. If we take the capital that we could use to fix the credit and start buying back the equity, that would be equity -- that would be credit negative. And if it's credit negative and the credit business weakens then even if you were trying to buy the equity in the open market, it would be weakening because the fundamental question is, is the credit business worth $100 billion or $1 trillion? If there is no credit business, the answer is no. It's worth zero.

But if there is a credit business, then there's just a debate over whether or not it's worth $50 billion or $100 billion or $250 billion or $1 trillion. And so the single most important thing for us to do is make the credit work. And right now, we're allocating our capital to doing that.

Okay. So fix the credit, fix the equity. Phong, this question is for you from Johanna Schmidt. CEO Phong Le has cited JPMorgan as a model for how Strategy should evolve for digital credit, yet Bitcoin's entire philosophy was designed as a direct alternative to the centralized trust-based banking system that JPMorgan represents. Doesn't modeling Strategy's business, including STRC after a centralized institution like JPMorgan contradict the decentralized principles that Bitcoin was built on? And how do you reconcile pursuing a JPMorgan-style corporate structure while staying true to Bitcoin's founding philosophy?

Yes. Let me address that. But I do want to follow up on the previous question because I think there is this misconceived notion that issuing our equity is dilutive to our shareholders. If we sell digital credit, STRC, and we issue equity to pay dividend, it's highly accretive to our shareholders. If we issue equity that's greater than 1x NAV, NAV and we're currently about 1.07x to buy Bitcoin that's actually accretive to our shareholders because it increases Bitcoin per share.

If we issue equity to buy back STRC at a discount at which we issued it. So if we issue STRC at $100 we issue equity above 1x NAV. And we buy STRC back at $95, that's also accretive to our shareholders. And so and it's accretive to Bitcoin per share, that's what matters. So I just want to make sure that, that's understood because a lot of times, people like Saylor's hitting the ATM, that's dilutive to shareholders. And that's not necessarily correct on a Bitcoin per share basis.

And the last trade is that we sell the equity at a premium to NAV to buy U.S. dollars, that's also accretive to the shareholders. So all the trades we're doing are accretive. They're strengthening the balance sheet, the company, they're strengthening the company, they're improving our long-term prospects.

We don't want to be JPMorgan. We want to be the JPMorgan of digital assets, right, which is a big difference, right? Like there are a lot of things to admire about JPMorgan. They're the most valuable bank in the world. We would like to be the most valuable digital asset company in the world, right?

They have a great amount of trust, a great amount of equity value. We would love to have the amount of trust and equity value in the digital asset world that JPMorgan has in the traditional banking world. They are one of the largest players in the repo market, right? They're a bank that the federal government turns to at times for assistance, if it's needed. We want to have that level of trust and scale in the digital asset world. But we're not modeling our business after JPMorgan. The analogy is we want to be the largest and most important player in the digital asset world. That starts with holding the most Bitcoin in the world, which we have now at 4%.

That continues with building products on top of Bitcoin like digital equity which is MSTR, digital credit which is STRC, and it continues with then having other players in the digital asset world build products on top of ours, like digital money, which Mike mentioned earlier. So we believe that being the largest holder of Bitcoin allows us to have the stature that JPMorgan has. But we're not modeling our business after that. So that was really the point there.

It's much like when Mike says that STRC is the iPhone, our iPhone moment. Obviously, we're not trying to build a business modeled after the iPhone or Apple. But the iPhone is the most successful product in the history of the world, and we think STRC can be the most successful digital credit product in the world.

This next question comes from @grainofsalt. Would Strategy sell STRC and use the proceeds for a cash reserve and MSTR buybacks in addition to buying Bitcoin. This was suggested in the Q1 earnings presentation and is it still a viable option?

Sure. Yes, we can use the capital. We could swap STRC for MSTR. We can swap STRC for USD. We can swap STRC for BTC. We could swap STRC for any other debt instrument or credit instrument outstanding. So -- and there are probably other things we could do with it as well. But we're very open-minded about how we use the capital.

Next question is from Garrett. What is your stance on MSCI's recent rule change proposal to remove Bitcoin Treasury Companies from their index? And what do you expect this removal would do to the stock prices?

I can start with the latter, right? MSCI indices represent somewhere between 3% and 4% of our current shares if we were to be excluded from their indices, then you could expect that to create some selling pressure over a period of time. But it's really immaterial to us, right? Like 3% to 4% isn't something that is going to cause a major change in our share price over a period of time. So I would call it immaterial and Bitcoin is even less important right, 0.1% perhaps if you include what we hold in terms of Bitcoin.

More importantly, I don't think MSCI is aligned with the U.S. government world markets or other indices. I think the fact that they're taking a second cut at this is a bit ill-advised. They've taken a different approach to it, which is to redefine what an operating asset is the SEC and FASB have defined what an operating asset is for Strategy and Bitcoin certainly is that, they don't see Bitcoin as an operating asset. So I think they're sort of taking a position against general accepted accounting principles in the SEC.

And so we'll go back and we'll respond to them and try to understand better why they're taking this approach that's antagonistic to Bitcoin, the asset class. And I think they will consider our responses and others and be constructive about this and hopefully not move forward with their latest proposal. But even if they do, right, I don't think it's that important to us in the end.

All right. This question comes from Sergio. Could Strategy eventually build a $20 billion to $30 billion USD reserve, mainly through STRC to deploy aggressively during future bear markets and could a larger cash buffer also strengthen the case for S&P 500 inclusion?

I think we'll always carry large cash balances going forward. And over time, we expect the U.S. dollar reserve balances to grow. We expect BTC reserves to grow. We expect the operating cash or U.S. cash balance that's unrestricted grow, and we will use that opportunistically to buy back our credit, buy back our stock or buy back our debt or buy Bitcoin whenever we think it makes sense. So the company's optionality is growing. And at this point, we would expect we'll just keep getting larger from here. And we will have more trading options than we've had in the past.

And on the question around S&P inclusion, I mean, there's two different things here. One is S&P, the Ratings. The second is S&P, the Index. On the ratings, right, we currently have a B- corporate rating, I think increasing the cash reserve will help with that, right? And could over time, improve our rating. Ultimately, what will improve the rating is whether they deem Bitcoin as capital that we have in our balance sheet right now, they see it as not true capital, it's a 0 value. If that changes, then our rating will go up, and that's probably the most important thing, more important than having U.S. dollars. Index inclusion, I don't think is directly correlated to the U.S. dollars and our -- on our balance sheet.

Jerry asked. Is the focus permanently on Bitcoin per share accretion via financing? Or could opportunistic spot purchases play a larger role in supporting liquidity and price discovery going forward?

Our primary focus is to create digital credit that strips a large portion of the volatility off of Bitcoin and extracts a yield. And so that's STRC, we're not really traders. We think that, that market, which is -- the digital credit market right now is about $15 billion. We think it can become $100 billion, then $200 billion, then $400 billion, then $1 trillion. So the business of the company is to create the credit, the trade that we're making is we're willing to bet that Bitcoin will outperform our hurdle rate.

Right now our hurdle rate is 10.5% or something we update on our website, every 15 seconds. The duration of the company, the duration is like 33 years. And so the business of the company is we're sort of betting sometime over the next 10 to 30 years that we're right, right? And we're not really traders from day to day. So we're not -- the reason you should buy the equity is not because we trade Bitcoin. If you really think that you found someone that can trade Bitcoin really well, you should invest in their private fund.

The reason you should buy the equity is because the company has $60 billion of capital and can create $5 billion or $10 billion or $20 billion a year of credit. And if Bitcoin beats the hurdle rate, that means the company makes $20 billion a year. And if you want to own a company that makes $20 billion a year, that can grow 30% a year than we're that company, right? So if you believe in digital credit, then you would look at it and say, okay, well, the company that can do that is very valuable. I think that as a practical matter, we will hold more cash and Bitcoin is trading at an extreme premium to the 200 week moving average, we'll probably tend to acquire cash rather than BTC when we sell credit and a Bitcoin is trading at a low premium or a discount to the 200 week moving average. We probably lean toward a bit more BTC than cash.

So I think that where Bitcoin is in the cycle may drive our cash to BTC allocations. But ultimately, we're not traders, and I think what people oftentimes they miss is -- they don't realize that in a bull market, our equity premiums expand. So demand for the equity expands, the equity premium expands, demand for the credit expands, the credit risk on the credit falls and so both the equity and the credit businesses explode and capital flows to the company.

So in a bull market when the Bitcoin price is rising or is high, we will tend to have a lot more capital come in the door and therefore, we'll buy a lot more Bitcoin because that's when the capital comes. And in a bear market, when Bitcoin is crashing, the equity premiums compress and the credit weakens and there is less demand for the credit and there's less demand for the equity. And so we will tend to buy less Bitcoin in a weak Bitcoin market than in a strong market.

But at the end of the day, if we're selling the equity at a premium to underlying Bitcoin, right? Bitcoin rallies and we're selling the equity at a massive premium, the fact that we paid double when we sold the equity for triple isn't a problem, it was still accretive to the company. So the price of Bitcoin when we're swapping equity for Bitcoin doesn't matter. And the price of Bitcoin when we swap credit for Bitcoin only matters over the duration of the credit.

So over a decade, if we're wrong, then we'll be wrong in 10 years on the credit, but with the equity we can never be wrong, like Bitcoin rallies and our equity premium expands, we could pay $1 million of coin for Bitcoin, and we pay for it with a massive stock price of $25,000 a share, we swap it Bitcoin might crash from $1 million to $200,000 and people who say, you're crazy, you bought it in 5x more than it is.

But the point is we swapped equity for the Bitcoin at the top of the market. And so -- and at the bottom of the market, the question is not, well, the Bitcoin draw down. The question is over the next 10 years, will Bitcoin outperform our hurdle rate or the cost of the credit. And at the end of the 10 years, we'll know. So we're long-term thinkers. We're not short-term traders and the amount of acquisition of dollars or Bitcoin or the amount of capital markets activity we engage in, is really dictated by the capital markets, that's Bitcoin. Bitcoin is capital.

The credit markets, that's the demand for STRC and then the equity markets, the demand for MSTR and even to a certain degree, the derivatives market, so those capital markets, they're all moving independently and sometimes they're correlated And we are participating in all of them every day. And so that's the key thing to keep in mind when you consider what will we do and why do we do what we do.

All right. We are a little over halfway through this Q&A session. I'm going to take a question from our live audience. This one is from Tim Fiaca. What do you think of the business model to acquire cash-flowing businesses backed by Bitcoin treasuries like ORANGE JUICE. Do you see yourself adopting some sort of cash flowing business model in the future? And what are your thoughts on the potential benefit of cash flow for MSTR?

We won't do it. It's a perfectly fine business model for other people to do. I mean for ORANGE JUICE, it's perfectly fine. And there are other businesses that are in the business and our investors are in the business of acquiring cash flowing business. So that's their business model.

Our business model is to create digital credit. And if we were to start to divert from that, we'll be distracting ourselves or diluting our focus. And so it creates all sorts of operational complications of different types. It would be -- it would undermine the equity, it would be harder for equity investors to properly handicap and trade the equity because we would be creating heterogeneous performance in the equity, you would have to have a forecast or you have to have an opinion on every single thing we own.

Right now, if you're an equity investor, you just have to have a model for BTC. It would also underline the derivatives markets. And so people that trade the call options and the put options, and that's a massive $30 billion, $40 billion interest business, they would be undermined if we started to diversify into cash flowing business. And it would also undermine the credit because now instead of having a homogeneous credit model where you can recalculate the credit risk every 15 seconds, you would have to create a heterogeneous credit model where you consider the credit risk that is implied by bolting on another business to our existing business.

And so we think it would be dilutive. It's a dilutive distraction for us. That's why we don't do it. we're laser focused on our business model, which we think is the best business model that we could possibly execute on.

All right. Let's pivot some questions to specifically digital credit. What lessons has the management team learned from the recent STRC drawdown and recovery that could be applied to increase adoption moving forward?

Phong, do you want to take that?

I'll start with -- the biggest lesson is the importance of having U.S. dollar liquidity in our balance sheet as a backstop to the dividends, right? And that's why we now have USD 4.8 billion. I think that's the biggest lesson and we'll apply that going forward, right? The question of, would we use stretch for something other than Bitcoin? Yes, potentially when we raise money from stretch going forward, we would add to U.S. dollar reserve or some other former U.S. dollar liquidity so that we backstop the dividends, and we create confidence in institutional investors, especially buying into stretch.

Yes. I would say we learned -- we have to be prepared to buy or sell anything at any time. So the company needs to be able to sell Bitcoin as well as buy Bitcoin for the Bitcoin to be fairly valued. And if we're not willing to sell it, then the credit is not fairly valued because if we're not willing to sell the Bitcoin to fund the credit dividends, then that's credit negative. So we have to be able to trade BTC.

We also realize that if we want to stabilize STRC, we have to be prepared to buy it as well as sell it. So we were very good at selling STRC at $100, and we are very good at buying BTC. But now we have illustrated to the market that we can sell BTC and we can buy STRC. So it's kind of like you can't just have a right hand, you got to have a left hand in a right hand or maybe the car has to be able to turn left and turn right.

And I think that we also -- to Phong's point, we have to show that we can dynamically manage our reserves and the U.S. dollar reserve, the unrestricted cash, the restricted cash and the BTC. And all of those things are important. I think the other important thing we learned is we need to have a focus upon the capital structure, and we need to keep improving the capital structure, and we need to keep a laser-like focus upon the quality of the capital structure if we're going to grow the credit business.

Phong, when we were on stage in Las Vegas for the Bitcoin conference. You talked about how 80% stretch holders at the time were retail. This question comes from Stewart. He said recently, I have seen you post about huge allocations from institutional funds to STRC. Why did retail lead the way on the product? And why are institutions now coming around? And what is the split now?

I think anytime you have a new product category, digital credit being one of them. Retail tends to be the early adopters, institutional, especially in something like digital credit. They want to see 1, 2, sometimes even 3 years of track record of the product paying dividends. They want to see a track record in the price. So they tend to lag. What's interesting is that 80/20 is now 70-30.

By the way, it doesn't mean that retail decline, retail doubled institutions just increased significantly over that time. So we're already seeing institutional adoption start to increase. I think our digital credit capital framework created more confidence in institutions. And as good as to have retail, institutions tend to be longer-term holders, they tend to take on less leverage so they'll stabilize stretch over time.

We've had a couple of investors curious about whether STRC could move to daily dividends like SATA and whether other preferreds will move to monthly dividends or daily dividends?

Right now, we don't have a plan to change the other preferreds. The STRD, E, F, and K are all institutional offerings and the institutions that are holding them have been comfortable with the quarterly payout. And so we expect that will remain that way for the foreseeable future. We're watching SATA cheerfully and enthusiastically, but we don't have any plans to go to daily dividends at this point. Our primary focus is on improving credit quality of STRC and focusing upon the balance sheet of the company. Phong, do you have any thoughts on this?

No, that's it. I think daily dividends is an interesting concept, and we're watching SATA, but semi-monthly seems to be quite powerful with our investor base.

We've got several STRK investors. One of them from the live chat wants to know if you would consider buying back STRK?

Right now, our focus is on returning STRC to health. So you can expect we'll be laser-like on that. After STRC returned to health, and we want that credit instrument to be stable and to be -- and to grow in a predictable fashion. And so that's our focus right now. After that, then we'll look at all the other instruments and consider if there's an appropriate thing to do for the investors in the company.

We think, by the way, the best thing we can do for an STRK investor or any other investor is to return STRC to health, right? Because the things that we're doing that are good for STRC are also good for STRK.

A question came in from John Li Dumas. Under what circumstances would strategy be comfortable letting STRC trade materially above $101 rather than taking actions to bring it back to par? And what would be the strategic rationale for allowing that premium to persist?

We won't do that. It's -- our target range is $99 to $100, but we have no interest in allowing it to trade substantially above $100. And the reason why is this, the important investor proposition is when it gets to $100, you can sell it at $100 and you won't be leaving money on the table. And then you can buy it at $100, right?

And then you can buy pretty much whatever amount you need at $100.01 and you can sell into the market at $100. And if we allow the price to fluctuate plus or minus x dollars, then you paralyze the market. So someone that was thinking about selling at $100 would think, well, maybe I shouldn't because it might be -- it might go to $102 or $101. And so instead of making a decision in 15 seconds to sell it, they would be paralyzed. If you actually look at the impact, if it trades between $95 and $105, people might very well take 3 months to make a decision that they would make in 3 seconds if it trades stably.

And on the other hand, we've seen examples where if people aren't sure whether -- if it was trading at $100.50 and they thought it might come back to $100, they might put in a limit order and wait for 4 days, and so if your bank told you that when you actually take money out of the bank, they might just arbitrarily only give you 99% of your money and keep 1%, you'd be very angry.

And if they said, well, on certain days, you might actually be able to get it all. And on random days, you might get 1% more than the money in the bank. And so that would drive everybody insane if you randomly got plus or minus 1% of what you thought you should get. And so the primary value added of the company, right, the thing that -- the reason that we're here is to strip the volatility of the instrument and extract the yield. And so if I use an example of like standard oil, like, okay, I have a barrel of crude oil and I create kerosene and the real -- the reason it was called standard was because it was the kerosene that didn't blow up in your face.

And so if someone came along and said, like 1 out of 100 gallons of the kerosene blows up in people's faces. And should we just go ahead and ship that one, and then we'll put a little disclaimer on the can that says, you need to test this before you use it. It's like, people would say, that's not a good business. It's not 1% less good. It's like 100x less good. So what we're doing is creating the very best credit we can create. And in this particular case, I think the value proposition to the investor is the company is going to create liquidity around par as much as you need. If you wanted to buy $1 billion of this, we're not going to make you pay $110 a share. We're going to sell it to you at $100.01 or $100.

So that's a value, and that would cause someone to come in. And on the other hand, somebody wants to know that if they sold at $100, they didn't make a mistake. And also, if this thing falls below par and it falls to $95 or $90, the company is going to use all of its resources to bring it back to the trading range and to bring it back to par, right? That's what we're going to do. And so if we're ambiguous or unclear about that, then we have broken the promise, right? We have undermined the value proposition of the instrument.

The instrument is to be the lowest volatility, highest liquidity, most predictable credit instrument in the digital credit market, right? We -- and we want to create the best credit instrument we can possibly create. And so allowing it to flex and rattle around is an abrogation of that responsibility I'll make one more point. The people that say that, sometimes they say, well, you should do that because that's like bad for the shorts.

Like if you let it float up to $101 or $102 or $103, people won't want to short it. We're putting the interest of the $10 billion of credit investors ahead of the interest of the $300 million of short investors. The point is run this program to the benefit of the people that buy the credit and hold the credit as opposed to worry about the short sellers. Our view is even if someone shorted STRC at $100, that's good for us, like we welcome that. And because if someone wants to come in the market and pay 12% dividend to create liquidity and then they're going to put their balance sheet and post their balance sheet to build digital credit. We actually think that's good for the ecosystem.

So we're not trying to discourage short selling. If someone wants to short $10 billion of this thing when it hits $100 billion, then we will have $10 billion of credit and someone else will be paying 12% interest on their $10 billion. And so you can see someone else will be paying $1.2 billion of dividends to make STRC a $20 billion AUM instrument. So we just don't see a logical reason why you wouldn't run a very disciplined program to strip the maximum amount of volatility off the instrument. That's what -- that is consistent with the highest liquidity.

And since that's the highest liquidity, that makes it the best credit instrument. And if it's the best credit instrument, then the demand is going to be higher. Everybody wants the best thing. And then if the demand is higher, that's good for the common stock and it's good for the company and it's good for everybody else. So we're going to create the best possible product we can create. And we're not going to worry about how someone might view it if they're a short seller one way or the other.

By the way, Natalie, if somebody really wants a product that will trade between $95 and $105, we have one. It's called STRF. What I wouldn't -- by the way, it's actually less risky. It's more collateralized, it's longer duration. If you're a long-duration credit investor and you want something that might trade above $100, then I would encourage everyone to buy STRF because it was designed to literally do that. And what you'll see is if you look at it is the demand and liquidity for it is 20x less than STRC.

So if people are wondering what would happen if the company let STRC trade like STRF, what would happen is the demand for the instrument would fall by an order of magnitude and the liquidity would collapse. And when that happened, confidence would collapse. So in my opinion, it's not a good idea to let the instrument float randomly around.

All right. Thanks so much for that, Michael. We have about 10 minutes left. I'm going to try to get through as many questions I know a lot are still coming in. So if we can keep the answers a little bit more concise just so we can get through a couple.

Starting with Osama and Eric both asked, Michael previously suggested that Bitcoin could reach $1 million per coin if Strategy accumulated 5% of the total Bitcoin supply and potentially $10 million a coin at 7%. Have your long-term price expectations and assumptions evolved given that the price is lower now than in November 2021 when Strategy owned about 120,000 Bitcoin?

We don't have a precise forecast for when those prices get hit. We know directionally that the more Bitcoin we buy, the better it is for Bitcoin. We're in the middle of a bear market right now. So things are a bit harder and the going is a bit tougher. But we will continue to acquire Bitcoin. And we think, again, if you're a short-term price predictor or a trader, I don't really have much useful wisdom for you. My advice is don't invest in Bitcoin unless you're going to hold it for more than 4 years, ideally hold it for 10 years. And what we think is the more Bitcoin we buy, the higher the price will go. And we remain bullish on the asset over time.

This question is from William. Phong, maybe you can take this one. Frontier AI models have identified security vulnerabilities in many kinds of software systems. How is the company thinking about this threat with respect to Bitcoin custody? And what are you doing about it?

I'll start with we custody with three of the largest institutional grade custodians in the world. And we sit down with them all on a regular basis and go through what are some of their security measures that they have in place. Both related to their software and their hardware related to their personnel and their automation. And by the way, these are the same custodians that custody most of the Bitcoin ETFs in the world. So they're evaluated by a lot of folks.

We have advocated for all of them and just the open source Bitcoin community in general have access to different tier models. Some of them do, and they do run their frontier models against some of their software. We're starting to do that, too. So I'd say, rest assured, Bitcoin security and custody is probably the most important thing beyond our Bitcoin capital planning in the company and we take it pretty seriously. And I'm sure some have seen, we've also become part of the Bitcoin Security Consortium, which puts together some of the largest Bitcoin custodians, issuers, exchanges, holders, banks in the world, and we're working together with them to and taking sort of the strength of all of our institutions to work on this together.

This question is from Jim. It's directed to you, Michael. Did you ever believe in Bitcoin's ethos of separating money from state regardless of how long that takes? And could you pay dividends in Bitcoin rather than the U.S. dollar?

Well, I think Bitcoin is valuable because it's a nonsovereign store of value, just like gold. And so it does -- it separates capital, it separates money from state. And the larger it gets, the greater portion of the global capital is sitting in a nonsovereign digital asset. So that's why we're enthusiastic. We don't have any plans to pay a Bitcoin dividend.

We think that the wise trade -- given the fact that 99.9% of the money in the world is in fiat and 0.1% of the money in the world is in Bitcoin, the smart trade is to sell credit and pay the dividend in fiat currency and to buy BTC. BTC is appreciating 30% a year, and we expect it will always appreciate, say, faster than the S&P Index, the credit rates are all much, much lower. And so we would rather pay 10 and collect 30. If we were to pay a Bitcoin dividend, we would be paying 30 to collect 10.

So the problem with paying Bitcoin dividends is your cost of capital becomes the strongest money. It's kind of like agreeing to pay 30% yield and then investing in a bond from a country that pays you 4%. And so it's kind of a -- if you get the trade that direction, it's the wrong direction, you'll go bankrupt.

And so I don't recommend it to anybody. The right thing to do is to borrow money in dollars or yen and to invest it in BTC. And that way, you're capturing the spread in the right direction. And of course, there's 1,000x more money to borrow in yen and dollars than there is money to borrow in BTC. So it just -- it makes sense to issue fiat credit instruments and buy digital assets like BTC. The opposite direction doesn't really make economic or financial sense.

Right. This question is from Anthony. Earlier this year, there were advertising campaigns for STRC on X created using AI. Some of the advertisements included the retired engineer lady on the Beach Resort, that This is Spinal Tap parody and a mockup of some traders discussing STRC. What were the results of the advertising campaign? And is the strategy satisfied with the results?

Well, some of the results were the number of views that we looked at click-through rates, people who came to our website, dwell time on our websites. So if you look at those as metrics, they're all quite positive. And I do think it led to greater retail adoption of stretch. So -- and look, just using AI and discovering all the capabilities ahead was fun, and it created a narrative.

So I think overall, I was fairly satisfied with the results of the campaign. That said, if we think that institutions are a greater target for STRC, then I don't think those advertisements are really getting to the -- causing them to buy the instruments. It makes them aware.

All right. I know a lot of people are always on the watch for your upcoming AI videos, Michael. We're going to end this with a little bit of a lighter note. We got a question from Jay asking what you guys do to unwind? Do you play video games? Do you play sports or have any hobbies that you can share? Have a great day from Jay.

We create and post AI videos promoting Bitcoin, in different languages lately. That's been the most fun. Me speaking Korean, Japanese, Italian and French.

That's right. And I think I heard you say on a show, Michael, or during an interview that a picture can say 1,000 words, right? And these images sometimes reach more people than, say, a quarterly earnings call or a book, for example, right? You can reach a lot of people and not even necessarily have to say anything, the video or the photo speaks for itself.

I do some fun things, Natalie. I know Mike just only works, but I do some fun things. I have 3 kids, a wife that I love to spend time with and travel with. I play basketball. I love to cook, as you know. And I do play video games and watch mindless shows from time to time, but I'm pretty -- I try to be pretty fastidious about protecting my time from doing things that don't create much value.

Guard your time. That's one of your 10 pieces of advice, Michael. That brings us right to the end of our Q&A session. Michael and Phong, thank you so much both for sitting in the hot seat and taking the questions. Thank you to everyone who submitted one. We received far more than we could possibly get through today.

So hopefully, we'll have another Q&A session soon, and we really appreciate everyone who took the time to participate. If you did miss any part of the conversation, again, the full replay will be available on Strategy's account, and I will also be airing it on the Coin Stories podcast. So Michael, Phong, thank you so much. Thank you to everyone for watching and listening. I'm Natalie Brunell. Please check out my book Bitcoin is For Everyone, and take care. We'll see you next time.

Thanks, Natalie. Thanks, everyone.

SP999 Hello, everyone, and good evening. I'm C.J., head of Investor Relations at Strategy. I'm excited to moderate Strategy's second quarter 2026 earnings rebore for you. We will start the call with a 60-minute presentation starting with Andrew Kang, followed by Phong Le and then Michael Saylor. This will be followed by a 30-minute interactive Q&A session with 4 Wall Street equity analysts and 4 Bitcoin analysts.

Before we proceed, I will read the safe harbor statement. Some of the information we provide in this presentation regarding our future expectations, plans and prospects may constitute forward-looking statements. Actual results may differ materially from these forward-looking statements due to various important factors, including fluctuations in the price of Bitcoin and the risk factors discussed under the caption Risk Factors and Strategy's quarterly reports on Form 10-Q filed with the SEC on May 6, 2026, and the risks described in other filings that Strategy may make with the SEC. We assume no obligation to update these forward-looking statements, which speak only as of today.

With that, I will turn the call over to Andrew Kang, CFO of Strategy.

Thank you, C.J., and thank you all for joining our call today. Moving on to the first slide, we now hold 843,775,000 Bitcoin, representing approximately 4% of all Bitcoin that will ever exist. Bitcoin per share is currently 203,683 sets, which remains 1 of the cleanest measures of how we create long-term value for our shareholders. Our market cap is approximately $38 billion, and year-to-date, we have raised $17 billion of capital across common equity and digital credit. That capital gives us the strength to continue building our overall Bitcoin holdings, manage our capital structure, meet our dividend and interest obligations and support the growth of our digital credit platform.

On this slide, we show that we adopted Bitcoin as a treasury asset beginning in Q3 of 2020. We have accumulated more Bitcoin in every single quarter across 113 acquisitions. And today, we hold again, 843,775 Bitcoin with a Bitcoin reserve value of approximately $55 billion.

Our total acquisition cost is approximately $64 billion, and our average purchase price is roughly $75,000 per Bitcoin.

Strategy is now the largest institutional holder of Bitcoin in the world. Our holdings are larger than the largest Bitcoin ETF shown here. They're larger than the estimated holdings of any nation state and larger than the major DFI custody balances. That scale matters, and it reinforces Strategy's unique position in the digital assets market. We are not just participating in institutional Bitcoin adoption, we are leading it, doing so as an operating company with access to the capital markets, a growing digital credit platform and a long-term objective of increasing Bitcoin per share for our shareholders.

Now turning to the balance sheet. Q2 reflected active execution across all of our operations and our capital structure. Digital assets ended the quarter at $49.7 billion, having acquired a net 83,901 Bitcoin during the quarter, with the total balance sheet holdings now slightly lower due to the lower price of Bitcoin as of the end of Q2.

Cash and short-term investments increased to $2.4 billion as of the quarter end and now even further to $3.75 billion current quarter-to-date. Now we hold over 2 years of dividend and interest coverage and also reflects our goal of continuing to replenish the USD reserve to support our digital credit instruments.

Long-term debt declined from $8.2 billion to $6.7 billion, driven by the $1.5 billion repurchase of convertible debt, which we executed at an 8% discount in Q2. And preferred equity increased from $9 billion to $14.4 billion, driven by the strong issuance of STRC during Q2.

We began the quarter with just over 762,000 Bitcoin with a market value of $51.6 billion. During that quarter, we accumulated more Bitcoin adding a net 83,901 bitcoin at an average price of approximately $75,500. At quarter end, we held 846,000 Bitcoin and the quarter-end Bitcoin price was approximately $58,700, resulting in a Q2 unrealized fair value loss of approximately $8.3 billion.

After quarter end, we have seen a recovery in the market value of our Bitcoin holdings. Quarter-to-date through July 27, we did sell 2,225 Bitcoin for approximately $135 million. And with Bitcoin price increasing to approximately $65,000 per Bitcoin, we currently would reflect an estimated fair value gain of about $5.2 billion on our total holdings. Our digital asset balance sheet will have increased to approximately $54.8 billion.

As of July 27, our total reserve, which includes our BTC reserve and our U.S. dollar cash reserve was $58.5 billion with a net reserve of approximately $36.3 billion, which nets out our out-of-the-money convertible debt and preferred equity balances. Here, amplification calculated as our BTC reserve of approximately $58 billion divided by net reserves of $36 billion is over 1.5x. Amplification represents our total Bitcoin as a multiple of reserves remaining after taking into account our debt and preferred claims. We have $15.4 billion of preferred equity outstanding and $6.7 billion of convertible debt outstanding and a low net leverage of 5.4%, which reflects our debt, less our cash reserves divided by our BTC reserve.

At a current Bitcoin price of roughly $65,000 or approximately $55 billion of Bitcoin reserves provides an 18.5x BTC rating against our net debt of about $3 billion. In an extreme stress case, as you can see here in the middle of the slide, even with a 95% Bitcoin price decline to roughly $4,000 per Bitcoin, our converts would remain fully covered at a 1.0x BTC rating. Over time, our plan remains to equitize, repay or refinance existing convertible debt while continuing to maintain strong collateral coverage. And as we demonstrated in Q2, we believe the market remains open to all of these options. We plan to remain patient, monitor the market conditions and continue to focus on the overall liability management of our outstanding debt.

Turning to the Q2 financial results. We reported an operating loss of $8.3 billion, a net loss of $8.6 billion and an EPS of negative $24.45 per share. These results were driven by the quarter-end noncash fair value mark-to-market of our Bitcoin holdings. Our focus remains on the long-term drivers we can control, which include capital allocation, balance sheet strength, the strengthening of our digital credit instruments and increasing Bitcoin per share over the long term. And I mentioned earlier, quarter-to-date with Bitcoin price having increased to closer to $65,000, our current fair value mark-to-market of our holdings would reflect about a $5.2 billion gain.

Turning to our Bitcoin KPIs. As of July 26, bitcoin per share was 203,683 sets compared to 191,904 sets in July of 2025, which is an increase of about 6% year-over-year. Year-to-date BTC yield is currently 4.5% compared to about 22.8% for the full year 2025. BTC gain is approximately 30,000 Bitcoin year-to-date, which is about 30% of last year's full year gain. And in dollar terms, BTC dollar gain is approximately $2 billion year-to-date compared to about $8.9 billion for the full year 2025.

Despite the significant drawdown in BTC price year-over-year, we continue to execute positive performance across all of our core KPIs.

Since 2020, our Bitcoin per share has increased from approximately 46,000 sats to 20 on which is more than a 4x increase over that period. And in 2006, we have delivered, as I mentioned, 4.5% BTC yield year-to-date. As you can see here, historical annual BTC performance does move sort of in conjunction with Bitcoin price. And Bitcoin, bear markets like we saw in '22 and '23, BTC yield was lower than the bull market years of '24 and '25. That being said, BTC yield this year does have the potential to outperform the prior bear market if BTC price improves and through the support and strengthening of our digital credit instruments.

On this slide, we show here in Q2, within Q2, Bitcoin per share increased approximately -- from approximately 201,170 sats at the end of Q1 to approximately 210,824 sats at the end of Q2. Despite the lower price of Bitcoin and the overall market volatility in Q2, the quarter's BTC yield of 5% outperformed the Q1 BTC yield of 3.2%. So we are continuing to make good progress.

And lastly, I will end with a quick snapshot on the most recent view from our equity analysts. We added 2 new covering analysts from Barclays and [indiscernible] for a total coverage of now 16. Across the firms shown here the average analyst Bitcoin price target for those that have one is approximately $98,000. The average MSTR price target is approximately $296 and all with corresponding buy ratings.

While we do not endorse any third-party forecast, it's important to note that the banks are increasing their engagement with Bitcoin with digital capital and with the focus on strategies role within that market. I think the growth also reflects the deep and growing demand from investors as well for independent institutional views on Bitcoin strategy and digital credit and it helps deepen investor understanding of our business model, our capital structure and the long-term value we are pursuing for our shareholders.

So with that, I thank you all for your time, and I will turn it over to Phong for his remarks.

Thank you, Andrew. Thank you, everyone, for joining us this evening. I'm going to provide an update on our capital market strategy and our capital markets programs. And before I go into some of those details, I do also want to recap Q2 2026. We acknowledge that it was an up and down quarter for Bitcoin, and our common equity in our preferred have gone down in that period of time. But if I look at the key metrics that we look at for performance and health of the business, things are, generally speaking, positive. Our Bitcoin holdings over the course of the quarter increased 11% from 762,099 Bitcoin to 846,000 Bitcoin. We reduced our debt outstanding from $8.2 billion to $6.7 billion, and on a net debt basis, we reduced it even more. This was down 18%. Our U.S. dollar reserve is up from $2.1 billion to $2.4 billion at the end of Q2. And as Andrew noted, we're now at $3.75 billion. That's a 12% increase quarter-over-quarter. And our Bitcoin per share, potentially most important of our metrics, went from 201,170 [indiscernible] to 210,824 [indiscernible] so a 5% increase. So many of these metrics show health in the overall business.

How are we able to do that? Three months ago in our earnings call, we said that we were adding engines to the strategy playbook, if you will. We went from 1 way capital issuance, buying Bitcoin through active issuance of MSTR of our preferreds and our convertibles to what we call active capital management. We're able to sell MSTR to buy bitcoin U.S. dollar debt press. We were able to sell our press to buy Bitcoin U.S. dollar debt MSR we're also able to sell our Bitcoin to buy U.S. dollars by debt by MSTR. And we were able to use those U.S. dollars to pay off dividends and to strengthen our balance sheet. We continue to be net buyers of Bitcoin and net issuers of stretch. We want to be the largest buyer of bitcoin in the world and the biggest issuer of digital credit in the world. And year-to-date, 2026, we have proven to be just that.

We bought 174,895 Bitcoin year-to-date 2026. We sold 3,620 Bitcoin during that same period of time. We bought 48x more Bitcoin than we sold, and we increased our decline 25% since the beginning of 2026 until now. When it comes to digital credit and stretch, we issued $7.52 billion of digital credit. We repurchased year-to-date $25 million. We issued 300x more digital credit than we repurchased, and we increased Stretch's notional 250% since the beginning of the year. So I think we are carrying through on our stated objective to be the largest net buyer of Bitcoin in the world and the largest issue -- net issuer of digital credit in the world.

Another way to think about our robust access to the capital markets is to look at what we've done year-to-date 2026. So through 7 months in 2026, we've now issued $17 billion of capital. As you can see here, that's approaching what we did in 2025, primarily used to buy Bitcoin. And you'll also see the percentage of capital that we issued that was digital credit, specifically primarily Stretch, was 44% of the total capital we issued versus 28% last year.

If you look at the same information on a quarter-to-quarter basis, Q2, we issued more capital than we did in Q1 of last year. of Q1 of this year. And also we issued more capital in Q2 2026, and we did raise more capital in 2026 than we did in any quarter of last year. So $8.4 billion total, of which $5.5 billion is digital credit.

Q3 2026, right? So this is the month of July of this year. We've issued about $1.3 billion of common equity. And of course, we want to see preferred equity added to that stack, too. And so I'll talk a little bit more about why that's important.

We talked about the flywheel in the past, but our overall objective is to double the coin per share in 7 years through digital credit. And why is this important? We want digital credit to work because we're able to sell digital credit to buy Bitcoin. That generates amplification to the company that would increase our Bitcoin per share for the company, especially as Bitcoin increases, and it allows the company ultimately to do what we have been doing and what we intend to do, which is to outperform Bitcoin, right?

What are the inputs that can help us flex these levers? Decreasing our cost of credit, and we'll talk about that in a little bit. Higher digital credit sales, this is selling more Stretch; and a higher mNAV through accretion of our equity -- our common equity MSTR.

So let me talk about the digital credit capital framework and how do we get this flywheel working even better than it has in the past. I'll start with our corporate objective. It's for Stretch to trade at $99 to $100 over time. We recognize that, that has not occurred over the course of the last month. Stretch is now trading at about $89.50. Our goal is to get this back to $99 to $100 because that helps our digital credit engine work and it helps us increase Bitcoin per share and ultimately accrue value to our common shareholders.

So about a month ago, we issued 5 pillars that are going to strengthen Stretch and strengthen digital credit. The first major pillar is the U.S. dollar reserve. We recognize the importance of the U.S. dollar reserve to our digital credit shareholders. We had decreased that over time in the month of June, and we realize that it's important to keep it strong. And so we've increased it now to $3.75 billion, which is about 2.1 years worth of dividend coverage -- dividend and interest coverage, and we're going to keep 1 year a minimum. And I'll talk a little bit -- a little bit more about that in a minute.

Bitcoin monetization, selling Bitcoin for 3 purposes; one, to fund U.S. dollar reserves; two, to fund dividends and interest expenses; and three, to support our repurchase programs. And those are our third and our fourth pillar, the ability to repurchase digital credit up to $1 billion, we repurchased $25 million so far year-to-date, and to repurchase MSTR up to $1 billion. And the fifth and last pillar is to manage our Stretch dividend in a way that it's thoughtful and supports the price of Stretch while also reducing our dividend burden, and we can review that monthly.

The good news is we built now an all-time high U.S. dollar reserve, right? So we started at the beginning of the year in January at $2.25 billion. We drew that down to pay down $1.5 billion notional of our 2029 converts to $871 million. We recognized that, that was not the right level to support Stretch and to support our digital credit, and therefore, in a pretty short order, we've built it up in about 2 months back to $3.75 billion.

Few things I'll note. One is that is the highest our U.S. dollar reserve has ever been. And two, that on a duration basis, which is how many years of dividend interest expense coverage we have, our high in January is 2.7 years, our low end of May was 0.5 years. We're now back to 2.1 years, and our target is to be somewhere between 2 and 3 years.

I talked about our Bitcoin monetization program, right? Our intent is to sell Bitcoin for 3 reasons when we think it's appropriate for the company: one, fund the U.S. dollar reserve up to $1.25 billion. That would take our U.S. dollar reserve up to $5 billion if we were to do that fully using Bitcoin, which will take us up close to 3 years. Two, fund dividend interest payments of $1.6 billion currently annually. And we used the Bitcoin sales to fund some dividend payments in the last month or so. And three, is to fund up to $2 billion in our repurchase program.

So let's talk a little bit about more about the core monetization of Bitcoin sales. This is a subject of much discussion during the month of May and June. So I thought I would provide some more clarity on to why we did it, and what we believe the result to Bitcoin was when we did this.

First, our first Bitcoin sale in the week ending May 31 was 32 Bitcoin. That was 0.004% of all of our Bitcoin holdings. And why did we do it? We did it to inoculate the market and test our processes. The average cost basis of that Bitcoin was cost $125,464, which came to a $4 million total cost basis with the proceeds of $2 million and an average sale price of $77,135. We took about a $1 million realized loss in that and that gives us a potential tax asset, assuming 25% -- 29% corporate tax rate of about $400,000.

Our second Bitcoin sale was about a month later, in the week end July 5. We sold 3,588 Bitcoin, about 0.4% of our bitcoin holdings, so about 100x more than what we sold the month before. Why do we do that? We did that to fund our press dividends that were due June 30, 2026. The average cost basis of that Bitcoin $116,000, which came to $418 million. The sale price of $60,000. And so our proceeds are $216 million, which we used again to fund our dividends on our preferreds at the end of June. And we took a realized loss of $203 million, which allowed us to potentially book a tax loss of $59 million.

If you see here, we have 843,000 Bitcoin. And you can see the size of the bars of our Bitcoin sales are almost not noticeable compared to our total Bitcoin holdings. Of course, then the question is -- sorry, and so the next topic I'll get into is what is our overall potential tax benefit? We showed this slide last quarter. Of all of our Bitcoin, we have about $18.5 billion in unrealized losses, which equals a potential benefit of $5.4 billion on our taxes. So selling high-cost base is Bitcoin at a low -- at a low price gives us the potential to take tax losses that can then offset future capital gains.

So did our Bitcoin sales have an effect of Bitcoin price, right? We have 2 data points, so I don't think we can make a definitive statement, but I thought it would be useful to look at these 2 data points in a little bit more detail. Our 32 Bitcoin sale was about $2 million that week. And what happened after we sold the $2 million of Bitcoin, well, in the week that we sold the $2 million, but coin price went down 4%. The week after we announced the $2 million sale, Bitcoin went down 11%. And as a reminder, that was 0.001% of the liquidity at Bitcoin that week. So we were 0.001% of the Bitcoin trading volume when we made those sales, right?

One month later, we sold about 100x more Bitcoin. And the week that we sold 100x more Bitcoin, Bitcoin price went up 6%. The week after we announced it, Bitcoin price went down 1%, and we were at 0.104% of the liquidity of Bitcoin in the week we sold. Did we have an impact on the price? Based on the liquidity, I would think not, based on sentiment, perhaps, we'll continue to study this, but we thought it would be useful to share a couple of the data points.

Another way to look at this, the bigger question we sometimes ask is strategy propping up Bitcoin price with our purchases, Strategy moving down Bitcoin price with our sales, does Bitcoin need Strategy. And I think we've said many times, Strategy needs Bitcoin. So how I look at this. As an example, average Bitcoin liquidity has been about $26 billion of trading on a daily basis. If we look at the week where we bought the most Bitcoin in the history of the company, our average daily purchase was $363 million. That's the max, right? In that particular week, we were 1.42% of the trading volume of Bitcoin.

If you look at the last 12 months, we would average about $56 million of Bitcoin purchases a day, which sounds like a lot. It is a lot, but as a percentage of the $26 billion of daily liquidity, we were 0.22% of the trading volume of Bitcoin.

Bitcoin is extremely liquid. We are a large purchaser. But looking at these numbers, I would say we were not a material purchaser of Bitcoin.

What about when we sell, right? The most we sold so far is $19 million a day. And in that particular week that would mean that we were 0.08% of the trading volume of Bitcoin. And that's a pretty small number. And if we were to sell to satisfy our $1.7 billion dividend obligations, that would average to about $5 million a day, and that would be 0.02% of Bitcoin liquidity.

All right. So my takeaway from this is, we are a heavy participant in the Bitcoin market when we buy, but still not a material amount of the overall Bitcoin markets. And we are a very, very small participant in the Bitcoin market when we sell.

That could be other pillars. So repurchasing up to $2 billion of our securities, right? So this is $1 billion of our digital securities. We have a reach purchase program now authorized. $13 billion is our market cap right now of our digital credit, $1 billion has been authorized. We said we'll prioritize Stretch right now. When would we buy Stretch, when it's trading at a discount to par? How much of a discount is subject to management discretion. Why might we buy it? We might buy to reduce our annual dividend, or we might buy to strengthen the quality of digital credit, and we might buy to capture net EPS accretion, right?

On MSTR, it's about $38 billion in market cap. We have an authorization to buy back up to $1 billion. We have not used it yet. Why might we buy? Or when might we buy it? We might buy it when it's trading at a discount to net equine per share, which we have not seen that occur on a sustained basis yet this year. Why might we do it? Because we think it would create long-term value by capturing that EPS accretion. How would we do this? We can buy in the open market, we could buy via block trades, tenders, exchange offers. And what's the time frame that we might do this? We have no obligation, no expiration. We can modify suspend or terminate this program at any point in time.

So how do we get Stretch back to par. That is the focus of the company, that's the focus of the leadership and the management team, right? To climb Stretch back to $99 to $100, we can adjust the U.S. dollar reserve. You've seen us actively do that. We can maintain the Stretch rate. We're not planning on decreasing the Stretch rate to bring it back to power, and we found that increasing the Stretch rate is not really an effective way to bring it back to par. So our current plan is to keep the rate right at 12%. And of course, we can buy back Stretch, which we've seen us start to do.

When we get back to par, we've learned a lot. We learned a lot about how Stretch trades. We learned a lot about the types of people buying Stretch. We learned a lot about the overall characteristics of digital credit leverage, what layer 2 players do on top of it. So what would we do? We can manage the ATM issuance, right? We could not issue necessarily as much as we have in the past. We could adjust the Stretch rate, in this case, down, right? If we see billions of dollars of demand for Stretch and we don't want to grow digital credit too quickly, we would adjust the rate down from 12% to 11% to 10% or whatever we see fit. We can manage the BTC reserve, meaning we could decide how much of our Stretch proceeds we put into Bitcoin. Historically, we've put it all in the bitcoin, but we don't necessarily need to do that. We could put some of it into increase in the U.S. dollar reserve. And of course, we can manage our overall capital structure. We can manage our convertible bonds. We can manage what else is in that capital structure, and then we can manage some of the policies, including the one that I've discussed.

The Stretch rate is adjusted by observing multiple signals, right? We have a 12% annualized dividend rate right now. And when we return to par, we'll look at things like trading levels, market yields, the Bitcoin market, the U.S. dollar reserve coverage and the capital structure to determine what the right rate is. And I want to reiterate our capital markets principles that we've shared in the past and there are 6 of them. One, we're going to continue to create long-term value for MSTR. That's the most important of our principles, and we're going to do that primarily by increase in Bitcoin per share. How do we increase Bitcoin per share? We're going to do that by growing demand for Stretch, getting it back to par and observe the trading characteristics and learning from that. We're going to responsibly reduce the convertible market debt based on market conditions. We did that in Q2, right? And we would consider doing that on a go-forward basis. We'll monitor stretch demand and credit risk to determine the size of the U.S. dollar reserve. I think we've learned from Q2 that keeping a robust 2 to 3-year U.S. dollar reserve makes sense, and our minimum will be 1 year.

We'll adjust the amplification based on market conditions. The price of Bitcoin is a big factor to the amplification and we'll sell Bitcoin when it's advantageous to the company, which we started to do, and you could expect that we may do that on a go-forward basis too.

So with that, I'll pass it over to Michael Saylor.

Thank you, Phong.I want to spend a moment talking about our credit products and our business model. So let's start with digital capital. We use Bitcoin as digital capital, and we just upgraded our website, and we're making available a whole set of metrics for Bitcoin investors to track Bitcoin as the investment. So what you'll see here is on our website, we're now tracking the real-time Bitcoin price and the market cap, but we've also added the 200-week moving average. We view that as being something akin to the basis in Bitcoin or the book value at Bitcoin, and a lot of Bitcoin movements are anchored to it one way or the other. You'll see that we're actually calculating the premium to the 200-week moving average in real time on our website. And we've also added a pretty neat metric, time above. And what you'll see on our website is that Bitcoin right now, it's trading at a very slight premium to the 200-week moving average. And for about 91% of the history of the network, it is traded at a higher premium than that. And so I'd encourage anyone to go check out this website. It's pretty useful. We've got other metrics like Bitcoin dominance and hash rate, the Farnbreed index. You can also see the net ETF flows. They were as high as minus $5 billion or so about a month ago. Now they're coming in.

And so this is for people that really want to gauge the status of our capital base, BTC.

Now let's go to the next slide. And what you see here is that we're in a phase of weakness. We're sitting now resting right around the 200-week moving average. If you're a capital investor, I'd say you have to take a 4-year time horizon. So the right price signal to look at is the 20-week moving average. And you'll see it's a pretty up and to the right message and signal, but you can see the periods of exuberance around late 2021 there was a massive premium. Then you could see in the crypto winter, we felt a slight discount. And then you can see we traded back to a premium. Right now, we're sitting right on that moving average.

Now if we -- if we ask the question, what are the headwinds holding back Bitcoin? We really think there are 5. There's an AI capital expansion, $1 trillion or more of capital that are flowing into the data center build-out, the AI center build-outs, with the SpaceX, the Google, the Mata, the Anthoopic, the OpenAI, and then, of course, you're probably familiar with all of the Bitcoin miners and they're building out their data centers for AI and they're extremely capital intensive. That's created capital suction in the equity capital markets and also an attraction in the private credit markets where massive amounts of credit capital has been flowing.

So that's a headwind. We think at some point, we'll get through the biggest phase of that buildout, and we'll settle into an equilibrium, and that headwind will become neutral attacking land or it will subside.

We also see trade tensions have been weighing on Bitcoin, all the foreign tariff wars and trade wars and uncertainty. The Gulf was disruption is a macro headwind and it revs up in subsides and things escalate. The Fed policy has tilted to becoming more restrictive over the past 9 months. And we could see even as of yesterday, there were rumors that the Fed might raise rates and 3 of the Fed directors or governors actually voted to raise rates. So that restricted monetary policy from the Federal Reserve has been a headwind. And then delays in regulatory clarity. The clarity bill has not moved as quickly as people have expected, and there's substantial uncertainty about when that will be resolved.

So those are the headwinds that we face right now. We also think any one of them could become a tailwind or a catalyst. And we think generally, Bitcoin has done pretty well in the face of those headwinds. And as we get good news in any of those areas, I think that will be very positive for the entire Bitcoin market.

You can see that sentiment is near a cycle low, and this is the [indiscernible] index. And we track this on our website now, and you can click through and you can see it. So that sentiment reflects itself in a number of ways in our equity price and our credit prices and then the Bitcoin price. But there are many, many positive factors in the Bitcoin ecosystem right now in the industry that I'd like to highlight. One of them is the BTC dominance has been consistently growing since the 2021 low. It's expanded about 20%. And now if you look at Bitcoin's market cap as a percentage of all the market caps of the crypto tokens, not including stablecoins, Bitcoin is a bit more than 2/3. And we think this is an incredibly bullish sign. So when I refer to the fact that Bitcoin has won the race to be the dominant digital capital network and the dominant digital monitoring network in the world, I think this metric is one of the key signals that shows that it's won. There really is no serious discussion of flipping, no one thinks that Solana or Ethereum or any other crypto network is going to flip bitcoin. Bitcoin is the winner. And that's incredibly clarifying insight.

Because if Bitcoin is the digital capital network for the next decade, it's more likely than not that it's the capital network for the next 100 years. And we are building our credit structures and our equity structure is on top of it. So this is the biggest uncertainty taken off the table over the past 4 years underappreciated by many people, but perhaps it's more important than any other week by week, month by month, year by year development in the entire digital asset space.

We keep track of banking adoption in this space. And I've noted that the real drivers of Bitcoin price are going to be the formation of credit networks, either digital credit or banking credit. And of course, the banks have the ability to create incredible mass of credit. So if the banks create credit on top of real estate, real estate values increase. And as banks create credit on top of digital capital, on top of Bitcoin, then the value of Bitcoin will increase. By our own Bitcoin banking adoption index, which we just rolled out, and it looks at the top 25 leading global banks, you can see that we've advanced from 9% to 14% to 24% to 32%. And so we think this is just incredibly bullish. We will keep track of this adoption index each quarter and on our quarterly calls, we'll report back to you as to how things are developing.

Another great development this quarter is the formation of the Bitcoin Security Consortium. We worked in conjunction with all of the major Bitcoin investing and custody and trading institutions in the United States in order to form this consortium. And this is in response to a lot of investor requests, a very broad-based -- a broad-based sentiment across institutional investors that they have clarity about how the Bitcoin network will address future security concerns. The most well-known one that's been talked about the most over the past 6 months has been quantum computer risk, and lots of investors wonder how would the network react to a quantum threat should it materialize? And we have joined forces with all of these other institutions to make sure we stay coordinated on that.

There are a lot of people doing really good work in the space, the point of the consortium is to support any work that is pro Bitcoin security-related. We all want Bitcoin to be a secure network for the next 100 years. And so I personally have had a lot of enthusiasm for supporting security-related work with regard to Bitcoin. I supported security efforts starting about 2020 with my own personal funds. And so this is really the natural evolution of institutional investment in the security of Bitcoin.

The [indiscernible] the consortium is not really to drive the protocol or protocol changes, but really just to fund investments committed to security and stability of the protocol. And each of the various institutions involved is going to make their own decisions. However, institutional investors would like a common voice and they would like a coordinated response. And so it will be helpful for the entire institutional community and for banking adoption, investor adoption and to get positive regulatory adoption and nation state adoption of Bitcoin for us to be able to coordinate and to communicate the work that's going on and then make sure that we're ready for any security threat that may develop in the future.

So a few words on digital credit. Stretch, STRC is our flagship digital credit product, and we're laser-focused on Stretch. Our goal with Stretch is we want to increase the liquidity, we want to decrease the volatility and we want to build an ecosystem of market participants. We want people that are willing to trade it. We want people that are willing to short it. We want people that are willing to go along and hold it forever. I'm not terribly bothered by the fact that someone might buy it at $88 and sell it at $95. We would love for that to happen. We'd love for another group of people that buy at $95 and hold until it goes to $98, and other investors that will buy whenever it falls below $99 and write it back to $100. And if no -- and if they don't want to hold it $100, that's okay, they'll be creating liquidity for other buyers at $100, and that stabilizes STRC. So we welcome derivatives traders, long traders, short traders, anyone that has any particular view, it's fine. If someone wanted to sell $1 billion of STRC short, they would be paying the 12% dividend. And so they would be paying $120 million a year in order to create $1 billion of liquidity to the benefit of our digital credit. So again, we don't really worry about it. We would like to return to par with the broadest, most diverse ecosystem of market participants that we can possibly develop. And so that means sometimes instead of doing things immediately, like we could return STRC to par very quickly using our own capital, but that would exclude many of these other ecosystem participants, and we would be getting ahead of our equity investors, our credit investors, Bitcoin investors and the like. So we will move progressively and deliberately with the thought that we want the deepest, richest derivatives market, the deepest, richest credit markets, the deepest, richest equity markets, the most clarity, the most liquidity and the broadest reach with regard to STRC we can possibly create and that will be best for everybody involved.

You can see our progress toward this year. STRC has grown from $2.8 billion in notional value to $3 billion at the end of Q4 and then to $5.3 billion at the end of Q1 and then to $10.5 billion at the end of Q2. It's growing quite rapidly. And we're sort of in a hypergrowth phase.

If we go to the next slide, you can see why it's growing. Simply put, it's the highest effective -- the highest tax equivalent yield and the highest effective yield of any major class of credit in the world. And right now, we see STRC as competing against private credit and bank preferreds and junk bonds. For the most part, those 3 categories, but we think over time that it will begin to compete against investment grade credit mortgage-backed credit as well.

The effective yield is 13.6% right now, but the tax equivalent yield is 21.6%. We think that digital credit is going to be the best credit, is the strongest credit because it's based upon the strongest capital asset, BTC, and because it's based upon the strongest business model. The digital treasury company business model based on digital capital is very -- has lots of advantages in creating the highest tax equivalent yield. And so simply put, we think we've created 1 of the world's great business models for creating 1 of the world's great products, the product being digital credit.

No, of course, I would think that, but the real question is, what does everybody else think in the world? Well, I think the most sophisticated preferred stock investors in the world could reasonably be considered to be those running the BlackRock PFF fund, the Virtus InfraCap PFF A Fund and the Van [indiscernible] PXF funds. Those are the 3 largest preferred credit indexes that are publicly traded and they are custodians of billions of dollars of capital.

One thing that you'll note here in the past 12 weeks is that STRC is now the #1 holding at all 3, right? So it's not a fluke. We used to be the #3 holding. We crawled up past everybody in the market to be #2 or #3 in a hurry. But in the past few months, we've emerged as the #1 holding and it's not a fluke. It's universal across all 3 indexes. So we think this is incredibly bullish because you can develop all sorts of theories about what retail investors like and don't like, but I don't think anybody disputes that a professional money manager who's in the business of managing preferred equities and has been doing it for a long, long time is pretty good at it. And they've got a lot of skin in the game, and they're responsible to the most sophisticated institutional investors that are their investors.

And you can see here on this table that were the security of choice for all 3 and the #1 security, and we've got a lot of momentum here, right? When other people were selling, they're actually buying STRC, and I think that's very positive.

Who's digital credit for? It's for every investor class, right? We're going to continue to refine it and we're going to offer it to retail investors, to institutional credit investors, to corporate treasuries, to hybrid and -- hybrid hedge funds and equity investors and the digital money in crypto-native investors. And we think that all 5 of these groups are just incredible growth opportunities for us.

If we look at a snapshot over the past 3 months or so, you can see that 78% of STRC was held by retail and 22% by institutional March 17, but as of the 1st of July, the institutional holdings had grown from $1.1 billion to $3.1 billion, so tripled, and they're now 29% of STRC outstanding. On the other hand, retail investments had not quite doubled. They were still very strong, but now they're 71%. So we think that the trend towards more institutional adoption is great for the stability of STRC. You can see on the right side of the slide that the average retail account grew from $44,000 to $48,000 over that period, and the average institutional holding went from $1.7 million to $3.5 million over that period. These are very, very bullish metrics, and they speak to the seasoning and the maturation of the asset.

When we came public with STRC, it took us about 70 trading days to reach par. And some people forget this, but when we did the IPO, we IPO-ed at $90, it took us 70 days to get to par. And if we trace the period since STRC fell below our trading range of $99 million to $100 million and where we are today, it's been 40 trading days. So if we were to trace forward 70 trading days from when STRC fell out of our trading range, that would put us around September 8. So we're keeping track of that date, and we're keeping track of our progress. We will focus upon returning STRC to health. And we think that if we did it in 70 days after the IPO then it's reasonable to target 70 days after it fell off our trading range from May 28.

We have the means to return STRC to par. Right now, you can see the market cap is $9.2 billion, and the notional is $10.5 billion. So there's about a $1.2 billion dislocation. We have allocated $1 billion to buy back STRC, about 2% of our BTC reserve. We still have $975 million of that program available to us. And so the first place we look is to use that buyback program to cure the dislocation, but I would remind everybody that the company has total reserves of $58.5 billion. I've shown the bar on the right. And what you can see is that if the $975 million doesn't cure the problem, we have ample additional capital in order to cure the dislocation. We're currently in a discovery process to figure out how much capital it will be required on our part in order to return STRC to par. We're certain that we will return STRC to par. That is the goal, right? So there's no question about whether or not success is returning it to par, it is returning it to part. The big question mark is, how extensive will the buyback be and how rapid will the buyback take place? And then what will be the exact open market execution strategy of the buyback?

We are calibrating day by day and sometimes multiple times a day as we learn from the market. And of course, we have a lot of market signal every minute of the day, every day of the week. We also are getting signal back each week as we put out a new announcement about our status. We think this is one of those things where we want to do it not too slow, but not too fast, and we want to allow other investors, our credit investors, our equity investors, and the Bitcoin community to participate with us. But especially, we want our other credit investors to join us on this journey.

We can go to the next slide. We updated our credit tab on our website, and I would encourage anyone to go check out that tab. One thing you'll see is the BTC ratings of all of our credit instruments. And you can see that -- the senior bond has got 122x over collateralization. You can see that STRF is now 12.9 BTC rated. So the BTC ratings of the instruments are improving as we build the U.S. dollar reserve. We think this is obviously good for credit investors.

You can calculate the BTC fair credit spread based upon your assumptions about forward volatility and forward Bitcoin ARR. And we've added a new metric, the BTC floor rate. And the floor rate is the rate that Bitcoin would have to fall on an annualized basis in order for these credit instruments to be collateralized 1 for 1 at the end of their duration. And so how do you get to a BTC rating of 1 for STRF? Bitcoin would have to fall 21% a year, more than 21.6% a year forever in order for STRF to be under collateralized at the end of its duration.

So this gives you a sense of how fragile or robust any given credit instrument is. And you can see, for example, with the senior bonds, Bitcoin has to almost go to 0 in a hurry in order for those bonds to be under collateralized. But you can see even with STRD the floor rate is 10.8%. And the floor rate across all of these things, all of our credit instruments is 11.8%, and we're starting to publish that on our website. We think that, that's pretty useful for our credit investor.

We can go to the next. I've got our credit model here, and it's a little bit more detailed. And I guess I'll just make a few points. If you're a skeptic, and if you think the Bitcoin is going up 0% a year forever, it's basically not going to perform, then the BTC credit spread that the model would spit out is -- for STRF is 86 basis points. So STRF would still be investment grade even if your view of Bitcoin was it's not going to perform forever. The other instruments, STRC, E and K, they start to look somewhere in the intermediate level as high yield, and STRD kind of falls into distressed debt levels. But having said all that, all of those publicly traded credit instruments have a spread premium over that theoretical BTC credit spread, right? Because the market is pricing them much weaker than that. So even if you're a skeptic, they've all got very, very large, 474 basis point to 670 basis point spread premiums.

Now what does it take for all those credit instruments to be investment grade? Let's go to the next slide. Right. The the BTC investment-grade rate is a little bit more than 12%. So you can see a 12.5% all of the credit instruments publicly trading, STRF, C, E, K and D, they all have credit spreads, theoretical credit spreads less than 150 basis points. And so if you think the Bitcoin is going to perform like the S&P index or I mean, gold's been about 12% for the past 6 years. The S&P has been a bit more than that. But if you have an optimistic view toward Bitcoin it's a legitimate capital asset, you can see that the credit spreads all look investment grade. The spread premiums are anywhere from 550 basis points to 1,048 basis points.

If you're a long-duration credit investor and you don't need your money back for 4 years or more and you just want to make a long-duration credit bet and you believe in the company then you buy STRD, and you could pay 1,048 basis points of spread premium, an effective yield in the 16% range.

The company is not going to suspend its dividends because we're going to protect the digital credit business. If we were to suspend the dividend then that would destroy the credibility of the company and digital credit. It would be devastating for the asset class. So if you believe the company's business plan and if you believe in digital credit, you can see that STRD has high effective yield and a massive spread premium. If you semitrust the company and you just want a lot of investor protection, but you're a long-term credit investor and you don't need your money for 4 years, STRF is showing a BTC rating north of 12 right now. So what you can see is it's senior -- the senior $1 billion in the credit stack out of $15 billion. It's got penalties, dividend penalties, it's got dividend stoppers, right? And on the other hand, you're collecting an effective yield of 10.5%, and you're getting an extraordinary spread premium, and the company doesn't have any discretion to lower that dividend.

So if you're a professional credit investor and you don't need your money in 4 years or longer, then if you trust the company, you buy STRD, if you semitrust the company, you buy STRF. But on the other hand, if you're a short-duration credit investor and you're going to want the money back in the next year or 3 months or 6 months, well, then you just don't want the volatility. You don't want to wait. And that's what STRC was built for. It was built for the shorter duration credit investor. I guess we would say at this point, if you think you need the money back in less than 3 months, you're probably a money market investor. If you need the money back in 90 days, you're probably a money market investor. You're going to put your money in the money market. But if you could wait 3 -- if you wait 4 months to 4 years, anywhere in that duration, then you're a short-duration credit investor like a Stretch investor. And if you don't need the money for more than 4 years and you're a credit investor, you might want to look at some of the other preferreds. And of course, if you don't need the money for more than 4 years, and you're a capital investor, you should buy Bitcoin. And if you don't need the money in less than 4 years and you're an equity capital markets investor and you want to amplify Bitcoin, you buy MSTR. But I think these models illustrate this pretty effectively.

And that takes me to my next point. We think digital credit is the best kind of credit. And we think that we're uniquely positioned to create digital credit and the best form of digital credit, the one that's in the greatest demand is going to be Stretch, STRC. It's going to have the greatest liquidity. It's going to have the largest AUM. It's the shortest duration and all of our discussions with credit investors, plus our view of the market, we've seen that what the market wants is they want the shortest duration, lowest volatility, highest liquidity, most stable, highest AUM, most broadly distributed credit. And STRC is already the most liquid and largest preferred stock in the world. So we expect to keep laser focused on it. We're going to do everything we can to make it the most appealing credit in the entire digital credit space. And we think that if we do that, it will be incredibly compelling credit for people that might otherwise invest in private credit or [indiscernible] credit or corporate credit.

A few words about our equity. We now publish the hurdle rate, the breakeven rate and the floor rate on our website. The hurdle rate represents our blended current cost of credit. And so if Bitcoin outperforms the hurdle rate, then, in our view, our BTC gain, when we sell $10 billion of credit and we book a BTC gain of x billions of dollars, let's say it is $10 billion, then if Bitcoin outperforms the hurdle rate, we're never paying back the credit, which means that the $10 billion is $10 billion of net income. So the company becomes incredibly profitable on a Bitcoin, a BTC gain basis when Bitcoin is outperforming the hurdle rate.

And you could think of this as 4 simple zones. If you think Bitcoin is going to outperform the hurdle rate and you're an equity investor, then our equity will capture the positive spread over the credit. We're borrowing money at the hurdle rate, we're investing and It's something that might be 15% or 20%, some premium to it. And so it's an incredibly good business. We capture the spread and then we can cover the cost of the credit with the capital appreciation. And so the equity will thrive. But of course, the credit will also thrive because we're making a wise investment. So in that zone, equity and credit both thrive.

If you expect Bitcoin to appreciate between the breakeven and the hurdle rate, the equity might underperform. It may not. We have a lot of tools at our disposal. We may actually benefit from the float and the volatility, and we can do a lot of things that may be good for the equity. But it's a bit harder for us. We have to work at that. So there's uncertainty around the equity.

The dividends are still covered because we're substantially north of the breakeven. As long as Bitcoin is at the breakeven rate, we can pay the dividend indefinitely, and we can do it without even selling a share of equity or without any other capital or recapitalization.

So you're in a pretty safe zone, a very healthy zone for the credit. And for the equity, we're in an operating zone. We have to think hard about how we can still perform, but it's harder than when we're substantially above the hurdle rate.

Now if Bitcoin underperforms the breakeven rate, that's challenging for the equity, the equity will probably underperform. And the credit -- for the credit, we have to do things over the long term, like we've got at 0%. We've got like 33 years that's the duration of the company. So it's not like we don't have time, but sometime in 33 years, we're going to have to do something if Bitcoin performs 0% a year. So we start thinking about what we might do if Bitcoin falls below the breakeven rate.

Below the floor rate, that's when we start to think it's -- that's a challenge for the equity. The equity is definitely going to underperform, but the credit is going to be impaired. And so that means we have to think about restructuring the credit. We refinance debt, we roll it forward, we would have to become creative. But you can see here just how bad things have to get before you get in that zone. So the beauty of a Bitcoin treasury company is there's transparency every 15 seconds to this, and you can create all of your own models, statistical models to figure out what you think is likely you can plug in your own assumptions and then you can figure out whether or not your long equity, short the equity, long the credit, short the credit, if you want to hedge these things, there are so many different ways to be long, short, straddle or take risk off the table, and we welcome it, and we encourage it.

That's one of the reasons why our derivatives markets are so healthy and why the equity is so much [indiscernible]. But what I would say to anybody is check out the website, look at these rates and come to your own opinion about what you think Bitcoin is going to do.

Now the history is Bitcoin has been appreciating 33% a year for the past 6 years. And if you go to our website, you'll find we've got the 10-year rate as well. So you're not without resources here.

Where are we right now? The markets right now are pricing fear. It's a very muted market, very skeptical market. Bitcoin is trading at a very slight premium to its 200-week moving average. As you can see, our credit is paying an 870-basis-point premium above the BTC credit spread you would predict. If you plugged in Bitcoin appreciating 12.5% a year and staying as volatile as it is right now, then the credit would be fairly valued at 870 basis points less than it currently pays. And so you can see the credit markets are fairly skeptical. The capital markets are fairly so. They've traded with a premium north of where we are in 90% of the history of Bitcoin. And the equity markets are fairly skeptical. MSTR is trading at a 5.5% premium to our net assets. And you can see this illustrated a bit more on the next slide.

Right. The MSTR price implies a near 0 value for the digital credit business. In essence, if you look at the market cap of the company compared to our net reserves, if we were to pay off all of our liabilities at face value, we still have $36.3 billion of net reserves. And the market cap is $2 billion in excess of that. So the real issue is what is the operating business worth? And so our view is, if we can sell $5 billion of digital credit a year and if Bitcoin outperforms a hurdle rate, then that looks like $5 billion of net income to us and the business ought to be valued at some multiple of that depending upon robustness and growth.

If we can sell $10 billion of digital credit a year, then you could imagine the business being -- at some point, we show the market, we can do it. We show the market we can grow from there. You could put a 10 P to E on that. And so what you can see is our view is the digital credit business is dramatically undervalued. It should be worth something substantially more than $2 billion. The market is pretty much skeptical that there is an operating business there.

As the market begins to realize that we have a digital credit franchise, then I think that they'll put a bigger P TO E on that. And as we show that we can stabilize SDRC and we can grow it in a stable steady fashion then I think that we'll see those multiples expand and the value of the digital credit business will expand as well. And I think that's very bullish for the equity.

MSTR is built to outperform Bitcoin over the long term. And 1 way to see that is looking at these statistics. If you're a short-duration investor, if you're just trading on a daily basis or weekly or monthly basis or even quarterly basis, it's pretty much a coin flip whether MSTR will outperform BTC. But as your duration stretches to 1 year, you get a substantial advantage. When you go to 2 years, it's 64% likely. When you get to 3 years, it's 87% likely, and 495 windows of 4 years or longer, it has -- MSTR has outperformed Bitcoin 100% at the time. So if you're a 4-year investor, you've got a long time horizon, you can see that as the time horizon extends the laws of statistics start to work in our favor and we begin to outperform.

And you can see it reflected here. In the last 6 years from August 10, 2020, to today, Bitcoin's up 32%, MSTR is up 42%, and the MAG is up 23%, the S&P is up 14%, [indiscernible] up 12%, real estate is up 8 money markets give you 3 in bonds or a minus 4% loser. So our strategy is fairly straightforward. The stats seem to be telling a very clear story. We believe that we can continue to outperform Bitcoin and the engine for doing it is the digital credit engine.

Why do we believe in the franchise? Well, let's look at these 4 factors, right? We're sitting on an incredible capital stack. We have $55 billion of Bitcoin, USD 3.75 billion, and we're a well-known seasoned issuer. That gives us a big capital advantage. We also have a technology advantage. We've been in the business for a long time, 35 years, but also we invented a lot of these credit instruments. We've been trading them in the markets. We've learned a lot about how they trade. And we think that understanding how digital credit works and how digital equity works is a big tech advantage.

Our third pillar of our franchise is the brand. We have millions and millions of followers. They know who we are. We're well known everywhere in the world in every major capital market, and this is a big advantage. And then finally, there's a network effect, millions and millions of investors, tens of thousands of institutions, deep pools of liquidity where we've got the highest ratio of open interest to market cap in the S&P universe. We've got a very deep I think 1 of the most liquid stocks in that S&P 500 universe, so deep equity liquidity, deep derivatives liquidity, we've got the most liquid preferred stock, so deep credit liquidity, lots of people trading these things lots of people making a market in them, all of the hedge funds.

And we pride ourselves on creating lots and lots of trading pairs. So there are a lot of ways that people can be long, short, hedged, straddled in equity or credit or derivatives and that's a very, very large financial advantage and a large brand advantage for MSTR and we think that we will be able to grow that. So simply put, what is the goal of the company? What's our ambition? We want to be the world's largest company. That's our ambition. Well, largest in what terms, not the most employees, not the most products. We want to be the largest in terms of market cap, the most valuable company in the world. And what's our plan to do it, it's very simple: own the most capital is capital, we're going to own the most.

Our strategy is on the most capital. Who else would say they want to own capital, Berkshire halfway in the 20th century. I don't think they're as ambitious right now as they used to be. Since most of their capital is sitting in T-bills or sovereign credit. But in essence, Berkshire Hathaway had a strategy to hold a bunch of capital. We have a strategy to hold a bunch of capital most other successful companies don't have that strategy. The second prong, after we own the most capital, we're going to issue the strongest credit. If we have the world's best capital, the best-performing capital asset, BTC, we should be able to create the strongest credit, STRC. And we think for every dollar of capital, we can sell $0.10 to $0.20 of credit per year. And so the more capital, the more credit, the more credit, the more liquidity, the more stability, the stronger the brand, the lower the volatility, et cetera.

And then by issuing the strongest credit, we think we'll create the best equity, MSTR. And that just becomes a virtuous cycle, acquire capital, issue credit, create equity, [indiscernible] and repeat. And we have done that. We've gone from a $600 million enterprise value 6 years ago to $60 billion, so by a factor of 100. and we think we're just getting started. Now we're getting the engine tuned and the credit turbine is beginning to spin up again.

I will end by thanking everybody for your support, reiterate our principles that haven't changed. And with that, we'll be happy to answer questions from the panel.

Thank you, Michael. We'll now start the late Q&A session. I'd like to welcome all our Q&A guests and invite them to turn on the video. We look forward to your questions. We'll go 1 at a time. I'll call out your names, and you can direct your questions to the management team. For the first question, we have Mark Palmer. Please go ahead.

Yes. Earlier in the call, Phong noted that management has learned a great deal about the investors in stretch and how they think. And 1 thing that we've seen is that the size of strategies USD reserve is important to retail investors in particular and more important than the amount of obligations ahead of stretch in the company's capital structure, such as the convertible bonds. With that said, would you consider borrowing against strategies, Bitcoin holdings, specifically with a bank with a fortress balance sheet as your counterparty and use the borrowed funds to increase the USD reserve to a size that would put to rest any concerns about dividend coverage and presumably drive the price of stretch back up to par at which point the company could resume buying Bitcoin?

Phong,, do you want to take that question initially start?

I think the feedback is that something between 2 to 3 years from our institutional investors at that level. that we need to get the current reserve to. We're at 2.1 years. We're to continue to grow. We're doing it primarily through issuing equity at a premium to net asset value. We have considered and talked to many counterparties about borrowing against our Bitcoin, and I would say that the market is not as big and not at priced as well as you would think it would be at the size we want. So it's not something we've considered doing. The other thing we have to consider is the counterparty risk, the terms, et cetera. So it's not something we've really looked too hard into. I think we have better ways to build up the U.S. dollar reserve.

So I think the short answer of it, it's not on the table right now. The company has the option, right, in the future, if we ever needed to use Bitcoin, but we think that right now, it's -- it would be more complicated than it's worth. And we have more straightforward ways to build the USD reserve up that will create fewer questions or counterparty risks or uncertainties. And so our goal, I think, is we would like to show debt. We would like the existing amount of debt to be the maximum we have. We would like it to be progressively whittled down in a responsible way over time, and we would like to avoid any kind of appearance of a margin debt or mark-to-market loan on the balance sheet just because it tends to be an attack surface an attack narrative for short sellers, and we don't want to create anything that creates those uncertainties if we don't need to. And I don't think we're going to need to.

Thanks, Mark. Next, I'd like to invite Matt Hogan.

Great. I have a 2-part question. So watching the business evolve. You periodically added new tools to the tool kit, first equity issuance, then convertibles, then preferreds and perpetual preferred, the first part is, are we at the end of that series of innovations? Or are there more instruments coming down the road? And then the second is a variant of that through the BTC monetization program you have effectively found a way to sell volatility and sell the volatility of investor sentiment at the securities layer. Wondering if you've considered or the reasons why you wouldn't also consider selling volatility at the derivatives layer as another tool in the toolkit to navigate always changing market environments?

I'll start with that, and then you guys can chime in if you like. Right now, we have 6 bonds and 5 other credit instruments. So we have 11 credit instruments. We could issue 6 more tomorrow. We could do 1 a week, every week, and we could blow out to 18 or 24 or 36 or 48 credit instruments, we could go. But we're actually -- it's not hard to issue a credit instrument when you have $55 billion or $60 billion of unencumbered capital. We're going the opposite direction. We're laser focused on consolidation. So I'd rather like the business model of like the Strives. If you look at STRIVE, they've got 1 equity, ASSP, they've got 1 credit instrument, SATA, and that's it. And it's just a question of how big will the market cap of the equity get and how big will the market AUM or the market cap or the credit get? And I think you would you probably should expect that we won't have more, we'll probably have less. So I think our 11 credit instruments will be whittled down. Our explicit plan is to whittle them down over time. I'm certain that we'll keep STRC. STRC is the flagship. All the focus is STRC. We think that the other preps that publicly traded are option value if they were fairly valued. Right now, they're not fairly valued, they're way undervalued. So like my message is like, if you get this, you want to go buy STRF or you ought to buy STRD. They're incredibly compelling institutional opportunities for a long-term credit investor, they're so good that I won't sell it to you, right? Like that's how good they are.

The bonds, we don't see a strategic -- we think that we had to do the 5. If I could do it again, Matt, I would just do -- I would do no bonds. I would just sell STRC. I would go directly to to go -- don't stop anywhere else, just go to the winner, if I could do it again. And I tell people generally like if you're sitting on $5 billion of capital and you're a Bikpoint treasury company, don't sell convertible bonds, don't sell long duration credit, don't sell convertible, don't sell a product like Strike or Stride or Stripe or Stream, like just create something which is short duration credit like SDRC or SATA because we know there's 50x to 100x the demand.

So if there is 100x demand, we don't really need to create any new credit instrument to grow. And in fact, that it's like I say, just because you can do a thing, you shouldn't -- it doesn't mean you shouldn't do a thing. I actually think this is 1 of those examples where don't just do something stand there. right? Like the more you do, the worse it is. Because every new credit instrument robs liquidity from the 1 that really matters.

So we're interested in combining liquidity or building liquidity. So it's more likely that we would offer you a swap to swap into STRC and pull liquidity than we would ever bifurcate it.

And it is true, I can imagine 100 cool things to do. I can imagine digital money in yen or Swiss francs or pounds or euros, I can imagine a 10-mall credit instrument in euros, pounds or Frank, I can imagine a zero-vol-money instrument in those and things -- we're just not going to do it. That's what I would say for everybody else. Every 1 of our partners, they are great ideas. You should do it -- but for us, they would be a distraction and they would dilute our focus and they would dilute liquidity. It's like rather than -- even if I could issue, for example, Stretch in euros, I would rather issue Stretch in dollars and have someone else create Stretch in euros and by the currency hedge and get paid 200 basis points, and they make a lot of money off that business than for us to do it.

So we feel like we've got Kerosene we're not going to design the jet airplanes, the trains, the planes. We're -- everybody else can build every refined version of it that they want. So I don't think it's constructive for us to be over inventing product right now. It's kind of demonstrative when you think of Apple, they're still making the money off the iPhone. And it's like, I'm not against magical revolutionary product, but let me put it as a hurdle as this. If you came up with an idea where the demand was $100 billion of the market opportunities between $100 billion and $1 trillion, you might get my attention, and we would talk about it. But if you gave me a $10 billion idea, I would say that's a distraction. And the only ideas I can think of that are $100 billion ideas are things built on top of STRC by someone else. And I hope someone else does build a $100 billion thing on top of STRC, good for them. I hope they make billions and billions a year off of it and everybody looks happily ever after. But I'm I'm reasonably sure that we're more likely to commit a fall by not by creating other things rather than by focusing on the 1 thing and making the one thing. Because the one thing is short duration low volatility, high liquidity, stable credit. And that's a $1 trillion opportunity for us. And if that's all we do, and that's all I do in the rest of my life, then that will have been greater than I could have ever hoped for.

So that's what I think of with regard to that. Now the second part of your question, selling volatility. We could go and we could sell volatility. We could sell tranche. We could sell out of the money. We could sell out of the money call options on Bitcoin. We could solve volatility against the commodity or the capital asset, BTC. We could also sell volatility against the equity. We could actually sell warrants on MSTR. And it's not lost upon us, right, that we could sell a war on a -- by the way, when we sell convertible bonds, we were selling a bond with a warrant. So I could go and sell a $200 Strike on MSTR, or I could tie it into a convertible bond. But as you could -- as you know, we don't want to sell bonds because bonds are senior to stretch. So that's a nonstarter. Now if I were to sell the warrant I'm selling volatility, but I'm stripping volatility. I'm clipping it off of the common stock and so the point really is we are selling volatility right now, Matt. And the way we're selling volatility right now is we're selling MSTR. And so when we saw MSTR. MSTR has a 90-vol or 80-vol. And the reason people want to buy it from us is because it's [indiscernible]. So if I turned around and I sold $1 billion of volatility on top of MST, I changed the convexity the instrument and I strip the volatility from the equity and I transfer it to the other security. So this is kind of like I can sell 5 credit instruments senior to STRC, but they undermine my best idea STRC. And I could sell 5 warrants, so I could sell a warrant at [ $150, $200, $250 or $350, ] but I'm stripping the vol and the value off of the underlying security. And what I'm doing is fragmenting all the liquidity, and I'm creating complexity and this is something that a professional options trader at Susquehanna or Millennium or Citadel or Soros, they could do all day long. And my view is they're better than us. And so there's 2 thoughts. One is I don't want to steal an opportunity from a credit investor or an equity investor or a derivative investor. I don't want to steal it from them. I want to leave it for them. I want them to say, "Oh, these goofball guys, they could sell the volatility, but they don't. So I can. Like yes, it's like you can. That's why people that we never met that I've never had a meeting with the derivatives traders that create the options market and our stock and yet they just spend this stuff up for us, right?

That's the reason they do it because that's what they do. So I don't want to steal their opportunity, and I don't want to make their job harder I want them to have complete transparency and line of sight for 5 years, right, as long as possible, so they can create all these things. But the second thing is there's a general principle that we're a publicly traded company we should do things that we are uniquely able to do that they can't do. So a guy with $100 million in a Bloomberg cannot create STRC, and they can't strip -- they can't do what we're doing. They can't issue it, right? And they can't improve it, and they also can't create MSTR. So we're creating securities. We can create publicly traded liquid securities globally, and they can't do that. But what they can do is they can enter on all those trades. So all of those other trades, whether it's like strip the ball, convert the currency, change the duration butter fly between 1 year and 3 year, amplify it up, damp it down, structure it, they can do it, they should do it. I welcome them to come do it and our representation to them, our promise is, we won't compete with you, and we won't change the convexity -- like how would you feel if I put it a press release saying, "I just sold BTC call options at $75,000 a coin against $50 billion of Bitcoin. How do you think about the equity then? Like, well, he just stole the upside on equity, you see. And so the equity investor and then how do you feel about the derivative, the call option guy? It's like, wait a minute, I just created that market and they just distorted the market in derivatives and they're mucking with it. And now you've got all this issue of derivatives guidance. And so we're not trying to make the company more complicated. We're trying to make the company simple learn and it's such a good idea.

My view is, yes, it is a good idea. So I leave it for someone else to do. And it's not that we're not selling the vol, we're selling the vol, right? We sold billions and billions of dollars of equity. And it's like, to a certain extent, the people that bought it from us were buying it for the volatility and for the upside. And when we start selling the ball, we're stripping their upside away from them. And ultimately, there'll be a price to pay. So I think it's one of those things where it's easy to do. I could raise $1 billion in 2 days by selling the warrant. I could raise $1 billion in 2 days by selling the convertible bond. I can raise $1 billion in 2 days selling and junk bond. And it's easy to come, but there would be a bad hangover and the hangover would be it would change the characteristics of the other securities, and it would fragment liquidity.

And also, it would undermine trust, right? And the trust is like I'm not going to do that. And so you can take advantage of that knowledge to put in whatever trade against me or trade with me. And it's more important for us that we make the biggest possible market in the equity MSTR and in the credit STRC, right, then we pursue every cool idea. One more point I'll make. We could generate billions we can sharing billions and billions of dollars of revenue by selling volatility against BTC right now, we would also generate a multibillion-dollar tax liability. And then the equity investors absorb the tax hit, and then we pass it through to the credit investors.

So MSTR equity investors currently have a business model where they've got deferred tax on capital gains and the credit investors have a deferred tax on the credit dividend. And so we have a very tax-efficient business model. And if we start to get cute by doing all this, we create lots of complications. You're Well, maybe I don't care about deferring tax on the credit. Well, actually, it's not just that. It also eliminates the withholding tax for foreign investors. So you might get a 30% withholding tax. So this has so many complications to the tax efficiency of the credit or to the tax efficiency of the company and introduces counterparty risk. And all of those micro reason, but to tell you the truth, the real reason that we don't do it is because I want some due with a Bloomberg to get up in the morning and lay a $500 million bet taking advantage of what he knows about volatility or she knows. And I want them to know that they can put that trade in, and we're not going to rugpull them by countertrading or trading against them because the most important thing, the thing that's made us successful is a very good partnership with the Citadels and the Millenniums and the Susquehanna, right, and the Soros of the world and the capital investors of the world and capital groups and then all those credit investors and all of them, they've got their own models. And the last thing in the world they need is to have to guess how we will decide to trade in the next 12 weeks. It just breaks their models and what will happen is they'll take their money and they'll go home, or They'll cut their allocation of capital. And so instead of -- instead of investing with us, they're like, well, I can't -- the company is too opaque. It's a black box. And I was like, that's just not the right way to build a network. And we don't -- we could do it. I could generate $1 billion like this, but we're not playing for $1 billion, Matt, we're playing for $1 trillion. We want to create a $1 trillion company and a $1 trillion asset class, and that requires that we think very long term strategically, and we can't do it alone. We need people with more money than us to trust us.

Next, we have Ramsey El-Assal Candor Fitzgerald.

I think it was Andrew that mentioned in the prepared remarks, plans to either equitize repay or refinance the existing convertible debt. Can you all collectively help us think through the scenarios where you would opt to or be compelled to deploy these different approaches and also comment on the general timing of your actions when it comes to addressing the upcoming convertible debt maturities?

I can start. I would say, Ramsey, the simple answer is that we have all of those options available to us, right? And so in terms of monitoring the market, being able to understand what the right action is at the right time. I think all of the options are open. In terms of timing, I don't think there's any prescribed rush right now. I think we're continuing to be very disciplined in how we think about it. I think the activity in Q2 showed that we're able to go out and repurchase the debt and there is an active convert market that's very active right now. But really, it's just about waiting and seeing when the right time is.

Right now, our priority is to get stretched back to par. As we said. And so I think the broader message is simply that liability management options remain open. There is no set time line. We will be disciplined in how we think about it, and we'll move forward in that manner.

I can give you an example, Ramsey. Our next convertible debt put date is September of next year. It's our 2028 converts with a conversion price of $183. My expectation is that in September of next year, we'll be north of that conversion price. We won't get put and then a year later we'll equitize it because it will be north of $183. Let's say a year from now, we're not north of $183, we get put that our options are either to sell MSTR at a premium to pay it down, our options are to sell Bitcoin to pay it down or we could just refinance it, right? The terms of convertible notes right now, we get asked every single week by a bank, are we willing to do a 0 up 40 $4 billion 8-year convert? The terms are actually better now than they were when we entered into most as converted in the last 5 years.

So there's a lot of options, and that's the next line that comes up, and that's how we would think about it.

Thank you, Ramsey. Next we have Samson Mow.

Okay. It's great to be here with this lovely big Bitcoin group of heavyweight intellectuals. So I have a compound question, if you don't mind. It's a bit of a follow-on to Matt's question. So I understand you want to keep things simple. You don't want to be trading against the guy with the Bloomberg Terminal and $500 million. But do you think there is any benefit in this sort of new shift to an active capital management strategy to do things like cell covered calls because there is now a price point at which following you said is advantageous to sell Bitcoin. So you could deploy some capital in those markets just to optimize your acquisition or possibly create like a side pocket for selling cash cured puts to buy a bit on cheaper at times, too. Do you view that as conflicting with the current strategy of keeping it simple? Or is it -- is there room for optimization in there for the Bitcoin accumulation because that's a very it's a hard market, especially when Bitcoin is...

I'll give you a quick answer on Samson, which is just right now, that's not part of the plan. We just think it would generate counterparty risk complications, change the convexity of the equity change, the tax characteristics of the company, change the tax characteristics or it might create a tax complication for the credit and aren't our view is the single most lucrative thing we can do with the stack of Bitcoin is cell credit against it, not sell volatility against it. So anybody with $1 billion of Bitcoin can sell $100 million or $500 million of coverage of covered calls like anybody can do it, a private citizen to do it. There's only 2 companies in the world right now that have shown that they can actually sell digital credit against Bitcoin, us and STRIVE. And there's only 1 company in the world that can sell credit at our scale, and that's us.

And we -- I don't know why we couldn't sell. We were selling $2 billion a month of it. We could sell $1 billion a month of it. So our focus is get the digital credit reactor up and running and don't do anything to confuse the matter and don't do anything to create opacity. And again, they're all options like in the future, if I had to do it, if I had to do it for some reason, I would do it. But right now, we think the best business in the world is selling STRC and the most useful thing we can do that the path to become a $1 trillion company, that the path to become the world's most valuable company is not selling call options on Bitcoin. The path to becoming the world's most valuable company is creating the credit money on top of Bitcoin. And everything we do that is complication to the credit that makes it confusing [indiscernible], that undermines the creditworthiness of STRC, and it distracts the management team.

So it's not on the table right now, and we're just going to focus on returning Stretch to health. Did you have a second part to your question?

Yes. Sort of related to Stretch, so just a disclaimer. I'm a big believer. I think Stretch is a brilliant product. We try to do the same structuring instruments for nation states like Stretch. But there is marketing around Stretch saying we make Bitcoin money. And in the Bitcoin space, there are people that are kind of wondering what is your view? Is Bitcoin an asset? Is it digital property? Is it digital Manhattan? Or is it money? And do you feel these instruments like the preferred squeeze out people from discovering real bare Bitcoin? And I think it'd be cathartic for people to hear what your view is on that.

Yes, it's a good point. I think the thing to keep in mind is, our marketing is to the 99% of the people that don't own Bitcoin that don't want to buy it, right? So when -- when we talk about Bitcoin and what we're going to do with it, we're selling products, credit products to people that would never ever in a million years buy the Bitcoin. They just won't buy, either they won't buy it because it's illegal for them to buy it, they don't buy it because it's against their mandate to buy it, they don't buy it because they don't want to hold it, they don't buy it because they literally can't -- that they don't have the ability to punch the button and buy it. So it's either technically impossible or it's just impossible. So we're creating a product for them. And when we create a product for them, we need to market it in a package that they can buy.

I think that the issue with money is, the Austrian perspective on money and the JPMorgan perspective on money is a nonsovereign store value bare instrument is money. So gold is money. Everything else is credit. A famous JPMorgan quote from more than 100 years ago in a congressional hearing, and I've said Bitcoin is money, everything else is credit. If you're an Austrian economist, and if you're a Bitcoiner, then you would understand that, that resonates with you and you would be 1% of the money in the world or 1% of the opinion. The rest of the world doesn't agree with us, right? The 99% of the world, they think that money is is a zero vol pegged to a fiat currency. It's a money market or it's actually a stack of dollars. They think of money as the most salable good as a media exchange in account store of value, but in the fiat frame of reference.

And it's not hard to point toward that. There's $30 trillion in money markets. And it's literally a regulated term, like, for example, it's illegal to market -- you think there's a money market, right, because it's a regulated banking term. And so the rest of the world has defined money as an asset pegged to a fiat currency, in yens, euros, dollars, Frank's pounds. That's how the rest of the world is, okay? So when you're creating marketing, there's no point in marketing to people that are 100% invested in Bitcoin that they should buy Bitcoin. Because they don't have any additional money to buy Bitcoin with, number one. And number two, they don't need to hear that, right? Like no one that's 100% invested in Bitcoin needs to hear from me that they should buy Bitcoin. They would say, I already did that.

So when we're marketing, we're marketing to the people that wanted to buy equity or wanted to buy credit or wanted to be invested in something different. So to the conventional institutional investor, we would position Bitcoin as digital capital because it's capital asset, and it competes with real estate and equity portfolios and credit portfolios other liquid instruments like that. So they think of it as capital asset and then they would recognize STRC as a credit instrument. And there will be a little bit of -- and some people think, well, it's preferred, that's not credit. Won't the truth is it is credit. It's just not a bond. And so they would view a preferred equity as a credit instrument, and we would deliver that.

Now in the fiat frame of reference, gold is capital, a gold-backed bond would be credit and an instrument that was pegged to the U.S. dollar, a note, would be currency or would be money in a fiat frame of reference. And that's the world for the last 100 years, and that's just the way it operates. So when we think about how you grow the business, if you're going to grow Bitcoin from $1 trillion to $100 trillion, you can't just convince all the people that have invested everything in Bitcoin that they should keep investing in Bitcoin because you're going to get a trickle of cash flows. You're going to have to go find $99 trillion of other money or monetary volume. And sort of by definition, it's somewhere else. It's invested in real estate. It's invested in bonds. It's invested in the equity capital markets. That's like a $1,000 trillion stack of capital, and we're $1 trillion where that makes us 10 basis points, like we're 0.1%. So when you go get that money, you're either going to create a Bitcoin backed credit instrument like STRC, or are you going to create a Bitcoin backed equity instrument like MSTR, or you're going to create a wrapped Bitcoin backed fund like IBIT, and all of those are channeling capital into the Bitcoin ecosystem that could not -- they could not contractually, maybe they could not legally, technically could not ethically, they would not economically buy the underlying crypto asset, they just wouldn't. And you can -- the irony is always seeing people that are Bitcoin maximal is to get angry that were actually -- that BlackRock is selling wrapped a Bitcoin to sovereign wealth funds, or that we're selling amplified Bitcoin to an equity investor, or we're selling digital credit, credit interest backed by Bitcoin to a credit investor. But I guarantee you, there's like there's no one that buys those instruments that sold BigPoint to buy the instruments because they didn't want to. It's like all the demand is coming from people that they say, "I have a pool of money, and I can't put it in the 40-vol crypto asset." And so their choices put it in a money market or put it in a credit a diversified credit fund.

So we see the expansion as digital credit will allow us to tap into the multi-hundred trillion credit mark. And then if you can take that credit and create an instrument pegged to a fiat currency, if you can peg it to the yen or the Swiss franc or the euro or the pound or the dollar and you can offer a spread higher than the risk-free rate, the conventional rate, then you will start to divert capital from the money market instruments. And we talk about digital money. What is digital money? Digital money is a Swiss franc that pays you 4% in a world where the fiat out money is the Swiss franc that pays you 0 or negative, right? And we can debate semantics and the crypto community, but it's kind of irrelevant because all the money is not in the crypto community. The money is in fiat community. So if there's $1 trillion invested in Swiss francs that yield zero, and you want $100 billion of it, you have to offer them a Swiss franc that yields 4% backed by a digital credit instrument backed by Bitcoin.

So when we use the phrase digital money, we're creating a product to sell to the people that have the hundreds of trillions of dollars of fiat backed securities or money instruments or credit instruments because that's what they understand. And we use the word digital credit, we're creating a product to sell to people that have credit that is fiat based that they understand. and What is Bitcoin? Well, yes, it is money. It's a non -- it's digital gold. As much as gold was metallic money, Bitcoin is crypto money or digital money, but it's also digital property. It's also digital capital. It's also digital energy. It's also trust, digital trust. If you want to establish or authenticate digitally, how do you prove your identity without a trusted third party?

It's one thing to transfer money without a trusted third party, it's another thing to prove that your [indiscernible] without a trusted third party. The answer with both of those is using a public-private key combination. I mean that's [indiscernible] approach this and I think public-private key cryptography is a critical thing. But even with public-private key cryptography, the ability to anchor it into the most energetic, most secure global blockchain is important.

So I think that Bitcoin is important to understand as a trust network, a monitoring network, a capital network and information network, right? And what is the highest best use? I think the market has clearly spoken that the highest best use is for store of value as a capital network. We have proven whether the shadow of doubt that Bitcoin functions if you want to store your monetary energy for 4 years or longer. And the way we've shown it is like while we're moving $50 million a day, you're selling $1 billion a week of something, right? So clearly, that's a killer app, but there are other applications, right, medium exchange applications and authentication applications and the like. They're not nearly as valuable right now. And it will be whatever it will be. But our view is we like Bitcoin to become 100x bigger than it is, and that means we need 100x more money and it's other people that have the money. And right now, they're invested in Fiat denominated credit equity and monetary instruments and we need to create products that appeal to them, and we need to market them and with words that they understand. And the most important thing is get the money.

Awesome. I think people will be happy hearing us talk about Bitcoin is money for 10 minutes.

Thank you, Samson. Next, we have Nick Cremo from Barclays.

The first, I just wanted to ask on STRC, it's good to see the dividend coverage is over 2 years now, well ahead of the 12-month minimum and the USD reserve from your digital credit capital framework. Just wanted to ask if you would consider raising the minimum number of months of coverage to say, maybe 18 or 24 months this as a mechanism to get TRC closer to par if later this year, it's kind of still trading in the high 80s range?

I think we'd consider it, Nick. I think the best thing to get is to trade to par is our commitment to a U.S. dollar reserve and increasing the actual number, not necessarily increasing the minimum. I think the other thing we can do to get trade back to par is a study repurchase program, which you've seen. And then another thing is just Bitcoin price going up. I think those are some of the levers. Would we increase the minimum U.S. dollar reserve? Maybe at some point, but I think a year is a good spot. Really, how much we have in the U.S. dollar reserve, I think, matters even more and our commitment only to use it for dividends and interest.

Thank you, Nick. Next, we have in Lyn Alden.

My question is, do you have current guidance on kind of a target level of overall amplification or leverage for the company as part of the capital structure? And kind of a related question, is the countercyclicality or procyclicality of capital issuance? And so for example, when STRC has a lot of demand, which tend to happen along with the other instruments during bull markets, there's a choice when it starts to go above our either to issue more STRC or to potentially ratchet down the dividend. So far, the choice has been made to issue more, accumulate more Bitcoin historically at these kind of pro cyclical price when they happen as most treasury companies do. Going forward, do you have kind of just overall guidance of what you think that kind of the ideal [indiscernible] structure is or like level is? And then do you plan on trying to find ways to -- now that you have kind of multiple different levers to pull to be somewhat more countercyclical in your approach or take a view on whether Bitcoin is maybe oversold or overbought and therefore, leaning in or leaning out of? Or is that not really how you view what you're offering to investors?

I guess I can start and then following you quite have some comments. You noticed on our website, we added those Bitcoin metrics. And 1 of the metrics we added is the 200 week moving average. And then we added the premium the 200 week moving average, and we started tracking it and we started tracking the percentage of the time is above that number. And so I think traditionally, we've always wanted to be long Bitcoin, but I think we underestimated the value of U.S. dollars. And now I think we've developed an appreciation for actively managing the mixture between USD and BTC. And obviously, we have more U.S. dollars today we've ever had in the history of the company. And we saw that when we went 98% or 99% BTC, 1% USD the Bitcoin investors didn't like it. The equity investors didn't like it. The credit investors didn't like it. So it actually was -- it actually was counterproductive to be focus. So I think you could expect that we're going to be staring at metrics like the premium to the 200 week moving average and I think that although in the past, we've had a 100% allocation to BTC. I don't think it will be the 100% in the future. I think it will be a mix and to your point, if you're sitting at 100% premium to the 200 week moving average, then the likelihood that Bitcoin is going to trade the opposite way goes up, right?

And so I think that when we're sitting at premiums, we probably will be countercyclical and enter more toward dollars, and we're sitting at discounts or we're sitting at very small premiums, we would be more bullish on BTC.

And the reason that we publish that on our website is we wanted people to see the metric that we're staring at. So yes, so that's a long-winded answer to your question, which is sort of yes, yes we are going to actively manage it. And one aspect is what is the credit coverage. And the other aspect is what is the mix between USD and BTC? Do we have 10% of our reserves in USD irregardless of credit obligation. And do we have 36 months or 24 months of dividends, right? So there are both interesting factors to be managed I'm the opinion with the credit. If you want strong credit like creating chromium steel or stainless steel, you want 20% to 30% chromium and iron and just a smudge of carbon -- but is it 20%, or is it 30%? That's the question of, do you have 24 months or 36 months of dividends.

So we want to actively manage to create the strongest possible credit and we're trying to figure out exactly what that alloy is. But the other piece is irregardless is the company better if we're sitting on $55 billion, $5 billion in cash. And if we had $100 billion of Bitcoin, we want to be sitting on $10 billion of cash, even without thinking about the credit. I think the answer to the question of how much cash is probably going to be driven by market sentiment and the market premium and I don't want to simplify it down to it's as simple as just looking at the premium for the 20-week moving ambers because A lot of people will come up with a few other metrics. You may have a number of your own metrics, right? And there's a debate in the community about what's the best way to calculate whether Bitcoin is at the top of the cycle or at the bottom of the cycle. But I think we're going to start to look at those signals and that will drive the allocation of cash flow.

If we saw $1 billion of credit, I don't think you'll see 100% BTC 0 as the norm. I think it will be a ratio and what the ratio is? Well, it will be a function of the equity capital markets, the Bitcoin markets, the credit markets and what are people telling us if the credit investors still want more cash then we're we'll probably lean toward dollars because the credit markets want it, regardless of where BTC is.

But if the credit is strong, and there's no issue there and it's stable, then it will be a function of where is Bitcoin in the cycle and what are the forward yield curves or the forward vol curves look like and and that will Barry. Phong, do you have anything to add on the subject or any thoughts?

Yes. I think we're at the 1-year birthday of Stretch, which is a brand-new asset class digital credit. At about 9 months, we learned the hard way that we shouldn't let our left brain Bitcoin bull, say that everything we can issue is just pour into Bitcoin. And I think we've learned that holding U.S. dollars makes a lot more sense. We also have learned a lot more about our investor base, the retail versus institutional base, the leverage they take on what is important to them. And so we've talked to a lot of them to figure this out. I think reducing the rate when we see a strong Bitcoin price, a strong premium to the 200-week moving average makes sense, right? So I think that's something we consider doing, too.

So yes, I think we agree with all your points, Lyn, that we need to look at the cyclicality. We need to look at the demand and you look at the price, the interest rate, how much U.S. dollars we hold, we'll be a lot more thoughtful and methodical this time around about growing the digital credit base. I'm excited to see stretch get back to par so we can exercise all that we have learned.

Great. I appreciate the guidance.

It's worth noting that with credit we've noted that the market would probably rather pay us a lower dividend rate with more currency backing it that a higher dividend rate with more Bitcoin back in it. And so there's this circularity there, which is if we you don't want to carry dollars because they underperform BTC, but you do want to carry dollars because otherwise, you have to overpay to issue the credit. And so to find the sweet spot of how do you create strong credit that has a dividend that's somewhat better than junk bonds, that's compelling enough to have a high demand, but is lower. We could see people don't want the thing paying 14% if they don't feel secure, right? But on the other hand, a lot of our credit investors told us, I'd be happy to be paying you 9% if I just didn't have any anxiety.

So finding our way to the right balance is all consistent with the dynamic equilibrium because if you find the right credit point, then that lowers the cost of capital that lowers the hurdle rate, which is better for the equity. So the equity benefits if we issue the most efficient credit and the credit benefits. And we know for sure that it's this balance of dollars and BTC. And we know that we have been underweighted dollars before. Now we're in this discovery. And we're talking to our investors every week right? Like every day, we're talking to them, but every week, there's a new announcement.

And so every single time we make an adjustment in the capital structure, we watch to see how the credit settles, then we go and we talk to our investors to see how they feel about it. And of course, we have other moving parts like the Bitcoin price is a massive moving part of it. If it falls $20,000 or rises 30%, but also SOFR and the federal the monetary policy of the Fed there's the second moving part and in the private credit markets and the equity capital markets.

So I think it's a moving target, but what we've learned over the past 12 weeks is we need to actively manage those ratios, and we need to be humble and maybe -- and this is a hard thing for a lot of people to understand. Maybe the best way to buy the most bitcoin is not to buy the most bitcoin Like if it was an 80-20 split or a 90-10 split, we'll actually get more bitcoin over the long term because it's all about sustainable growth. And of course, it's very difficult to explain this on X because people want you -- they don't like nuance of I'm going to sell 1 and buy 10. They want to hear that you're going to sell none and buy 11 and do it with money you conjured from a genie under the desk. We don't quite have that.

Thank you, Lyn. Next, we have Lance Vitanza from TD Cowen.

That's a great segue to my question. Over the years, investors have come to associate strategy with a number of principles that at 1 point, seemed absolute, but later proved more flexible in practice, Bitcoin monetization, obviously, 1 example. Today, management has been clear that it does not intend to issue stretch below par. My question is under what circumstances would you reconsider that position more broadly, how should investors distinguish between principles that are foundational to the model and those that are contingent on market conditions?

I think we learned that the market wants -- they don't want volatility in their credit, they want lots of liquidity, low volatility, short duration, stability. They want to buy it around par. They want to sell it around par. They want to collect the dividend. That's what they want, and that's what they expect us to give them. And if we do that, then they make a decision in 10 seconds. I'm just going to buy $1 million or I'm going to sell $1 million. If we allow it to flex plus or minus $1, that order becomes a 3-day process. Like I placed a limit order -- we've allowed it to flex $0.40 in the past. People put in limit orders and they wait from -- they put in the order on Wednesday and they're waiting on Friday and the order isn't filled and what would have been a 5-second decision became a 3-day decision. But if you let it flex plus or minus $5, we have an example like STRF. STRF is objectively a better credit instrument, like it's 12x overcollateralized. It's got super dividend stoppers and it's got nonpayment penalties. And if you're a credit investor, in theory, it's 10x better. And yet it trades with 120th or 130th the liquidity. And I scratch my head and I'm like, why is it nobody wants this thing? And so whenever people say, why don't you just at TRC float up $2 or float down to hours, I think, well, because I've already got that. It's called STRF or STRD, and it's got 130th or 150th of liquidity.

And so the answer to the question is, we're never going to -- if it trades -- if you offered me $10 billion to sell you the instrument at $99.9 and take %0.01 off, I wouldn't give you the penny, Lance. I would not give you -- I would not knock off $0.01, if you put $10 billion in front of my face because it's a matter of principal and credibility. If we can't create it such that the trades at par, and we can't sell it at par, we're not going to sell it at all. Our backup is, we just do nothing, the hippocratic oath, do no harm, right? And if we can't -- like we're not going to sell Stride, Strike, we're not selling Strike, we're not selling Stripe, we're not solving Stream, and we're not selling stretch right now. And that's okay. At some point, Stretch will return to par. And the only question is how much money or time will we have to exert to get it to par. But I guess I would say it's it's not worth doing if we can't do it right. So I come back to [indiscernible]. It's like the recent standard oil was successful was because it was standard and it didn't blow up in the engine and it didn't burn you to death. It didn't start a fire. It used to be that people created oils and they were impure. Like if you ever put bad diesel or bad oil and your fuel tank of a boat or a plane, like I'd like to store the engine. So the impurities render the product useless.

So here's my analogy to you, which is, if it's a little bit bad, I could either say, okay, well, here's some kerosine. You should test it in your own factory or in your own [indiscernible] before you put it in the engine because it might blow up. And I put the disclaimer on it. Or I could just not sell it to you. And my point really is, if you can't create this stuff so it's pure, like it's got to be pure, and it's got to be what the market wants or just sell nothing at all. And if we can't create pure short-duration credit at par, we'd rather just sell nothing at all until we get it right because the demand is -- in my opinion, it's 100x more for short duration credit, 100x more and maybe the ultimate market is 100x bigger. And so it's like we're just playing to win here. And it would be very easy to -- it's like, "Oh, I could let it float between -- I could sell it at 98 or 97 some days or 99." What would happen would be the market would shrink by a factor of 100, and you would basically turn people from -- it's like what if your bank took a 1% commission every time you deposited money or they didn't, and it was random and it came and it went, and you weren't quite sure. Or what if the trading fee, it changed from 5 basis points to 5% randomly from week to week. It's like, yes, it's like I put my hand on the light switch and sometimes I get a shock and sometimes I don't get a shock. And it's like, you don't want to touch the switch. And so that's how we feel about this thing.

It's like you would be so angry at me if it's like you bought it at $100, you sold it at $100, but you could have sold it at $105, or you bought it at $100, but then you could have bought it at $98, It's like that kind of thing. It just destroys the product. And we've discovered, we've inadvertently tripped over what we think is the magic product, the greatest product in the world. The marketplace wants us to strip the volatility of it. They want it to trade at par. They want it to be liquid. That's our job. If we punt, if we aggregate on our responsibility, it's just like someone shipping you a beer and saying, "Well, here's the 6 pack. One of them is spoiled, but the other 5 are good, just check before you drink." It's not acceptable, right? It's a failure, right, to create -- we're creating a failed, flawed product, and we're telling -- we're lowering our standards and telling ourselves it's okay. It's not okay. It needs to trade at par. We won't sell it below par, right?

If we have to spend an extra $1 billion to get it to par, it's an extra $1 billion. If it took an extra $2 billion, an extra $2 billion. If it took an extra $4 billion, spend $4 billion. It's like how much is it worth spending to make the airplane that flies across the Atlantic without crashing on the way? It's like just make the thing work, right? And that's what we've discovered. We've got a thing, everybody wants it, we need to make it work. I can't guarantee you exactly how many dollars it takes for me to get it to work or how many days it takes me to get it to. But what I can say is that it is so clear in our mind that this is what the market wants. And this is what we can create, and this is the thing that will make the company worth hundreds of billions and then trillions of dollars that there's nothing else worth considering. Everything else is a distraction or waste of time. We just need this thing to work as designed.

Thank you, Lance. Last but not the least, James Straton.

I love seeing the 200-week moving average on the dashboard, and it would be great to see also like on chain metrics that are complementary, like the realized price and true market mean? I think it gives a much greater indicator of support levels. I've got kind of a 2-pronged question. So like looking back over the cycle, is your guys' second cycle. What assumption about the capital markets proved you guys wrong lease certain that you expected? And then as capital markets start to move on chain, do you think this can create new opportunity to strategy, whether to tokenize securities, which would obviously reach a broader global investor base or even issue a strategy stable point in the future? Is this something that you guys think about?

Phong, do you want to start?

Yes, I can cover the first one, maybe Mike will cover the second one. In our first [indiscernible] cycle in 2022, some might recall, we had secured debt that had covenants on it that were quite restricted to the company. And we had a Bitcoin backed loan that had a margin requirement on it. And our biggest lesson learned for 2022 is don't do either of those. So here we sit in 2026, and we're fully convertible notes and preferred. And so that was a big lesson from 2022, and I think we upgraded our capital structure as a result. The biggest lesson so far for 2026 is the importance of holding liquid U.S. dollars to fund our dividend and to overfund our dividend until people have confidence in the preferred dividends. And I think we thought that liquid Bitcoin would be important. But what Mike mentioned earlier is the people who are holding these preferreds don't look at Bitcoin the way they look at U.S. dollars. So that was a major lesson learned. And we did a lot of things in May, June that I think looking back at that, we can execute things better. So we learned a lot. And so the next bear market, 4 years from now, wherever it is, we'll go from that too.

Yes. I would add, I think, yes, in the capital markets, sometimes the equity capital markets correlate with Bitcoin and they trade in lockstep. But sometimes the correlation is broken like with the AI bubble forming equity capital markets diverged from the digital capital market. And so they will converge and diverge and generally things that are good for risk assets are good for all of us. But sometimes they'll get a boost from their -- from the demand for AI and then sometimes we'll get a boost as a very pro Bitcoin dynamics evolve.

So I think as a company, we've realized that we're straddling the equity markets when the equity capital markets are rallying, that's certainly good for our equity, but it's not necessarily good for our capital asset BTC. And so we're also struggling the credit markets. And sometimes, there are things that are credit positive or credit negative, the way the yield curve moves and SOFR. And then sentiment in private credit or other sorts of corporate credit, they have their own dynamic. And then there's the digital capital markets, and that's Bitcoin and it has its own dynamic and drivers.

And what we need to do is just be in a position to exploit and arbitrage the various opportunities. And when 1 market is mispriced, we're buying the cheap one, selling the well valued one. And then occasionally, we just have to put the engine in reverse and go the opposite direction. And I think that 2, 3 years ago, we had a much simpler business model and now we realize we -- sometimes you sell credit, sometimes you buy credit, sometimes you sell capital, sometimes you buy capital, sometimes you sell equity, some tone buy equity. And the more nimble you are with regard to that and then the more shareholder value you can create. With regard to the issue of tokenization, I think the security of tokenized is digital credit. If you look at what's going on right now, people have been tokenizing money market funds, and they are yielding 3.5%. And and they put them in a looping protocols and everybody wants yield and yield drives the entire DFI economy. But if you can plug a 10% yielding instrument into a tokenized asset instead of a 3% yielding instrument, there's so much more energy that you can do a lot more with it.

So ultimately, I think that the real interesting killer application is going to be looping digital credit, either stepping it up 2x, 3x, 4x or stepping it down stripping the vol. And if you tokenize STRC and then you step it down and transform it, there's a market for 4% yielding yen as a yield coin or 5% yielding euros or 4% yielding Swiss franc or 6% yielding dollars. And the way you're going to get to that is you can't create that with money markets. You can't take a 1% yielding yen money market and step it up to 3% with any kind of economic responsibility or rationale. It's just -- it's crazy. But you can take a 10% yielding or 12% yielding digital credit instrument and you can transform it into any currency, stabilize it, step it down, provide liquidity, give it daily liquidity or hourly liquidity and you can stream a yield and strip the vol off it.

So I actually think that the more tokenized securities we see and the more money flows into that, the better that's going to be for digital credit. And I think that what does the world want? The world wants -- well, probably the world wants $1 trillion worth of stable coin that pays 6%. And what the world has right now is $250 billion of stable coin that yields nothing, right? And then they jump through hoops trying to make the stablecoins of the yields, not thing yield something. But -- and so how are you going to actually create $1 trillion of stable tokens that yield something that's more than SOFR? You're going to do a digital credit. So I think that, that's really the killer thing.

With regard to all the other tokenized securities, real -- the idea -- the killer idea of tokenization is creating a free market in custody and credit. Like if I have $1 million of Apple stock, can I actually transfer it to a custodian that will pay me a 4% yield on it? Because right now, I don't get yield on it. And if I have $1 million of Apple stock and my bank will give me a advance ratio and charge me 8%, while someone could be an 80% advance ratio and charge me 4%. So in theory, you could see those markets form. In practice, I don't see them happening in the U.S. right now, and there's still a lot of obscurity. There's a lack of clarity about what kind of tokenized use cases will be allowed for securities. But one thing is clear, stablecoins are going to tripled in their ability to generate yield. So the path to generating yield and fixed income is going to be through tokenized securities, not through tokenized currency or the like. And I think we're really well positioned for that. And I think ultimately, it's -- the one thing that they're really good at in DeFi is they're really good at looping something 2x 3x, 4x or they're good at tranching risk and stripping it down to zero vol. So that's financial engineering tokenized.

And the one thing you want to engineer is, if I give you a 10-vol, 10% dividend yielding asset in dollars, then in DeFi, in theory, you can create any currency, any monetary instrument pegged to any currency and you can step it up and step it down with transparency. And so I really see as something like STRC is like the universal fuel source for the digital asset economy, and that's really an opportunity for us should that economy become material.

To be clear, right now, it's only 0.1% of the money is in DeFi. So 99.9% of the money is TradFi. And so we don't need it. And it won't -- and the truth is 100x more money is solving this problem in the credit markets and the equity capital markets. But I do think that DeFI and digital assets and tokenization is interesting because the people involved are more progressive, more innovative, they move much faster. They're much more creative. They'll take risk they're not so crippled with tradition and custom and incumbency that they fear to do something, which is an obvious thing to do.

And so all of the really cool innovative products will probably come out of the digital asset space first. And then it becomes a regulatory struggle and a political struggle to see whether you can get approval to sell a compliant version of that thing in the capital market where you're operating. And we don't have any time to go into that. That's a podcast in and of itself. But that's what I think.

And sorry, I have a quick question as well. On the 26th of June, Stretch traded down to $70, is there any insight you had on that? Is that forced liquidations from the DeFI? Or was there something else?

Tell me, I didn't hear the first part of your question because you cut out on the 26th of June, when what...

On 26th June when stretch traded down to, I think, $70, is there any insight you can give on that day? Was it both liquidations or...

What I think happened is that there are a number of broker-dealers unnamed, and we can't even identify them all that we're actually creating credit 3x or 4x credit against STRC under very favorable terms, so they were giving very high -- like a 70% advance ratio or an 80% advance ratio against STRC based upon its previous trading dynamic. And then when it traded down and the ball spiked, I think that those entities change -- they dial back their credit lines from an 80% advance ratio to a 20% advance ratio or they pull those credit lines, and they created, in essence, the equivalent of a margin call or a liquidation event. But see, to call it a margin call would be misleading. It's not like someone got overlevered and margin called, it was a second order thing. The credit lines creating the leverage got withdrawn. And one of the lessons we learned is, it's important for us to offer the instrument in such a stable way so that the second order and third order credit lines backing the investor that took on the trade don't get pulled away from the investor, right? And that was kind of a -- it was an unexpected thing that we learned.

So it wasn't DeFi, by the way. The simplistic notion would be, oh, yes, some retail guys over-borrowed or some DeFi did generate like took on too much leverage. That's not what happened. Some TradFi organization said, "Well, we'll give an 80% advance ratio when it's trading with a vol of less than 10. And then when the vol spike to 20, they changed the advance ratio and it created this second order and third order rippling effect where you then had someone sell or liquidate and that created a downdraft in the price, which created another liquidation. And so it was a second order, third order reflexive contraction in credit in the system, we believe that cause it to trade into the 70s. And that created -- when I got into 70s, that created anxiety for first order investors then reacted to it. So it's kind of like an amplified reflexivity through a lot of different parts of the market, all working at the same time. on a novel asset I'll turn the call over to Pan for any closing remarks.

[indiscernible] Phong for any closing remarks.

Thanks to the analyst, both on the Bitcoin side and the banking side for joining us. Thank you, everyone, for joining us for our earnings call and looking forward to seeing you all again in 3 months.

Hi, everyone, and welcome. I'm Natalie Brunell, host of Coin Stories and author of Bitcoin is for Everyone, and I'm so glad you're all with us here tonight. Whether you're a longtime MSTR shareholder, a brand-new Stretch holder or you're just trying to understand what strategy is actually building you're in the right place it is for you. The questions that drive this conversation are coming directly from this audience, from retail investors who submitted them on X and through the QR code that we shared a few weeks ago, and we're putting them in front of the 2 people best positioned to answer them.

We'll also be folding in questions coming in live in the comments during the stream tonight. My colleague, [ Alexandre Devani ], is behind the scenes. ready to filter those in real time, and then we'll share the sharpest ones to me as we go. We will try to get through as many of them as we can in about an hour that we have.

Before we jump in, we have an important disclaimer. This Q&A webinar is for informational purposes only. It is not an offer to sell or a solicitation of an offer to buy any securities. And it is not investment, financial, legal or tax advice. Any offering of securities will be made only by means of perspective -- perspective, excuse me. For additional information about strategy and the key performance indicators visit, strategy com/notes. So without further ado, let me bring in our featured speakers, Michael Saylor is the Executive Chairman of Strategy and one of the most influential voices in Bitcoin in the world. Under his leadership, strategy has become the largest corporate holder of Bitcoin and the company has reshaped what's possible when you build a capital structure on digital sound money.

And Phong Le is the President and CEO of Strategy. He runs the company day-to-day operations leads the capital market strategy and has been central to executing the products that have opened Bitcoin exposure up to an entirely new class of investors. Michael, Phone, thank you so much. Welcome, and thank you for being here.

Excited about this.

Well, we're doing this directly for and with the people who invest in this company, there's been so much news just the last couple of weeks, a vote on the table around shifting some of the preferred dividends to semi monthly, the announcement that strategy could eventually sell some Bitcoin and a lot of buzz in general about where the company goes from here. The retail audience watching tonight has real questions about all of it. We've got about an hour or an hour and 15 to dig in.

So the topic we'll begin with is questions about the potential of strategy selling Bitcoin. The first question is from Kagan. Michael, since your May 5 earnings call comments, odds that strategy sells on Bitcoin by year-end, have spiked from around 30% to 84% and odds of a cell by June 30 are at 66%. Critics stretched dividends and a narrowed MNAV premium are forcing your hand? How wrong is the market?

I think we enjoy keeping everybody guessing. It definitely makes a lot more interesting. Our view is business as usual here, we're a kind of a matter of fact about this -- the goal of the company is to drive Bitcoin per share and to increase its Bitcoin and increase the enterprise value continuously forever. We'll make decisions about how we fund our liabilities week by week, day by day. Sometimes we make them minute by minute to tell you the truth. We set algorithms where we're looking at what is most long-term advantageous to the company. Are we managing our credit risk? Are we creating Bitcoin per share? And are we best off to pay a liability with cash or to pay a liability by issuing equity or to pay a liability by issuing credit or to pay a liability by selling Bitcoin.

We've done a lot of multivariate models and in all the models, what we find over the long term is that by far, the best thing for the company is to engage in a mixture of those 4 instruments. Any model that we put together that's limited only to equity or only to credit or only to Bitcoin always underperform. So ultimately, the way to think of it is 7 years out, we would like to have maximized our Bitcoin per share. And what is it that we should be doing now that's going to maximize and optimize the company's performance so that we've maxed out Bitcoin per share 7 years from now.

And I think it's not unlikely that we'll sell some Bitcoin between now and the end of the year. I don't know how much. We still consider these things. But it's also likely that we'll sell a mixture of equity, a mixture of credit that we'll manage our USD, our cash positions. And we do it in a very thoughtful programmatic fashion, where we're running our multi-variant models. And we're literally running them. We're making trading decisions to say every minute might be an understatement. We often use make trading decisions every second and we'll continue to do that.

All right. This next question comes from Jerry. If strategy sells Bitcoin to fund Stretch distribution, does that shift the tax treatment from return of capital to ordinary income since the gains would be realized?

The short answer on that is no. We've stated that we're going to be able to have rock dividends for a Stretch and for all of our preferreds for the foreseeable future, likely in the next 10 years. The reason selling Bitcoin doesn't result in address that or is primarily because we have cost bases of Bitcoin everywhere from $10,000 to $125,000. So if we're able to sell Bitcoin at a high cost basis and take a tax loss, which we can keep on our balance sheet for a while. That's positive, and it doesn't affect how active it is.

Well, since I know decisions can be made signed a second, you probably want to pay dividends as quickly as possible. And a couple of folks asked if you could react to Stride's announcement of the daily dividends? And then can you walk us through what shareholders are being asked to vote on specifically with strategy and why semi-monthly is the right move right now? Why can't it be daily?

I'm really excited and impressed by what Stride has accomplished. I'm thrilled to see them bringing a daily dividend, digital credit instrument to market. I'm also impressed with how rapid they did it. I think it's quite an extraordinary thing for the space. I believe -- it's actually great for them. It's great for the digital credit space. It's great for Bitcoin. It's great for us that they're able to bring that instrument to market. It's obviously working very, very well right now.

They've been sitting around par for the last week or so. And so it's working in the market. I don't feel like we need to steal their thunder. I actually wouldn't mind seeing them get 10x bigger than they are right now as they actually use [ SATA ] as the engine to drive growth at Stride. And I think we're all in a cooperative relationship there. We we're a Delaware company, they're a Nevada company. We have different corporate governance requirements than they have.

We're also 100x bigger in terms of scale. And so I think it behooves us to move forward deliberately. And right now, for us, going from monthly to semimonthly is a bold, and I thought -- I think a very progressive step. I think that will play out over the course of the next 4 weeks. We have a shareholder vote coming up in early June. I think that will dramatically improve the performance of STRC.

Once we've gotten to semi-monthly, then I think the market will have a daily credit instrument from Stride and a semimonthly credit instrument from Strategy. I think it's quite possible that the market will benefit by having the 2 different frequencies. I'm humble enough to know what I don't know. And I'm looking forward to seeing how the market trades, STRC, how it trades SATA, if both of them reach their full potential, that's great.

We'll watch that performance. And over time, if it turns out that there's overwhelming demand from our own shareholders to go to daily, then that's something we'll consider. But I don't really think that we need to copy what they've done. I almost would rather have them be the only instrument in the world doing that because that's insanely good publicity for them insanely good publicity for digital credit. And for those people that absolutely need that, that's going to be a great market expanding innovation. Phong, you might have comments of your own on this topic?

I agree. Look, I think Matt Cole and Jeff Walton and all the guys over at Stride have proven that they can innovate extremely rapidly. And Michael said we're humble enough to realize we're not going to come up with every great idea, right? And so we hope other Bitcoin treasury companies and other folks in the market are going to come up with great ideas too. That's how we have a great marketplace for Bitcoin, Bitcoin treasury company is digital credit. So it's actually pretty exciting. And it will be very interesting to see how this all plays out. I don't think we know exactly what will happen. But it's great for everybody to see Stride innovating.

Well, staying on the topic of dividends. Eric asks, as Stretch matures over the next 1 to 2 years, where do you see the dividend rate eventually settling? And would you expect it lower in a full Bitcoin bull market?

I think that we're -- we like where it is right now, 11.5% is -- seems to be working very, very well in the marketplace. We're not -- we think of this as we're kind of piloting an aircraft carrier or a cruise liner and it takes a while to change direction. Once you get it up and running and there's a certain amount of momentum, you prefer to just leave it that way. So we're not anxious to over control the vehicle one way or the other.

And I think we think over 20 years that the dividend will gradually be lower. But we're thinking in terms of 20 years, not 20 months, and ultimately, the dividend rate for STRC will be driven by the health and the growth of the crypto economy and specifically the Bitcoin economy. So we'll manage this in order to create our goal. We want to minimize volatility.

We want to minimize uncertainty. We want to maximize the growth in the credit instrument so that we can maximize our acquisition of Bitcoin so we can maximize Bitcoin per share. And all things being considered, we would rather do something which is low volatility, stable enthusiastically embraced and pay 11.5% then save a few basis points and pay a little bit less but create uncertainty, anxiety or instability in the marketplace.

And so I don't think we presently expect a change in that dividend policy, but we have to look at the performance of the credit, the 1-month VWAP the strength of the credit, the strength of the underlying Bitcoin economy, the volatility of Bitcoin and people's views toward digital credit, digital capital, et cetera, and make the responsible adjustment from time to time if we needed to. Phong?

What I would add is we're 10 months into a product. I think the Eric's question was as the product matures in 1 to 2 years, I don't think it's going to mature in 1 to 2 years. I think it's going to take, as Mike said, 20 years, maybe 10 years, maybe 5 years until we reach a point of true maturity of digital credit. Right now, the objective is to create the best product possible. And so reducing a dividend rate really is dependent on what is the market telling us. And every month, we learn new things, right? The behavior prior to the record date this month in May was extremely different than the behavior in the month of April, which was extremely different than the behavior in the month of March. So we just have to look at what's happening in the Stretch every single day, every single week, every single month. And that's what's going to drive ultimately the decision on the dividend rate as the market.

The question that came in live a couple of moments ago is, at what point will strategy slow down purchasing Bitcoin is that price only or a certain percentage of all the Bitcoin?

Well, I can start and Mike can add. I mean we've mentioned earlier. Ultimately, our goal is to accrete the coin per share and do it in a thoughtful way to our credit and to our equity and to Bitcoin. And so ultimately, it's not about how much Bitcoin we buy or how fast or how slow is are we accreting the claim per share.

So the number of Bitcoin, although it's a nice vanity metric. It's not even Satoshi is nice, but it's ultimately how do we increase bit coin yield. And whatever that results in, in terms of how much Bitcoin and the acceleration changes, right? Like -- our low point of Bitcoin yield was in 2022, right? Our high point was in 2024. And that was because of the market, not because of any decisions that we are making to accrete more or less.

We view ourselves as powering the Bitcoin economy. And so powering the Bitcoin economy sometimes means buying Bitcoin and raising capital by equity or credit issuance to buy Bitcoin. But the best thing is a very healthy digital equity, so MSTR MNAV expanding and then very healthy digital credit, low volatility, high liquidity, high performance stable credit. And so we're always thinking about those things.

I expect that Bitcoin price will go up forever. And a Bitcoin price goes up forever, you could buy it forever, getting exponentially less as the price goes exponentially higher right? And that would be good for the entire economy, I mean, for the entire crypto ecosystem. But we don't have any hard target one way or the other, and it all comes down to the equity capital markets and the credit markets.

Yes, someday in the future, it might take years to get a whole bit coin. Joel from Mississippi asks, is the $100 Peg-Something strategy is legally obligated to defend? Or is it more of an aspirational target?

We don't have a legal obligation for the security itself, but it is the company's #1 business objective. So the way to understand it is we have about an $80 billion enterprise. And if you were to ask what is the #1 thing that we want to ensure month by month, quarter by quarter, it's -- we want to ensure the stability of STRC around $100. If STRC doesn't hit the $100 peg each month, then the company is going to take action in order to strengthen it. And we've shown ourselves want to do it. We raised the dividend, was it 6 months -- 6 times in a row or how many times, Phong?

I think it was 6...

Many times. We raised the dividend multiple times. We raised billions of dollars of capital and bought Bitcoin with it. We raised billions of dollars of capital and we put in a U.S. dollar reserve -- we have just bought back $1.5 billion of debt, which is senior to STRC. So we will restructure the capital structure, we will raise capital. We will adjust the dividend we went and put a presentation or proposal in front of our shareholders to double the frequency of the dividend.

So all of those things I just named are all in pursuit of stability out around the $100 target. So you can think of it as a business objective, and it's almost -- you could almost view it as that's the reason that the company is here, like that is the primary KPI for strategy is to stabilize and make the digital credit successful. And I would contrast that to we're not terribly concerned about the price of a convertible bond trading in the OTC market. And if you were to ask how do we feel about the price of STRD, STRF, STRK, STRE. Well, we'd like them all to be higher, but we don't get up every week and every morning and obsess over what we need to do in order to in order to deal with those securities performance in the market or in the near term, MSTR is going to move around the primary flagship security of the company is STRC. And the primary objective is to strip the volatility and stabilize the instrument at par.

We got a question from Tyler, Matt and John, this is a popular one. We're now seeing D5 volts and leverage products built on top of Stretch. If one of those products were to fail or a large levered pool unwinds, what's the playbook for defending the $100 peg from selling pressure that originates outside of strategies control?

When you design a structure to be anti fragile, whether it's a skyscraper in Manhattan or whether it's an aircraft wing, it's important that it flex if you try to take the flex or the motion out of the building or out of the wing, it will be rigid and then it will snap. And so we're not really defending the peg of $100 in the same with, say, a stable coin at Shorewood.

If you were a bank or a money market or a stable coin issuer, you have deposits and their daily deposits. They're almost debt like 1-day loans, and you literally have to defend them down to the penny or to a subtraction of a penny. That's not the design of STRC. STRC is designed so that it will trade at par for some portion of the month, and then it will trade down 50 or 100 basis points. And that's all part of the engineering.

If you look at those D5 protocols, let's say there's one with $300 million in it. We have $10 billion of AUM and STRC. How does the instrument perform when someone wants to sell $300 million or $500 million or $1 billion of STRC in a single day? Well, we already know the answer. It will trade down 50 to 100 basis points, maybe in the extreme, it will trade down 150 basis points and someone in our ecosystem, not us, a hedge fund right, a large hedge fund that has $50 billion or $100 billion will step in and they will buy it. And that's why it is so antifragile.

So I think that -- and I think you can see it. It seems like we have about $1 billion to $2 billion of support when the instrument trades down 75 to 100 basis points that will just walk into the market very quickly. But if someone were to dump $2 billion of STRC on the market in an hour, right? Let's just take an extreme amount there's -- you'll see the support for STRC will exponentially increase as the price falls.

So below 99, there's a lot more support, hedge funds will walk in and buy it because they get a quick 150 basis point gain in a couple of days, below 98, you will see even more support, below 97 even more support. This is -- if you study the way ships are designed where they have a center of gravity and -- the whole point of nautical stability is there's a force, as you push the ship down, there's more force pushing it up. And as the ship plays left to right, there's more force bringing it back it's basically stability theory.

And so I think what -- we're not concerned about the fact that someone may decide to sell some large amount of STRC. The instrument is literally designed so that it's insanely profitable for the hedge funds and the other credit investors to buy it that they would I would have talked to them -- there's a lot -- they will buy it at 97 or 98 if they had the opportunity, they'll sell it at par, right? They exist to actually support it back up to par. And when it's trading at $99.98, they don't have much incentive to step into the market.

The incentive for all of the third parties that support our ecosystem increases exponentially as it trades further away from par. So you could think about the entire thing is a very elegantly designed servo mechanism where it's much better than us stepping in to defend the peg. We have, I think, an entire cohort of investors and they have hundreds of billions of dollars of capital, and they will step in to defend STRC because they trust us. And they know over the long term, it's a very good investment.

So we can't know that a corporation won't get up and decide to dump $200 million of this tomorrow. And we already know that once a month, someone buys $1 billion and they sell it the next day. So we already know that happens. In fact, it's part of the design of the instrument for that to happen. And that's why we're comfortable that the entire digital credit layer is antifragile because it's designed to flex and not to fail.

Well said. Someone in the live comments is asking, why is Bitcoin not going up with the broader equity market right now? Do you expect a catch-up to happen at some point?

Bitcoin is its own asset, and it's driven by geopolitical capital flows. So for example, Chinese crypto investors, Asians, South Americans, Africans, Europeans, they all have their own capital flow dynamics. And so an [ edict ] coming out of India, Pakistan, China, Iran, Russia or Ukraine could drive Bitcoin flows, having nothing to do with the U.S. equity capital markets.

Right now, the headwinds that it faces are rising interest rates on the high end of the yield curve everywhere in the world. And that is drawing capital out of this ecosystem. It's also facing the headwinds of AI. There's a lot of capital flowing into the AI trade right now, and that has drawn capital out of Bitcoin from -- on the investor side. And also, if you're watching the miners, a lot of the Bitcoin miners have been diversifying or transitioning into doing AI high-powered compute and they're selling Bitcoin and/or they're not holding Bitcoin in order to fund their transition.

So that's a bit of a headwind. I think that the trade wars are a headwind. I think the hot wars are a headwind. And I think the lack of the rollout of bank credit networks, which is evolving, but it still has not taken place yet. Those are all headwinds. And if you look at the equity capital markets, the equity markets aren't influenced by the lack of credit from JPMorgan. They have a lot of it. The equity markets are being driven by the AI trade. They're benefiting from it.

The equity markets they're not -- they don't have the drag of the China crypto policy, which has an impact on big claim, but not on equity capital markets. And so equity capital has got its own dynamic. Metallic Capital Gold has its own dynamic. Digital capital has its own dynamic. And you just kind of have to humbly make your piece with them. They're different asset classes. They're not always going to correlate and lock step. And you don't want them to correlate. They are different things for different investors with different degrees of utility.

Phong, I'm going to throw this one to you by far the most repeated question across all audience submissions was would strategy consider shifting Strife, Strike and Stride from quarterly to monthly dividends?

What's interesting is when we sat and thought about what proposals we wanted to take to our common and preferred shareholders in our June shareholder meeting, we had considered modifying all of our preferreds Stretch Strides, strike to more frequent dividends, whether that be semi-monthly or monthly. And we ultimately made the decision that we wanted to focus on Stretch first because it's the primary and making changes to the other, although beneficial to the other could be distracting, and we might not be clear enough to get the vote for Stretch. And with that as the backdrop, we want to improve Stretch first and foremost because it's the most innovative and as the largest product. It doesn't mean that we don't care about the other ones, right? There are other children, but we want to get Stretch working as well as possible. and then turn to the other ones.

What I'd also say is there's a significant opportunity in the other ones because they're made to perform, I would say, more in a Bitcoin bull market, which we get to see. And so where they're trading right now is likely below, right, the real value of those assets. And we'll turn to those and look at them as stress starts to grow and mature over time.

Let's talk a little bit more about those other children because the Stretch of success, we're getting questions from investors about what is strategy's commitment to Strike, Stride and Strife. Are any of them at risk of being retired?

I think they represent very important optionality and complementary products to STRC. We don't think it's in the best interest of the company to retire them. By the way, we do think it's in the best interest of the company to retire the 6 convertible bonds. And of course, the point is the bond or debt and there is no shelf registration on them. So they are not really sources of true Bitcoin yield or Bitcoin per share accretion and their senior to the other credit instruments.

So our view on this is the bonds are liabilities, and we will retire them. The 4 perpetual preferreds, strive stride stream and strike, their opportunities. To Phong's point, they're undervalued. That's why if you look at our weekly filings, we haven't been selling any of those instruments pursuant to those shelf registrations. We think they're undervalued. And so the #1 thing we're doing to help if you own any of those 4 is we're removing liability senior to you. So we're improving the credit of them by retiring the debt.

And the second thing we're doing is we're not selling them. So we're keeping the supply very scarce. So I would think probably the single most important thing that I could say on this call, if you were an STRF hold or STRD or STRK or STRE is, we think they're undervalued. We're not selling them. right? And so if you're an investor, you know that the company's view is that over time, they should trade up.

And so our view, I agree with Phong there, I'll make the other point, they're institutional products right now. They're long duration, they're more complicated they have more delta. So they have more delta, more volatility, more duration. And so for the classic retail investor, the retail investor just kind of want pure synthetic yield, they don't want duration and delta and volatility. They want all that to go away. And so STRC is the flagship for that reason.

But there are institutional investors that do want a perpetual senior credit instrument or perpetual junior credit instrument or our convertible credit instrument. And so that's why we leave them outstanding and we will continue to take actions to improve their credit to improve -- that should be credit positive for them. That should result in the price improving over time, at least theoretically, right? The market will decide what happens and the market is kind of above our pay grade in a way. But the strategy of the company is to nurture those 4 instruments to the benefit of the company and the investors over the long term.

All right. Orion asks, have you considered a fixed rate Stretch variance, say, a clean 10% return of capital to make budgeting easier for retirees and fixed income investors who find variable payouts hard to plan around?

That's an easy one. We've already done it. I mean STRF is a fixed 10% dividend yield at par in the senior and STRD is a fixed 10% dividend yield at par, which is junior. So I would direct Ryan, you said?

Orion.

Right, Orion. I would direct Orion to go check out Stride and Strife because those are exactly what those 2 instruments are. They guarantee you that 10% dividend yield forever.

Great. Well, 1 question came in from Louise about just scaling Stretch. He says most people watching or working hard for their paycheck. It's not going as far as it used to with Stretch paying north of 11%, do you see it eventually becoming the most practical way for everyday people to protect the purchasing power of their labor and not just grow capital.

I think one of the biggest opportunities of Stretch beyond what it does for Bitcoin and what does for digital credit, is to equalize opportunity for people regardless of how much income they have or how much wealth they have. And I know this is important to you, Natalie, if you have a low income level and you're making $50,000 or $100,000 a year, and you don't have much money in your checking account and no money in your savings account. You pay a bank for your account.

And if you have a little more, you get 0% and a little bit more 0.5%. And at some point, if you're lucky, you can get a 3.5% money market. So I think there's a huge opportunity with a product like Stretch and digital credit to provide yield generation. What will it take to get there? I think maturity of the product and people understanding digital credit and perpetual preferreds and Stretch.

I think why we work a lot with traditional finance is they are the gateway to those types of folks, right, who can't get into institutional offerings that provide 8%, 10%, 12%. And I think things like the Clarity Act, our integration into traditional finance, launching these products through wealth management, we'll start to legitimize digital credit and you say Bitcoin is for everyone. We say stretches for everyone.

All right. There might be a new book I've got to work on. This question comes from @BTC Strategists. It's along the same lines. What's the biggest challenge for strategy to reach those who are still very skeptical on Bitcoin in general?

I think that's just a number and in communications mission. So we're going to keep communicating. We do it with hope.com, we do with strategy.com. I do it on my personal website, Phong and I do it every day on X. I've been going on podcasts that are non-Bitcoin, noncrypto podcasts. Podcasts targeting millennials and Gen Zs, we're reaching out dividend and retiree information channels. Obviously, we go on television, you might have noticed that it used to be a year ago was just me on television, and then we went to 2 inches became Michael and Phong and we started tag teaming. And now it's not like I stopped going on television. We're just going twice as often and where a conference is, every type of conference.

We're also -- I think building an entire cohort of other business partners, whether it's Bitcoin treasury companies are on podcast everywhere, right? And now you've got companies like Stride and digital credit companies that are out there and if you look at all the people that are tokenizing STRC and the [ defi ] space and the crypto -- they're going on all the crypto podcast and their story is, hey, we've just found -- we created a yield coin backed by digital credit and it's only possible because of Bitcoin. Let me remind you why Bitcoin is good again.

So I think tomorrow, I'll go on to Schwab network in the evening, in the morning, I'll go on Squawk Box today, I'm at a credit investor conference, right? And so we will basically go to all 4 corners of the earth talking to every type of audience imaginable to spread the gospel of Bitcoin. It's the #1 question when you offer even digital credit is, well, it seems to going to be true, how do you pay 11.5%. And the next thing is, well, let me tell you about this thing called Bitcoin. And so I think that digital credit, digital equity, digital capital, it's a story to be told over and over again through all channels, but, my friend, Matt says, Mike, what we learned in politics is after you've told somebody something 42 times, they just barely remember what you said.

Right, repetition is key. I know a lot of investors are very appreciative of how transparent the company is and how available the executive team makes themselves. I was actually interviewing Ben Honeywell the other day. And I said that I think strategy is like a Trojan horse in the capital markets, and he's like, well, then it would be a very see-through. That's true north. We're letting everyone know what we're bringing.

All right. This question is from Eric. You guys detailed on the earnings call that the MNAV breakeven for accretive MSTR issuance is roughly 1.2x. Can you walk us through that math in plain terms?

Yes, I'll start with the math, and then I'll talk more generally about the concept. MNAV can be calculated in many ways. We detail how we calculate it on our website and try to make it as simple as possible, right? So the Bitcoin net asset value is very simple. It's our amount of Bitcoin times the price of Bitcoin, right? And then the numerator of MNAV is the enterprise value of the company, which you take the stock price you multiply it by the total shares outstanding, right? And then we add in our debt, we add in our preferred and we subtract our cash.

Now someone would say, well, that calculation, why wouldn't the breakeven for Bitcoin per share be 1.0. And the slight complication is when you have convertible debt, you have to assume dilution. And then that creates an assumed diluted shares outstanding, which is different than basic shares outstanding.

And then you might say, why don't you use that -- and the challenge we're using assumed diluted shares outstanding is that calculation changes every second based on the price of the converts. So we try to use the simple method. And ultimately, the question is, when we make capital markets decisions, we don't just look at the MNAV and say is at the level above 1.00 or making capital markets decisions based on are we increasing the coin per share, right?

And adding preferreds and adding converts and removing converts complicates the capital structure. So it makes the math a little bit harder. I advise is anybody who really wants to understand fully sort of what the math is. go to our website because we show all of the calculations for MNAV, but we also show the calculations for assumed diluted shares outstanding.

Michael, this one's for you. Frederic asks, you've said that you'd like to get MNAV back to 3 to 4x. How do you intend to rip the wings off the shorts?

I think the first thing that we do is make sure that we illustrate to the equity holders to the common shareholders that we can increase Bitcoin per share. So Bitcoin BTC yield last year was 20% plus BTC yield this year so far is 12% plus. So I think putting a healthy BTC yield or an increase in Bitcoin per share, this year, last year and show them how we're going to do it going forward. I think that's the first thing. You're demonstrating that the business model can generate more Bitcoin per share.

Once you've done that, then it's an education process to go and educate the equity capital markets. If the company hypothetically can generate 10% BTC all the year, you can double bit point per share over 7 years, and that's worth a premium to NAV. But if the company can generate 20% BTC yield, you can double Bitcoin per share in 3 years. That's a much faster growth rate. That's worth a higher premium to NAV.

When the market -- when the market sees BTC yield, right, that's sort of the dividend yield for someone on the Bitcoin standard. So if your Bitcoin Max on the Bitcoin standard, you're saying, okay, well, 20% would be a 20% dividend yield. And then the question becomes, okay, have you embraced the Bitcoin standard. If not, you don't recognize that as being valuable at all, right? But if yes, then yes, that's 20%.

Now the second question is how durable is the business model? So if I thought that would last for 10 years, I might put a PDE of 10 on it, and I might say, I'm going to multiply 10 x 20 and give you a 200% premium to your Bitcoin Holdings. That works out to an MNAV of 3.

If on the other hand, I thought that was going on for 20 years, right? If I was really very confident the PDE might Stretch out further, you could say, when you see a business model that the equity capital markets are hyper enthusiastic about. I'll give you an example. Apple when people thought the iPhone was going to get commoditized had got a PDE of 8. And then when people thought everybody's going to use the iPhone is the best thing ever, the PDE went to 30. And so when the market embraces the business model, the PDE expands, and right now, we're in embryonic state.

I mean the business model is dynamically evolving. It was convertible bonds about a year ago, 1.5 years ago, and now it's digital credit and digital credit is 10 months old. And for the last 3 months, the digital credit business last month was a $24 billion annualized run rate. And 12 months ago, it was a annualized run rate.

So we have to go out and we have to communicate the power of Stretch digital credit to create BTC yield. And then the question becomes explain the Stretch thing again, how much of this can you sell? How does it work with the Bitcoin? How does it work with the capital? And now an equity investor they have to consider the business model to consider how durable it is. And based upon that, they'll put a multiple on the key metrics.

So our plan to drive MNAV to 3, 4, 5 or 6 is kind of simple. First, make sure that the business can generate Bitcoin per share, the more the better, right? The faster we generate Bitcoin per share, the higher the BTC yield, the higher the premium that is warranted. But second, we need to build the machine so that we can keep doing this consistently over the next decade. So it can't be a one and done. And so first, you build a machine, then you make the machine capable of running the marathon and running hard for the next decade.

And then third, you have to go communicate that to the marketplace and explain it to them. They're rational investors when they understand how you create shareholder value. And then when they understand the risks associated and the unique capabilities the company has, then they will decide, yes, I'm going to put a PDE of 5 on that at a 5, then they give you a 100% premium. Maybe I'll give you a 10, maybe that's a 200% premium. Maybe I'll give you a 20, right? And that's a 400% premium.

And then, of course, we got to perform. And so I think we're simultaneously doing things, make the credit better, sell the credit, manage the balance sheet, strip the credit risk, and then we're communicating things. And the market is digesting and absorbing a revolutionary new business model. Digital Capital is a new asset class. Digital credit is a new asset class. Digital equity is a new asset class, supported by the digital treasury model. and a treasury company is like a reserve asset bank. Like the Bank of England was founded to buy a bunch of gold and issue credit against the gold 300, 400 years ago, whatever, 300 years ago. And so here we are, we're creating a Bitcoin reserve bank of sorts, and we're buying Bitcoin issuing credit against it.

You can't blame an equity investor for looking at it and saying, gosh, this looks new and different and strange, and I've never seen this before. And there's a concept. A concept that Nicholas Taleb popularized, he called it the Lindy effect. And he said that if a restaurant had been around in New York City for a decade, it's likely to be around for a decade more. It has been around for 50 years. It will be around for 50 years more.

So when you've seen a business do its thing for a year, then a skeptical investors like, well, maybe if it's been around a year, we're just going to assume it will go in for 1 more year and we'll be kind of skeptical. And once you understand the Lindy effect, that products get exponentially more valuable as they get lender as they get longer lived then what you just see is a bunch of rational actors in the capital market, absorbing information, taking risk and allocating assets based upon all of the information and the durability of the business model over time.

Well, let's stay on this topic of a strategic horizon. We have a question from Howard and Reinhart stretches the result of a quest to design the best vehicle for digital credit. How do you see making it even better and what's the next big leap forward after Stretch?

Phong, do you have any comments?

Well, I think Stretch is the best product, right? And it's -- it took us 5 iterations of preferreds and it took us about 15 iterations of debt and capital creativity to get to Stretch. And so we've been working this for 10 months. I'd all sit here and think to myself and maybe Mike does, but I don't, what is the next product the focus right now is making Stretch the best product possible. And I think we're going to focus on that for the next 3 to 5 years. Doesn't mean we won't come up with something else in 2 or 3 years? Not necessarily. But I think it would be very premature to jump on to what is the next product and the next big leap forward.

In fact, a lot of the next product and leap forward is being built on top of Stretch. Like mentioned what Saturn and APICs and others and the D5 protocols are doing. People are building ETF products off the Stretch. Traditional banks are starting to build products that they'll distribute to wealth management. Will somebody build a product that can service people across all income levels, right? Would somebody ever get to a point where they sweep somebody's money like they do into a money market into Stretch. I think that's where the innovation is going to come is through partners in the ecosystem. Because we've not just built a product, I think, Stretch is a platform for people to build products on top of. And that's -- you know you have a really good product when it becomes a platform that people can innovate on top of. And we're starting to see that.

Even in the last 3 months, we've seen it, like did I think somebody was going to build APICs and it was going to become a $500 million product in about 3 months, right, using a D5 protocol now. And is someone going to build something we've never thought of 5 months from now yes. And I think that's where the innovation will go.

Yes, I think it's such an important question. I would add, Taleb has a concept called Via Negativa, which is when you make something better by taking away as opposed to by adding the an experienced tech, things I got to add 100 new features to something to make it better. But if you live long enough, you realize that some of you can make it better by the not doing of things or by removing distractions that are nothing to do with it.

So for example, the best way to make Stretch better is to eliminate the bonds that are senior to Stretch and the capital structure such that Stretch stretches BTC rating increases, its credit risk decreases. It's nothing to do with Stretch it has to do with the rest of the capital structure.

Another way to make Stretch better is simply for the company to illustrate that we're responsible custodians of STRC and we're going to responsibly manage it and not change it. In fact, so cultivating it, curating it, improving the credit around it and allowing it to season is what makes it better.

Stretch if it had been operating consistently for 3 years would be 100x better product than Stretch operating next month will be. So to a certain degree, you have the Hippocratic Oath, do no harm, don't be distracted don't burden it with a bunch of new ideas, let it breathe.

And then I echo Phong's point, which is -- by the way, I said this about Bitcoin, too. Bitcoin is an incredibly good protocol. The technocrats want to add 100 features to it to make it better. And I've always been of the opinion that it's already good enough to be a $100 trillion network. And so all of the innovation ought to be at the layer 2 at Lightning or the Layer 3 in the application built by a company.

And so when we think about Stretch, we think, will Stretch really is a nice Layer 2 on Bitcoin, but how do you make it better? It's already pretty good. There's no reason why it can't be $100 billion or $1 trillion asset class simply by focusing on it. And then if both Phong and I we could sit down and we can come up with 1,000 ideas of things you could do with Stretch. And the humble thing to do is to let somebody else have the fun and make the money. The -- I actually believe there will be $100 billion companies that will be created based on Stretch and there'll be [ 100 billionaire ] spawned or incredible amounts of wealth created by people doing all these cool things that we can conceptualize because, number one, it's better for them to do them.

Number two, they will actually execute better, and then they'll come up with 100 ideas of their own, we'd never come up with. So do I want to see 8% digital money in yen or Swiss francs or euros. Yes, I do. Will we do it? No, we won't. Can I -- we're looking at all these tokenized tranching protocols in the defi space? There is -- should we do it? No. Some people will. Will other people lose money? Likely, right? And so our view on this is just like with Bitcoin, do no harm to Bitcoin, protect Bitcoin. Bitcoin is going to be successful as long as we don't engage in some iatrogenic campaign to corrupt it.

And then our view is Stretches, do no harm to Stretch be very careful, make it the best, deepest, lowest volatility, most liquid instrument, we can possibly make it. And don't be afraid to not come up with yes. We don't need to come up with a new product idea every quarter or every year, right? When you're throwing out ideas as fast as you can, that's because you keep iterating until you find the one that's the slam dunk home run.

When you find the iPhone -- by the way, Apple's biggest product right now is the iPhone. It's not every single product they came up with after the iPhone. In fact, you could almost argue that most of the things Apple did after the iPhone have been dilutive to the iPhone. In fact, you could even argue that a lot of the upgrades that they made to the iPhone are diluted to the iPhone. The others -- how many people have pocket dialed from the iPhone because they make it so easy and you find the -- and it activates 13 features that you didn't need that you didn't know you wanted because some software engineer wanted to like create a shortcut. And so doing something insanely great. It requires humility. And this is not a complicated idea. This is digital credit, and it doesn't have to do much more than stay stable to become 100x bigger than it is right now.

Well, I feel like that response sort of answers this question, but maybe Phong, you want to add to this. At ponder with me asks, what does strategy look like when Bitcoin is trading at $10 million a coin, which power losses will happen in 20 years?

I think it will be a great day. I don't really give myself the opportunity to think often 20 years out or even 10 years out. The focus is the next 2 to 5 years, whether Bitcoin is $1 million or $10 million or $20 million, that's really not what drives the company day to day. It's how do we drive the equity up by increasing Bitcoin per share and we do that by buying Bitcoin accretively by issuing digital credit. It's good to be a dreamer, but it's also good to sit in the reality of the day to day. So will Bitcoin get at $20 million? I hope so. What will happen at that point in time, it's probably really not that important to what we do tomorrow or the next month or in the next year.

First, someone watching tonight, who's a long-term MSTR or Stretch holder, what's the 1 metric beyond the Bitcoin price you'd tell them to focus on? I'm assuming you're going to say BTC yield.

Yes. I think it's -- it's Bitcoin per share or the rate of change of Bitcoin per share, which is BTC yield. You kind of -- you're asking the question at what rate is the company compounding my Bitcoin Holdings. We had 50,000 Satoshis per share 5 years ago. And now we have more than 200,000 Satoshis per share. So that's the focus I would have if I'm a Bitcoin standard person and a Bitcoin Maximus. The company exists to increase Bitcoin per share for every shareholder.

We had a few investors ask about custody and proof of reserves without revealing sensitive operational details, can you shed more light on strategies custody and is publishing proof of reserves on the road map?

I can start on this one. We're a $60 billion public company, and we have shareholders all around the world. And as a public company, we hold ourselves to an extremely high standard. We're audited by KPMG. We have internal audit done by another big 4 company we have our taxes done by another big 4 company. Mike's been a public company officer for 28 years, I have for 11 years. And that's a pretty high standard for an investor, to invest in a company of this size or overseen by the SEC.

We have since disclosed our custodians and how much Bitcoin we hold with them. And so we'll start with as a public company, there is a very, very high bar that we have to overcome. And when we offer securities into the market, all the banks we work with make sure that Bitcoin is there. they rely on a set of attorneys and law firms to make sure that Bitcoin is there.

We have a team inside looking every single day running reports and audits to make sure that Bitcoin is there. So that's the standard of which we hold ourselves. Would it be good to also provide proof of reserves if we could do it in a secure way without as an example, docking our wallet addresses. I think it's something that's worthwhile to look at. But for those who invest in MSTR they're first investing in the equity in the public company. And second, Bitcoin is quite important, but we wouldn't want to do anything to be able to have true proof of reserves that would put us at risk.

All right. We have about 10 more minutes. We're going to take a few more questions, a few maybe personal ones towards the end. But Chris asks a geopolitical question, the U.S. government has taken equity recently in companies like Intel and MP Materials and set precedent with Executive Order 6102 in the gold era. As Bitcoin becomes more geopolitically important, what are the risks of a similar action involving strategy? And how would management approach it?

We're flattered by any attention from a sovereign. I think we've already got investors that represent the government of Norway, the government of Switzerland, governments and in Korea, other nation states. And many of our institutional investors represent the citizens of the United States or other nations. If someone wants to buy the company or buy into the equity, we welcome them. We're literally a public company. We exist so the public entities, whether they're pension funds or endowments or sovereign wealth funds would like to buy the equity. So it's not really a concern.

I think the best thing that could happen for the United States is for the people of the United States to be invested in Bitcoin. And we are a gateway for their pensions, their endowments their institutions, their institutional investors, their annuity funds, whatever it might be. We're a gateway for them to take an interest in Bitcoin or make an investment in Bitcoin either through the equity or through the credit. We feel that we have a trusted responsibility. We're basically holding The Bitcoin and trust for all of them. Every entity will do what it will do sovereigns are already investing in us. Hopefully, more sovereigns will. If everything ends the way we expect. I don't know why every rational nation wouldn't want to have its citizens invested to a certain degree. And digital capital and digital equity or digital credit.

Well, staying on the bigger picture, this question is interesting. Strategy now holds Bitcoin indirectly for millions of retail investors who will pass those holdings to children and grandchildren. So what role does strategy see itself playing in educating the next generation about what they're inheriting?

I think it's quite important, the role that we're playing in the role that you're playing and everybody in the Bitcoin community is playing. What I love about talking to, we'll call it, the next generation about Bitcoin is you open their eyes to a conversation about economics and global macroeconomics about security, about self-sovereignty about investing about the power of money.

And so it's a conversation that you seldom are able to have otherwise. And it tends to lead to people then going down, not just a Bitcoin rabbit hole, but an educational rabbit hole. And why wouldn't you want to do that? And why isn't that a great opportunity? And then it's no longer just about strategy or about Bitcoin, but it's about people becoming curious people getting excited and people understanding a little bit better how the world works around them.

So it's a responsibility, but it's an opportunity, right? Because what's your alternative? You can talk about what was the Netflix show you saw in season 8 of this. That doesn't really lead to creativity or productivity. In fact, it's the opposite. So that's why I like talking to people about the coin and -- and the best is sometimes I talk to folks and they don't -- they listen for about 5 minutes, and they change the subject to the 50th season of survivor.

And then 3 months later, they come back and they say, hey, you don't think that you're talking about, can we talk more about it?

Watch out. Someone might ask you your favorite Netflix show. Well, let's do a little bit of a lightning round with some lighter questions. This one seems to be for you, Michael. You often reference history. What's the 1 historical moment that best explains Bitcoin? Or what is your favorite historical era to study?

That's a tall tale, hard to tell. I think the historical moment that best explains Bitcoin is a great financial crisis and Satoshi posting of the white paper, Halloween 2008 and of course, the subsequent -- the subsequent genesis of the network. The fall January. I think there's something to be learned from every single historic era and my advice to anybody is with all of your copious free time, I would find your favorite historian, and I would just start reading and I would read the history of the Greeks, Asian histories, Middle East histories, Roman histories, Medieval histories. I would read the histories of the Europeans in South America. I'd read the history of the U.S. before the revolutionary war after the revolutionary war. I'd read the history of Europe in the 19th century, then the 20th century. And I think that there's something to be learned. It's humbling. It's invigorating, it's inspirational, it's empowering. I don't think you'll ever regret having gone down the path of reading the story of someone who was as bright as you trying to do their best in the world, struggling through the circumstances in their time period -- and when you see how they behave and how they rose the occasion, that will inspire you to be a better person, and it may very well brighten your day and give you the solution to a challenge in your own life.

And don't make the excuse that there's no time. You can read 10 pages a day, you end up reading several books a year so. This could be for either of you, both of you, what's a habit you've developed that has had the biggest impact on your life?

I wake up at 5:00 a.m. every morning, I work out and I listened to a Natalie Brunell podcast or a Michael Saylor podcast or I listen to a book on audible, and I do that for about an hour. And I think for another 20 minutes. And it's the most productive 1.5 hours of my entire day. And if I didn't do it then, I would never do it. And then I try to go to bed at 11:00, if I can. And I tell my kids who are up to 1:00 in the morning, nothing great happens after 11:00 p.m. They'll probably figure it out when they're 40 or 35 like I did. But it's extremely productive time to be by yourself, exercising your body and your mind at the same time, and it helps me get prepared for an intense day ahead.

My answer is just 1 word, not only reading.

I love that. And Phong, your answer makes me smile because I did the same thing when I was working full time as a reporter, it was really kind of like 9 to 6 or 9 to 7 job that I would get up at 5:00. And I would watch Bitcoin podcasts and read coin books and it ended up in me working in the space. So you never know what can happen in those early hours.

Well, I just want to say thank you to everyone for joining us for submitting your questions. Thank you so much to Alexandre Divani behind the scenes filtering them. thank you to our featured speakers, Michael Saylor, and Phong Le. I want to give both of you just a few moments to share your takeaways. I know that there's a big vote coming up. You probably want to talk a little bit about that. So Phone will start with you.

What's extraordinary and that was surprising about Stretch was when we saw that 80% of our shareholders are retail, and the number is 40% for MSTR. And often, we go to conferences and we do our quarterly earnings call, and we talk to institutions. But the retail audience is humbling. And it also is grounding to see people take their hard-earned money and put it into our securities and ultimately invest in our company. So I appreciate everybody for that, and we'll continue every bit of outreach we can. And we do have a vote coming up June 8 for Stretch to move from monthly to semimonthly dividends. We think it's a very obvious vote. It will increase the liquidity and decrease the volatility of the instrument, but get out there and vote if you haven't.

All right. Michael, the floor is yours.

I want to thank everybody for your time. I think this is just the most exciting year in the history of the industry so far. What we're seeing is Bitcoin and crypto becoming integrated TRADFI and DEFI becoming integrated equity capital markets, credit capital markets and crypto capital or digital capital markets, all becoming integrated. We're seeing the entire world rethink a lot of things. It's rethinking banking, banking banks are entering the space. We never thought that we'd see that. we're going to see tokenized securities, and they're going to be rippling throughout the entire space, and they're already having an impact. And some of these new ideas, as Phong pointed out. They can go from 0 to $500 million in a few weeks. There are going to be ideas are going to go from 0 to $1 billion or 0 to billions of dollars in a year.

So I would encourage everyone to, first of all, focus upon digital credit, think very hard about STRC because people's knee-jerk reaction is just to sort of say it's sort of like something else I know that either didn't work or something else I know and I think I know how to put it in the right container. But it really is a new thing, and it has new implications for everybody, every business. And what we're seeing is the literal digital transformation of a $300 trillion credit market, a $100 trillion equity market, a multi-hundred trillion dollar capital market. And this is the most exciting time to be alive in this space.

So to Phang's point, if you don't get up at 5 a.m. and think real hard about it, when you do get up, think real hard about it. the AIs make it easy to think real hard about it. You can literally take every idea people throw out and put it in the AI and say, what do you think, think harder. And so I think this is the year where -- if you have epiphanies and new ideas and you're inspired and excited then you're doing it right.

And if you think this is just like every other year, you're missing it, you're missing the opportunity, and that's the tragedy. So anybody is on this call. Obviously, they're interested. You put in the effort. Thank you for putting in the time. We appreciate your support. We're delighted and we're humbled to be on the journey with you. And I'll look forward to doing this again sometime soon.

Absolutely. Thank you so much for joining us. and the strategy, it was an honor to host this Q&A webinar. Hopefully, we'll have more in the future. I want to emphasize again just how much -- we appreciate how transparent and available the executive team at strategy has been.

So thank you so much, Michael Saylor and Phong Le. Thank you to all of you watching and listening around the world. Again, this is not financial advice and you can learn more at strategy.com. See you next time.

SP999 Hello, everyone, and good evening. I'm C.J, Head of Investor Relations at Strategy. It's an honor to kick off Strategy's First quarter 2026 earnings webinar. I'll be your moderator today. We will start the call with a 60-minute presentation, starting with Andrew Kang, followed by Phong Le and then Michael Saylor. This will be followed by a 30-minute interactive Q&A session with Four Wall Street equity analysts and Four Bitcoin analysts.

Before we proceed, I will read the safe harbor statement. Some of the information we provide in the presentation regarding our future expectations, plans and prospects may constitute forward-looking statements. Actual results may differ materially from these forward-looking statements due to various important factors, including fluctuations in price of Bitcoin and the risk factors discussed under the caption, Risk Factors in Strategy's annual report on Form 10-K filed with the SEC on February 19, 2026, and the risks described in other filings that Strategy may make with the SEC. We assume no obligation to update these forward-looking statements, which speak only as of today.

With that, I will turn the call over to Andrew Kang, the CFO of Strategy.

Thank you, C.J. First off, I'd like to officially welcome C.J. Jane to his new role as Strategy's Head of Investor Relations. I also want to take a moment to thank Shirish Jajodia, our Corporate Treasurer, for helping establish and lead our IR function for the last 20 quarters as our team grows. I know he will strive to continue to provide transparent and relevant information to all of our shareholders and stakeholders. So welcome to C.J.

Now turning to the quarter's results. We are off to a very strong start in 2026. We now hold 818,334 Bitcoin which is about 3.9% of all Bitcoin that will ever exist. That keeps the Strategy in a clear leadership position as the largest corporate Bitcoin holder in the world.

Our market cap is now $62 billion, and Stretch SDRC has grown to $8.5 billion outstanding, showing strong market bit and investor demand and filling a gap that has existed for investors seeking stable price and attractive yields backed by Bitcoin. So far, in 2026, we raised about $11.7 billion of capital, giving us more flexibility to keep our Bitcoin position and creating long-term value for our shareholders.

Turning to Q1 financial results. We reported an operating loss of $14.5 billion and a net loss of $12.8 billion. As you would expect, these results were primarily driven by the decline in Bitcoin's fair value during the quarter. And as these are largely noncash market-driven impacts tied to Bitcoin's quarter end price. Our underlying strategy remains unchanged, raised capital responsibly, buy and hold Bitcoin over the long term and grow Bitcoin per share for our shareholders.

On Slide 8 here, Bitcoin per share increased from 181,030 per share in May 2025 to 213,371 per share in May 2026, which is roughly an 18% year-over-year increase. Year-to-date, we have delivered 9.4% BTC yield compared to 22.8% for the full year 2025, showing acceleration year-to-date compared to the same point last year. We've also generated 63,410 BTC gain so far in 2026 compared with 101,873 BTC for all of 2025, having already achieved about 62% of last year's full BTC gain in just the first 4 months of the year. In dollar terms, that represents approximately $5 billion of BTC dollar gain year-to-date versus $8.9 billion for the full year 2025.

Since 2020, Bitcoin per share has grown to 213,371 per share as of May 2026, which is nearly a 4x increase since the beginning, delivering positive BTC yield every year across multiple market environments. In 2025, we delivered 22.8% BTC yield, and so far in 26, we've already added another 9.4%. We remain focused on consistently increasing the coin per share over time through our disciplined treasury operations of long-term conviction in Bitcoin.

Here on Slide 11, our track record remains constant, having acquired additional Bitcoin in every quarter since 2020 across 108 separate acquisitions. As of May 4, we held over 818,000 Bitcoin for a total value of approximately $64 billion and a total acquisition cost of about $62 billion. Our average purchase price is approximately $76,000 per Bitcoin, and our holdings now represent, as I mentioned, 3.9% of all the Bitcoin that will ever exist.

Turning here to the balance sheet. Digital assets ended the quarter at $51.6 million compared to $58.9 billion at year-end, having acquired 89,599 Bitcoin in Q1. The change reflects the lower price of Bitcoin at the end of the quarter versus at the end of last year. Cash and cash equivalents were $2.2 billion, which largely reflects our USD cash reserve.

Regarding taxes, the change this quarter was driven by the quarter-end mark-to-market movement in Bitcoin. And as Bitcoin moved from an unrealized gain at the year-end to an unrealized loss at the end of Q1, our deferred tax liability of $1.9 billion shifted to a deferred tax asset. A full valuation allowance against that tax asset brought the net balance sheet tax closures to zero, which also resulted in a noncash tax benefit on the income statement, which partially offset the pretax loss for Q1. Long-term debt remained unchanged at $8.2 billion, while preferred equity increased to $9 billion, driven by strong Stretch issuance in the quarter. Overall, the balance sheet remains highly liquid and extremely well capitalized.

At the end of Q4, the market value of our Bitcoin was approximately $59 billion, which is based on a Bitcoin price of about $87,500. During Q1, we recognized that unrealized fair value loss of about $14.5 billion. And despite Bitcoin price volatility, we continue to execute having purchased an additional 89,599 Bitcoin in the quarter for approximately $7.3 billion at an average price of about $80,900. We ended the quarter with a digital asset value of $51.6 billion based on a Q1 ending Bitcoin price of about 67,800.

In Q2 so far, we are illustrating an unrealized fair value gain of approximately $8.3 billion as of May 1. We purchased an additional 56,235 Bitcoin quarter-to-date for approximately $4.1 billion at an average price of roughly $73,400 for that period. Those purchases benefiting from the increase in Bitcoin price adds approximately $300 million of positive fair value. And as of May 1, our Bitcoin held a market value of approximately $64 billion based on a Bitcoin price of $78.350.

Bitcoin Reserve, implying an NAV of 1.27, which has expanded since the beginning of the year. We have $13.5 billion of preferred equity, representing 34% amplification and net leverage of 9% made up of the $8.2 billion of convertible debt.

Strategy is building around Bitcoin as digital capital. We have approximately $58 billion of equity. You can see here large traditional banks operate with liabilities to asset ratios above 90%. Our ratio is a mirror 9%. That gives us a very different foundation made up of a very large equity base, substantial Bitcoin reserves and structurally lower balance sheet risk. We can issue Bitcoin back credit products to support investors with strong collateral and continue accumulating Bitcoin over the long term from a position of strength and durability.

We have approximately $6 billion of net debt, which represents just 9.3% net leverage against our Bitcoin reserve, which is effectively a 10.8x BTC rating. Our strategy is based on a disciplined balance sheet construction, modest leverage, strong collateral and permanent capital to grow our Bitcoin over time. Our net leverage is lower than the average of the investment-grade S&P universe and lower than every major industry sector across most S&P 500 companies.

At the current Bitcoin price, our reserve is valued as -- our Bitcoin reserve is valued at approximately $64 billion compared to $6 billion of net debt, which translates to the 10.8x BTC rating. The stress case on the right shows that even after a 91% Bitcoin price decline to roughly about $7,300 per Bitcoin, our Bitcoin reserve would still be sufficient to cover our net debt at a 1x BTC rating.

Our USD cash reserve has remained consistent at $2.25 billion. And while the years of coverage has shifted down with the growth of Stretch this year, we believe the stable cash along with our Bitcoin reserves and ability to raise additional capital continues to provide us with the flexibility to continue supporting our dividends for the foreseeable future.

On the next slide, the $64 billion of BTC reserves adds an additional 43 years of coverage. Another way to look at this at today's reserve size, Bitcoin would need to grow by only 2.3% annually for the reserve growth to cover our current obligations. If Bitcoin grows at or faster than the breakeven ARR here, the BTC reserve alone can support our dividends without requiring any additional capital.

Before I turn it over to Phong's remarks, I'd like to highlight the amendment to Stretch that we have asked for your voting. We are proposing to move Stretch dividends from monthly to semimonthly with payments twice per month on the 15th and the last day of the month, while keeping the economics unchanged. Our goal is to make Stretch work better for investors by reducing reinvestment lag, improving liquidity, dampening the impact of a single monthly record date and helping Stretch trade more efficiently around the target price.

Today, Strategy pays out 12 times per year with 1 payment at month end. Under the proposed amendment, Strategy would pay 24 times a year with payments around the 15th and the last day of the month. Again, total dividend economics are unchanged and payments would simply be about half the size and pay twice as often. Under the proposed change, there would be two record dates, one on the 15th and one at the end of the month with the related payment dates made on the next scheduled record date.

If the vote is approved, the first record date would be June 30 and the first payment date would be July 15. The mechanics are pretty straightforward, same dividend economics, more frequent payments and a clear transition time line. We believe this change creates the highest frequency credit instrument in the world and makes a great product twice is better, and we look forward to your support.

With that, I will turn it over to Phong.

Thank you, Andrew. Thank you, everyone, for joining us on this evening's earnings call. I have a few updates to make on our capital markets on our equity, on our digital credit, and then I'll conclude with updates on our capital market strategy overall.

If you had asked us at the beginning of the year, what was our target for the year in terms of capital markets raises, we would have said it was uncertain, and it really dependent on the success of the Stretch product. And I think 4 months in, we can say that Stretch has been more successful than we had expected at the beginning of the year. And one representation of that is the amount of capital that we've been able to raise for the company and ultimately for Bitcoin. And you'll see here, year-to-date 2026, we've raised $11.7 billion, as Andrew had mentioned, Notably, about half from issuances of our common equity, half from issuances of our preferred primarily Stretch and no longer are we issuing convertible debt to raise capital.

How does that compare to the rest of the U.S. capital markets, equity capital markets, you'll see last year, we represented about 8% of the equity capital markets in the full year 2025. We're the largest issuer. And we are, again, this year, the largest issuer in the equity capital markets at 10% total, 6% of common equity -- 60%, notably of preferred equity. And we're doing what we said we would do and what we were trying to do, which was to shift our ATM more towards credit. And you see this even pronounced as we look at each month of the year 2026. We started in January with 20% of our equity issuances using digital credit, 88% using MSTR and we've largely flipped that number in April, with 17 using MSTR and 83% using digital credit, which, of course, is also less dilutive to our overall shareholders.

Research analysts have been consistently supportive as we look to exit the Bitcoin barocycle that we're in, the average price target of all of the equity analysts covering strategy for Bitcoin is $138,000, which is about a 70% increase. The average MSTR price target is about $323 which is an 80% increase from current levels.

So let's talk about digital equity and MSTR overall. We show this chart every quarter. You can find it on our website, strategy.com but this is our annualized asset performance since we adopted the Bitcoin standard. August 10, 2020 is when we look back to. We've outperformed Bitcoin by about 50%. Bitcoin has outperformed the MAG 7 by about 50%. And the MAG 7 has outperformed the S&P 500.

So our ultimate objective is for our common to outperform Bitcoin by accreting Bitcoin per share. And based on this chart, we've continued to deliver on that performance. As Andrew mentioned, our Bitcoin per share is also accreting. That's our business objective ultimately. And we're at 9.4% Bitcoin per share increase so far this year. And you'll see that's also accelerated in the last month, right? We started off a little bit slow in January and February, 0.4% and 0.1% increase in the month of March with 3% and really increase doubled in the month of April with 6%.

Last quarter on this call, we said our objective is to double Bitcoin per share in 7 years, doubling Bitcoin per share in 7 years implies about a 10% annualized BTC yield. And as I mentioned so far this year, we've increased 9.4%, our BTC yield. So we're well on to our annual target, and we've been happy with the success of Stretch so far this year. And ultimately, MSTR continues to be one of the most widely held equities around the world and the most widely held Bitcoin proxy in the world, and we're able to reach 1,400 institutions 927,000 retail accounts, 1,300 ETFs and funds. Over 100 million beneficiaries that share, nearly 4% of the Bitcoin in the world. So I don't think about this as concentrated amongst one company. a set of leaders, but really amongst 100 million people that we're sharing Bitcoin wood per share around the world.

So let's talk about digital credit, our favorite topic so far this year. Look, the idea of preferred capital and preferred credit is not a new idea. And in fact, the industrial revolution was built on the railroads, which was built on digital credit -- sorry, built on analog credit through preferred capital. At that point in time, during the late 1800s, early 1900s, 20% to 40% of the capital structure around the world was preferred capital. What happened in the mid-1900s and the early 2000s is the rise of liquid debt markets, increased regulation, pushing preferred capital into what I would call niche use -- now as people are waking up to preferred capital and digital credit, especially, we're seeing a reemergence. And my knowledge here is we're preferred capital help build the railroads, which helped drive the industrial revolution. Now digital credit will help drive the digital railroads or the digital rails. It will drive the digital revolution, including the AI revolution. So we're excited about bringing this back to the forefront of the world.

If you look at an overview here, we have 5 preferreds. We've mostly been focused on a Stretch so far this year. I think there's an opportunity for the remaining preferreds to start to perform as Bitcoin starts to perform. But Strategy is clearly the tip of the arrow as far as digital credit. And so that's what I'll talk about primarily. We're up to 11.5% dividend yield. Notably, we've kept this flat for the last 2 months, right? So we've increased the dividend yield from 9% to 11.5%, and now we're flat for the last 2 months because what we've seen is the volatility has started to decrease. The price has started to remain stable, and we've seen an increase in sharp ratio 2.53. So the notional value is up to $8.5 billion, and we're trading $375 million a day. And I'll share how that compares to other preferred equities and also common equities in general.

The first thing I'll note is the rapid growth of Stretch, right? In just 9 months, we've raised $8.5 billion of capital. We had a running start with $2.8 billion. It slowed down, and it's really accelerated over the course of the last couple of months. Comparatively, this is one of the most successful financial instruments ever created in terms of capital inflows second only to IBIT compared to other products. has seen faster growth in terms of capital inflows and famous products like the iPhone or Google AdWords. So we're very proud of the acceleration of the product, and it means that we built something that is resonating with people in the U.S. and people around the world.

Stretch is by far the largest tradable preferred in the world, right? We're nearly 2x the size of Wells Fargo's preferred. And you'll see here, what's interesting is almost all of these other preferreds save us and another one are bank preferred. So this has gone from being an industrialized product that's building the industrial revolution to a niche financial product, and we're excited to bring it back to being a major product in the world.

The liquidity stretch, so this is the average 30-day average trading volume is 25x, the second largest preferred. So where Wells Fargo is about half our size is trading 125 of rig trading at $15 million versus $375 million. And what that means is with that liquidity, the turnover of the next best preferred, we're at 4.4%, 10x of what Wells Fargo is and some of these other products like Bank of America products. So -- we think we really found a new product category, digital credit based on an old product category, prefer capital, and we're excited about where this is going.

Interestingly, and as we've pointed out before, Stretch is performing not just as one would expect in a bull market, but performing in a Bitcoin bear market. So while Bitcoin has gone down 37% since the beginning of October, now it's starting to rise again. We're seeing Stretch trade essentially near par and paying dividends that are increasing and then monthly and monthly. So we've increased the dividend, as I mentioned, from 9% to 11.5% and kept it steady at 11.5% for 2 months now going on 3 months while Bitcoin has been decreasing.

And so with that, we've also seen the ATM velocity of stretches accelerated. And the ATM velocity is really the net inflows into the product. right? This is the demand of the product overall. And you'll see it notably in April, we had a week where we raised $1 billion and then the subsequent week, we raised $2.2 billion. And so we've seen tremendous demand coming into Stretch.

And at the same time, we're seeing the volatility decrease. And so our target price range for Stretch is $99 to $101. We've actually seen it trading in a much tighter range -- and for the last 3 months, March, April, May, it sat in that price range for 100% of the time.

I mentioned here, the deli liquidity is pretty significant, but it's also growing, right? So from $54 million to $120 million in January to $250 million in March to $360 million in April. So for those who are interested in getting into the product and size, if you're a corporate or if you're a large institution, you need to have confidence that when you need to trade in and out you need liquidity, our prior to showing that level of liquidity.

I'll go through a series of analyses of sharp ratio because sharp ratio ultimately is a measure of the returns above the risk-free rate given the volatility of the instrument. And ultimately, if you're an investor, people are looking for high sharp ratios, right? So compared to traditional credit, junk bonds investment-grade bonds, bank preferreds, we outperformed pretty notably. Compared to traditional asset classes, the S&P 500, even Bitcoin, NASDAQ, et cetera, we also outperformed very notably.

And then obviously, if you're looking for sharp ratio, a lot of folks go to the MAG equities, right? And Navidea is obviously saw on a hot tear because of the AI trade. Google runs essentially a digital monopoly and has been a very solid equity over the course of the last 20 years. Stretch has outperformed all of those and all of the MAG 7.

Another place people typically go to find a high sharp ratio or hedge funds, right? Hedge funds are built with different strategies, different analyses, different quant strategies and typically, they are built to outperform the S&P 500 and with lower volatility. And here, what you'll see is looking at different hedge fund strategies to date notably and understandably early in its maturity is already outperforming these different hedge fund strategies, whether you're in multi-strat, whether you're a macro, equity arbitrage, et cetera.

So we see a lot of benefits to this emerging category of digital credit, right, when compared to hedge funds, private credit, private equity. One is extremely liquid, right, to get these levels of returns and these levels are sharp ratio. Sometimes people subject themselves to 90-day lockups for hedge funds, 3 to 7 years or private credit to 10 years of private equity. We charge no fee, right? These other strategies often charge a management fee of 1% to 2% and a 10% to 20% carry, right, 2 and 20, if you will, right?

Digital credit is homogenous. You know exactly what's behind it. It's Bitcoin. These other strategies are sometimes heterogeneous with many different asset groups assets grouped together, and we're making it very hard to ultimately assess the risk Ours is scalable through an ATM mechanism that allows people to buy the product and hedge funds and other strategies are discrete. We're accessible, traded via 4 letter ticker on the NASDAQ and now, interestingly, trading on many tokenized exchanges and tokenized products. The other ones are typically restricted to those who are credited institutional investors or high net worth individuals. And we're transparent, right? We disclose our performance, or holding through weekly 8-Ks and websites that update every 15 seconds.

So one of the big questions as we have seen stretch perform over the last 4 months, essentially the year 2026, is what does this mean for our capital market strategy, right? And I'll introduce this topic and Michael will talk about it a lot, right? And so we said our objective is to double Bitcoin per share in 7 years through the success of digital credit. And so what does that mean? We sell digital credit, right? And we said that we target about 10% to 20% of the corn reserves annually in digital credit volume. And of course, we'll analyze that and assess that to see if that target makes sense, but that will generate amplification to our common stock, right, which should increase the Bitcoin per share in our common stock, which is ultimately our goal as we increase Bitcoin per share that allows MSTR to outperform at Con, which is what you've seen happen over the last 6 years, right?

What allows us to flex these levers even better if our cost of credit goes down, right? If we're able to decrease the yield from 11.5% to lower for a variety of factors, if we're able to sell more stretch that increases amplification. And if our mNAV goes higher, and I'll talk a little bit about our NAV, but that also creates benefits for example, our cost of paying our dividend. What has happened in the last 4 months is we have increased optionality for Strategy of the company, right?

We have more sources of capital and we have more uses of capital than we ever had before. And the success of stretch gives us options to do different things from a capital markets and treasury operations perspective to benefit our common shareholders. right? Our traditional sources of capital, sell MSTR, sell Stretch, right? We could sell our U.S. dollar reserve right to pay dividends, which we added in November. We also have Bitcoin that we have the opportunity and the option of selling. We can see our other press start to perform and sell those into the market. And we've talked in the past about also being able to potentially sell BTC or Bitcoin derivatives. What are our uses of capital? -- primarily today, we bought Bitcoin. We used Capital Pay, our U.S. dollar dividends, and we use capital to build up the U.S. dollar reserve. We have used capital in the past to pay down our convertible debt, our secured loans, our Bitcoin back loans. We continue to do that in the future. And then we could also use capital if we want to in the right time to retire any of our other right?

So what does this really mean? This means we had 3 trades that we have executed. And really, before 2025, 2 trades, we sold MSTR. We bought Bitcoin. We sold MSTR, we bought U.S. dollars. Last year, we added Stretch in preferreds, and we sell Stretch and we bought Bitcoin. Now we're really seriously thinking about and contemplating I want to introduce the concept of a few more trades, right? Selling MSTR at the right end, whereas Bitcoin per share created to buy back debt. What does that mean? Considering retiring, potentially early some of our convertible notes using our common stock.

Selling Stretch to buy U.S. dollars, right? We haven't done that much to date, but perhaps reserving part of our Stretch proceeds to build up our U.S. dollar reserve and then selling Stretch to buy back debt, right? You can see how that will be an accretive trade to Bitcoin per share because stretch inherently on sale is not dilutive in buying back future dilutive convertible shares. All right.

And then the third sort of set of interesting trades that I sort of previewed on the last slide is selling Bitcoin, right? And this is a big sort of statement, but our ability to sell Bitcoin either to buy U.S. dollars or sell Bitcoin to buy debt if it's accretive to Bitcoin per share, right, is something that we would consider doing going forward.

So how do we make these decisions? Ultimately, there are 2 sides of the same coin, if you will. One side is our equity performance, right? And to our common shareholders, the most important thing is to accrete Bitcoin per share. which results in higher BTC yield, which ultimately those together result in a higher BTC game, right, adding more Bitcoin and BTC gain on a dollar basis is the closest proxy to earnings per share. So those were the 3 KPIs we look to assess equity performance.

On the risk side, the other side of the coin, right, we have a BTC rating, which is the amount that our debt and our leverage is overcollateralized by Bitcoin. We have an MSTR duration, which is the average duration of all of our instruments, right? And so if you look at our perpetual preferreds, they have the longest duration based on a calliduration basis, 10, 15 years out. And then we have our convertible debt, which has a shorter duration. So swapping longer duration for shorter duration, is a good trade for us, right?

And then we have MSTR risk, right? And so the BTC rating and the MSTR rating together influence the total risk profile to the company. And so we'll talk through a little bit more about this framework later.

A couple of things I want to note before I hand off to Mike. One is Bitcoin per share accretion is our primary goal. MNAB is an input, right? The threshold for Bitcoin per share accretion when selling our equity and buying Bitcoin is increasing over time, right? So where it used to be a 1x mNAV as we add debt and as we add preferred primarily to our structure, the breakeven increases. Right now, it's about 1.22x. That means at 1.22x or higher mNAV, it's accretive for us to sell MSTR and buy Bitcoin.

Below 1.22x mNAV, it's actually more accretive for us to sell Bitcoin, right, and pay off our dividends than it is above 1x to 2x mNAV. And so that's a note, and we'll talk more about this, and we'll explain it further. But it's important port because I think there is a misconception that the breakeven point is 1.0x.

Next thing I'll note, there are benefits to the way we bought Bitcoin and the holdings of Bitcoin that we have by cost basis here. And you'll have this here, taking $20,000 tranches here at 2000, 20 to 40, 40, 60, 68 and beyond, we bought Bitcoin at every price level. Below current price is about 80,000, we have an unrealized gain from a tax basis on that Bitcoin. Above 80,000, we have unrealized losses. If we were to sell Bitcoin, our objective would be to sell high-cost basis Bitcoin to capture some of those unrealized losses and to take some of those unrealized tax benefits, of which on our balance sheet, there's about $2.2 billion, right, estimated of tax benefits.

So there is a tax benefit if we were to sell high cost basis Bitcoin as an example, right, to pay down some of our dividends over time.

Amplification, we're currently at about 34% amplification. A portion of that, about 10% of that is driven by our convertible debt. The ability for us to increase amplification to the company is higher when we have a long-duration digital credit than it is when we have short duration convertible debt. So as the company starts to cycle over time from convertible debt to digital credit, we can take on more amplification with lower risk levels. And so we could see ourselves getting 50%, 60% amplification levels. Over time, and still feel like we have a high credit quality and a high risk quality to the company.

And the last thing I'll share here before I get to some of our principles is the U.S. dollar reserve, right? We have built up the USD 2.25 billion reserve, which at that point, represented over 2 years of dividends and interest payments. And now we're with the same exact U.S. dollar reserve at about 1.5 years.

Adding to the U.S. dollar reserve reduces Bitcoin per share, but improves the credit quality of the company. And so it's something that we'll continue to evaluate over time what's the right level of U.S. dollar reserve is. We feel like at a minimum, it should be $2.25 billion. But likely, as we grow our digital credit and stretch, we will want to add to this at a certain level. So I'll summarize what I shared here because hopefully, it addresses a lot of questions from our shareholders. How do we think about managing capital markets and our balance sheet. One, our objective is to create long-term value for MST, right? We want to increase Bitcoin per share, which will increase the price of the common equity and ultimately be better for our common shareholders.

Two, we're going to continue to grow demand for Stretch. We've seen it to be a very popular product in the market and very beneficial to our balance sheet. It will continue to improve the features as we can, for example, moving the semi monthly dividends. Three, we are going to proactively reduce convertible debt based on market conditions and that could mean actively purchasing back through whatever means we think appropriate, some of the convertible debt before it comes due, right?

Fourth, we're going to look at the Stretch demand and credit risk to determine the size of the U.S. dollar reserve. There's a natural market mechanism that as the U.S. dollar reserve in months to cover or years to cover decreases, the credit risk of stress goes up nominally and could decrease the demand. And so we will monitor that to decide what is the right U.S. dollar reserve size.

Fifth, similarly, the amplification, the appropriate amplification for the company will also based on market conditions. Mike and I and Andrew and the entire team are looking literally every day. at what are the trays that are accretive to the claim per share. What are the trades that create the right equity accretion and what are the right trades that manage the credit risk at the right levels.

And six, not necessarily most importantly, but maybe most notable, we will sell Bitcoin when it's advantageous to the company, right? We're not going to sit back and just say, we'll never sell the Bitcoin. We want to be net aggregators of Bitcoin, increasing our total Bitcoin, but more importantly, increasing our Bitcoin per share because we think that is what is going to be most accretive long term for MSTR and for the company.

And with that, I will hand it over to Michael Saylor to complete the presentation.

Thank you, Phong. I thought I'd elaborate on some of the things set up until now and just give you an overview of the BTC market and then our capital market strategy. Everything is based on digital capital and Bitcoin is digital capital, and that means global legitimate collateral, global property. So we keep track of Bitcoin as digital capital and the consensus in the market. What you can see here is the U.S. government has embraced it. All of our key financial regulators, the Head of Treasury, the Head of the SEC, the head of the CFTC and now the incoming head of the Fed are all digital assets, enthusiasts, innovators and Bitcoin believers, as is the President of United States, Donald Trump and the Vice President, JDate, along with many, many other covenant members. And I think that's a very important fact.

There are a lot of bills still working their way through Congress. The most notable one right now is clarity. The real key here is that Bitcoin is a priority in the House and the Senate, on the Hill, at the White House and this bipartisan support and bipartisan agreement for Bitcoin's digital capital and for legislation that supports the adoption of Bitcoin's digital capital in the world.

Really exciting a few months ago at our Bitcoin for Corporations conference. We saw major announcements by systemically important banks, Morgan Stanley, Citi TD, all with intent to integrate Bitcoin into their operations. This is something we only hoped for 3 or 4 years ago, and now it's a reality. And at the point that Bitcoin is integrated in the banking system, than its digital capital here to stay.

You can just see the announcements across your ticker, right? Everywhere in the world, this is a global phenomenon. It turns out whatever happens in the U.S. and with the U.S. banks is spreading to Europe to the UAE to Hong Kong to South America, et cetera. I think you're going to see these announcements accelerate, but we've crossed the event horizon, and it's pretty clear that you can't put the genie back in the bottle. Bitcoin has arrived.

We try to be systemic. So we track it, and we track the 15 largest or most systemically visible banks in the world, and we look at their embrace of Bitcoin as a creditworthy instrument, Will they trade it? Will they offer credit against it? Will they custody it? Will they handle the derivatives, et cetera. And what you can see here is that adoption has actually advanced since even last quarter, and everywhere in the world across all of these banks, they are active efforts to improve Bitcoin support.

If you track the number of accounts that put Bitcoin access, you can see we're marching up into the high hundreds of millions, 840 million crypto exchange accounts, nearly 1 billion neo bank accounts, nearly 1 billion brokerage accounts, they all have access to some sort of Bitcoin derivative. ETFs, of course, continue to embrace Bitcoin. There's now been 125 ETFs with about $126 billion of capital. The capital flowing into these ETFs continues to accelerate.

And as you can see, we were the first company to embrace Bitcoin, and now we're up to 194 public companies. We anticipate this will continue to grow.

Lots and lots of IPOs. The public markets have embraced Bitcoin. And this is just an example of some of the notable companies that have come public just recently that have substantial Bitcoin exposure. The digital credit ecosystem has been a very pleasant surprise. It has grown very rapidly and has become very diverse. And the way that we know the digital credit is working is that companies and economic actors everywhere in the world that we've never met face-to-face are discovering this and they're building products and businesses around it.

So -- right now, what we see is very enthusiastic support with retail investors, with corporate treasurers, with institutional investors, with crypto-native innovators and with Trafi innovators. So 5 different groups of capitalists, but they're all getting very heavily involved enthusiastically and rapidly.

If we drill into retail, 80% of all STRC shares is held by retail as of our last check. This is an extraordinary fact. Normally, it's very difficult to get broad, deep retail support for a common stock or a public stock. And yes, we've been very pleasantly surprised. We're able to trace about 120,000 individual retail accounts. Word of mouth is spreading this. It's spreading virally. Based upon our studies, we see that anybody that buys SDRC is generally telling their friends, their family, their parents, their working associates about it, and it continues to spread word of mouth.

You can also see Schwab is a big distribution channel. 23% of stretches held in Schwab accounts. Fidelity is a channel, Robin Hood is a channel, Morgan Stanley eater channels. BlackRock as a channel. Interestingly enough, Vanguard that won't let their investors buy Bitcoin natively. They actually are a channel for stretch. And so it's pretty exciting that we have wrapped Bitcoin into a credit instrument that is being distributed through all sorts of traditional finance channels to types of investors that otherwise would never be able to buy a Bitcoin itself or would never want to.

We actually have traced stretch exposure, and we estimate that there are about 3 million households that are benefiting from Stretch right now. So think of it as powering a savings account for 3 million households. Phong mentioned about 100 million beneficiaries of MST while 3 million beneficiaries of SDRC in 8 months is a pretty good start to the race. Our ambition is to spread this to tens of millions and then hundreds of millions of people. So we're off to a good start, but we're just really enthusiastic about the retail support.

We're also very enthusiastic about corporate support. Corporations unprompted by us. We didn't go and sell this to them. They just figured out that it was a good idea for them. But corporate treasurers and corporate CFOs with working capital have been allocating some of their treasury capital to Stretch. And -- this is a really pleasant development, and we're starting to think that there might be thousands of companies that might allocate some amount of their treasury capital to Stretch.

And I've had a lot of experience selling BTC to corporations. What I found is that tends to be a Board-level decision. It goes all the way, the Board of Directors, the CEO has to be way behind it. And if 1 director on the Board has concerns the cycle slows down. But with STRC, it's not a board-level decision, it's more like a CFO-level decision. If the treasurer is enthusiastic, the CFO can greenlight it, they might or might not give the CEO a heads up. But this is a very different value proposition. It's maybe a 5-minute conversation with the CEO instead of a 2-hour conversation with the entire Board -- for that reason, we think that STRC really is Bitcoin for corporations, it's going to spread very rapidly now.

The other thing that's very exciting is that SDRC is spread into credit indexes. BlackRock's PFF is a $14 billion credit ETF and Stretch is the #2 holding. VNX PFXF is another credit ETF, and strategies stretches also the #2 holding. And so imagine an instrument coming out of the blue didn't exist 12 months ago. And in less than 12 months, we've gone from nonexistent to #2.

Next up, number one, we're enthusiastic about seeing stretch embedded in lots and lots of institutional credit indexes and lots of institutional credit funds.

Third-party ETFs have been finding stretch, and they're building innovative ETFs. STRIVE is building a digital credit ETF, 21 shares created an ETF with Stretch and took it public in Europe. There's a number of ETF providers that are working with us that are in the pipeline right now. I think active discussions with 4 right now. And so we would think that over time, there'll be more ETFs to build SDRC into their fund offering.

So here, I'd like to talk about digital money and digital yield. We start with digital capital. Bitcoin is 34 vol on a rolling 30-day average. It's 39% ARR. The 1-year trailing Bitcoin is almost 40%. So think of it as a 40-volt -- 40 ARR asset, raw economic energy. We split that asset into STRC, which is 3 vol, 11.5% yield. And then MSTR which is 71 vol, 59% ARR. So one is an amplified Bitcoin, we call digital equity, and the other one is damp digital credit. Now digital credit, we believe, is like the case of finance, right? It is the monetary fuel and is a universal monetary fuel. It's high grade, highly distilled. But from here, you can build all manner of products.

And we see the Layer 3 as digital money and digital yield, neither of them would really be possible without digital credit. It's just too difficult to distill pure 0 vol 8% money from a 40-vol 40 AR asset, you have to crack it. You have to have a crypto reactor, and you have to have 50 billion, billions of dollars of equity capital to do it, and that's what we did to create Stretch.

So a simple definition, digital money in our Lexicon is 0% volatility, daily liquid instruments built on digital credit, like 0 vol, 8% yield coin. And then digital yield, that's non-zero volatility or it might be illiquid. It might be a 3-month lockup 5x levered 35% yielding fund that loops digital money 4, 5, 6 times in order to get there. And so digital yield is a levered construct and digital money is the strip down construct. We think digital credit is programmable across lots of dimensions. So a lot of ways to add value to it. You can you can tokenize it, put it in a private fund, put in a public fund, put it in a bank account. You can deploy it on a crypto exchange on a neo bank. You can deploy it on a real bank, you can deploy it on a crypto network, you can program it to volatility of 0 or let it float up to a volatility of 10. You could program the liquidity to be continuous or daily or monthly, but you could also put in a quarterly lockup or an annual lockup in order to put more leverage on it or create a different characteristic. You can program the yield from 5% up to 25% reasonably. Some people might go beyond that, but we think 5% to 25% is reasonable. And then you can convert the currency. You can create great British pounds or euros or yen or Swiss francs with digital credit starting from STRC.

And so when you think about all these different forms, the question is, do you want to create a yield coin, like a digital money coin? Do you want to create a yield fund? Do you want to create an account, right? And depending upon what your assets are, if you're the biggest bank in Australia or if you're a Deutsche Bank, you probably would do it one way, but if you're a crypto exchange, you might do a different way.

The math is pretty straightforward. You start with 11.5% performance in like 3 vol right now. If we're lucky, maybe we'll be able to get our vol to two or to a one handle. I mean that's the goal of our proposal to the shareholders. But I doubt seriously we get below 1.5 or a valve. One valve is sort of what publicly trading -- trade market funds look like right now. But getting to zero valve takes a bit of work. So -- so one approach to add value is to step it down, stripped of valve to 0 and maybe instead of 3 volve 11%, you offer volve vol, 8%. And that's a digital money. And the other approach is step it up, right? Lever it 3:1, pay 5% for the capital. And maybe you end up with something that's paying you like $35, you pay $10 on the capital and you get a 25% yielding levered yield fund. And these are all opportunities.

We are not going to do it ourself. Our laser-like focus is make stretch the deepest, most liquid, most stable, least volatile, highest sharp ratio credit instrument in the world. And that's a mission. But what we think is their love crypto innovators, and you see right here on the screen, a lot of very impressive companies that are moving fast right now. Apex has had enormous success early on Saturn is doing the same thing. -- but Hermetica Kraken, Roam, Ando, Pendal spreads, strata, -- they're all doing very interesting things right now, and they're very innovative. And they're moving about 10x faster than the Triad complex normally moves on these sort of initiatives. But having said it, there's a lot of interesting TADF initiatives, things you can do in a traditional finance environment either with a private fund or a public fund, and we see those things happening as well.

Eight weeks ago, there was no Stretch in the DFI industry. And in those 8 weeks, we have rapidly grown to something like $270 million of exposure. So this is just really extraordinary, the rate at which money is flowing. Sometimes money is flowing in at this complex $1 million an hour, $2 million an hour. It's starting to feel to me like we may very well see more than $1 billion of stretch enter the DFI industry in the near future. It's moving very fast and it's very dynamic.

So let's speak about outlook and our vision. We are a structured finance company, and you can see here, we're taking raw capital, digital capital 40 ARR, $1.6 trillion market comp of Bitcoin. We are stripping we are stripping the currency risk. We are reducing the credit risk. We are reducing -- we are compressing the duration risk. We are distilling a yield, we are dampening volatility in order to create various instruments and our greatest product and bigger success right now is Stretch. As you can see, it's -- it's taking a 71-volt down to a 3-volt and we're targeting a 1 vol

Some important items to be aware. The Bitcoin breakeven ARR. We calculate it all the time. It's very significant for this reason. If Bitcoin grows more than 2.3% a year that breakeven ARR, we can fund our dividends forever. We can fund our dividends forever without selling a single share of stock. It is a very critical point. If Bitcoin does not grow at all forever, we can fund the dividends for 43 years. We're very clear about this. You'll see we publish it on our website, and we updated every 15 seconds. So let's go to the next slide.

Here, you see, this is our website. If you go to the credit tab. You're going to see we show you the Bitcoin Reserve. We show you the years of dividends. That's the years we have of coverage of Bitcoin appreciate 0% a year. And then we show you the Bitcoin breakeven ARR, 2.27%. It's updated every 15 seconds. So for those people that are wondering, what is the credit risk in all of these instruments, I encourage you to go the credit hub. You can go and you can type in, you can assume the Bitcoin price crashes to 30,000. You can change your Val outlook, you can change your ARR outlook. The model will recalculate all of the risk and credit spreads for every credit instrument and especially for STRC. And as I said, we're updating all of these things in real time, every 15 seconds.

There's a misnomer. Some much people think, well, Bitcoin has to appreciate 11% or 11.5% for us to be successful or cover the dividend, not true, 2.3% or they think 30%. Now that's what we think it will do. The number that really matters is 2.27%, the big BTC breakeven ARR. Now it's important for another reason. The BTC breakeven AR is also the inflection point where Stretch issuance results in more Bitcoin being stacked by our company than the Bitcoin we use to pay dividends if we choose to pay dividends with Bitcoin.

So this chart here, what it illustrates is that we don't have to sell a single share of stock. We could stop selling MST our common stock right now. We can fund the dividends with Bitcoin sales. And if Stretch issuance is greater than that BTC breakeven number, not only will we fund the dividends forever. We will increase the amount of Bitcoin that we hold forever at the same time.

So you would say, well, how much is that? Well, you can see if we were to sell $1.5 billion of Stretch per year. We can sell Bitcoin, pay the dividends, buy more Bitcoin than we sell, grow our Bitcoin stack and generate Bitcoin yield. Now of course, we saw $1.5 billion of Bitcoin and like -- sorry, $1.5 billion in Stretch in 2 days a few weeks ago. So yes, I think we can definitely stay above that breakeven point.

What you see here on this slide is that if we actually have Stretch issuance equal to 20%, that would equate to $12.8 billion of stretch sales this year. And we're kind of on the path of that if we look at the first 4 months of performance, we might exceed it, who knows, we might be less. But if we actually run at a 20% issuance rate, then the first order model shows or indicates that we generate a BTC yield of 17.7%. We accumulate an additional 144,000 Bitcoin, and that's after we pay all the dividends by selling Bitcoin. So again, -- the most important point here is there are occasionally some short narratives. People would say things like, well, if they sell the Bitcoin, that's bad for the business or it proves the business doesn't work or something. But -- we look at it as if you're a real estate development company and you bought land for $10,000 an acre and you sold it at $100,000 an acre and then you bought more land with the profit. or if you sold $100,000 an acre to pay some interest expense on debt that you used to buy more land, nobody would say that that's bad for the price of real estate and no one would say that, that proves business doesn't work. real estate development companies literally exist to buy land sheep and sell it expensively.

We're like a Bitcoin development company. We buy it cheap. We sell it deer.

Where do the dividends come from? Capital gains, fund credit dividends, right? That is the essence of the business. We invest in digital capital, Bitcoin. The capital gains from the investment fund the credit dividends. They will do it in perpetuity. If you -- if the capital appreciates at that breakeven rate. And it turns out that sometimes we will sell a Bitcoin derivative because it's in the best interest of the company but it's not necessary. This chart really illustrates that you can strip the business down to something very simple. You buy back coin with credit, you like it appreciate and then you sell Bitcoin to pay the dividend. And as long as you're issuing credit in excess of the breakeven point than this business works and grows forever. So how do we decide what to do? Because every single day, we've got a bunch of trading decisions Well, we have a very sophisticated equity and risk model. We calculate the benefits of the equity and the deltas to the risk for every single capital markets transaction. And that means we're making these decisions, not just every day, oftentimes every minute of every day based upon all the fluctuating prices of the trading pairs.

Right now, our BTC rating corporately is about 3.3%. The duration of our liabilities is 10.9%. That's the stochastic duration. It's our estimate of of the stochastic duration of all the debt in the press. The risk that we've centered on works out to 88 basis points. And that works out to a fair credit spread of 61 basis points. 818 basis points of risk means that there's an 8% chance at the end of the duration of the liabilities that you're trading at a BTC rating of one. And 61 basis points is the credit spread, a rational investor needs to be paid to offset the risk.

What you can see here is two things. First of all, the assumptions we plug into the model to estimate that center line risk is 10% BTC AR. We assume that Bitcoin will perform about at the level of the S&P 500 over the last 100 years. It's a fairly conservative, realistic view. And we plug in 40 vol. We assume that the asset will remain volatile add in for item. So we see that as two conservative estimates. But even with those estimates, what pops out is a credit spread of 61 basis points. The investment-grade credit spread is like 88. And so this is investment-grade credit even with very realistic pragmatic inputs. Let's delve a bit more into this.

Here's the risk model. What you can see, of course, is that if you're a Bitcoin Max, you think Bitcoin is gone up 30% a year, there is no risk, right? The more bullish you are in Bitcoin, the more the risk drops away. If you're a tech investor and you think Bitcoin is as good as a MG-7 stock and it goes up 20% a year. The risk is fairly de minimis. If you're a trader and you think Bitcoin is no different than the S&P, well, then you're on that 10% ARR line. And then if you think that the ball stays constant, you've got that 818 basis points.

If you're a skeptic and you think Bitcoin is going up 0% forever, the risk increases. And if you're a hater, a pessimist, and you just think that Bitcoin is going down at infant item. -- then the risk actually explodes, there's a lot of risk here, and you can see it in the model. We we'll show you risk numbers here with that realistic view as though you're an agnostic trader, you don't love Bitcoin, you just think it's just as good as any other equity capital asset that's diversified.

You can see you can calculate the risk with various Bitcoin prices and you'll get the answer you would expect. Bitcoin price going up is good, Bitcoin going down is good. And on the next slide, you can see you can slice this with various assumptions about the outlook of Bitcoin as well.

So let's look at some trades. If we decide to sell $1 billion of MSTR stock and buy $1 billion of Bitcoin. If you do that at less than 1.2 mNAV, when you do it at 1 mNAV, you can see it's dilutive. It's a minus 48 basis point yield. It cost the shareholders $310 million. For that reason, not very good idea. What you can see here is that as the mNAV goes to 2 or 2.25, it becomes a screamingly accretive deal; two, you make $457 million in gains on the trade. We've broken it down to basis points of yield. It's also another point, 57 basis points of BTC yields a lot of money. It's worth 1/3 of $1 billion.

So it's not that complicated to see whether something is accretive or dilutive when you're swapping common for Bitcoin. You can also see here what it does to the credit risk. It improves our BTC rating, it decreases the risk. So whenever we're swapping MSTR for Bitcoin, it's credit positive. It's probably equity positive unless we're trading below that 1.22 breakeven.

Now let's consider whether we want to use equity to pay the dividends or whether or not we want to use Bitcoin to pay the dividends. If we fund $1 billion of dividends with Bitcoin, it cost us $1 billion. It's $1 billion of cost to the shareholders. Look at the lowest line, you'll see it. It's a 12,763 Bitcoin loss, 156 basis points. And what you can see here is that's pretty comparable to funding the dividends with common equity at 1.22 mNAV. They are pretty much the same.

If you fund the dividends with equity below that breakeven, it gets more expensive for the shareholders. It cost you an extra $290 million to fund it 1 mNAV. So you'd be better off to sell the Bitcoin than to sell the equity on this analysis if the equity is trading weak. On the other hand, if the equity is trading at 2 mNAV, then it only cost $535 million. So it's an 83 basis point hit instead of 156 basis point hit.

So as you can see, we're always considering to us MSTR, to use BTC to fund obligations of the company. What you'll notice is if you do use equity, it doesn't change the credit metrics at all because you're expanding the capital base of the company. With Bitcoin, it may be less dilutive, but it does slightly increase the credit risk. It drives down the BTC rating, the risk goes up 13 basis points. That would equate to like a one basis point increase in the credit spread.

Now what about funding the U.S. dollar reserve to the tune of $1 billion? What you can see is, well, it's a lot more efficient for the shareholders to fund it at a high mNAV like 2.25 or 2, then it is to fund it at a lower mNAV. And of course, it's constant to fund it at BTC. And that's the negative from the equity point of view. The positive from the credit point of view is it extends our duration dramatically, 160 days of duration. It decreases MSTR risk by 55 basis points and improves the rating.

Next, now what if we actually buy back one of the converts or some of the converts. You can see here, if we go and we sell $500 million of stretch to buy $500 million of convertible bond, we actually generate substantial BTC gains. We get a yield of anywhere from 22 basis points on the 2029 convert to 63 basis points of yield on the 2030 convert in the middle. So Why? Because different converts have different equity content in them. And so some converts are more dilutive to the common than others.

And you can see here all the analytics, you can see the impact on the rating. You can see the impact on the risk. Generally, we'll stretch the duration will dramatically decrease the leverage, will slightly increase the risk and will, of course, generate massive BTC gains through this trade. You have to evaluate this, of course, every day because the price of all the converts will be changing every day. And so this is an illustrative of the model we use.

So what have we actually sold Bitcoin to buy the common stock back? This is not something that we have considered before, but I'd like to illustrate it -- because what you can see here is that below 1.22 mNAV, it's actually extremely accretive to the investors to swap BTC for MSTR. And so if you have an irrational market, let's say, some crazy short sellers shorted our stock to 0.5 mNAV. Well, the most profitable trade in the entire model is to actually swap BTC for a common stock at a massive discount to mNAV, and you pick up 636 basis points of yield, massive amounts of BTC gain.

And of course, the opposite is intuitive. If you're trading a high mNAV and you're swapping BTC for the stock, you're generating a dilution. So you won't see us swap BTC at a high mNAV, but you might see us swap at a low mNAV in the future. And you can see all of these trades, they have a small impact on risk, but it's fairly de minimis. It's primarily an equity dilution or accretion.

And you can see we can swap BTC for MSTR. But here, another very powerful tool the company as is, we can swap STRC. We can sell credit to buy MSTR. So over time, as the business model becomes more well understood, the company has the ability to do its own levered buyout or LBO on his own common stock. We can create amplification. I'm not going to use the word leverage because leverage implies that you've got a debt obligation that comes due. Really, it's amplification on the equity. And if we wanted to amplify the returns of the equity, we would simply sell the credit and buy back to common equity. And of course, we get to take advantage of market mispricing. If the market perfectly prices everything, we don't have great arbitrage opportunities. I mean -- but you can see here, even if the equity was trading at 2M NAB, we can generate 85 basis points of yield by swapping $1 billion of credit for $1 billion of equity. But if the market trades down to 0.5 mNAV, we can generate 800 basis points of yield. So it starts to become pretty accretive, and this is an option in the future that we have as an operator.

And of course, we can actually sell dollars to buy common equity. So you can see the impact of this. And of course -- probably one of the more expensive programs we have is to carry the U.S. dollar reserve. It's dilutive to the equity. It's equity negative, but it's credit positive. And you can see we do have the option if the equity were to trade to a discount to actually swap the dollars back for the common and it would be extremely profitable for the common stock shareholders to do that.

So we've got some scenarios here. We can continue with our conventional strategy at 1x mNAV. So even if the stock was trading at a discount to breakeven we're selling credit and selling equity and we use the equity to fund the dividends and we hold the U.S. dollar reserve constant at 1.5 years. We would run a 10.6% BTC yield, and we would accrete up to 263,000 BTC per share or CTOs per share over the next 3 years.

So you can see even if the market conditions aren't great, right, we have a business to deliver 10.6% yield. The duration would stretch out a bit. The risk would increase a bit, the fair credit spread, it looks like 94 basis points, but it's still just a shade off of investment grade. So that's a conservative case.

Should the market continue, if we were a 1.22 mNAV. You can see that the yield expands to 12.2%. The credit metrics don't change, but this is really positive for the equity investors. So now here at 1.5 mNAV, you can see that the BTC goes to 13.4%. So you can see market sentiment and confidence in our ability to maintain this business, our belief in digital capital, belief in digital credit is going to drive an expansion of the MDA, which is going to actually drive an increase in the rate of accretion a bit point per share are going to drive the BTC yield up. It's going to drive bit line per share aggressively.

And then at 2 mNAV, you see the BTC yield of this strategy gets you to 14.6%. So those are just different scenarios showing how market sentiment drives the business, but negative sentiment, it's a pretty good business. We'll double Bitcoin per share over 7 years and positive sentiment means that we will double Bitcoin per share faster.

Now the company, as I said before, it can fund its dividends without selling any equity. We can fund the dividends by selling Bitcoin, and we can still grow Bitcoin Holdings continuously. So here's a scenario where what we do is we fund the dividends. We fund the USD reserve at 1.5 years. We do it by selling Bitcoin and you can see. We drive a 12.2% BTC yield. We go from the 670,000 BTC level to $850 million to $950 million to $1 million. So go through 1 million Bitcoin held on the balance sheet in the next 36 months, and we'll do that while funding all of our obligations with Bitcoin.

You can see the impact. The impact that's measurable is a slight increase in credit risk and a slight increase in credit spread. But I think it would be a second order effect to the market. So this is interesting to keep in mind.

Now what happens if we fix the U.S. dollar dividend and fund dividends with Bitcoin? Here, what we do is we just hold the dividend at $2.25 billion. And we pay all of our obligations by selling Bitcoin, and what you see is we get to a 14.7% BTC yield. Again, a slight increase in credit spreads, a slight increase in risk -- but this is without accessing the equity capital markets at all to drive the business. And we're looking at first order effects. We're not really showing the second order effect and the third order effect. There are tax credit advantages that are second order effect. There's reflexivity in the common stock itself. It might very well be that if people decided we weren't going to sell any common stock. They might actually decide that the rational map should go to 2 or 3 or 4. And so we can't really model those. What we can just illustrate here is that even the first order model, it's pretty clear that the company has the option to run on the Bitcoin engine or on the Bitcoin derivative engine. MSTR is a bit coin derivative and either of them are options.

Here's a scenario where we just retire all the converts. And have we diverted 20% of the Stretch issuance to retire debt. We retire all the debt in the next 3 years. We'll go from $8.2 billion of debt to 0, net leverage goes to 0. The duration of our instruments goes up to 15 years. There's 114 basis points of credit spread on the digital credit, but there is zero leverage. And we run with a 12.4% yield, and we maintain this constant 1.5 year USD reserve. And so you can see that's kind of interesting as well and an option that's available to us.

So here's a table that just shows all the various options. And of course, there's a lot of other things. We've got a sophisticated model. We can plug in any possible trade in any size on any day of the week. And rest assured, we're continuing -- or we're considering these every single day, and we're programming trading algorithms to trade all these instruments sometimes every single second. And so the key point that Phong made is the optionality in the business is expanding dramatically. You can see on the equity side, our assumptions are 30% BTC ARR, 20% stretch issuance, 11% dividend rate. On the credit side, we're much more pessimistic or conservative or you could call it realistic, if you want, 10% BTC ARR, high vol. If Bitcoin vol starts to fall as Bitcoin price appreciation accelerates, we have a lot of other options we can take advantage of. And rest assured, we'll jump on top of those.

I thought I'd show one last slide of interest here, which is sometimes people have this misnomer. They think that we're borrowing money at 11.5%, and it's a fixed obligation. That's not correct. We're not borrowing money. When we sell $1 billion of Stretch, we're never paying it back. And so the first obligation is Stretch is a perpetual swap. It is not a loan. And the second observation is the cost of capital is not 11.5%. There is a stochastic cost of capital. What Stretch is, is a perpetual swap where the issuer agrees to pay SOFR plus a credit spread, a variable credit spread adjustable each month and then the issuer invests that in Bitcoin. So we are paying SOFR plus the credit spread. We are taking back the Bitcoin return. And the company, the issuer has a couple of very powerful options.

One powerful option the company has is over time to reduce the credit spread. That is an option. And of course, the credit spread is probably at a high point when you're early in the industry when digital credit is not understood. But you would think after 3 years or after 6 years or after 9 years, the credit spreads will compress as confidence in Bitcoin grows, as confidence in stretch grows, as AUM grows, as confidence in the business model grows, the credit spread should compress.

The second option is the company has the option to lower the dividend to a floor of SOFR. So as SOFR falls, when SOFR is 375 basis points, that's the floor. But if SOFR goes to 200 basis points, the company gained 175 basis points of additional optionality. SOFR has gone to 0 or 25 basis points in the past. So the fact that SOFR generally fluctuates between 500 basis points and 25 or 50 basis points on an 8-year cycle is a very important point. And when you consider those two options, the stochastic cost of capital for stretch has to be modeled as something less than 11.5%, maybe more than the long-term rate. If you imagine SOFR is 2% or 3%, and we have a 300 basis point credit spread 20 years out, that might be 6%. So somewhere between 6% and 11.5% gets you to like a blended rate of 875 basis points. So when we think about the cost of capital, we think that it's probably 875 basis points and the debt is never coming due. And I think that's an important point to make to the world, and it colors your thinking.

And so with that, I'll just end with our capital markets principles. And I'll reiterate what Phong said, we're here to drive Bitcoin per share up, and we're doing everything we can to drive Bitcoin per share up. We think the best product and the best tool to do it is stretch. And it's clear the market is telling us that. And so we will focus laser-like on making stretch the best digital credit instrument. We do see a world where we're debt-free and sooner rather than later. We're going to adjust our amplification and our credit metrics and our U.S. dollar reserves and our use of proceeds based upon market feedback. We get market feedback every minute. We're literally staring at all these signals every minute. And of course, we're talking to every credit investor and every equity investor continuously.

And again, with Bitcoin, the company has got more than $60 billion of Bitcoin and the Bitcoin market has $20 billion or more of daily liquidity. If we were to be boxed in by a troll or a cynic or a skeptic into agreeing that we're never going to sell the Bitcoin and we're never going to tap the liquidity, we would be impairing the asset, which accounts for 99% of the future of the company. So it's kind of like a real estate developer saying, I'm just never going to sell any real estate ever at any price. It's kind of a silly thing. If a wealthy person, if a billionaire sells $1 million or spends $1 million to make $1 billion, nobody says they're poor. And nobody would lament that spending a few million dollars is going to crash the U.S. currency either.

I don't think that if we spend $100 million of Bitcoin or sell $100 million of Bitcoin to pay a dividend, I don't think it's going to negatively impact the Bitcoin network. I think it's probably good for the Bitcoin network. It definitely doesn't impair our business model. If anything, it just creates more optionality in second and third order effects. So the management team's practice is to run the company in the best interest of all the stakeholders. And that means there are 3 that we laser-like focus on. Whenever we're making a decision, we ask the question, is it good for the common equity MSTR. And we asked the second question, is it good for the creditors, especially STRC investors? And the third question we ask is, is it good for the capital investors, BTC investors? And we happen to believe that running our business in such a way as to commercialize digital credit in the most efficient fashion is the best thing we can do for Bitcoin and Bitcoin investors, the best thing we can do for digital credit investors and the best thing that we can do for our common equity investors.

There is no conflict between those 3 goals because if we suboptimize to the benefit of one to the detriment of the other two, the entire machine doesn't work. And so when we balance the interest of the three, the more credit we sell, the higher the equity mNAV, the higher the equity mNAV, the more credit we can sell, the less the credit risk, the more Bitcoin we can buy, the better it is for Bitcoin. The better is for the price of Bitcoin, the less risky the credit is, the more profitable the equity is, there really are concentric flywheels here, feedback loop within feedback loop within feedback loop. And when we're in harmony, all three -- all of those feedback loops are working really well, and you can see that happening in the market. We monitor it. And in dish of everything working is when the mNAV is expanding and the equity is healthy and the equity is outperforming Bitcoin, when the volatility of Stretch is falling and liquidity is increasing, right, that is Endicia of the success of the credit and when Bitcoin prices appreciating and Bitcoin support and liquidity in the world is appreciating, that's indicative success of the capital.

And so that's what we've been doing. That's what we're continuing to do, and we thank you for your support. Now I think we'll open it up for Q&A.

Thank you, Michael. So before we jump into the Q&A, I'd like to just share with all our investors that we're organizing a special Q&A for retail investors next week on May 13. You can scan this QR code if you'd like to submit questions, we'll share the link on X and we'll share more details as well.

With that said, let's turn into the Q&A. I'd like to invite all our guests to turn on the cameras, get ready to ask some tough questions. Let's get started. Pete Christiansen from Citi.

Michael, I just want to -- I was just hoping we just can take this call and how you've laid out, I think, both of these scenarios and think about like historically, I guess, I'm pointing to last year, at the end of last year that there was a false signal that strategy and was selling Bitcoin and it was taken negatively in the marketplace. Today, you outlined a lot of different optionality scenarios that, that strategy now has to optimize its capital stack. Should we take today's call as a signal to the market that, yes, strategy is willing to be more proactive with its capital stack, which may include the sale of Bitcoin, maybe for tax purposes or meaning for other optimization purposes, credit, what have you. Should we take today's call as a signal that yes, Strategy is going to be more tactical with its capital stack going forward?

Yes, you should. I think the company got much healthier when we proactively began to utilize the equity ATM and we said it, we're going to do it. We're not ashamed of it. We'll probably do it again. And then when the company started proactively executing on the stretch the credit ATM, and we said we're going to -- we're not a shame , we're going to keep doing it. We think it's good. And we've got a plan for it. And now I think at this point to say we're turning on the BTC drive. We're not ashamed of it. We got $65 billion -- We have a $2.2 billion tax credit that's lying on the floor. We ought to go find a way to pick up the $2.2 billion, right? And just like with everything else, the more optionality we create and the more tools we have at our disposal, I think the better it is for the equity investors. We'll probably sell some Bitcoin to fund a dividend just to inoculate the market just to send the message that we did it look, the company is fine, the Bitcoin is fine. The industry is fine. The world didn't come to an end. And if you're a short seller and your thesis is the company has got to sell equity in order to fund the dividends. I would like nothing better than to rip your wings off.

I'd like to invite Jeff Bak next.

Hello. First off, congrats to the team, particularly on Stretch's accelerated region. Hope part of this. Thanks for having me here. My question is focused on understanding how macro factors may influence the firm's Bitcoin acquisition strategy and particularly in the works to interest rates. As we all know, we're just about a few weeks away now from Kevin Wash's official inauguration and even though rate cuts odds are a little lower this year, Strategy now does have like an explicit growing interest rate sensitivity, right, as we just saw from the Sucat model. And so if hypothetically, we see interest rates being lowered, Stretch has this momentum that it will likely trade above par more aggressively, given the nature of like the floating rate dynamic. And now the company has like a really, really interesting fork. You can either one, issue more Stretch and push the price back down to par or you can actually use that moment to reduce the interest burden itself right on what's outstanding. And there's a healthy attention between these two things. I guess my question is, can you help us understand that risk framework a little better to calibrate that particular trade-off, right, lowering the coupon versus selling West TRC. It changes a little bit of the Bitcoin acquisition velocity, but it also cuts interest expenses, especially in that lower rate interest environment. And any specific like input parameters that you might say takes priority here in your calculation?

I'll start and then Phong or Andrew may have some comments. So first of all, when the macro indicators are moving against us, we've got a headwind, everything slows down, right? And when we go to a restrictive monetary policy, that's bad for Bitcoin, that's really bad for Bitcoin. It's bad for risk assets. Bitcoin is risk asset squared. MSTR is risk assets cubed. So I feel like we're like tech cubed and big tech cubed, and Bitcoin is big tech squared in a risk-off environment, and you could see that. In a risk-on environment or a more accommodative monetary economy, I expect you'll see the opposite. I think Bitcoin will rally hard squared, our equity should rally as tech cubed. The credit presumably, we have more optionality if SOFR falls. Our bias is to grow the business responsibly, but as rapidly as we can and our bias is to grow Bitcoin. So if we have the ability to accelerate our capital raising, and we could twice as much capital in a risk-on or more a looser, more accommodating monetary policy, we will run the vehicle as hard as we can -- but we won't run it so hard that the capital structure doesn't keep up with it. So the circumstances under which we would slow down or want to throttle the credit would be if Bitcoin -- if we go to risk on and Bitcoin doesn't rally and our equity doesn't rally, but the credit rallies. So if the demand for the credit triples and somehow Bitcoin -- and Bitcoin doesn't react to the interest rate macro environment or MSTR doesn't. Then we might very well say, well, we're going to want to adjust the dividend rate down because we're getting too much demand for the credit.

By the way, Jeff, I don't think that will happen, right? I think the likelihood that we go to a risk-on environment and Bitcoin doesn't rally is small. So then at Bitcoin rallies, then our capital stack and our collateral base expands and then we can accommodate more credit. So the rate of stretch issuance or credit sales is a function of the BTC growth rate or ARR. If Bitcoin grows 30%, we can expand credit aggressively. If we grow 50%, we could go faster. And then the second order is really the equity capital market's enthusiasm for our business model. So if the equity capital markets looked at our business and said, "Okay, we're going to run a BTC yield of 20% a year, and I'm going to give you a PD of 10. I'm going to give you a 200% premium in NAV and you're trading at 3x mNAV. Well, that would be better than we are right now. If the equity capital markets did that gave us a 10p to on BTC yield or BTC gain. Then of course, our optionality increases, we grow faster. And the countervailing view is, well, you've only been doing this for a year or 2 years, and so the Linde effect says, I'm only going to put a PD of 2 on that.

And so if we get a PDF2, we could have a Bitcoin rally that gets us a collateral stack, but the equity doesn't go as fast, and that might govern the rate at which we run the credit engine. But the bottom line is if Bitcoin -- if the macro environment turns risk on and expands and Bitcoin rallies or equity rallies, it's go time. we're going to go and we're going to go with the credit. Like we're going to use the credit. Make no mistake about it. We want to see the mNAV -- the equity is undervalued. We want to see the mNAV expand to 2, 3, 4, 5 or 6. And nothing would make me happier than to rip the faces off of all the skeptics and the shorts and drive the equity to the moon. And I think -- the question you've got to ask yourself is, is this company going to sell $10 billion of stretch this year or $20 million or $40 million or $80 million, right? And the answer to how much we can sell responsibly is a function of where the Bitcoin price is and to a lesser extent, how the equity capital markets react. If the equity capital markets are accommodating and supportive and Bitcoin -- The company has a lot of tools to manage the BTC rating and the collateral coverage, and we can and we can add more equity capital. And you could see -- I just showed you, we can put equity capital in the market fast. We're the biggest equity issuer last year and this year. we could also take common equity out of the market if we decided to.

What we're going to look at is -- we're going to look at the interest rate forward yield curve. We're going to look at how Bitcoin performs a Bitcoin keeps performing as big tech squared. We're going to look at the forward curve or the forward expectation curve of BTC. We're going to look at the forward vol curve, right? Bitcoin involve 40 or 35 is different than vol at 50 or vol at 20. When Bitcoin vol falls to 20 or 25, you can lever these things and still have investment grade. You can lever 2, 3, 4, 5x more and still of investment grade. So that's -- by the way, Bitcoin Vale being 30 right now is not the same as institutional credit investors expecting Bitcoin ball to be 30 for a decade, right? So the forward yield curve, the forward ball curve, the forward price curve, the forward equity curve, all that stuff gets discounted back and we get up and we ask ourselves the question, what is the rational thing to do. But at the end of the day, what we're wanting to do is to drive the mNAV to the sky and drive the Bitcoin price to the sky and to build Stretch into the biggest credit instrument in the world because the higher Stretch AUM we have the more liquidity. And if we can get to $1 billion of liquidity for STRC, the ball will keep coming off, adoption will expand and we get a network effect. So I think -- you know how Amazon gave like free shipping or shipping for $10 a month and everybody said you're losing money on that, and they lost money on that for a decade, and then 1 day, they just raised the price, and they were the only player in the world. They made a fortune and people thought, well, I guess that was a good idea.

I think we would like -- if you gave me a choice, do I want to sell $500 billion of Stretch and pay 11%? Or do I want to solve $50 billion in pay 9? If you know me and the company, I think you can guess which of the two we want? At the end of the day, our long-term view is Bitcoin is going to go up more than 11%. It's going to go up 30%, and if we're wrong, it's 20%. 200 basis points won't make the difference one way or the other. But I'd rather think that if we gather an extra $100 billion of capital, I think the war to determine the future of the credit markets and the word in terms of the future of money is going to be fought and won with money. And so we're going to get the money. If we can do it in a responsible way, right? And at some point, if you have this perverse random situation where Bitcoin price is not reacting and MSTR is not reacting, but everybody -- I can't imagine that credit investors are more bullish on Bitcoin credit than equity investors or Bitcoin investments. But if you construct that cultured scenario, then maybe we would slow down the credit machine. But if equity investors are more bullish than capital investors and if capital or Bitcoin investors are more bullish than credit investors, then I think the entire system solves its own problems because we're probably not going to be able to keep up with the expansion of our BTC collateral stack.

I'll add one short thing to this, Jeff. I think the scenario you lay out is in a maturation of the digital credit market, right, 5, 10 years out when digital credit is $3 trillion or $30 trillion on a $300 trillion market. We would run into this issue of how do you manage the demand for Stretch. I think 10 months into it. I think our issue is not so much are we an interest rate or are we paying or what is the Fed due to interest rates? I think the demand is going to be driven by awareness and marketing of the product right now. So I don't think that scenario is going to be much of an issue for the short term.

Next, I'd like to invite Andrew Harte from BTIG. .

Thanks for the question. I think the optionality in the business really came through clearly today. Maybe just shifting gears a bit. Earlier in the slide, Michael, you talked about Bitcoin being digital Capital and Micro Strategy being digital equity and Stretch being digital credit. Then you also talked about kind of innovators kind of building digital money down the road, you call it like a layer 3 in that example. I guess considering stretch is going to be the foundation or the building blocks for digital money at some point as the market continues to mature, I guess, what do you think that solution looks like? Are you having conversations with innovators who are out there looking to build on top of Stretch and create these digital money solutions?

Can you hear me?

Yes, I can hear you.

You hear me fine. Okay. So I think you see it with Apex and Saturn and Hermetica and a lot of the token issuers that are creating these yield coins that are powered by Stretch. And so they are rapidly innovating. I think if you look at some of the DFI protocols that are offering 2x, 3x, 5x, 10x leverage and looping pedals of the world and the like. I think they're also innovating pretty rapidly. We don't know the final shape. I think there's 1,000 different combinations of digital money and digital yield. I think there's a different -- for example, there's a different currency in every country. I think you can create various yield coins in different currencies. I think that I think that in Australia, you can deploy it via a regulated bank or by a token that can sell in Australia or via an ETF, taken public in Australia or via private fund in Australia.

So when you take the combination of currencies and platforms and containers. The sky's the limit. But what I do notice is the people that seem to be moving the fastest and the most enthusiastically right now are the D5 players. And it's people that are launching stable coins that have to compete with tether and circle. And the issue is, how do I convince people to put AUM or put capital into my stable coin. And I need to create either a digital monetary a yield coin, 0 vol, 8% yielding. I mean that's kind of compelling or I need to create like a 25% ARR stake -- lock up your money for a month, and I'll give you 25% on 3 or 4 turns on the capital or something. And Obviously, the market's going to decide who it trusts and is going to decide what form of that it wants to buy, and it votes with its money, and you can literally watch the money flowing every hour in that system. I think you'll see some ETF players, but they'll come slower because they're a little bit more -- there's more regulatory friction there.

And we hold out hope that we'll see a neo bank offer a digital yield account. There's no reason why the a bank or any neo bank that is a mobile up couldn't just say, "Hey, what does give you 8% on your money in this yield account if you want it." Each one of these things, it's a different counterparty, a different platform, a different regulatory container. What I would say is we had none of these conversations going on 8 weeks ago or 12 weeks ago, and now I see like 3 dozen, like 3 dozen initiatives. And so I think there's Cambrian explosion and Check back in, in 12 more weeks, I think we'll have some exciting news and some exciting partners. But just watch my ex feed because I retreat some of the more interesting digital yield, digital money offerings that are literally happening. A lot of times, people are inventing stuff and I'm finding out at the same time you are, but the market is evolving in real time right now.

Next, I'd like to invite Eric Balchunas.

Yes. Thank you for having me today. Great presentation. My question is maybe a little more philosophical. I think it impacts the price in the future, but it's about the changing ownership and identity of Bitcoin. So according to River, in the past 16 months, you've had businesses buying 560,000 Bitcoin, ETFs bought another 208,000. Governments bought 160,000. So that's 1 million total bit quote by those entities. Meanwhile, individuals sold 730,000 Bitcoin. Some have called this a silent IPO, and it's arguably the reason for that 45% drawdown. This changing ownership is being reflected, I think, at the recent Bitcoin conferences where you see an increasing number of suit corners, as some have called them, which you highlighted in the slide on the government and the banks. And I've noticed it's made some of the native bit corners a little uncomfortable and conflicted regarding the original mission given it was made to bypass governments and banks.

To me, it feels like Facebook 10 years ago, when everyone's parents joined, some people left the platform, although the user base did grow from $1 billion to $3 billion since then. And I just want to get your read on this transition and the sort of mainstream vacation of Bitcoin and how important it is to keep the original base of investors, keep them along for the ride and keep the sort of Cipher punk edge of Bitcoin as it goes more mainstream and gets adopted by companies, asset managers, governments and boomers in general. Maybe it doesn't matter given the size of the institutional advisory market, for that price, maybe hitting $1 million, but maybe it does. Just curious your thoughts.

I'll make a quick point. Since we got in the space, there's been something like call it, $1.4 trillion of wealth created for people other than the sup corners. So I don't know who got the money, but there's certainly 80. I think we can trace 4% to BlackRock investors, and they must have 50 million to 100 million beneficiaries. You can trace almost 4% to our investors. We've got 100 million beneficiaries. So if you look at the corporates, they're representing thousands of institutions and tens of millions of investment accounts and hundreds of millions of beneficiaries. And the network is decentralizing. It is distributing through them and it is maturing through them and finding its way into retiree accounts and insurance beneficiaries and trust funds and 3-year-old trust fund babies.

Everybody in the world is getting exposure now. But when everybody criticizes the centralization of the network, I note that 85% of the network is held by others. It's held by the crypto OGs. And we don't know how many people that is, but it's almost certainly represents fewer beneficiaries than beneficiaries that rely upon BlackRock ETF or a common public stock. So the corporations have been spreading exposure to Bitcoin by an order of magnitude or orders of magnitude right now. I do think that -- if you ask, well, who owns the $1 trillion of Bitcoin that's not public. And the Chinese, they're Chinese, they are Russians, they're Americans, they're Europeans or South Americans or Ukrainians, they When you wonder who's selling it, well, it's $1 trillion of capital held by crypto OGs that are unbanked, maybe they're selling it because the currency in a row crash, maybe they're selling it because of some fear of some Chinese government memo. If the Chinese mind half a Bitcoin in the first like 15 years, is kind of impossible that there aren't a lot of people with Bitcoin in China, you would figure since they mined a great deal of it.

So I think, generally, the industry is maturing. It's rotating from the crypto OGs, but they're not going away, right? We spent $62 billion to get to less than 4%, it's pretty expensive to not get to the other 96%. And if you look at all the money that BlackRock and us put in this together, right, the $150 billion or $200 billion of capital that flowed from the institutions, it didn't get 90% of the network. So 90% of the network is still in global crypto OG hands. And I meet people -- I go everywhere in the world. I'll walk down the beach and there's someone that's like slapping me on the back, thanking me for making them a lot of money, right? And it's because literally, people that you will never know who they are, and they will never announce it they're sitting on $1.2 trillion of capital gains right now in the crypto ecosystem.

So I guess what I'm saying is I'm not worried that the crypto ethos is being squashed people with $1 trillion probably have a lot of power to do whatever they're going to do and they're continuing to do it. The Bitcoin network is still highly decentralized. The miners are decentralized. This is a global phenomenon. If anything, what's happening is the corporates are just powering up the network. We're the people that invest the $100 billion or $200 billion of capital to drive the price from 10,000 to 80,000 or from 10,000 to 100,000. But when we do it, 90% of the gain goes to other crypto actors and they power the entire decentralized digital economy. And -- good for them. That's good. They'll do whatever they're going to do. I think that if you want to -- I don't use the analogy, it's like Facebook when your parents came along. I used the analogy -- it's like the Internet when it used to be a girl or a dude in a dorm posted their blog on their web page and then all of a sudden, Amazon started selling hundreds of billions or trillions of dollars of products on the Internet, right? It's just we started doing business with digital assets. And ultimately, the killer app, a Bitcoin that we see is digital credit. And the way you know it's a good app is when someone wants to buy $1 billion of your product today, right? That's -- I mean everybody in the entire crypto ecosystem is always dreamed about, let's invent the killer app. And a good product is something that people will buy $1 billion a day of and there aren't that many in the history of the world and we found one.

So I think that the networks are going to grow. We're going to power it up. You're going to see an explosion of all the other crypto ideas. Whatever crypto idea didn't catch fire over the past decade. Now they've got 10x as much money and opportunity to catch fire. And some of them will and the ones that don't won't because the market doesn't want them. But the industry is -- the number is evolving in every direction simultaneously. And I would take issue with anybody that ever said it's centralizing. It's absolutely not. It's decentralizing -- the truth of the matter today is that there's a lot of people with money and power and influence in the world that are going to support this network and defend this network because of the success of all the corporations, whether it's coin base or whether it's BlackRock or whether it's strategy, right? And if you're going to lobby for things that are good for digital assets, in Washington, D.C. It's not going to be a Chinese crypto synonymous billionaire hiding off the grid that's going to do that lobbying right? So the $1 trillion of crypto OG money is not going to fix the accounting, fix the tax code, fix the banking system and build the technologies that actually commercialize these apps to 1 billion people. They're not going to give a bank account, a 1 billion people that pays them 10%, and they're not going to put the crypto OGs are not going to put Bitcoin on every iPhone, in every Android phone in the world. That's going to be corporate actors. And so the corporations are doing their part, the crypto OGs did their part. Everybody is in the system. There's tension, it's healthy tension. We welcome the healthy tension. It's what -- the global -- the fact that someone is going to sell Bitcoin because they're in Iran and some missiles got launched, right? That's a feature, not a bug. It's just -- people are trading based upon things that have nothing to do with the way Wall Street trades the S&P Index. And I think that's what makes Bitcoin special, and that's why we welcome it as global digital capital.

Next, we'll invite Ramsey El-Assal from Cantor.

Michael, you mentioned that a Bitcoin volatility were to fall as the asset price accelerates, You'd have some options and cards to play to preserve the attractiveness of the model. I'm just wondering if you can kind of elaborate a little further on what you meant there. And then completely separately, I was wondering if you could just give us a quick update on the BTC security initiative. How has that been received? And has there been any developments on the quantum risk topic worth calling out?

I'll answer the first. I'll let Phong answer the second. If you go to our credit tab on our website and you type in a vol of like 40 and you have a BTC rating at 3, stuff starts to look sort of investment grade. When the vol falls to 30, you can have a BTC rating of 1.5 and it looks investment-grade. When the vol falls below 30, your amplification can triple quadruple. And so as the vol falls, the credit risk falls. So I think that the forward volatility curve changes the view of credit investors and it's going to create more demand amongst more traditional credit investors, and it's -- it's also going to change the view of banking regulators and credit rating agencies and the like.

So -- there's a certain gift here or a certain -- one is the word like Nuance. If the vol is high, it's equity positive, today, I think on CNBC at like 350, they said the largest options trade in the entire market in the entire stock market today was an MSTR options trade. Someone traded hundreds of millions of our options today in the market. Number one, of all companies in the entire United States, that's because of the vol. So when vol is high, it feeds the equity market, and that's good and its equity positive. When the vol falls, it won't be so good for the equity, but it's very credit positive.

And the -- the conclusion you come to is, is you're going to get performance through volatility on the vol side, and you're going to get performance through more amplification and more intelligent leverage as the vol falls. And of course, the entire asset class is going to expand and people's view of it is going to improve as the vol develop -- as the vol falls. I do think, over time, over the long time for Horizon, if the assets 40 ARR, 40 vol, it's reasonable for it to eventually mature to be 20 ARR 20 vol. I mean, it's just kind of common sense that as it gets bigger and it gets more liquid, the law of large numbers and the inertia of the market and its relative size to all the other post capital dimple.

I think it will always be more volatile than the S&P and always be more useful. But I think that if you're a credit issuer and a credit investor, you just want to be sensitive to it. And certainly, right now, the single #1 issue in the entire market is what is your forward volatility curve for Bitcoin? Because if you think that Bitcoin is a 30-vol asset, everything we sell is investment grade and it should be priced double or triple what it is. If that's what you think or view of volatility will control how much of this you want if the ball starts to fall, there's just no reason why there shouldn't be a 10x bid on all this stuff. And then you might decide rather than levering at 3:1, you lever it right, or something so it will change the behavior of all the downstream players as the volume increases or is it changes?

Okay. So Phong, do you want to talk about security?

Yes, Ramsey, we started to bring together a group of folks calling at the Bitcoin security program or counsel. And the objective is to bring together institutions that represent custodians, exchanges, large Bitcoin treasury companies who have a vested interest in the success of Bitcoin and share combined point of view on what is the potential risk and time horizon of quantum, what activities are underway in the development community? How do we get to consensus. And so likely in the next month or so, we'll share who's in that group. And what is our combined point view. Right now, I'd say there is a lot of divergent point of views, and I thought it would be useful to those who are interested in the success of Bitcoin bring them together. And so you'll hear from the Bitcoin security program likely in the next month or so.

Next, Jeff Walton.

And very appreciative of your leadership, and I've got a bit of a 2-parter here. So you spent a lot of the presentation talking about risk of the credit instruments. You've created a really unique arbitrage surface between all of the different instruments and a really unique incentive structure. It's resulted in people buying and selling the instruments right below par on SDRC and some of the other instruments. So first question is -- do you find that the market agrees with you? This is kind of in line with the answer to the last question on forward-looking volatility there. Do you find that the market agrees with you and the instruments are trading in tandem with each other what's the biggest hurdle in communicating that relative risk profile? And then part 2 is what is the biggest hurdle in accelerating the adoption of the digital credit instruments into the future?

Well, I think all the credit instruments are undervalued. So no, the market doesn't agree with us. If the market agreed with us, then STRF would be trading $200 a share right now, not where it is. So I think all of the -- I think the equity is trading weak. I think it's undervalued. I think all the credit instruments are undervalued. I think all the bond instruments are way undervalued. So I would say the market is much more skeptical and biased pessimistically than we are -- and that's why, for example, we're not selling STRF, SDRD, SDRK,STRE. And we don't really have much interest in selling MSTR. We think all of those assets are undervalued. The STRC is special because as we pointed out, it's a variable monthly preferred. And so the cast cost of that capital is, is hard to determine over 20 years, but you're not locking in a missense trade. And so I have a lot more enthusiasm to sell 1 billion of STRC at 11.5%, and I have enthusiasm to sell $1 billion of STRF at 10%, right? So -- No, I think we're embryonic. I would say, how do we fix it? It's a lending effect. There's a lot of education. We have to go and educate the market. So you could say part of it is we have to tell the story, and you could say part of it is people are just going to have to wait, right? Like after we've been in the market for 3 years, they'll say, well, it's worked for 3 years. And so I guess it's better than we thought it was. So I think we'll be continually rerated up. I mean the risk will be rated down and the opportunity will be rated up as time goes by -- and we won't be sitting on our hands, right?

We'll be out there communicating the message, displaying it. Well partly, we'll do it through publishing. Partly, we'll do it through investor outreach. Partly, we'll do it through partners. I think as our partners create compelling digital money products or the like, I think that's helpful. And I think if you just asked the question, how long will it take -- how long did it take before the market thought that Amazon had a good business, right? It took 10 years after they started doing what they were doing. And so you could be a pessimist and say, it took 10 years for that and how long did it take before Netflix was deemed to be good? The truth is Apple was mispriced and misunderstood for many, many years. So I think if you have a revolutionary business, I think that the market will be bias skeptical because that's just what it is. It's going to be skeptical. The market was skeptical of Google. Google -- the market was skeptical of NVIDIA, skeptical of ample, skeptical of whatever. It will be skeptical of digital credit and digital treasuries for a while.

And then there'll be some point when it isn't, and just like Warren Buffett comes in and buy some apple and the stock price doubles and the multiples expand from 10 to PDs of 10 to PDs of 20 or 25 or 30. It will happen at some point when we least expect it to happen, but we have to do all the hard work of performing, laying down the track record and educating the market and managing the risk of the business and the like. And so that's what we're doing. I think if you want the optimistic observation, well, the fact that the market is willing to buy more of that SDRC is the most successful preferred stock in the world in the century, I think that's an indicia that maybe some people get it, right? So there are a lot of indicators that it's working and it's spreading fast and virally, but we still have a lot of work to do.

Thank you, Jeff. Next, I'd like to invite Randy Binner from Texas Capital.

Michael, I think this one is for you. And hopefully, you can hear me okay. The question I have is we talked about a lot of the Clarity Act a lot, and it's -- I think it's important for the broader crypto ecosystem or this bipartisan compromises good news. But for MSTR for Micro Strategy, for your world, what would be the most important regulatory or policy change or impact? I think I think we've talked about bank and insurance companies being lobby recognize crypto as a statutory asset. Is it something like that? And the follow-up question, in case you covered this along the way is did -- at this point, with so many arrows pointing in the right direction for crypto regulation and guardrails, do the midterms matter that much? And for that matter, does the next presidential election matter much from kind of a policy and regulation perspective?

Bitcoin is in a safe harbor, there's global consensus is digital capital. MSTR is sitting in a safe harbor. It's a publicly traded well-known seasoned issuer came public in 1998, governed by securities laws that date back 100 years. STRC is in a safe harbor. It's a publicly traded preferred stock based on a 100-year old tax law, 100-year-old securities law trading on the NASDAQ exchange, which has been around for who knows how long, longer than many of us have been alive. So everything that we're doing is sitting in a zone of regulatory clarity. I don't think we need any change in a law or a rule in order to 10x or 100x. We can probably be 100x bigger from here without any change in any law or any rule, we're not asking or looking for anything. I think that clarity is pretty important to the dynamic and the balance of power with regard to token issuers, DFI exchanges, stable coin issuers, crypto exchanges. And it determines the balance of power between the crypto industry, the neo banks and the regional banks and the systemic, the big banks. And so there's a lot of dynamics there. There are almost 2 nuance to get into right now. The significance to us is just ignorant skeptics will gloat if it slows down and they will all flip to uninformed share leaders or acknowledges if it passes, but there's not anything that we need. It's just going to change sentiment. It's going to be a positive bullish sentiment as it goes through. Long term, if I look at my laundry list of things that are good for Bitcoin and good for us, it's a second order, not a first order, but the second owners is the Basel rules to the extent that they're upgraded to recognize Bitcoin as legitimate collateral and not haircut it, it would be positive for banking adoption and especially credit adoption because right now, there's still a bit of haircutting of it by the credit rating agencies and the very conservative regulated entities that they want a gatekeeper or they want a regulator to tell them it's okay.

And so -- so I think that at some point, -- if you want an insurance company portfolio manager to buy the product without knowing what it is or why they bought it, then it would be beneficial for the Basel rules to evolve and get an embrace of Bitcoin as a legitimate asset. Right now, we're selling to informed investors that want to buy the best thing. And if you look at that market, if we just -- if we slurped up 10% of private credit, that's $370 billion right there. And so we've got plenty of runway for the next decade, but my wish -- if I had one wish is for Basel rules to be fixed and then for the world to recognize Bitcoins legitimate collateral parapsuto gold or to other capital assets on banking balance sheets and regulated entities, then it should spread faster through the banks as a reserve asset and through insurance companies and the like. But it's not necessary to us. We could be a multitrillion dollar company and sell $400 billion of STRC and not have that fixed.

One thing I'll add, Randy, is stretch is already a rapidly accelerating product in the category of digital credit. And that is without clarity as it relates to tokenization of securities, which I think will either be created through the passage of clarity or rulemaking by the SEC. That will only accelerate things. So we showed $270 million of layer 2 tokenized stretch from companies like APIC and StockX by Kraken. Those are sold outside the U.S., not in the U.S., right? And so when we get clarity, that will only accelerate things and will accelerate Layer 2 development on top of stretch and just accelerate digital credit overall. So it's exciting to see what may come on something that's already an exploding asset class.

I was just saving the best for last, James Lavesh.

Thank you, C.J. Congratulations on your new role. Phong, Michael, Andrew, thank you for having me in allowing us to ask questions. So -- but first, congratulations also on your success with Stretch. I'm a believer in the digital credit world. And I appreciate you all sharing the many levers that you can now use to create value for the common shareholders while protecting creditors. But on that, with Strategy's energy and focus on Stretch, which you've said before is the security you landed on through iteration. What do you see as the optimal future balance sheet structure for maximizing the accretion of value for common shareholders? And would that include retiring most or all of the debt and preferreds currently outstanding? And do you believe that, that's ultimately necessary to attract more of the largest institutions to invest in Stretch in lieu of traditional yield-generating securities?

Yes. We think we want to be debt-free completely. So all 6 of the converts, we make go away by either swapping them for a Stretch or swapping them for equity or paying them off with cash. So I think there's consensus on that. I think there's consensus that Stretch is the killer strong credit instrument. I think the jury is still out on the other 4 credit instruments. They're all long duration, credit instruments, and they represent important optionality for the company. And they -- and so I think that our policy will be to retire the 6 convertible bonds to promote and to polish the jewel in the crown, which is SDRC and then to watch and nurture the other 4 and improve them as we can and then observe whether or not they're material in generating demand. I think right now, you can imagine the company -- if I was designing a Bitcoin treasury company from a clean sheet of paper, the company would consist of one common equity one monthly or semi-monthly variable preferred equity and a big stack a bit coin and nothing else, right? And that's my advice. I give freely do bit of or ask me.

The other things that are interesting, maybe but not necessary, we'll watch them. It's very difficult to create a publicly traded instrument like Stripe or Stride or strike. So we won't retire it because it represents giving up billions of dollars of optionality. But on the other hand, what really is critical for us is manage the common stock carefully to get the mNAV up and the premium up manage the Bitcoin stack and then manage the monthly variable rate preferred, the digital credit instrument. Those are the things that really matter.

Thank you, everyone. That brings us to the end of the Q&A session. I'd like to thank everyone for their questions and all the attendees for joining and listening to the earnings call. I'll hand it back to Phong for any closing remarks.

Yes. I want to first thank everybody for attending our earnings call. I know there's tens of thousands of you out there spending 2 hours and 15 minutes of your evening with us. And we find that to be very gracious and flattering. Many of you are shareholders of our common MSTR and our perpetual preferred stretch. And as many of you know, we have a shareholder vote coming up that's due early June to primarily modify Stretch to go from, as Andrew mentioned, a monthly dividend to a semi-monthly, twice-a-month dividend. We believe this is beneficial to our shareholders. As we mentioned, one of our principles is to make stretch better and more attractive. So we would appreciate you all voting early so that we can start to tabulate the votes. And this is how you can do it. If you have additional questions on how to vote for Stretch and for the common, you can also go to our website. And with that, I really appreciate your time. Thank you for all the interest and the attention, and we'll talk to you again, if not before, then at our next earnings call 3 months away. Thank you all.

Hello, everyone, and good evening. I'm Shirish Jajodia, Corporate Treasurer and Head of Investor Relations at Strategy. I will be your moderator for Strategy's 2025 Fourth Quarter Earnings Webinar. We will start the call with a 60-minute presentation starting with Andrew Kang, followed by Phong Le; and then Michael Saylor. This will be followed by a 30-minute interactive Q&A session with 4 Wall Street equity analysts and 4 Bitcoin analysts.

Before we proceed, I will read the safe harbor statement. Some of the information we provide in this presentation regarding our future expectations, plans and prospects may constitute forward-looking statements. Actual results may differ materially from these forward-looking statements due to various important factors, including fluctuations in the price of Bitcoin. And the risk factors discussed in our current report on Form 8-K filed with the SEC on October 6, 2025, and under the caption Risk Factors in Strategy's quarterly report on Form 10-Q filed with the SEC on November 3, 2025. And the risks described in other filings that Strategy may make with the SEC from time to time. We assume no obligations to update these forward-looking statements, which speak only as of today.

With that, I would like to turn the call over to Andrew Kang, the CFO of Strategy.

Thank you, Shirish, and thank you, everyone, for joining our call today. I'll start by touching on a few of our highlights for Q4 as well as for the full year 2025. We closed the year with 713,502 Bitcoin on our balance sheet, which represented approximately 3.4% of all Bitcoin that will ever exist. This reflects continued discipline around Bitcoin accumulation through the fourth quarter and further reinforces our position as the largest corporate holder of Bitcoin in the world.

Also during 2025, we successfully raised over $25 billion of total capital, funding growth across our treasury strategy and expanding our product ecosystem. We now have 5 listed preferred equity securities, which has broadened investor access across yield, duration and risk profiles. Our execution throughout the year puts us in a position to enter 2026 with a stronger balance sheet, more access to liquidity and upside when hopefully Bitcoin price rallies soon. Next slide.

2025 overall was a very important year with several strategic corporate events that I think strengthened our foundation as the world's leading Bitcoin treasury company. We adopted fair value accounting at the beginning of the year, which provided greater investor and market transparency of our Bitcoin holdings, which are now, as you know, marked to market each quarter.

Second, Treasury and IRS guidance confirmed that unrealized Bitcoin gains would not be subject to additional corporate alternative minimum tax. We also received the first ever credit rating for a Bitcoin Treasury Company, which marked an important step, I think, in institutional recognition and setting the foundation for future progress.

And lastly, in Q4, we established a $2.25 billion cash reserve, which provides over 2.5 years of dividend coverage. This is an important enhancement to our overall risk management framework and supports our ability to meet our interest and dividend obligations through market cycles like the 1 we are seeing today. And lastly, MSCI confirmed that digital asset treasury companies will remain eligible for inclusion in its global market indices, which we believe was the appropriate outcome, and I'll touch a little bit more about that later on in my presentation.

Next slide. Next slide. Thank you. Turning to our Q4 financial results. We reported an operating loss of $17.4 billion and a net loss of $12.6 billion. These results were obviously driven by the quarter end decline in Bitcoin's fair value under our mark-to-market accounting.

Next slide. For the full year, we reported an operating loss of $5.4 billion and a net loss of $4.2 billion. We updated our target range for the full year 2025, precisely because our results are highly dependent on Bitcoin price and can move meaningfully based on market conditions. It's important to call out that our full year results were within our target guidance based on where Bitcoin price ended the year. And while accounting outcomes may fluctuate quarter-to-quarter, our long-term focus remains unchanged. We are committed to increasing Bitcoin per share and building durable shareholder value over the long term.

Next slide. Turning to our Bitcoin KPI performance for the full year. At the start of the year, we established clear KPI targets tied to Bitcoin per share growth while recognizing a wide range of possible Bitcoin price outcomes. Under those conditions, we delivered a BTC yield of 22.8% for the year, beating the lower end of our target range, which was set at 22% to 26%. That translated into a total BTC Gain of 101,873 Bitcoin and a BTC $ Gain of $8.9 billion, also beating the lower end of our target range.

I think the key takeaway is that even with significant volatility in Bitcoin price, our strategy remained disciplined and we executed against our KPIs of increasing Bitcoin per share and compounding shareholder value for the long term.

Next slide. Since adopting Bitcoin as our treasury asset in 2020, we've consistently added Bitcoin per share each year. 2025 was yet another strong year in this regard, and building on the momentum of prior years and demonstrating our ability to add more Bitcoin per share in both good markets and in challenging ones as well, our focus remains unchanged. As I mentioned before, our goal is to systematically increase Bitcoin per share over time regardless of near-term market cycles and continue to deliver durable BTC value for our long-term investors.

Next slide. One more. Thank you. Now turning to the balance sheet, I'll start at the top here. Our digital assets increased from $23.9 billion at the end of 2024 to $58.9 billion at the end of 2025. This was due to a $17.9 billion increase in fair value at the beginning of the year balance, as well as the fair value of the Bitcoin we added in 2025. As a result, we ended the year with also $2.3 billion in cash and cash equivalents, of which, as I mentioned earlier, $2.25 billion of that represents our USD cash reserve.

As of the end of 2025, we now carry also a $1.9 billion deferred tax liability which just reflects the accounting difference between the market value and the cost basis of our Bitcoin. I'll remind everyone, this is a balance sheet item. It is not a cash tax obligation and it does change quarter-to-quarter with the price of Bitcoin.

Moving on. Can you go back, please? In terms of long-term debt, we ended the year at $8.2 billion, which takes into account a new convertible bond as well as an equitization of a prior convert, which we executed both in early 2025, as we said before, we do not plan to issue any new convertible debt in the future, and we'll focus on assessing strategic liability management opportunities to the extent market conditions make sense. And over time, we intend to reduce our leverage to further enhance our credit profile.

We also added $6.9 billion of preferred equity, diversifying our capital raising channels. As a result, total equity, including both preferred and common rose to $51.1 billion at the end of the year, up from $22.8 billion a year ago. We added $6.9 billion of preferreds through 5 distinct IPOs as well as subsequent ATM activity, and our common equity increased to $44.2 billion through our ATM.

We deployed all of that capital in an accretive manner to acquire more Bitcoin. As I mentioned before, we delivered 22.8% BTC yield, and we established the cash reserve. I'd say the year-over-year growth of our capital base strengthens our balance sheet and provides more -- a more durable base to continue raising capital efficiently and acquiring more Bitcoin over the long term.

All right. Thanks, Shirish, next slide. At the end of Q3 -- sorry, at the end of Q4 -- sorry, at the end of Q3, the market value of our Bitcoin position was approximately $73.2 billion, that was based on a Bitcoin price of about $114,000. During Q4, Bitcoin, as we all know, experienced a price decline, which drove the total unrealized fair value loss of $17.4 billion. Look, quarter-to-quarter moves like this can be sharp. It can also be unsettling, but it's important to emphasize that our strategy is built for the long term. It's built to withstand short-term price volatility, even short-term extreme conditions like we're seeing today. And importantly, even in a volatile environment, we continue to execute, and we purchased an additional 32,470 Bitcoin in Q4 for approximately $3.1 billion.

Next slide. For the full year 2025, the market value of our Bitcoin holdings increased by approximately $17 billion from $41.8 billion at the end of 2024 to $58.9 billion at the end of 2025. And during the year, we added approximately 225,000 Bitcoin. We also recognized an unrealized fair value loss of about $5.4 billion across the year, but we significantly expanded our Bitcoin position, right? We increased our total holdings from 447,000 to 672,500 Bitcoin for the year.

Next slide. Our total interest and dividend obligations are now $888 million, which is made up of about $35 million in interest on our converts. That represents an average cost of about 42 basis points. It's also made up of $713 million in dividend obligations from our cumulative preferreds, an additional $140 million related to our noncumulative preferreds. You can see here at the bottom, our cash reserve of $2.25 billion, which was established in Q4 now, provides over 2.5 years of interest and dividend coverage, and it's an important and direct benefit to our debt and credit investors.

Next slide. And lastly, in October, MSCI opened a public comment period around the proposal that could have excluded companies whose digital asset holdings represented more than 50% of total assets. We felt it was important for us to be a voice on this matter, and we submitted formal written feedback to MSCI. We noted that this threshold would, in our opinion, be discriminatory towards digital assets. It's arbitrary. And in many ways, I think the proposal was unworkable, and that it rested on a mischaracterization of strategy. As a result, MSCI determined not to implement their initial proposal. And as a result, we have not been excluded from MSCI's indices.

I'd note Strategy is an operating company. We have 30-plus years of history in software and tech. We have 1,500 employees. Last year in 2025, we generated $477 million in annual revenue. And while our Bitcoin holdings has grown significantly from a balance sheet perspective, we are an operating company with a treasury balance sheet built upon a commodity.

And lastly, look, on a final note, I just want to say thank you. We appreciate the strong support we received from both active and passive retail and institutional investors, regulators and policymakers, all in support of our efforts on index inclusion. We thank you for that. I think there's still some more work to be done, and we look forward to working with the industry in the coming year on that as well.

So with that, I will turn over to Phong, our CEO. Thank you.

Thanks, Andrew. First, just want to acknowledge. I understand the market conditions for today's call is challenging. And the fact that we have thousands of people watching this as a testament to your intellect, your curiosity and for many of you, your conviction. So thanks, everyone, for joining us today.

I also want to share, look, some of you bought Bitcoin or MSTR in the last year. This is your first downturn. My advice is to hold on. Remember the fundamentals that cause you to buy Bitcoin. It's because Bitcoin is the digital transformation of capital or maybe it's because it's the hardest and most ethical form of money or because you believe in a non-sovereign sensor resistant store value.

None of these fundamentals have changed. They didn't change in the last year. They haven't changed in the last 18 years. For the MicroStrategy shareholders and the Strategy shareholders now remember the fundamentals of why you bought into MSTR common, because we are levered and amplified Bitcoin were built to outperform Bitcoin over the long run. It could be because you see us as digital innovators. We invented the enterprise business intelligence software space in the 1990s, and we invented digital treasury companies in 2020. Or it's because you believe in the management team that's here today. None of that has changed in the last year.

And for those of you who have been with us on this journey since 2020, you've seen other periods of Bitcoin and MSTR downturns, and you held on and you were rewarded for your conviction. So thank you. And perhaps I ask that you share your wisdom and your confidence with those who are newer to the community. X is a great place to do this, in person is a great place to do this, and great opportunity to get together in person.

Next slide, please. It is Bitcoin for corporations. We will have our sixth annual Bitcoin for Corporations in Las Vegas in 3 weeks, February 23 through 26. I'd love to see you there. It's a great place to get together and learn about Bitcoin, Bitcoin Treasury companies, digital credit, digital capital, and digital money. It's also a great place to see our software business in action. And as Andrew mentioned, our software business constitutes 1,500 employees and over 3,000 customers, and they'll be there showcasing the transformation of intelligence and the intersection of AI and BI.

And I would like to note, we had a great year last year in our software business. We saw a big cloud transition as our revenue went from decline to increase of 3%, and our cloud revenue went up 65% year-over-year. So I invite you all to join us in Las Vegas, February 23 through 26.

Next slide. Take a step back, this is our business. We have been buying and holding Bitcoin since the third quarter of 2020, every single quarter. We now have 713,502 Bitcoin with a total acquisition cost of $54 billion and a $76,000 average Bitcoin purchase price, recognizing now that Bitcoin is below the average Bitcoin price, you might ask the question, what does that mean? It really doesn't mean anything, right? It doesn't mean that we have any issues servicing our debt or paying the dividends on our preferreds.

We don't have any covenants or triggers that say when Bitcoin price goes below our average Bitcoin purchase price, that anything has to occur other than we continue with our strategy.

Next slide. 2025, as Andrew mentioned, was a pretty big year for us in the capital markets. As you see here, in 2024, we raised $22.6 billion, and we actually outstripped that number in 2025. The big change last year was we moved from convertible debt $6.2 billion '24 and $2 billion in '25 to $7 billion of preferred. We invented digital credit, and we invented the preferred market, which now other Bitcoin Treasury Companies are moving into issuing perpetual preferreds. We're pretty excited about this. You'll see here, we had 5 IPOs.

The other thing I'll note here is that year-to-date 2026 in the face of a tougher Bitcoin market, we were able to, in 1 month, raised an additional $3.9 billion of capital. And for the most part, buy Bitcoin with that.

Next slide. So what are those big numbers mean? How do you think about that? In 2024, we were the largest U.S. issuer of equity in the entire country. Last year, 2025, we were once again the largest issuer of equity where 8% of the entire equity capital markets, 6% to the common equity market and 33% of the preferred equity market. We are getting people to invest in our company through equity raises and preferred raises, and turn that into Bitcoin, Bitcoin per share and Bitcoin yield to our shareholders.

And we're doing it with the intersection of traditional finance with some of the largest banking partners in the world. Morgan Stanley, Barclays, Moelis, TD, Benchmark Clear Street, have all been participants in these markets. And they give us distribution out to wealth management and to retail and to institutions. So we've been very successful in the last year with continuing our strategy. Next slide.

You'll see here in addition to getting folks to participate in our equity raises in our equity capital markets. We continue to add more and more research analysts. Here you can see price targets, and you can see they all have buy ratings on strategy.

Next slide. So let me talk about digital credit and what are we doing in digital credit and why digital credit is important. Next slide. First, I mentioned 2025 marked the launch of digital credit, and we launched 5 different instruments. We started with Strike, which is convertible digital credit. And it was really a gateway from convertible debt, which we no longer are issuing to a convertible preferred note. We then launched Strife, which was our most senior of our instruments, our first fixed perpetual digital credit instrument. And after that, we launched our most junior 1 Stride. And as you can see, the size gets bigger and bigger with each one.

And then we launched the most important, which was Stretch, which is $2.5 billion in our first digital credit instrument. And then in November, we went to the euro market and launched Stream, which is USD 717 million. And the importance of this is accessing a European market and those who want euro exposure. Our plan with Stream is to, over time, uplift it into a regulated retail accessible market, and we're excited to do that over the course of this year.

Next slide. Here's the overview of digital credit. I think the most notable here is to look at as an example of the liquidity that we're experiencing in Stretch, $118 million traded a day over the last 30 days, as a comparison, typical U.S.-based preferreds trade $1 million a day. So these are very liquid and very interesting instruments, the dividend at 11.25% and on a tax equivalent basis 18%. And you also see the volatility here at 7%. So it's an instrument where we've been able to start to target a very finite price close to $100 and drive that volatility down to 7%.

Let's go to the next slide. So what is 2025, the third quarter and the rest of 2026 has been about. It's really been about seasoning our digital credit. And by seasoning, I mean, maturing in the market and making the instrument more creditworthy. So after we launched Stretch on July '25, there are a couple of actions we took that made the credit, more creditworthy and a better investment. First, and Andrew mentioned it, the CAMT guidance was a big deal. This is a big change by Treasury and IRS acknowledging the importance of the digital asset ecosystem and that there should be no unrealized capital gains, taxes on Bitcoin period.

The second thing is we've got an S&P rating at B- issuer credit rating, which is a starting point for us to be able to access different types of investors in the credit market. November 4, we got to what -- really was our target was to get Stretch to trade at power $100 for the first time. $100 is important because it decreases the volatility of the instrument. It shows that we're able to do something that no other preferred instrument has done in its past, which is to target a specific price, and it allows us to raise more via our ATM. And then we added our U.S. dollar reserve.

At the same time, since we launched Stretch, we have added 105,732 Bitcoin to our balance sheet. That's about 16% more. These are all actions we took to make our digital credit stronger over time.

Next slide. So what is Stretch, right? Why are we so enamored and excited about Stretch? Why did I say 2026 as the coming out party for Stretch. Stretch is one of the most attractive instruments and securities in the market today. It pays an 11% effective yield, 18% on a tax equivalent basis. We paid monthly dividends on time, on schedule. And we have said that we expect the return of capital treatment for the next 10 years. We'll run our business to be able to give everybody tax deferred earnings for the next 10 years.

We're targeting $100 price. The volatility is 7%. It has actually decreased recently to 6%, and we have mechanisms above and below that price to keep the price stable. It's quite a bit of feat of financial engineering, and it's extremely over-collateralized after you take out all instruments that are senior to Stretch, we still have 5.6x collateral overstretch. And so it's an over-collateralized instrument.

And then after that, we've added $2.25 billion of U.S. dollar reserves. So we have 2 to 3 years of dividend coverage. And I mentioned the liquidity of Stretch is trading extremely well. As NASDAQ listed, it has a 4-letter ticker, is easily accessible to folks. It's now accessible on Robinhood and Square Cash App and pretty much anywhere else that you can buy security.

Next slide. So let's talk about our balance sheet. I've seen a lot of questions. We get them from investors. We get them from shareholders. We get them from people on X what's going on with strategies balance sheet? Are you worried that when Bitcoin price drops, that you are going to have issues with your convertible bonds. Are you going to have issues paying your dividends? You're going to have to sell Bitcoin.

The short answer is I'm not worried, we're not worried and no, we're not having issues. What's the reason? One, we have a BTC reserve at $60 billion. This was as of last Friday, now it's $45 billion. And our equity or enterprise value still trades above our Bitcoin reserve. Our convertible debt, that's the notes that come due or preferred equity hasn't come due is at about 10% leverage with the latest Bitcoin price as of today. We still have about 13% leverage. So the $8.2 billion that come due is 13% leverage.

How do you think about 13% leverage. Those who do not spend a lot of time in the debt world, you might say, well, 13% sounds like a lot. Let me show you how we compare 13% to the S&P 500 universe. Next slide.

First thing is when you take your leverage, you take out the cash that we have. So our net debt is $6 billion. As I mentioned, our net leverage is 10% and 13% with the most recent Bitcoin price. If you look on the bottom left-hand side, this is how we compare to the S&P 500 universe, right? We have 10%, currently 13% leverage. If you're a AAA-rated, right, investment-grade company, your bonds are trading as AAA rated, you have 23% leverage. If your BBB rated high yield, you have 32% leverage. We have half the leverage of investment-grade company, 1/3 of the leverage of a high-yield company.

How about looking at it by sector, Strategy at 13%, it looks like a tech company, which is low capital, low assets, high income, right? They're levered at about 15.7%. You compare us to asset heavy, high debt companies and industries, utilities or real estate, they're levered at 42% to 48%. We are not a highly levered company. Next slide.

What about our convertible debt, right? Not very highly levered, so that's good, but what happens when our convertible debt comes due over the next 5 or 6 years, are we worried that we're not going to be able to pay back our convertibles. No, not really. You'll see here the net debt of $6 billion compared to a Bitcoin reserve of $59 billion, now $45 billion. In the extreme downside if we were to have a 90% decline in Bitcoin price, and the price was $8,000, right, which I still think is pretty hard to imagine. That is the point at which our Bitcoin reserve equals our net debt, and we will not be able to then pay off of our convertibles using our Bitcoin reserve, and we either look at restructuring, issuing additional equity, issuing additional debt.

And let me remind you, this is over the course of the next 5 years, right? So I'm not really worried at this point in time, even with Bitcoin drops that we're not going to be able to service our convertible debt. All that said, it's staggered over time. We have put dates between 2027, 2032 and our plan is to equitize that over time. And if we're not able to equitize it, we'll find different ways to restructure the debt. Next slide.

Of course, we have this Bitcoin reserve. And what does it really do for us? It creates long-term durability. That's why we've been building it up. That's why we've added about 16% over the last 9 months to our Bitcoin reserve. It gives us long-term durability to issue more credit ultimately. And as we issue more credit, the dividends will rise. Our dividends, as Andrew explained, $888 million, we have 67 years of dividend coverage with our Bitcoin reserve.

If Bitcoin goes up 1.5% a year, that's our breakeven ARR, we could just sell the incremental Bitcoin that we get, not that that's what we'll do. to pay our dividends. So we don't need a large increase in Bitcoin price to be able to service our dividends, primarily through Stretch. Next slide.

Our U.S. dollar reserve, which I'm very happy we put in place in Q4 and solidified in Q1, it's $2.25 billion. That's 30 months of dividend coverage, 2.5 years of dividend coverage. So if we were not able to raise capital, which we've shown that we've been able to do through equity issuances, we could sit here and do nothing and pay off our dividends over the -- or satisfy our dividends over 30 months using this reserve. Next slide.

And as I mentioned, since we took -- since we received a B- stable outlook credit rating from S&P, we've taken a lot of positive actions to improve this, right? Will the S&P increase from B-. I think if they were to make an evaluation today, they likely would, but they use to make valuations every year or so. They don't want to move fast in terms of what the credit rating is. But we've added a U.S. dollar reserve $2.25 billion.

I'll remind you that the first $1.44 billion we raised in 8 days. The second is we've been able to maintain a robust access to capital to raise $9.5 billion in 3 months, and 72,300 Bitcoin. So we've shown that we're highly liquid and able to access capital. And we paid dividends every single month, every single quarter since our credit rating. Next slide.

So what are we going to do to make Stretch even better. In addition to improving the credit quality, we've been working with brokerages like Robinhood and Cash App to get Stretch and preferreds listed there. Robinhood, in fact, launched the first ever preferreds on their platform because of the demand and the liquidity that they saw in a Stretch. We've been working with wirehouses, wealth management and broker-dealers, RIAs to help explain a Stretch. We've integrated stretch now into crypto. So just like you saw MSTR turn into MSTI, MSPU et cetera, we're seeing Buck in other coins like Saturn, [ APIC ], APYX and TradFi platform starting to launch products on top of Stretch. And we expect, over time, Stretch will be tokenized. We'll integrate with ETFs also, right.

We started, we've been involved in industry conference, leveraged finance conferences, teaching sessions, and so we're telling everybody about Stretch. And we engaged in digital marketing, you might have seen ads on X or YouTube or Wall Street Journal. And of course, we have strategy.com Strategy app interviews and podcasts. We want everyone to be aware of digital credit because we think it's an amazing product for an end investor, and we think it helps build the Strategy flywheel on the Bitcoin flywheel over time. Next slide.

I do want to update a slight change to our Stretch guidance. In the past, we've said that we're going to base our actions on stretch on a 5 VWAP at the end of the month. What we found is that stress trades very interestingly around dates like our record day and our payment date. Our record date falls before the 5 days at the end of the month, and that's where we've seen people try to buy Stretch through the ginning before the record date. So we thought the better view of stretch price is to look over the course of the entire month.

So the VWAP range by which we'll look at the price of Stretch and make determinations on what to do with our rate will be based on the entire month. So as an example, for January, if we were to have made that change in January, it would have been January 1 to January 31, for February, it'll be February 1 through February 28. Next slide.

So we talked about digital credit and the importance of digital credit is what it does for a digital equity. Digital credit amplifies our common equity. And I just looked at these numbers were as of last Friday. As of today, MSTR is up 48% since we started this strategy, Bitcoin is up 36% since we started this strategy, and we've outperformed the MAG-7, Gold, S&P 500. We're amplified Bitcoin designed to outperform Bitcoin, and our belief is that coin will outperform every other asset class in the world over time. Next slide.

How do we create amplified decline? How do we outperform Bitcoin? We produced Bitcoin per share. We increased Bitcoin per share, which is the change of Bitcoin per share is Bitcoin yield. And you look here over the course of the last 6 years, we've increased Bitcoin per share every single year. That's why we outperformed Bitcoin. If you buy 1 Bitcoin at the beginning of the year, you'll have on Bitcoin at the end of the year.

If you buy 1 -- Bitcoin 1 share of Strategy at the beginning of the year, 2025, you would have had 23% more Bitcoin at the end of the year 2025. We increased Bitcoin per share, and we call that increased Bitcoin yield. Next slide.

So how do we think about this over the course of the next 7 years? I showed you what we've done in the last 6 years. The way we're going to increase Bitcoin per share over the course of the next 6, 7 years is we are going to sell digital credit. And what does digital credit do by selling digital credit. We generate amplification by generating amplification. We increased Bitcoin per share by increasing Bitcoin per share, MSTR common outperformance Bitcoin. It's a very simple formula.

And what are the inputs how much digital credit can we sell, which is how much Stretch can we sell. Here is an assumption that on a base of $60 billion at Bitcoin, if we can sell 10% of digital credit, which is $6 billion, this is what this might look like over time. And you say $6 billion that a lot? Or is that a little? Well, last year, we sold $7 billion of digital credit. And when we raised over $25 billion in the equity capital markets.

So we think this is a fairly conservative assumption of $6 billion. This assumes a 10% dividend rate, which is where we are right now. and that we're issuing equity to pay for the dividend, our digital credit at 1.34x right? And so I'll call this a low scenario. If we have this low scenario over the course of 7 years will increase Bitcoin per share 1.4x. That's a 5% annual coin yield. Next slide.

What if we can do a little bit better. What if we can assume 16% of digital credit sales, so not $6 billion, but $10 billion. What if the Fed lowers interest rates or we're able to lower interest rates on our digital credit down to 9%. And what if the view of this causes investors to believe will increase Bitcoin per share and our mNAV goes up and we have amplified Bitcoin and MSTR. And we're able to get to 1.75x. This scenario with the assumption of 30% Bitcoin ARR gets us to a 2x increase in Bitcoin per share over 7 years, which is a 10% annual BTC yield. Next slide.

What is a more aggressive scenario look like? Maybe we can assume 20% digital credit sales, we were able to drive the dividend rate down to 8%, and our mNAV goes up to 2.25x, then we can increase Bitcoin per share 2.5x over 7 years and a 14% annual Bitcoin yield. That's another scenario. And I'll go to the final slide of my section.

Ultimately, this is the strategy of the company. We're going to issue digital credit through stretch. We're going to amplify the common equity because of it. It increases our Bitcoin per share, and we outperformed Bitcoin. What are the levers that we can play with, how much digital credit can we sell, how attractive can we make Stretch, how well do we market it, how well do we either distribute it? With higher demand, we can lower the cost of credit, and we'll increase the mNAV. That's the thesis for the company, and that's what we're excited to do and that's what we're going to focus on in 2026.

So with that, I will pass it over to Michael.

Thank you, Phong. I'm delighted to have you join us today. Why don't we go to the next slide? All of our strategy is based upon looking at the fundamentals and taking a 10-year view. And so when you consider the fundamentals of digital capital, you have to start with the most important regulator in the entire world. And that is the President of the United States. We have a Bitcoin President, and he's intent upon making America the Bitcoin superpower, the crypto capital in the world and the leader in digital assets.

I don't think you can underestimate the importance of having support for the industry and digital capital at the very top of the political structure. Now equally important, if we look at the cabinet that's been put in place on the next slide, you see the entire government is now embrace Bitcoin. When I say embrace Bitcoin, what I mean is 18 months ago, there was 1 person in the government that had an awareness of it and was skeptical to neutral or grudgingly accepting of it. And everyone else in government was either negatively inclined or they were ignorant of it.

And now there are 12 individuals I'd want to highlight here. J.D. Vance, the Vice President; Scott Bessent, the Treasury Secretary; Paul Atkins, the Head of the SEC; number four, Kevin Warsh, who is just -- who is the Fed Chair Nominee, who is -- who understands digital assets, understands the use case of Bitcoin. This is a tremendous move forward for us, a big fundamental shift that now you can look at the Head of the SEC, the Head of the Treasury and the Head of the Fed is all appreciating the pivotal role of digital assets and the growth of the country.

And the economy, and if you go to the second line, right, you see the Head of Intelligence, the Head of the Small Business Administration, Head of Federal Housing, the Head of Health and Human Services. All Bitcoin believers. And then Michael Selig, the CFTC Chairman; David Sacks, who's doing a wonderful job; Howard Lutnick, Commerce Secretary and even Kash Patel. So if you consider that, we went from 1 neutral to a Bitcoin President and 12 positive, constructive. This is great fundamentals for us, and I don't think we can lose sight of this, because everything that follows in the marketplace is very much influenced by the political structure of the world. On the next slide.

Capitol Hill has embraced Bitcoin. We've got bipartisan consensus that the United States should embrace digital assets, should embrace digital capital should be a leader. That is not a debate. No one is saying that there's 1 party in favor of digital capital, another party against it. That's a big deal. So although the political process is complicated, the fact that we have moved from an asset which was a scary speculative thing and may be a legitimate to a legitimate asset that most reasoned politicians and regulators and policymakers believe they need to move constructively forward with. Let's go to the next slide.

Big banks are embracing Bitcoin. Roll the clock back 18 months, and this [ HarveyBall ] diagram is pretty much blank, mostly blank. And so when you actually look at the top financial institutions and you ask the question, do they allow IBIT trading. Well, there's an avalanche of support there. That slipped in 12 months. The second question is do they offer credit against IBIT? That's a big deal. 12 months ago was almost impossible to get a loan or a margin loan against IBIT. Now there are many banks coming in the space.

Would they let you trade BTC? Now you have banks that are announcing support for that. You have banks announcing support to custody BTC and you have banks announcing intent to offer credit against BTC. Again, this is an extraordinary sea change. We cannot underestimate the value. I think that the fundamentals of the industry are driven by the banks creating credit. One bank can create as much credit as all the Bitcoin miners can create in Bitcoin in a year. So each bank the turns on Bitcoin credit lines might be the equivalent of another having for the network. Let's go to the next slide.

TradFi and fintech have embraced Bitcoin. If you look at the number of accounts of BTC trading asset, there's a pretty clear bullish trend here both across crypto-native exchanges, fintechs and neobanks and the brokerages and banks and the wealth management channel. Those are large numbers, fundamentally, we're going from an asset class that no one could buy if they wanted to, to an asset class where everyone is competing to facilitate access and exposure. The next slide.

This is the ETF trend. ETFs are embracing Bitcoin. 125 ETFs ETPs launched, 1.4 million Bitcoin held in them. A very consistent trend up and to the right. Next.

And this is the corporate trend. It was nothing in 2019. We were the first serious player. We were only for a bit and we went to 33, then we were at 64 in 2024, and now we're 194. This is clearly explosive growth, and there's a signal here. Next.

The public markets are embracing Bitcoin. Look at these IPOs that have taken place this year. Bullish, Circle, Gemini, BitGo, Kraken that's coming. And then Coinbase, Block and Robinhood have all been included in the S&P 500. So I see this as a very bullish indicator and a fundamental improvement in the structure of the industry.

The concern dejour is quantum computers and many people ask. Do quantum computers represent a threat to Bitcoin? I would note the Quantum computing concern and quantum FUD is just the latest in a long litany and a parade of orderable FUD that has been taken by since the beginning of Bitcoin. There was functionality FUD. Bitcoin is not functional enough. So it will fail it needs some more contracts. And then people thought it was a pans. And then they thought it was too volatile and then they thought , well, there was a bug in it and maybe it will be 51% tech. Maybe the Chinese control too much of it. And in the words, the Chinese shut it down. It was the opposite of the China FUD. It was the China non embrace.

And then we had all manner of block size awards and bandwidth FUD and in there was it uses electricity FUD and then there was a wealth concentration FUD and of course, then there was another crypto will be better. What I would say is whenever dealing with each of these concerns, we have to take them seriously. We have to consider them, but we have to remember 2 things. One, the 2 words on the back of the hitchhikers guide to the Galaxy. Don't panic. Most important, 2 words, more important than everything and the encyclopedia or the hitch hike to the Galaxy.

The second observation, the hippocratic oath, do no harm. And so whenever you're faced with a challenge in any system or any network, you have to make sure you don't panic, you're not railroaded into doing something foolish or destructive. And you also can't do something that causes harm. You don't want an iatrogenic intervention where the care is worse than the disease.

So our position on quantum computing: one, we think it's probably 10 or more years away before there's a threat. That is the consensus. It's a promising technology, but it's still nascent. Many industries, including finance and defense are dependent upon traditional cryptography. They face the same risks. There's a significant global investment going into building quantum resistant protocols not just in the Bitcoin community across all communities.

The Bitcoin community in specific is engaged on research and development in these efforts. There's good work that's taking place. If Bitcoin requires an upgrade, there will be global consensus. Right now, there isn't a global consensus that existing cryptographic libraries are at risk. And to stampede into a hypothetical fix before there is consensus would introduce new attack surfaces and new complexity and new failure modes that don't currently exist. It's very similar to over vaccinating and it's like, well, there's a 0.001% chance that the kid might get a disease. So we're going to vaccinate them just in case, but of course, 3% of the people that get the vaccine have side effects, right? And so it's very important that we don't over ensure over vaccinate, overtreat, over-worry.

A famous President in the United States, he said, if you see 10 problems driving down the road, 9 of them will probably drive themselves into a ditch before they get to you. So the 1 thing you can't do is you can't buy 100 expensive insurance policies that cost collectively 100% of all your operating income to ensure again something which is 2% likely to happen. That's why you have to be very thoughtful about addressing these risks. And you have to address them at the right time, not too soon, not too late. But because too soon, you probably don't have the right technology and you're over-insuring too late, right? You accept the risk that you shouldn't. That's why consensus is very important.

Bitcoin will be stronger if and when that quantum upgrade takes place, right? And so Bitcoin is upgradable, and Bitcoin can be upgraded to be stronger, and we, of course, are optimist. And we believe that the human race will accept challenges and we'll upgrade to meet those challenges and do it in a rational fashion. And Bitcoin has a history of meeting challenges in a rational fashion such that is stronger, and you can see all those examples.

Last, but probably most important on this slide, Strategy, we are going to initiate a Bitcoin security program that coordinates with the global cybersecurity community, the global crypto security community and the global Bitcoin Security Committee, in order to help and contribute to consensus and solutions to address the quantum computing threat as well as any other emerging security threats that evolve.

We think it's reasonable and appropriate for us to do this, given our large responsibility as a Bitcoin holder but we want to do it in a very responsible fashion. And we want to make sure that we coordinate with the global cyber crypto and Bitcoin security community, because there are a lot of very, very brilliant minds here. There's a lot of good work being done. And it's likely that consensus will form and solutions will form at the right time in a responsible fashion. So that's our view on Quantum. Next slide.

Digital credit. Our company exists to -- we structure and we secure Bitcoin, right? We're a digital credit issuer. If you look at this chart, what you can see is that the native volatility or the natural volatility of Bitcoin is about 45%, for a 45% vol asset to draw down 45% shouldn't shock anybody, right? I note the Bitcoin looks like it's drawn down about 45%. And since it's all-time high 4 months ago. So a 45% drawdown on a 45% vol asset is probably to be expected, just like an 80% drawdown when it was an 80% vol asset.

On the other hand, what you can see pretty clearly is that strategy has stripped that volatility off of BTC with Strike, which was 32%; Stride 27%; Strife 24%; and Stretch down to 7%. So we are stripping the volatility off of Bitcoin, and there is conservation of energy and conservation of volatility. And so the volatility that we stripped off of the credit instruments accrues to the common equity. And so that's why MSTR 63% vol. But it's not really complicated piece of engineering. It is just -- it is very pure financial engineering there's a group of people that want low vol principal-protected instruments that are credit instruments, and there are other people that want high vol, high performance. Next slide.

Right, think of us as a digital credit vehicle. Our job -- we are thrusting forward. We are actually moving through space through issuing digital credit, right? It's digital credit, is the product. Bitcoin is the back and collateral. The secret or the most important thing for us to do is to build the vehicle in the most robust, fault-tolerant way that we can, the most scalable way we can. You could think of it as a Bitcoin battery and then a U.S. dollar battery.

And we have lots of options. We have options to run on the U.S. dollar reserve. We have the option to sell equity. We have the option to sell Bitcoin. We had the option to sell Bitcoin derivatives. And we keep our options open so that we can do the best thing for all of our stakeholders. Our common stock shareholders. We want to do the right thing for the MSTR common stock shareholders. We want to do the right thing for the credit holders of the digital credit instruments. And we want to do the right thing for the Bitcoin community. And we believe that if we're rational and thoughtful then we get a good outcome, which is BTC positive, MSTR positive, STRC positive. Next slide.

Companies exist to convert capital into cash flows. In essence, you have capital investors and you have credit investors, the credit an investor wants $10,000 a month forever. And the capital investor gets $1 million of real estate with no cash flows for the next 30 years. And maybe they'll get more than 10% a year. Maybe they'll get 20%, 30% a year performance. But it's pretty straightforward that the world's built on capital. The world runs on credit.

BTC is digital capital. STRC is digital credit. We -- it takes an operating company to transform capital into credit. If we were a real estate development company, we could take $50 billion of capital by a bunch of land in New York City, build a bunch of buildings, market the buildings, rent the buildings and generate cash flows. That's a way to do this, but you take on all sorts of liability, all sorts of counterparty risk, operating risk, it takes a lot of time. You have property taxes, employment taxes, income taxes, usage taxes, et cetera. That's the 20th century way to actually create credit from capital.

We've taken a much faster route, we would just take the money, buy Bitcoin and just issue the credit, and we skip all the intermediate steps. That makes us extremely technically efficient and makes us extremely economically efficient. It makes us extremely tax efficient. Next slide.

At the core, what are we doing, right? we're transforming that capital on the credit. We're taking BTC and we're converting it into a currency, whether it's a U.S. dollar or euro. We're stripping the risk by over collateralizing it, right? If you have $5 a Bitcoin, right, and it falls by 80%, then you've got $1 a Bitcoin, but when you have $1 of STRC back by $5 a Bitcoin and it falls by 80%, you still got $1 of STRC backed by $1 a Bitcoin. So we're stripping or reducing the risk by the BTC rating.

And then we're also taking other actions to reduce risk, right? We're an operating company. We can raise capital. We can sell equity. We can refinance. We can strip risk by taking a 2-year obligation or a 10-year obligation and stretching it out to a 20-year obligation. So operating companies can do these things. We're also dampening the volatility. We damped the volatility by building the collateral by building the U.S. dollar value by adjusting the dividends by adjusting the ATM programs by adjusting our capital markets behavior. And we adjust these things minutely every minute, maybe even every second, right? We have programs to adjust all of our activity so as to damp volatility, and we're very engaged and we are very focused on it.

Of course, and then we distill the yield from the capital asset in order to create a fixed income yield rate. And of course, we're compressing the duration instead of telling you to wait 10 years in order to get a 30% return, we're giving the 18-year-old cash flow this month and every month. So 10 years of duration is 120 months. We're converting 120 months into 1-month duration.

And so when people say, what does the company do? The company transforms digital capital into digital credit. Are these things valuable? Of course, they're valuable. There's a $300 trillion market for credit. It's extraordinarily valuable. And the key is for us to create the best credit in the world. And to create the best credit you can using digital capital. Let's go to the next slide.

How do we benchmark ourselves against the other credit alternatives Well, the bank accounts might give you 40 basis points. The money markets are giving you 360 basis points. Taxable insurance companies don't pay tax and endowments don't pay tax, but actual real people, families do, private companies do, public companies pay tax, the world's full of people that have to pay tax. And so 360 basis points of money markets works out to -- might be only 180 basis points if you live in New York or California after tax.

So clearly, what we have here is a yield-starved environment. The base rate and the risk-free rate is 360 basis points taxable, and that means that all the conventional credit instruments are pegged to that, like mortgage-backed securities, investment-grade bonds, junk bonds. They all trade at very small premiums or spreads over that risk-free rate. And STRC is paying 11.3% at par, 11.25% at par.

And so you can see here that it's 3x more on a pretax basis, but on a tax equivalent basis, it's like a bank account in Miami that pays you 18%. It would be much more. It would be like a bank account that pays you 22% or 23% in New York City or San Francisco. So we think we've been able to create a very compelling credit instrument versus other credit instruments. It's just 2 to 4x better. And let's go to the next slide.

We don't just benchmark ourselves against other credit instruments. We also benchmark ourselves against all the other non-U.S. dollar currencies. And what you can see here is the U.S. dollar has gone a 370 basis point risk-free rate, but the Korean won, the Canadian currency, the euro, Singapore dollars, Japanese yen, Swiss francs, the they're much weaker. And so fundamentally, you can think of the stretch rate as the risk-free rate and the Bitcoin ecosystem. It's like the Bitcoin rate, short end of the yield curve.

So we are working to define the yield curve, like what -- and if you're willing to accept no guarantee of yield and 10-year duration, then you get the Bitcoin rate, which is right now 35%, 40%. We expect that going to be 30% over time. But if you want to go to the short end of the yield curve to the 1 month and then 11.3%, right, is the rate. We think that this is [indiscernible] just a very compelling opportunity. Clearly, we believe the killer app of digital capital is digital credit. And oftentimes people joke, it takes 100 hours to understand Bitcoin, maybe it takes 1,000 hours to become a Bitcoin maximalist. It only takes 10 seconds to understand Stretch. Stretch is 11.25% dividend yield paid monthly. That's it, right? It's a 10-second idea. Let's go to the next slide.

Okay. Here's an actual 4-month snapshot. And this is an interesting comparison Stretch versus Bitcoin. What's the difference between credit and capital. Well, in the last 4 months, Bitcoin has traded down 30% through the first of February, Stretch is up 1%. And so it doesn't take a rocket scientist to look at this chart. If you're a retiree, if you're a corporate treasurer if you're a fixed income investor, if you're any kind of investor and you look at these 2 charts. If your crypto curious or you think you might like Bitcoin. You look at this and you think, well, I like it, I just can't stand the wall. You could see why.

Do you want 30% drawdown and no dividends? Or do you want a 1% price appreciation and 5.3% paid dividends with an ongoing 11.25% dividend rate and with the company that's making a commitment to stabilize that price to target $100 and do whatever it takes, including raise the dividend. So we believe that what we're doing is expanding the market. We're bringing new capital with new forms of investors into the digital asset space. And we're making -- we're creating sort of a gateway product or an on-ramp to digital assets and digital capital by way of STRC.

And of course, we're still very early on this is like the first 5 months of seasoning of STRC, we think that after 12 months, we'll have a better picture. And clearly, in some cases, with credit instruments, people have to see it for 2, 3, 4 years before they actually want to buy it. So we think that STRC is going to continue to season continue to harden, continue to stabilize, continue to build AUM, build liquidity, and we will continue to make progress on volatility over the coming 2, 3, 4 years. So it's a very straightforward exercise on our part.

This is the flagship product of the company, right? At this point, everything we're doing in the capital structure is to improve the liquidity decreased the volatility, increase the AUM increase the creditworthiness, decrease the risk and improve the standing of Stretch, right? And you can extrapolate what that might mean with everything else that we do going forward. Let's go to the next slide.

There's a picture of that volatility, right? We started with a higher vol. We're working it down. We do things like create the USD reserve. We adjust the dividend rate. We do know harm. We don't sell it if it's not at our target. I mean, all of these things are active decisions every day, every minute of the day. Next.

And we're pleased that we are building the AUM. It is scaling. And it's not going to be a straight line up and to the right. We're going to have good months. We're going to have great weeks. We're going to have bad weeks. We're going to have bad months. That's okay. We're in this for the long term. By the way, the long term means 4 years is the short number 10 years is the target number. 7 years is the middle, right.

So as Phong pointed out, we're looking out 7 years thinking, well, we can -- if we do what we're doing, we can double bit line per share over 7 years. If we execute well, and then we're looking at this over that 7-year time frame and thinking about how we actually make this into a truly great -- the greatest credit instrument in the world. Next slide.

Phong had alluded to the fact that it's much more liquid. I think stretch traded something like nearly $300 million today, a huge number, right? And it's trading consistently above $100 million. That's unheard of. A lot of people list perhaps over the counter, they trade $100,000 a day. And then they publicly listed, they trade $1 million a day. So these things in the first 12 months are already off the charts by a factor of $100 more.

And Phong noted, but we didn't dwell on it. We were 33% of the preferred stock issuance last year, right? We are transforming the preferred equity markets. We're digitally transforming them. We're -- just like we revolutionized and shook up the convertible bond market until we were the largest convertible bond issuer. We're now shaking up the preferred equity market and becoming the largest preferred equity issuer. And that is because -- we're putting an innovative asset together with an innovative security together with innovative business strategy and the way we manage our ATMs, the way we manage our company. Next.

This is a chart we're very proud of. Even though Bitcoin has struggled, if you look at the Bitcoin price, we've been increasing the BTC rating of stretch even as the Bitcoin price has been falling, right? So we're increasing the collateralization of this. We're decreasing the risk of this. And we're doing it through programmatic, thoughtful risk management on our balance sheet. Next slide.

Bitcoin is a 43% ARR, 45% vol asset. Digital credit stretches 11.25%, 7% vol. It might jump up to 10% vol sometimes, maybe we get it down to 55 vol, 4% vol, 3% vol, 2% vol. I don't know where we'll get it, but it seems like it's going to be single digits. And then the third layer is digital money. Our view for that is less than 1% vol, 0 vol,, digital money, can we actually create something that pays 6% to 8% that's got 0 vol. We can't do it ourselves. We won't do it, but we welcome partnerships with other companies. With ETFs, with TradFi projects, with banks, with crypto token projects, a lot of other people can use Stretch and they can step it down. They can make it 80% Stretch, 20% cash.

People are going to Stretch down. They're going to lever it down. They're going to lever it up. They're going to mix it. They're going to manage -- they're going to actively put in management and volatility buffers and liquidity buffers, and put it in various regulatory containers.

Next slide, right, you can deliver digital money as coin, like a savings coin you can deliver it as a fund, a private fund or a public fund, an ETF or you can deliver it as an account on a crypto exchange or a bank. We welcome all those partnerships. Our view with Stretch is, we're going to market it to the general public. We're going to market it to credit investors. We're going to market it to enterprises. We're going to market it to corporate treasurers and corporate CFOs, right? We're going to offer you 2 to 4x more than your existing treasury strategy. And we're going to also work these OEM relationships in order to build great partnerships so people can create insanely good digital money products based on our digital credit. Next slide.

Quick review of illustrative models. We're looking out 7 years. And so one model is we target 5% BTC yield, and we increased Bitcoin per share by 1.4x over the 7 years. The mid case is we target 10% BTC yield. Let's go to that slide. Yes, 10% BTC yield. In that case, we will double Bitcoin per share over 7 years. And the high end would be a higher yield and we 2.5x Bitcoin per share. What is our objective? Our objective is to double your Bitcoin per share, right, over 7 years, right? I mean I would be disappointed if we don't double Bitcoin per share over a 7-year time frame.

This chart actually shows how the amplification works in practice by selling digital credit, we create an amplification. So a Bitcoin ARR was 10%, we could achieve a 12% to 19% ARR. If Bitcoin was a 30% ARR, we could achieve a 36% to 45% if we execute on our strategy. So clearly, the equity is for vol junkies and performance junkies, they want to outperform. This is how we believe you can best outperform Bitcoin in the most responsible fashion while doing the most good for the world.

And for the other end of the spectrum, for the credit investors that can't stand the vol, they want principal protection and low vol and no currency risk and they want clear yield and they want tax-efficient treatment, well, then they have digital credit and stretch specifically. Let's go to the next slide.

So I would end with this thought, right? Bitcoin is digital capital. We believe in it. We will continue to advocate for it. And for the pure capital investor, you should buy it. Stretch is digital credit. If you don't know what you want, but you believe in digital assets and you believe in digital capital, you probably want Stretch. It's 11.25% dividend paid monthly, tax deferred, if you're a corporate treasurer, if you're a retiree, if you've got money that you need 3 months from now to pay your kids tuition, but you want to invest it in more than 2% after tax. Well, then Stretch is an option for you, right?

So Stretch clearly is the flagship product. And if you believe in the future of digital credit and you want to invest in the company that is making it possible, and you would buy our equity. And if you do that, you should probably have a 7-year time horizon because we're long-term thinkers, we're not -- when every day is not going to be a great day, every week, every month.

If our thesis is wrong for 100 years, the equity won't work, and we'll run out of money to pay the dividends at some point in 100 years. If our thesis doesn't work for 10 years straight, if that doesn't work, then the credit will get paid, the dividends will get paid, the equity won't be a great investment for you. But if we actually execute and if over the next 7 to 10 years, things work out fine, the company is well managed, well collateralized and responsibly structured so that we can stand difficult months, difficult quarters, even difficult years or 2 or 3-year cycles at a time. We've done it before. And we're prepared to do it going forward.

So with that, thank you. And I think I'll pass over the floor to open Q&A.

Thank you, Michael. We are now going to proceed to the interactive live Q&A section of our webinar. I would like to welcome all our Q&A guests and invite them to come on video. We look forward to hearing your questions. [Operator Instructions] So for the first question, I would like to invite Lance Vitanza, our research analyst from TD.

My question is, since the beginning of the year, I can count 3 weeks over which your Bitcoin acquisitions have generated negative -- slightly negative, but negative Bitcoin yield. Now I'm all in favor of buying Bitcoin even when times are tough, but shouldn't the goal be to increase Bitcoin per share at all times rather than just increasing the total amount of Bitcoin that you own? And maybe if you could just talk about the strategy or the thinking that went into those 3 particular weeks and what that could mean going forward?

Yes, we agree with you. We -- those -- we don't aim to reproduce those weeks. The times that we've actually done dilutive transactions on a Bitcoin per share basis were -- if you go back to the crypto winter when we had to recapitalize some toxic debt on our balance sheet, we took out debt either it was like asset-backed loans or senior debt that had EBITDA covenants that we felt were crippling the company's growth prospects. And so we didn't do it enthusiastically, but we did it because over the 10-year time frame, we knew we needed to remove those toxic elements to our balance sheet. If you look at these 3 weeks, when we took actions that were somewhat dilutive, they all were generally associated with building up the U.S. dollar reserve.

And we did that in response to analysis and feedback from the market and some reflexive concerns that we wouldn't be able to pay the dividend if the equity capital markets closed us. So we wanted to get ahead of that and address the credit quality. So the reason we did it, the short answer is we do it to improve the creditworthiness of the company. And if we felt that there was a credit problem, we would do it.

Right now, we feel that we've built the U.S. dollar reserve to the level where we don't have a credit problem. We're good for the next few years. We don't have any of those other forms of debt, the senior debt or the asset-backed lending. So the balance sheet is in much better shape today. Going forward, we wouldn't electively or programmatically issue equity to buy Bitcoin if it was going to decrease Bitcoin per share, right?

We're we don't think that's a good idea. We would only take those actions when we feel like it's essential to defend the credit of the company because if people lose confidence in the credit, then that will ripple into losing confidence in the equity and then losing confidence in the business model in general.

So it's a practical consideration. But I don't think we expect to see anything of that magnitude going forward because the first USD 2.25 billion of U.S. dollar reserve was a big move.

And just if I could just get a follow-up question regarding that $2.5 billion cash reserve, could you -- in theory, could you use that -- if you chose, could you use that to redeem the $1 billion of converts that are putable in September of '27?

Yes, we could. We can use it for any corporate purpose. We can use it to pay dividends. We could use it to meet a credit obligation. We could use it to pay interest on a loan. We could use it for whatever.

Great. Thank you. For the next question, I would like to invite Tom Lee from Fund and Bitmoin.

Really useful presentation. I took a ton of notes. But I wanted to ask you a 2-part question. I apologize, it's 2 parts. On Slide 53, you talked about quantum vulnerability of Bitcoin. And I apologize, and it's getting a little nerdy, but I know a lot of people have questions about quantum vulnerability because -- of course, Bitcoin could upgrade its network. But I know there's 3 types of wallets that remain quantum vulnerable.

One is Satoshi because he used a paid to public key, a really old wallet. And then anyone who's sent Bitcoin reveals their public key. And then as you know, the taproot wallets actually are somewhat quantum vulnerable. So I think that's like 25% or 30% of all Bitcoin wallets out there. So the part question is, you -- I know MicroStrategy is a security expert. You have so much experience in security.

Could you give us some idea of how Bitcoin and the core developers might think about addressing the quantum vulnerable wallets. But the second part is, that's really a small part of the story because there's 4.4 million -- there's only 4.4 million wallets that have even $10,000 worth of Bitcoin, which means what -- whereas there's almost 1 billion accounts globally that have $10,000 of stocks, bonds or cash, meaning the world hasn't really adopted Bitcoin yet. And so as you think about the rest of this year, could you give us like what you think are some milestones or road maps that further drive Bitcoin adoption, which in turn help the price of Bitcoin.

So with regard to the first, the quantum question, I don't think it's appropriate for us to advocate a particular solution or a particular approach nor a particular time frame. I think that our role is to support all of the various communities and facilitate the evolution of consensus about what should be done, how it should be done, when it should be done. And I think that if you accelerate those and pressurize those processes, you end up solving a bunch of problems that don't exist in a way that maybe are iatrogenic.

So we don't have a particular set of policy points that we wish to advocate right now, nor do I think it's really responsible or appropriate for us to do that. I think that, that will be emergent exactly what should be done. By the way, it's not clear anything should be done ever. It's quite possible we'll actually pop out -- you remember, the world was going to end in climate change, death 26 years ago when 26 years went by and none of those things happened, we were going to -- Bitcoin was going to boil the ocean and use all the energy on earth as late as 2018, and that never happened.

So it's possible that whatever happens in the quantum domain will actually improve the security of the Bitcoin network inadvertently before we have to even discuss a protocol change. So I don't think there's any particular policies to be advocating right now other than to support all the various communities and facilitate consensus at the right time to do the right things. The second topic is really what are the catalysts for Bitcoin price to improve. Look, I think the fundamental catalysts are regulatory support.

We have a very -- we have the most constructive set of financial regulators in the history of the industry right now. The head of the Fed, the head of the Treasury, the head of the CFTC, the head of the SEC and the White House has a digital asset ZAR, right? Those 5 things are massive bold flags. They're all very positive. And generally, you would expect that something good will come probably out of the CFTC or the SEC as they are constructive about facilitating financial companies to innovate in the digital asset space, right?

I would have been skeptical about that 2 years ago. But I think for you to be skeptical about their support for digital innovation today would be ignoring all the words from everybody in those positions. And I think that the second catalyst will be banking adoption. The formation of the banking credit networks as the large banks and as companies like Schwab, they start to allow you to trade Bitcoin, custody Bitcoin, borrow against Bitcoin. They're going to legitimize the asset, and they're going to decrease the volatility of the asset.

They're going to improve the usefulness of the asset. You're aware of the announcement of the BlackRock, Bitcoin volatility Income Fund that came like about a week ago where they said they were going to sell volatility or generate income. And a lot of people that speculate that will decrease the volatility of Bitcoin and put a more stable floor into the asset.

So I think the actions by big finance, the actions by the big banks and the actions by the financial regulators are the fundamentals. I mean those are the fundamental things. And if you were to light a candle and pray to the gods of the crypto sphere, you would say, I want prodigital assets regulators, I want prodigital assets banks, and I want prodigital assets, financial innovations like BlackRock is bringing to the market, like we're bringing to the market, right?

Like SRC, fundamentally, the industry is going to move forward because of enlightened regulation, engaged, thoughtful banking and then innovative finance. And that's what we're doing, and that's what we see right now.

For the next question, I would like to invite Pete Christiansen from Citi.

Michael, I want to talk about events of the last week. On Friday, the President presented his nominee for next Fed Chair, which exacerbated volatility across a number of asset classes, including Bitcoin. The good news is Kevin Warsh is on the tape noting that Bitcoin is the new gold. So that's good. But I guess my question is, how would strategy's capital allocation framework or possibly if it would change, if the next Fed share is perceived to be less independent, perhaps maybe more tolerant of fiscal dominance, that may raise Bitcoin prices short term.

But longer term, it may introduce increased rate volatility, which may be a challenge on the funding side. I'm just curious if you have any perspectives on how that might change the capital allocation framework for strategy.

We try to be very reactive to market signals. So for example, when our equity trades weak, we don't sell it. When our credit instruments are trading weak when the cost of credit is too high, we don't sell them. The most obvious is STRC, if it trades below 100, we don't sell it. So in periods where the marketplace loses confidence in our particular credit instruments, we simply wait. And in periods when the NAV of the equity explodes to 3 or 3.5, we might sell $1 billion a day, right?

So when the capital markets are enthusiastic about either the equity or the credit, we react to them. And it's above our pay grade to set financial policy. It's even above our pay grade to interpret like the financial policy, like sometimes the the macro economy has one set of numbers, and you would think that's good for Bitcoin, but it's bad for Bitcoin.

Or another time, you would say, well, if they do this, that should be good for us and it's not good for us. And in other times, it's the opposite. I think the nice thing about our business is we have the option to do nothing. And we have a set of disciplined capital markets programs. They've moved from being discrete where it's like, well, we got to do a deal this quarter. What's the deal we're going to do in Q3? And we've moved from discrete 144A capital markets programs to continuous ATM type programs. And with the ATMs, if the market thinks that the cost of capital on an instrument like STRF should be 11%, well, we just don't want to sell it.

We think it ought to go to 8%. So when the market takes STRF to $140 or whatever the price it is that we think is fair, then we will be open to issuing more. And when the market is bearish on those instruments, we don't. And the good thing about the business is if you think Bitcoin is going to grow pill in a number, 30% a year, then our option is just do nothing, and we're a company that's a $45 billion, $50 billion company growing 30% a year. So that's our default.

Our default -- if you think Bitcoin is only going to grow 10% or 20% a year, our default is we just do nothing and we grow at the rate of Bitcoin, and we're okay with that. And then if we think that there's something very accretive, that's going to be good for the shareholders, then we will participate. And we can participate in size, $1 million a day, $100 million a day, $1 billion a day. And the truth is, Pete, sometimes we get up in the morning, and we basically set up our programs and we think, well, nothing is going to happen today and then 5 minutes before the market closes, a lot of stuff happens.

Like it can literally change in 60 seconds. And again, that's beyond our control. We can't control how the markets will interpret all these things. What we can do is set up a rational set of credit structures so that we only issue credit when we think it's in the best interest of the company, and we only issue equity when it's in the best interest of the company.

I would like to invite Lynn Alden from Lynn Alden Investment Strategy.

Given the popularity of STRC, my question is focused on that. The company established that USD reserve, which I think shored up the confidence of these products and make them more attractive. Right now, the USD reserve is on the website, 30 months of coverage compared to the dividends of the preferreds. The other preferreds are fixed dividends. STRC is a variable dividend, which introduces some degree of uncertainty around how many months of coverage there are for the total amount of dividends payable.

Do you have any kind of views on what you think is an appropriate minimum reserve relative to months of dividend coverage? Or do you have a kind of a maximum that you'd be willing to pay on a dividend for STRC? And then a related question is, we are seeing some kind of early financial products that are out in the market that are looking to potentially leverage STRC given the goal of low volatility and high yield.

Are you monitoring the space for leverage build on top of that as it could contribute to spikes of volatility should there be an issue in the market? And do you have any -- are you -- would you encourage that kind of thing? Or would you dissuade leverage from building on top of that increasingly kind of a popular product?

I can start, Lynn. Thanks for the question. First, we said that we target 2 to 3 years of dividend coverage with the U.S. dollar reserve. So we wouldn't want it to go below 2 years. I think 3 years would be pretty high. And as far as whether we think there's a cap to the stretch rate, we're pretty early on, and we're sort of trying to understand what happens every single month at the end of the month, and that's why we have our guidance that we have, right? It's at $11.25. Could we take it to 12 potentially. But it's going to be a function of how do we keep the price within a tight range right around that $100 and also a function of what happens to interest rates in general. But I don't think we have a cap right now. We're just going to have to see how this instrument plays out over time. So that's the answer on stretch overall. And your second question, remind me?

The second question was around we're seeing kind of early products potentially looking to lever it up for other customers. Do you perceive issues in that? Are you monitoring it? Would you encourage or dissuade that type of activity?

I think any time people create products on top of stretch, right? There are some products that we've seen like buck that have been issued that are -- they're not levered products, but they're actually reducing the volatility down to about 0, and they're actually showing daily accruals as opposed to monthly accruals. So I think those are positive. I think the extent people are going to build levered products, one, we can't really -- we're not going to stop them. And I think leverage adds liquidity, adds a certain extent, interest in stretch. And we'll see how it plays out over time. But I don't necessarily think that's a bad thing.

Okay. So we can move on to the next question. For that, I would like to invite Mark Palmer from Benchmark.

A couple of questions. First of all, we have seen over the last year, a tremendous number of new digital asset treasury companies formed. Many of them focused on accumulating Bitcoin, others on accumulating other crypto tokens. What is your take on how this industry is likely to evolve in terms of the number of players, whether there's going to be a shakeout, if there is a shakeout, will there be consolidation? And most importantly, what could this all mean for strategy as it unfolds? Are there opportunities for the company to take advantage of that dynamic?

I think every business has to have an operating model that works, that adds value if it's going to grow and prosper. So one model is just to provide Bitcoin exposure if people in the country in question can't get it any other way. There are a lot of people in the U.K. that bought our stock for 4 years because they just couldn't buy Bitcoin any other way. So if there's a value proposition in Brazil or in France or wherever, then maybe just you can be a simple Bitcoin holder. I think another value proposition is issue digital credit, and you can see that Strive and MetapPinet have both pursued digital credit.

If you're good at it, by the way, you can do digital credit and not be good at it, right? If you take on debt, you can't pay back, right? And that doesn't help the company, that hurts the company. But if you're good at digital credit, that could be another case. 1/3 would be anything that uses capital, right? So if these companies -- if they want to generate Bitcoin yield, they're going to have to find some way to generate a benefit from the capital, right?

You could underwrite insurance, you could support trading or derivatives trading by posting it as collateral. You can engage in derivatives trading. right? You could literally become a public company with a lot of capital that trades in a digital derivatives market, posting your Bitcoin as the collateral to take the trade and sell the volatility.

It's a different business model. What do I think? I think there's thousands of companies that get launched. Many don't succeed. Some will fail. Some get launched doing one thing and then they evolve into something different. like look at our company, we evolved. In fact, you could argue that the most successful companies evolved through 2, 3, 4 stages in their life cycle.

I mean, Apple didn't start out as a phone company for sure. And I think Elon maybe he ends up being a robot company and not a car company, right, at Tesla. So I think that the winners will evolve and they'll find a niche. And I think that the ones that don't evolve, if you're just a holding company holding Bitcoin, not doing anything with it, might you get bought up?

Yes, you might get you might get bought and would that be good for you? You're a lot better off if you have something people want to buy, for example, Sears had a future because they had a lot of real estate that somebody wanted to own. And if they didn't own the real estate, it would have been a much worse situation for them. So I think that you're going to see all sorts of examples.

Now -- and presumably thousands and thousands of companies get launched and they all do different things, and we're very embryonic early on, like in the first year or 2 years. 50 years from now, right? I mean, the debate will be who's the best Bitcoin-backed insurance company, right? But 20, 30, 40 years from now, and that company doesn't even exist right now. But on the other hand, what about us? -- are they opportunities for us? Well, they were an opportunity for Stryve. Stryve did the deal with similar and they closed it quickly, and they were able to build their capital base pretty rapidly.

So that's -- we see examples of that. There probably will be some mergers and acquisitions of other companies in various spaces that they put together their various assets in a synergistic way.

Our business is laser-like, monomiacally focused on one thing right now. we want to make stretch, STRC, the premier credit instrument in the digital world, the best digital credit in the world and maybe the best credit in the world. If we can create a product that trades with less than 5 that pays you 10% dividend with a stable $100 value and we pay a rock dividend, the question is who would want that? It's like everybody would want that.

I mean, why wouldn't you -- like what's the demand for that? It's infinite. Like -- so if stretch works, it's the ideal product and the company that can create treasury credit based on digital capital has the ideal business model. And so we generally won't get distracted, right?

The #1 risk for us is a dilutive distraction. -- right? Everything else on our capital structure that undermines the credit of stretch is a question mark, right? So you have to be thinking about that. And then anything we might do that looks complicated or risky or different would -- anything that introduces a question in the mind of the stretch investor, can we pay the dividend? That's going to be deemed negative.

Anything that introduces a question in the equity investors' mind, can you outperform Bitcoin? So generally, generally, we're pretty skeptical on acquisitions because they take a long time and then you might acquire something that you didn't want that you have to divest and then everybody wants to talk about how and why and how long it takes. And so I don't think -- I wouldn't say it's not a good strategy for other companies and other investors.

There are other companies and other investors for which it's a great opportunity for them, and they can make a lot of money and they will pursue it and God bless them. For us, we believe we've stumbled upon maybe the most promising product, STRC. After 20 capital markets transactions and all sorts of credit instruments, we think we found the best one for us and for the credit investor. And we've -- and we think we found a great business model, right, the treasury company.

If you can generate return of capital dividends scalably and scale up the issuance of treasury credit, you've got maybe one of the most efficient business models in the world and one of the most compelling products in the world. So we don't want to do anything that would dilute that focus, undermine the credit of the balance sheet or distract the management team from what we see is a once-in-a-lifetime opportunity.

For the next question, I would like to invite Larry Leppard from Equity Management Associates.

Yes. Thanks for having me on, guys. First off, 2 great things in my view, came out of the call. One, the whole guidance on the STRC rate. I mean that's brilliant. I really love it, and it's going to help people like me who are buying STRC as kind of a solid retirement type of asset to understand where it's going. And I have a question related to that, but I'd like to put it to the end. The second thing that I thought was really important was the notion that we're going to upgrade -- we're going to upgrade and play a leadership role in the technical direction of Bitcoin.

I think that's fabulous and a great way of addressing all the f around Quantum, which I think is probably scared off a few of the bigger institutions who are looking at it and kind of saying, hey, who controls this whole thing. Just back to first principles, I want to just kind of run through how I look at this and see if you, as a management team agree I'm a value investor. I look for asymmetry. And in my view, right now, MicroStrategy is the most asymmetric value investment in the world, and most people don't understand it. And it's kind of stunning to me. My partner, David Foley and I, we did a model. We've done several models, and we've looked at it and said, if Bitcoin stays at $50,000 for 4 or 5 years, you can't break this company. It's unbreakable.

I mean the dilution -- we calculate the dilution would maybe be 15% or 20%. So the downside case here in our view is really covered as a result of the fact that the debt is unsecured and the interest rate on it is very, very low. Some of it's convertible, as we all know. And the preferred is really equity. So to me, you've got an unbelievable situation. I think a lot of people listening to this call are kind of wondering, "Hey, what's going on with the stock price, what's going on with Bitcoin."

My view on that is just that what's going on with Bitcoin is liquidity is really tight. And this is what's going to drive a big print at sometime relatively soon. And it's also what's driving the stock market down, and Bitcoin has always been kind of a leading indicator of where -- how much liquidity is out there.

And so things are tight right now, and you see it, gold is getting hit, silver is getting hit, all of a sudden money assets are getting hit. But we know that the basement trade is alive and well because gold and silver have just been on a tear. And this reminds me very much of 2020 when gold and silver led first and Bitcoin followed harder. Bitcoin went up 6x in October of 2020 after gold had gone up 45% when Pell pivoted and then COVID came along.

So to me, what's going to happen here is this thing is going to be a 2-bagger, 5 bagger, 10 bagger and most people don't really understand it. And I think the reason that's the case is kind of said where he said, commodities are a very, very hard business to invest in because they have long cycles and the average investor who's being marked quarter-to-quarter, month-to-month, year-to-year can't show long time preference.

He didn't use those words, but he was essentially saying the same thing, which is Seifadine's point. And if you have the long time preference, you realize this is a commodity that has a fixed supply, the asymmetry, it's just -- it's absolutely blowing my mind. So I just want to say congrats for all you're doing. And I think it's a no-brainer that this is going to be an outstanding upside investment. I do have one specific question related to the stretch product, and that is this. you're going to adjust it, okay? So maybe you have to adjust it in a while to get more people to buy it, fine.

At some point, this is going to be a fabulous product. Everybody is going to want it. And if you kind of set the price at 100, could it ever adjust down? I mean, I'm buying it and I'll probably gift it to my kids because the tax basis will be 0, and I'll never sell it. Would be -- could you think about setting a lower boundary on the yield?

I mean, 11%, that's attractive, 9%, 8%, 7%, those are all attractive. If it got so attractive that the yield on it started to go down to 5.4%, 21%, that would be -- I mean, if people looking at buying it, thinking long, long term might wonder, is there a boundary below which this thing can fall? And we'd be better, we'd be more comfortable buying it if we knew there was such a boundary on the yield.

Go ahead, Phong.

I can start, Larry, and we agree with all your points. I think there's a significant misunderstanding of the leverage on the balance sheet and how we're going to service our convertible debt over time and these ideas that if Bitcoin price goes below our cost basis, that becomes an issue. And as I stated, Bitcoin needs to go down to $8,000 a coin and sit there for 5 years up until 2032 before we really have a problem being able to satisfy the convertible note. So thank you for pointing that out.

On the rate on stretch, right, right now, technically, the bottom of the rate would be SOFR, but we think of the fact that we get capital from stretch. We put it into Bitcoin and Bitcoin is going to go up on average 30% a year. So anything that we pay less than, call it, 20% is accretive to our shareholders. So I don't think it's something where you should sit there and think that we're going to drive it down to SOFR, right? If stretch price goes to 100 and sits at 100, we might take it down a couple of percentage points. But I don't think -- and obviously, it depends on where SOFR goes, but I don't think it's something that someone should think we're going to pull the rug out from under folks and drive it down to 1.

Yes. I think stating that publicly to people who are buying stretch would be important just so people understand. And if you were to say something along the lines of we're not going to let it go below 7 or something because it's going to get to be really popular at some point in time. And those of us who are buying it are buying it with multi-decade time frames, right?

Yes. Another point to make is we can't lower the rate more than 25 basis points a month. So we're always going to be very incremental. And we would only lower the rate when -- in such a way that we thought it would stay in that zone of 99 to 101. Like we want to keep it target at 100. So you might 5 years from now find out that the rational credit spreads that the market assigns us are 300 basis points instead of 600 and that people would like to buy this thing at 400 basis points over SOFR, maybe.

But we would very gradually get there and we would still expect STRC to be trading around 100. And so we're not looking to do anything that is jarring to the price. We want the price to be stable. As a practical matter, the reason that we would lower the dividend rate would be we had such an avalanche of demand.

We had too much demand and people want to buy infinite, and we don't want to sell infinite because we'll drive the BTC rating of STRC down. right? Like if hypothetically, someone said, I want to buy $100 billion of STRC tomorrow, you can see how we don't want to sell it, right? Because then that's reflective and that would undermine the credit quality and that would increase the volatility and that kind of works against everything.

So luckily for us, and practically, that's not going to happen, right? Like they say it's good that we have time because otherwise, everything would take place at the same time, right, all at once, all at once. We don't want stuff to happen all at once. So it will happen progressively. We'll be very thoughtful about it.

Our goal is always for it to be extremely compelling to attract capital. and at the point where we feel like we've got too much capital. It would be a circumstance, Larry, where there was massive success of STRC and Bitcoin was lagging and MSTR equity premium was lagging and it's that weird situation where it's hard for the company to increase its collateral base in order to back the credit.

And then we would say we have too much demand for the credit, so we need to click it down. But if there's over demand for the credit, it would still be pegged at 100 when we -- and we take it down 25 basis points. And so we're going to responsibly manage this so as to minimize volatility, maximize stability, and in all likelihood, it's going to be excessively compelling in terms of dividend rate for quite a while because even though you believe in Bitcoin as collateral and I believe in Bitcoin as collateral, we've got a lot of work to do with credit rating agencies and the Basel rules and traditional finance establishment before they recognize it as being good collateral. And as long as they don't, then that means probably the spreads are going to stay pretty compelling.

For the next question, can we have Andrew Harte from BTIG...

So it'd be great to hear some examples of some of the doors that have been open since strategy got a credit rating. Back in the fall, I think it's opened -- potentially open doors to pension funds, insurance companies and other really large institutional investors. And Michael, before we got on this webcast, you said something like times today that we're seeing with Bitcoin is when people are looking for insight and leadership.

So I guess who better to ask, right, what is your expectation for conversations with these new potential investors with these really large pools of capital? If you could also shed some light on how the conversations to date since you've gotten that credit rating have evolved.

Sorry, go ahead, Andrew.

I was going to start, and Pong, please jump in. Look, Andrew, thank you for the question. I think the process with the rating agencies was an excellent process I think we've noted that we've had a credit rating in the past. It was more based on the legacy business. This is the first time a Bitcoin treasury company with a framework specific to that was rated by a major credit agency. I think overall, the reaction has been what we had expected, right?

Like there is now a public profile that investors can look to. It is opening up, I think, interest. I think it's still early though, right? I think a lot of us that have been in these types of markets know that the credit rating agencies take time to develop.

I think we noted earlier in the presentation that we believe we've made strides since the launch of the -- relaunch of the rating that we'll continue to make progress I think there's more to do in that sense. And there -- it's sort of created a little bit of a floor, so to speak, because everything we do here will be incrementally increasing the capital base.

It will increase our ability to strengthen our balance sheet. And so I think in the long run, it may be -- it may take longer than it would take a near-term action. But I think that there's possible upside. I think that will continue to drive more large institutional demand. And to answer your question, I think the reaction from the investor base has been net positive. And certainly, the cash reserve has added on to that as well.

Mike, do you want to cover the second question around just general Bitcoin?

Just restate the question again.

I was wondering how the conversations you've had with these really large -- very large investors have come along. And then before we got on, you said times like this is when people are looking for insight and leadership. And so as you continue to have those conversations with people that are new to Bitcoin, what do you tell them in a day like today?

I think we've got an unprecedented number of invitations to financial conferences and meetings with investors in general. And I think that the amount of interest in this topic explodes. And when the volatility explodes, the engagement explodes. What I would tell them is the same. We've kind of said for a while, Bitcoin's capital investment, your time horizon needs to be minimal 4 years. I would actually say, look at the moving -- the simple moving 200-week average, the 200-week simple moving average or the 4-year average, and I would invest like with a 4-year DCA dollar cost averaging type approach if you're going to invest in Bitcoin.

And you really want to have the intent to hold the product -- hold the asset for a decade. And if you can't stomach -- if you can't wait a decade with no cash flow and if you can't stand the volatility, then I would say you ought to buy the credit. If you believe in digital assets or digital capital, you believe in Bitcoin, but you can't stand to wait for a decade and take the vol, you should buy the credit and just take the 11% tax deferred with much, much less volatility and with someone else stomach aching, the pain for you.

And so I think it's kind of simple, right? You either don't believe in Bitcoin at all and then you don't want the credit or the capital or you believe in Bitcoin as a maxi and you want the equity because you want 2x Bitcoin or you want Bitcoin as sovereign and censorship resistant long-term store value to give you great grandkids who may be living in a country you're going to live in right now and you want to self-custody, then you buy the Bitcoin.

Or you just think all this stuff looks really good, but you need the money back in September. then you think about the credit, right? And specifically the treasury credit because the other credit instruments are too complicated. So I would say we're really, at this point, pitching the credit, treasury credit as the first step in a Bitcoin journey for a traditional or conventional investor who believes in digital assets.

And we're pitching to a lot of people, like we're talking to a lot, right? So there's a lot of conversations. And if anything, right, the volatility right here is the kind of the reason why you might want to have a product like SDRC. If you wonder what's the justification? Well, just look at the 2 charts next to each other and you figure out why you might want the credit instrument.

Great. And for the last question here, I would like to invite Dan Hillary from Buck.

So my question is as follows: -- the de-equitization of the convertible notes has seemed to be a bit of a headwind for the cost of capital across all the preferred equities. And if MSCR continues to trade below the convertible note conversion price, how many months before the put date would you guys consider refinancing or retiring the converts at a discount in order to lower the cost of capital across all the digital credit instruments?

Dan, we went through this in 2022 during Bitcoin winter and our converts were at some point in time trading at $35 each and...

You mean $0.35 or $0.40 on the dollar, $0.35 on the dollar. And we had considered whether it made sense to call -- to buy some of those back, and it never really made a lot of sense, especially if you live in a world where you think Bitcoin price is going to go up. So the converts aren't really this big overhang for us.

And as I mentioned, you need Bitcoin price to go down to $8,000 and sit there for 5, 6 years before it really becomes a problem. So it's not really something that we think about a lot of whether we're going to buy back any of the converts or if we're going to do something early with them right now.

I would say a year before we have a put event or a year before we have a redemption event. We certainly look at it and we look at the statistical likelihood of anything. And then we evaluate whether or not it makes sense to refinance or hedge or mitigate anything. And if we were to do it, we would want to do it 6 months before the event took place. So -- but right now, we're still far out of that window, and it's not clear there's any event.

The last time I I looked at one of our puts. It was the one that was coming due earliest, the bond was already above par, and so there is no risk to it. So when we get to a -- certainly, when you're more than 1 year out, it's all hypothetical worrying about something that's unlikely to ever happen.

When you get to 1 year out, you have to consider whether there's a risk. And then we're certainly not going to wait until 1 month before we deal with the risk. We wouldn't wait until the last few weeks or the last few months. We would probably do it with a few quarters buffer at the latest, which means we start thinking about a year before.

Great. Thank you, everyone. This concludes the Q&A portion of the webinar. I would like to thank all the guests for the questions and all the attendees for tuning in live. We had over 3,000 people join us live on Zoom webinar, over 4,000 people on YouTube live stream and over 180,000 views on X live stream. So this should be one of the most viewed earnings call in our history. So I appreciate all your interest in curiosity, and thank you. I would like to now turn the call over to Phong for final closing remarks.

Look, I want to echo everyone's thoughts. Thank you for the analysts for joining us. Thank you for everybody for dialing into the call and listening, and thanks for those who are joining us online. I invite you all to join us in Las Vegas, February 25 at Strategy World and Bitcoin Corporations. And if we don't see you there, we'll see you again in 3 months at our next earnings call. Thanks.

Hello, everyone, and good evening. I'm Shirish Jajodia, Corporate Treasurer and Head of Investor Relations at Strategy. I will be your moderator for Strategy's 2025 Third Quarter Earnings Webinar.

We will start with the call with a 60-minutes presentation, starting first with Andrew Kang, followed by Phong Lee and then Michael Saylor. This will be followed by a 30-minutes interactive Q&A session with 4 Wall Street equity analysts and 4 Bitcoin analysts.

Before we proceed, I will read the safe harbor statement. Some of the information we provide in this presentation regarding our future expectations, plans, guidance and prospects may constitute forward-looking statements, including, without limitation, our guidance with respect to earnings and our KPIs contained in this presentation. Actual results may differ materially from these forward-looking statements due to various important factors, including fluctuations in the price of Bitcoin and the risk factors discussed in our most recent quarterly report on Form 10-Q filed with the SEC on August 5, 2025, and our current report on Form 8-K filed with the SEC on August -- on October 6, 2025. We assume no obligation to update these forward-looking statements, which speak only as of today.

With that, I will turn the call over to Andrew Kang, the CFO of Strategy.

Thank you, Shirish. I'll start with some highlights for the quarter. We now hold 640,808 Bitcoin or over 3% of all Bitcoin ever to exist. This reinforces the scale and the dominance of our corporate Bitcoin treasury company. We have a market cap of $83 billion, which positions us among top publicly listed companies in the U.S. And we have 4 listed preferred securities in the market, STRF, STRK, STRD and STRC with STRCs or Stretch being the largest U.S. IPO of 2025 so far, and all which continue to grow in liquidity and investor interest each and every day.

We've also raised $19.8 billion in capital year-to-date to acquire more Bitcoin. And our capital markets platform continues to deepen in liquidity and investor interest, and we continue to show positive performance in our Bitcoin metrics, all central to generating long-term shareholder value. Moving on to EPS results.

Turning to our Q3 2025 GAAP financial results. We reported $3.9 billion in operating income, $2.8 billion in net income and earnings of $8.43 per share. That's a transformative improvement year-over-year, reflecting a strong performance in Bitcoin, the fair value treatment we now have on our Bitcoin and disciplined capital raising activities. This marks our second consecutive quarter of significant positive GAAP earnings and over $8 billion in positive earnings in the last 4 quarters.

Next slide. Our results for the first 9 months of the year showed $12 billion in GAAP operating income, $8.6 billion in net income and earnings of $27.80 per share, continuing our record-breaking year of performance.

Moving on to Bitcoin per share. Bitcoin per share, as we introduced last quarter, measures the accretion of Bitcoin on a per share basis by calculating the ratio between the company's Bitcoin holdings and assumed diluted shares outstanding here represented in Through October 26, our Bitcoin per share was $41,370 compared to Bitcoin per share of $39,716 as of July 31. We are consistently accumulating more Bitcoin per share each quarter, the highest of any Bitcoin treasury company, creating direct and measurable value for our shareholders.

Next slide. Since adopting our Bitcoin strategy in 2020, we've consistently increased Bitcoin per share. We began with 56,598 Bitcoin per share in 2020 and as of October 2025, that has grown to 200,197 Bitcoin per share, more than a 3.5x increase over that period. We've also grown BTC yield year after year through disciplined capital raises and immediate conversion into Bitcoin on our balance sheet, reflecting a 26% BTC yield year-to-date. This sustained growth reinforces our ability to deliver Bitcoin yield to our shareholders through market cycles and by continuously executing on our capital markets and acquisition strategy.

Next slide. Here, we highlight our year-to-date Bitcoin performance metrics versus our full year 2025 targets. Year-to-date, we've achieved a 26% BTC yield compared to our revised full year target of 30%. Our year-to-date BTC gain is 116,555 BTC, up from 88,000 at the end of Q2, reflecting disciplined capital deployment and the strengthening of our Bitcoin balance sheet. Our BTC gain performance translates into approximately $12.9 billion in BTC dollar gain year-to-date compared to our $20 billion full year goal.

Next slide. We now hold 640,808 Bitcoin or $71 billion, purchased at a total cost of $47 billion or an average $74,000 per Bitcoin. And we now hold approximately 3.1% of all Bitcoin that will ever exist. And as in the past, 100% of our Bitcoin remain fully unencumbered.

This next slide highlights the transformation of our balance sheet over the past year and the continued strength we've seen through the third quarter. Year-over-year, digital assets grew from just under $7 billion in Q3 of 2024 to just over $73 billion in Q3 of 2025, driven by both additional Bitcoin acquisitions and the adoption of fair value accounting at the beginning of the year. The accounting change alone added approximately $18 billion to our digital assets and $12.7 billion to total equity at the time of adoption.

Quarter-over-quarter, digital assets have continued to climb from $64.4 billion in Q2 to $73.2 billion in Q3, alongside steady growth in total equity on our balance sheet, reaching now $58.1 billion at the end of Q3. Overall, fair value accounting has made our balance sheet more transparent for our investors, while execution in introducing innovative digital credit through our preferred equity IPOs this year has continued to expand shareholder equity and reinforce the company's position as the leading Bitcoin treasury company.

Next slide. In Q3, we recognized an increase in our Bitcoin holdings from $64.4 billion at the end of Q2 to $73.2 billion at the end of Q3. This increase was made up of $3.9 billion of fair value gain in our Bitcoin holdings, which was due to the change in Bitcoin price between the first and last day of the quarter and also through the addition of $5 billion of new Bitcoin added to our balance sheet in Q3.

Next slide. As of October 24, our enterprise value was $98 billion with a market cap of $83 billion, which is supported by a Bitcoin net asset value of $71 billion or 72% of total enterprise value. Our $8.2 billion of convertible debt is equal to just 11.6% of our total Bitcoin NAV and the $6.6 billion of prefs represent just 9.3% of our Bitcoin holdings. Our annual dividend and interest obligations totaled $689 million, which is less than 1% of our total Bitcoin, reflecting the efficiency and sustainability of our balance sheet. And our capital structure is built to endure volatility, provide stability, scalability and long-term shareholder confidence.

Next slide. We continue to have $8.2 billion in total notional debt across our converts with all but 2 that remain in the money with a total weighted average maturity of 4.4 years. The total current notional value of our outstanding preferred equity as of October 24 stands at approximately $6.7 billion, up from $6.3 billion as of July 29.

Next slide. Our total annual interest and dividend obligations are $689 million, which consists of $35 million in interest expense on our converts which is about 42 basis points average cost, and we have $522 million in dividend obligations from our cumulative preferreds, STRF, STRC and STRK and an additional $125 million related to our noncumulative preferred STRD. Here, we show we have more than sufficient access to liquidity to manage our total annual interest and dividend obligations through our proven track record of capital raising activities.

Our total annual obligations represent only about 1.7% of total capital raised in the last 12 months and only about 2.6% of total common equity raised in the last 12 months. As a measure of our strong financial performance, our fixed obligations represent only 6.1% of year-to-date GAAP operating income.

Next slide. Finally, we are extremely pleased with the IRS interim guidance that was issued on September 30, which now excludes unrealized gains from our Bitcoin holdings from adjusted financial statement income for purposes of Not only does this important clarification directly benefit strategy, but it also paves the way for other corporations to hold and grow Bitcoin on their balance sheets. We are grateful and appreciative for the support of treasury, IRS, Congress and the administration for aligning on the importance of clarifying the specific rule under CAMT and lifting what otherwise would have been an extremely burdensome rule that would have targeted digital assets. and for continuing to support the growth and innovation of the digital asset economy.

I'll now turn the call over to Phong Lee, Strategy's President and CEO. Thank you.

Thank you, Andrew. I will go through an update on our capital markets activity, and then I will review the guidance that we provided for 2025. So first, I want to welcome and invite everybody to join us in 4 months in Las Vegas at the Beautiful Wynn Resort for Strategy World 2026 and our fifth annual Bitcoin for corporations. So hopefully, those who are listening or watching this presentation and have been a fan of strategy software or strategy and our Bitcoin strategy can come out and join us.

So next slide. So taking a step back, we used to compare ourselves to other companies that have Bitcoin on their balance sheet. And as you know, with over 640,000 Bitcoin and nearly over 3.1% or nearly 3.1% of all the Bitcoin effort to be created in the world, we found it best to compare ourselves to the largest corporate treasuries in the world. You'll see here with $71 billion of Bitcoin on our balance sheet, we're fifth when comparing cash and short-term investments and excluding financial services companies. And our aspiration in the next year is to be #2 and the next 5 to 10 years to be #1. And so how do we do that?

Next slide. What we've done in the past in the last 2 years is raise a significant amount of equity and capital through the capital markets. In 2024, we raised $22.6 million and about 27% of that or $6.2 million was from the convertible debt market. Year-to-date this year, we've raised $19.8 billion. And what you can see here is the way we've raised it has changed significantly. We've reduced our convertible debt raises to about 10%, and we've increased our raises through preferreds to $6 billion or about 30%. And that was all happened this year.

It's really just been since the end of January of 2025 that we've launched our preferred strategy, and it's been very successful so far year-to-date. As we start to reduce our reliance on convertible notes, our plan is to allow those to equitize over time. And based on the earliest potential equitization dates, you'll see here that by 2029, we'll have no more convertible debt on our balance sheet. And instead, what we'll do is we'll start to season the preferred market.

You'll see through the course of this year through 4 IPOs, and as Andrew had mentioned, the largest IPO coming 3 months ago with STRC or stretch, we've been able to raise $6.7 billion through the preferred market. And interestingly, as you look at this, a largest portion of that raise has come from the retail market. The initial offering of Strike had about 4% access or raises through retail. And the latest one stretch had about 23% through retail.

Next slide, Shirish. So how do we seize in the market and how do we grow our preferred offerings and raising more capital through our preferred offerings. Three real techniques that you'll see us continue to use. First is distribution. Recently, in the last month, we've seen more brokerages list our preferreds. Robinhood listed each of our 4 preferreds in the last month, and we've seen significant volume and liquidity through Robinhood. And they listed those as the first ever preferreds on the platform because of demand from other folks that were on Robinhood.

We're also going to continue to distribute through wealth management, broker-dealers, RIAs, Morgan Stanley participated in our latest preferred, which gave us significant access to their wealth management channel, retail customers. And we'll start to work with different banks and financial institutions to explore other types of products, potentially ETF wrappers and structured finance products that have our preferreds underlying them. We're doing more and more in terms of field marketing, industry conferences, leveraged finance events where we seek access to customers and buyers who are interested in credit and debt products.

We're also doing more and more teach-in, so just feet on the street meeting with financial advisers, brokers, RIAs and family offices. And last is you'll see more digital marketing. You're already seeing us provide some information and advertise some of our preferreds, namely stretch and social media on X. We plan to have even greater presence on YouTube, traditional media potentially, channels like Wall Street Journal and Bloomberg. We continue to use our strategy.com website and our strategy app, which if you have not downloaded it, I suggest you do so and more and more presence on interviews and podcasts.

So these are 3 different ways we'll continue to create distribution and awareness of our credit instruments. The other area of distribution that we are going to look to access with our preferred credit instruments is international expansion. right? Currently, our products are listed on the NASDAQ and our U.S.-based products, U.S. dollar-based products. But there's a significant access to capital that we can get if we were to, as an example, launch a Canadian product on a Canadian exchange in Canadian dollars, launch a European product on a European exchange, euro or potentially other areas of the world like Asia or Latin America also.

And we think by accessing these markets and by providing new products that are similar to our preferred products like Stretch or Stripe that we can access even greater pools of capital to provide more funding for us to ultimately buy more Bitcoin that's accretive to our shareholders. We announced this week on Monday that we have now the first ever published rating of a Bitcoin treasury company by a major credit agency. S&PS a B- issuer credit rating to strategy.

We think this is a big milestone, not just for strategy and for Bitcoin treasury companies, but a big milestone for Bitcoin in and of itself. There's been a lot of discussion around whether we think this is a good rating or not a good rating. I think it's a solid starting rating. And I think even more importantly, to have a rating, it gives us access to more pools of capital. So what does a B- rating mean? By definition, it means that there's a stable outlook and it reflects the expectation that we'll continue to manage our capital structure prudently and retain that we maintain market access.

We are rated under a structure that's a framework that's called nonbank financial institutions. That's a framework that S&P uses to rate us. And importantly, at this point in time, Bitcoin is -- we don't get any credit for the Bitcoin on our balance sheet when it comes to our rating, it's deducted from our equity. And this drives negative risk-adjusted capital. So what needs to change for the rating to improve?

Well, one, I think it's appropriate at some point in time that Bitcoin be treated differently and as a capital asset at full credit, and that would require the risk-adjusted capital or the Basel frameworks to change or for S&P to change how they look at capital at Bitcoin as capital. And I think that will start to happen over time. We see already other banks seeing Bitcoin as potential collateral. We've seen the U.S. housing agencies suggest that Bitcoin should be collateral for mortgages. So as that starts to evolve, I think the risk-adjusted capital and the Basel frameworks will start to evolve.

And I think the S&P will evolve in its view on Bitcoin. But it's good to have a stake in the ground. I mentioned the potential equitization of our outstanding convertible debt because these are senior to our preferreds and are at the top of our capital structure in terms of seniority. As these start to roll off, that will start to reduce our maturity risk, and that should also improve our rating. And finally, what we've been doing for the last 5 years, we've demonstrated strong access to capital markets.

We demonstrated in 2022, the ability to service our debt during a Bitcoin bear market as we continue to show, improve consistent leadership in this area, we'll start to see a better rating, too. point about getting a rating because we are now S&P rated, it gives us access to larger pools of capital than we had before, right? And the unrated credit market is about $2.8 trillion worldwide. Now we have access to what we call a high-yield rated, right?

B- is in the high-yield category, which is a market that's about 3x the size of the existing market that we're in. And over time, our hope is if Bitcoin was to be treated as a true capital on our balance sheet that we would be considered an investment-grade rated company. And when we get to that point, we would be able to access a market that's 11x what it is today. So in summary, on the S&P rating, I think it's a good starting point, and it's important that we're rated. And I think an agency like a credit agency like S&P validates our company, starts to validate Bitcoin as an asset class, and it's a good starting point for us.

The other part of S&P, so their index business has also started to embrace crypto. -- right? The S&P 500 has in successive quarters, added Coinbase, then Block, then Robinhood to their index. And we now meet all of the criteria that's required to be in the S&P 500 Index. We're # 131 by market cap of U.S. publicly traded companies. And unlike the NASDAQ 100 that sets its criteria purely by market cap, S&P also has some other criteria. I have to be a U.S. company, U.S. listed, which we are. I have to have a minimum of $23 billion market cap, which we have and 250,000 shares traded each month for 6 months, which we have.

You have to have a last quarter with positive earnings. We've had 2 now. And some of the last 4 quarters have to have positive earnings, which we also have. So now that we meet all the criteria, the question we get often is why are we not included? We don't know exactly, right? This is an S&P 500 process that they don't publish exactly why someone gets added or not. But first of all, we just became eligible in the last quarter and eligibility doesn't mean immediate inclusion, and that's pretty typical.

Many other highly successful companies, Tesla and the ones I mentioned here, Block and Rob were not included in their first quarter of eligibility. But we hope to access the index in $13 trillion of capital that tracks the S&P 500 at some point in time. The other big development that's happened really just in the last 3 months with the passage of the Genius Act and with more and more government related to Bitcoin and related digital assets is big banks further embracing crypto.

Morgan Stanley has dropped their restrictions in which wealth clients can now own crypto funds. In fact, they can solicit Bitcoin-backed securities and including Bitcoin-backed ETFs, and they are recommending as much as, in some cases, 5% to 6% of clients' portfolios owning Bitcoin. They also underwrote our most recent offering, stretch. And as I mentioned earlier, gave us access to the wealth management channel. Citibank recently launched coverage, the first, I'll call it, bulge bracket bank that's launched coverage on our equity, and they also provide now a price target. And they which I think is going to be now custody Bitcoin and other digital assets.

Societe Generale, which is a large bank in France, which became the first major bank to launch dollar peg stablecoins and even banks like JPMorgan now are allowing Bitcoin and Ether as collateral with their banks. And I mentioned that Citi has launched coverage on strategy, and they've also given a Bitcoin price target, which is a major improvement. And you'll see here of all the banks that are covering us and all the research analysts that are covering us. There's an average price of Bitcoin for 2025 of $156,000, average price at the end of 2026 of $180,000.

You'll also see here strong price targets and ratings on all of the banks that are covering -- so let me move to 2025 guidance and review the guidance that we provided last quarter and talk through some of the additional guidance that we'll provide this quarter. The first piece is I want to reaffirm the BTC guidance for 2025. This is all assuming a Bitcoin price of $150,000 at year-end, which is based off of the consensus targets that I just reviewed. We have a BTC yield target at the end of the year of 30% and a BTC gain -- dollar gain target of $20 billion. And we have activities underway to try to achieve those, which include capital raises and such.

As for our earnings guidance, I also want to reaffirm what we communicated 3 months ago, which is an operating income target of $34 billion, a net income target of $24 billion and an EPS target of $80 at the end of this year, again, all assuming a Bitcoin price of $150,000. Stretch, which we just launched 3 months ago, I also want to reaffirm the guidance that we've given on how we think about the dividend rate. If the 5-day VWAP of the price of stretch is above $101, we recommend a rate decrease or potentially a follow-on offering.

If the 5-day VWAP is between $95 and $99, we'd recommend a 25 basis point rate increase to get the price -- to try to get the price of stretch within our target price range of $99 to $101. And if the 5-day VWAP is below $95 at the end of the month, we would recommend a 50 basis point rate increase. And so let me show you what we've done so far since we've launched stretch and what we will update today as far as our dividend for the next month. So as you recall, when we launched the product in July, we launched with a 9% dividend rate. We increased that to 10% in August.

And today, we're will increase another 25 basis points our dividend and will be at 10.5% on November 1 paid monthly. The last guidance I want to talk through is something that's new to this group. And Micha will talk about this a little bit more, but this is a pretty unique equity, which is that the dividends are paid return of capital. And if it's tax as a return of capital, it means that it's tax deferred until you sell the underlying asset.

And so if you hold on to the underlying asset, you can expect that you're paying essentially 0 taxes on that. That compares to a qualified dividend, which is at a rate of anywhere between 20% and 35%, depending on the state you live in and the city that you live in, in the U.S. and compared it to an interest income, which is what you would pay on something like a money market or a bank account at 37% to 55%. We call these rock dividends. It's a pretty unique feature and one that I think is not as clear and it may be lost on folks.

But when you invest in our preferreds, for the foreseeable future, you can expect rock dividends. And so why do we have ROC dividends? It's fairly unique to our company, which is that we have negative taxable earnings and profits, which is a function of the business that we're in, and it's a function of our intent to buy and hold Bitcoin and not sell Bitcoin, where it's negative from a tax perspective and not engage in activities that will result in significantly positive taxable earnings and profits. And our guidance here is that we expect that this rock treatment continues for the foreseeable future for 10 years or more, and we can impact that guidance, and we can impact our negative E&P with how we run our business.

So the summary here is that our preferred dividends are tax-free or tax deferred and that we expect that to continue for the foreseeable future. It could be 10 years, it could be more than that.

So with that, I want to hand it over to our Executive Chairman, Michael Saylor.

Thank you, Phong, and thanks for joining us today. I'm really excited to talk to you about digital capital and digital credit. So let's go to the first slide. The first point that I want to make is that Bitcoin has emerged as digital capital. What is digital capital? Digital gold. Capital is a long-term store of value, Bitcoin is a store of value.

The U.S. government has embraced Bitcoin as a store of value, and that means every major cabinet member, and I'm showing them here. And of course, the decision that America is going to be the Bitcoin superpower is an endorsement along with the President's point that you don't ever sell your Bitcoin.

Let's go to the next slide. Wall Street has embraced Bitcoin as digital capital. Now you've got 1.5 million Bitcoin held by the spot ETFs, about $170 billion worth. The most successful ETF in the history of Wall Street is IBIT. And IBIT has explosively grown even in the past few months. The daily liquidity in BIT is now approaching $4 billion or more a day. Open interest in BE has gone to more than $50 billion in open interest. And so this is wildly successful. Next, Public companies we're the first public holder about a year ago, there were 60.

Now there are 200-plus publicly listed companies holding Bitcoin. That's more than 1 million Bitcoin, and it's about $116 billion in value. I've got a few metrics here on this slide that show just the scale of the Bitcoin market. It's a $2.3 trillion market cap. It's $58 billion of daily liquidity, $76 billion in BTC open interest in the derivatives market, and it's backed by 26 gigawatts of power. That's 26 full-on nuclear reactors. It's -- and the hash rate keeps going up. We're now up to 1,100 exahash.

And you have 30% of all voters in the United States that are registered -- of the registered voters that are crypto holders the industry crypto is $3.9 trillion, and there's 700 million crypto users and of course, 300 million Bitcoin holders. So this is a global movement at this point. Bitcoin is the capital asset at the center of the entire crypto industry. And it is traded on 1,000 exchanges. Next. Now what do you do with digital gold?

Well, what do you do with gold? You issue credit on gold. For 300 years, the Western world ran on gold-backed credit. Bitcoin is digital gold. What we've realized is that the killer application of digital capital is digital credit. And strategy enables a wide variety of securities based on that digital capital. What you can see here is that the baseline is digital capital in an ETF wrapper, and it's got a 53% annual -- 53% return on average for the past 5 years. And the volatility is 38% right now. Now what we have done is created 4 digital credit instruments that strip the volatility and extract or distill the performance out of B.

So Strike's volatility is 28%, and it gives you a 9% effective yield and some upside. Stride's volatility is 16. It gives you a 13% effective yield. Strike's volatility is 14%, and we extracted a certain type of risk or we're mitigating I'm stripping off a bunch of risk. We're extracting a yield. We're damping the volatility. And the largest piece or the greatest piece of financial engineering we've performed is stretch, which has converted that 38% volatility into 8% and extracted that effective yield of 10%.

And of course, as you can see, since we damped the volatility, there is sort of a conservation of energy or a conservation of volatility in the thermodynamic universe. And so where does the volatility go? It goes to the equity. So -- the volatility that we strip off of BTC accrues to MSTR. And of course, the performance and the opportunity that we strip off of BTC also accrues to MSTR. So what you see here is a fairly straightforward financial engineering exercise. We are a structured finance company, and we are starting with a blob of high energy capital, long duration, highly volatile, high performance. We are engineering out different durations, different volatilities, different risk profiles, different performance profiles.

We're even transforming it from the BTC currency into the USD or to different currencies. And that is the exercise. Next. Now this chart shows the economic landscape we work in. Here, you see Bitcoin's performance of 53% over 5 years, almost double the MAG 7. You can see gold performed 15% a year. It's slightly edged out the S&P at 14%. S&P is the conventional cost of capital. Real estate is underperforming the S&P dramatically in this time frame, only up 6% a year.

Money market instruments, those short duration treasuries in the U.S., on average, have provided 3% performance a year and mid-dated to long-dated bonds are minus 3%. Strategies equity is plus 83%. And of course, all of our financial engineering is based upon taking advantage of a lower cost of equity and a lower cost of credit and then using that in order to acquire Bitcoin, which then accrues to the benefit of the equity holders. Let's go to the next slide. So let's look at our products, Strike.

Strike is structured Bitcoin. It's convertible preferred. So it has some upside via the equity component at 33% of Strike is equity. It has some dividend, an 8% dividend at par right now an effective yield of 9.1% and then Strike pays ROC dividends, which means they're tax deferred as you step down your basis. And so the tax equivalent adjusted yield is 21.6%.

How do you get to that? Well, you take the cost of strike, you subtract the equity component and then you look at the effective yield of the remainder and then you look at the tax adjusted effective yield, and you end up getting to 21.6%. So this is a misunderstood security, but it's got very compelling offers because on one hand, it's an indefinite -- a perpetual duration call option on the stock and it's also a perpetual dividend.

So if you're a very long-term investor that wants the best of both worlds, some upside some income and if you want risk stripped away, well, we've got a BTC rating of 5.2, which means that Bitcoin could fall by 80% and you would still over-collateralized.

If you bought Bitcoin and it fall by 80%, you lose 80% of your money. If you buy this and Bitcoin falls by 80%, you still keep your money, right? It's a principal protection. And so down here at the bottom, I've got a table and you can see the effective yield of the things that Strike competes against or 1% to 4%. And so this is a very unique thing. It's really -- it's higher yield, more upside longer duration than alternative investments.

And let's go to the next slide. Stride is our second credit instrument. This is long-duration, high-yield credit. The effective yield is 12.5% and that makes the tax equivalent yield nearly 20%, 19.9%. It's still 4.8x over collateralized, so Bitcoin can still fall by 75%, you're still over-collateralized.

And it's got a duration of 8 years, which is a duration. But really, what you're getting is you're getting the 10% dividend at par perpetually forever. And -- so if you compare it to the universe of competes against, the effective yield on most high-yield corporate bonds of 6%, and they're taxable 6.2%, leverage loans are 6.8%. They're taxable as normal income.

Preferred stock, ETF 6.2%; emerging market debt, 5.6%. So the effective yield of Stride is double, but the tax equivalent yield Stride is triple. And so you get triple tax equivalent yield with more collateral coverage. This, again, is a misunderstood instrument, but if you're seeking maximum cash flows, right, and if you trust Bitcoin minimally and you trust the company, then this is a very interesting opportunity for you.

The next instrument is Strife, STRF. While that's long-duration senior credit it's cumulative, and it's got more protections because there are penalties of the company wherever to suspend a dividend, but -- and it's also more highly collateralized, the BTC rating of 7.5 and also $7.50 a Bitcoin for every dollar of Strife outstanding, the effective yield is 9.1% because it trades above par, and the tax equivalent yield is 14.4%.

So when you look at this against comparable assets, the effective yield is double, the tax equivalent yield is triple and the collateral coverage is 2x to 3x more. This has got a duration of 11 years. It's a longer duration. What that means is that if interest rates move up or move down, there's going to be more volatility on this.

If you believe interest rates are going to dive, then this is a great thing. You would like a long duration instrument. If you believe that interest rates are going to go up, then that would be the opposite. You probably wouldn't.

Now let's go on to Stretch. Stretch is the highest degree of financial engineering we've engaged in because with Stretch, our goal was to strip the volatility, strip the -- compress the duration, convert the BTC into a pure USD yield and then offer that to the investor. So right now, Stretch is 10.4% effective yield, but that's a tax equivalent yield of 16%. It's just slightly under 6x over collateralized, and of course, it's the lowest volatility.

Our goal with Stretch is we want to give everybody something that's competitive with the money market that pays you 10.4% that is tax deferred. If you walk down the street and you say to someone, do you want a convertible bond? Not sure.

Do you want a 20-year cryptobond, not sure. Do you want a crypto junk bond? Not sure. Would you like a bank account that pays you a 10% tax deferred? Yes. Yes, everybody wants a bank account that pays them 10% tax deferred, right? Why wouldn't you, right?

And so this is -- to be clear, it's not a bank account, it's not even a money market. But we are structuring it to compete with that source of funds. That's what we call treasury credit. It's for corporate treasurers. It's for your family treasury. It's the money, the money that you probably need to spend in the next 12, 24, 36 months.

If you didn't need the money for 4 years or more, I would say, you probably ought to go look at buying Bitcoin. If you don't need the money for a decade, you buy a Bitcoin, it's a better deal. But if you need the money in 4 months or 8 months or 2 years or you have 30% of your working capital, it's stable, that's a treasury obligation.

And right now, your options aren't great. So here, we're offering 10.4% effective yield, but 16% tax equivalent yield. If you look at bank accounts, they yield nothing. Money markets are 4% in the U.S. So this is 4x better, 4x better than the tax equivalent yield of a money market.

Now you'll note, it's more volatile, right? The money markets managed to get down to less than 1% or about approximately 1% volatility. We're still 8% volatility and I think that's in some part because we're still seasoning. And so we are going to continue to work to get this volatility down below 8% to 7% to 6%. We got to 5% about a week ago. We don't know how low we can get it, but our goal is to make it the least volatile of our credit instruments.

Let's go to the next slide. Phong spoke about return on capital. The point that I want to make is ROC dividends have been around -- this is settled tax law since 1910. Return on capital has been around since 1910. You'll find hundreds of companies that have issued dividends that are return of capital. You'll find oil pipelines, natural gas companies, real estate companies, et cetera. We just happen to have a very compelling business model.

The treasury business model allows us to have much greater visibility to return of capital than if you were just a REIT or you're a gas pipeline or something. And so the difference really is it's 0% upfront dividend tax rate versus 20 to 30 or 30 to 55. And if you got your money in a money market and you live in California and New York City, it's a pretty heavy tax load.

And so presumably, New Yorkers or San Francisco dwellers when they start to look at this, are going to find it to be pretty compelling. The fact that we expect this to continue for the next 10 years means that we're not just announcing that this quarter is a return of capital. We're expecting the next 40 quarters to be return to capital, and I think that's a pretty material thing.

Let's go to the next slide. Now all of those credit instruments have one impact, they amplify our Bitcoin exposure. So right now, strategy has 11% leverage, 21% amplification, okay? Amplification is the leverage that comes from debt plus the improved performance that comes from equity. Our goal, our target as a company is to drive leverage to 0.

When we equitize the convertible bonds and if we don't issue any more bonds and we don't intend to, leverage will go from 11% to 9% to 7% to 5% to 3% to 1% to 0. So our leverage is going to 0. Our target for amplification is to drive the amplification to 30%. So we're going to drive amplification up and drive leverage down. And of course, here, you can see on this chart, if we run at a 30% amplification level, what naturally happens is your 200,000 per share become 560,000 per share over 10 years.

That's a BTC factor of 2.8. That means that we actually perform 2.8x better than an ETF. That is the source of the premium and the equity. That is the value that's being created by the treasure -- the digital treasury model. And of course, the value creation is a function of the amplification.

When you increase leverage, you increase risk. But when you increase amplification, you just increase value creation. So if we get to 30% amplification and we may very well go to 35% or 40% amplification, because we're doing it with digital credit and digital credit doesn't have the risk profile of debt.

Let's go to the next slide. We are at a historic point, we're kind of at an inflection point, we believe. Our multiple to NAV, mNAV has been trending down and has been trending down over time as the Bitcoin asset class matures, as the volatility decreases. The volatility, by the way, is decreasing in part because the growth of companies like ours, the maturation of the Bitcoin treasury industry, it's decreasing because of the success of it's decreasing because the derivatives market onshore has grown dramatically.

The derivatives market and IBIT has gone from $10 billion to $50 billion. And so people are using those derivatives to damp volatility, and that's very good for the asset class, it's very good for the industry. In the near term, it's resulted probably in some pressure on our mNAV. But we think that over time, as the credit investors start to understand the appeal of digital credit, they're going to want to buy more, and we're going to sell more and issue more credit and as the equity investors start to appreciate the uniqueness of the Bitcoin treasury model. And especially, the uniqueness of our company and our ability to issue digital credit worldwide at scale, we think that, that's going to drive an appreciation of the equity.

Next slide. Why am I so enthusiastic about digital credit? Well, there are 7 innovations in digital credit that make it better than traditional credit. So I'm going to take you through the 7 things.

First of all, traditional credit, like a mortgage, well, it's built on a depreciating house or depreciating warehouse or a traditional credit. It's built on collateral that's a depreciating asset. A bunch of fiat currency, a corporate product, a corporate service, a corporate warehouse, a bunch of hardware, a data center full of NVIDIA chips that are depreciating with useful life, that is collateral, which is collapsing.

It makes it hard to pay a higher yield when you have a depreciating asset. But our collateral is Bitcoin, it's digital capital. And Bitcoin is an appreciating asset. So whereas $10 billion of warehouses are most valuable, the day they're built. $10 billion of Bitcoin is only going to get more valuable, not less valuable. And so that digital capital is the first big innovation.

Next, the second innovation is we're replacing traditional risk with digital risk. Traditional risk, it's opaque, it's heterogeneous, it's discrete. You own 8,700 houses or you own -- you're exposed to a portfolio of 47 junk bond issuers. And maybe they're fine, but then there's a tariff or there's a trade war or there's a competitive change or maybe there's a strike or maybe an airplane crashes or there's a COVID lockdown.

Whenever you have these kind of conventional real-world issues, you have a discrete explosion of risk, a forest fire an earthquake or a change in a political regime or a change in tax rates or a change in customs duties. So traditional risk is opaque, it's heterogeneous, it's discrete.

On the other hand, digital risk is transparent, it's homogeneous, it's continuous. You can go to our website and we update the risk model every 15 seconds. And so it is completely continuous. We update the price of Bitcoin. We update the volatility of Bitcoin on a continuous basis. We update the BTC ratings.

You can plug in your statistical models into them. And of course, all the risk is based upon the year outlook of BTC ARR, BTC vol, BTC price and BTC rating. So digital risk is something where you don't have to wait for a year for a credit rating agency to publish a new report to tell you whether your favorite airline or your favorite restaurant chain is riskier or less risky. With digital risk, you can literally plug into the website and you can recalibrate and calculate your risk every 15 seconds on Saturday morning, and that's a big upgrade.

Now there's a third innovation in digital credit. Our third innovation is we don't just -- all credit is not created equal. We don't just issue debt. Debt is credit. Bank deposits are credit. When a bank takes your money, they're creating credit and your bank account pays you whatever they pay you.

When you put money in a money market, it's credit. Of course, junk bonds, sovereign debt, mortgage-backed bonds, they're credit, but their debt. And debt and deposits or liabilities, they amplify risk. If there's a run on the bank, people withdraw their deposits, right. You're going to have a collapse of the entire banking system.

When the debt comes due, when your 3-year note comes due, when you get to month 34, everybody goes crazy and loses their mind because the capital is getting called away from you, right? If you have a bad quarter in the 12th quarter and you've got 4-year debt, you amplify risk, the equity collapses people go crazy.

What we've done is use preferred equity. It's not debt. Some of those people think, okay, well, it's a liability. It's equity. It's actually counted as -- preferred equity is equity on the balance sheet, it's not debt. It's an asset, not a liability. And so therefore, it mitigates risk.

How does it mitigate risk? Well, I mean, the first obvious way of mitigate risk is when you sell $1 billion of bonds, you have to pay them back in 5 years or 7 years or 3 years. When you sell $1 billion of preferred stock, you never pay it back. So there's $1 billion of refinance risk that just goes away.

The second way that it mitigates risk is that the dividends are approved by the Board, they're not coupons. You miss $1 million of coupon payments, you're in default. Whereas if you're short $1 million of a dividend payment, you can suspend $1 million, you're not in default. So you could think about preferred equity is permanent capital and shock absorbers to the business model of the company. And therefore, digital credit based on preferred equity is dramatically better than digital credit or credit that's based upon debt or deposits.

The fourth innovation is, we didn't just issue preferred equity, we issued perpetual preferred equity. Sometimes banks or issuers issue equity, which has got a 3-year life or a 5-year life for a refinance option or a call option or a put option that creates some sort of refinance risk or withdrawal risk.

But when you have a perpetual equity, it is permanent capital, right? Your bank might have $100 billion that's overnight money. Someone can take the $100 billion away from them. You have $100 billion of debt at your airline, it's going to be taken away from you in 3 to 5 years. When we have $100 billion of preferred equity, we have it forever, like forever 1,000 years. It just goes on and on and on.

Perpetual life. When you have permanent capital, you can make indefinite investments. We can buy Bitcoin to hold for 100 years, if we have capital for 100 years. When you have a 5-year junk bond, you can't make a decision that's going to -- the truth is you have to have decisions that are no longer than like 2 or 3 years because you have to keep rolling them because of the refinance and the withdrawal risk. So the perpetual life of the instruments is the fourth big innovation.

The fifth big innovation is that we took these securities public. This is public credit. A lot of times, people sell their credit instruments by a 144A offerings to a private market. It's like I sold it to 50 investors and they're traded over the counter. Those are illiquid. They're unbranded.

Can anybody name the 17th tranche of bank credit sold by one of the large banks in the U.S. They have CUSIP numbers. They're traded on Bloomberg's between 37 counterparties and they all know each other. So it's unbranded, it's illiquid, it's local, it's very difficult to buy it even if you wanted to buy it. You would need a professional money manager to even find it for you or buy it for you.

When you do, there would be 300 basis point credits or bid spreads, very big spreads. The thing traded last 2 weeks ago. That's the problem with private credit. Public credit like SDRC, it's liquid. I mean it traded nearly $100 million today in the market. It's branded, it's got a name, Stretch. It's global. You can buy it if you're in the U.K. from your retirement account. It's easy to access.

You can buy it on Robinhood. You can buy it on Schwab. And so public securities become public brands. And if you're going to buy a credit instrument, what would you rather have a credit instrument that's traded by 12 funds in Italy that know each other or would you rather have a credit instrument that's held by tens or hundreds of thousands of investors worldwide that I'll refer to it by the name Stretch.

And if it ever gets mispriced or it gets undervalued, they're going to leap in and they're going to put lots of money behind it. When we did the IPO of Stretch, we priced it at $90, we said we're targeting par $100. There were individual investors that bought $250 million of that instrument, $250 million, right? The value of a public security, a public credit instrument, is if someone goes wacky, crazy and decides they want to misprice it, there are people that will walk in and they'll buy $50 million or $100 million or $500 million to fix the market because they can. That does not happen in private credit markets. And so public branded global securities are just better.

Let's go to the next innovation. Digital creation. Ask yourself, how long does it take for a bank to create $1 billion worth of home mortgages? How long does it take to issue thousand $100 million loans? It's very difficult. It's very -- it's slow, it's expensive, it's labor intensive.

So the creation of traditional credit is very hard. The reason that you have banks with 37 floor buildings that have 27,000 people in them is because the creation of credit is expensive and difficult. On the other hand, we can create $1 million of credit, $10 million of credit, $100 million of credit or $1 billion of credit in 60 seconds on any given trading day.

It's all automated. It's efficient, it's instant. So digital creation makes this completely scalable, right? We have a very scalable business model. And you can understand why if someone wanted to buy $10 billion of commercial credit backed by airplanes, it's kind of hard to create the airplanes to back to $10 billion. You can't just create the airplanes in 60 seconds. But we can buy $10 billion a Bitcoin to back $10 billion of digital credit, and we can do it contemporaneous with the demand. So that's the sixth advantage of digital credit.

Let's go to the last point. The last point is traditional credit is taxable whether it's fully taxable as a debt instrument or it's partially taxable as a qualified dividend. Digital credit is tax deferred income, right? We pay ROC dividends. We pay ROC dividends because of the business model because we have digital capital as the underlying asset because we have a digital treasury company and a digital treasury company business model, we pay ROC dividends and ROC dividends are profound competitive advantage for the credit issuer and for the credit investor.

Let's go on. Next slide. Here, you can see the value of the Bitcoin treasury model. We have created a flywheel. It's a scalable, tax-efficient fixed income generator. You issue digital equity and digital credit that's tax deferred. We pay dividends on that credit, they're tax deferred. We purchase Bitcoin with those proceeds, and we hold it indefinitely, that's tax deferred, right?

So it's a triple tax deferred business model, scalable, new, never been seen in the history of the capital markets. That's why it will take people a while to get their head around it, but it really is a beautiful instrument once you understand it.

Let's go to the next slide. This digital treasury model allows us to create a digital credit factory. If you look at the company, what we're doing is we're manufacturing USD yield for credit investors and we're delivering them that yield in the form of ROC dividend. So we're generating tax deferred dividend yields in USD, and they're giving us capital.

We are then buying Bitcoin with that capital. So we are funding the crypto economy. So the crypto economy is a 750 million people that are growing by millions every day that believe in pure global finance and they're engaged in everything under the sun and 1,000 exchanges. So we fund that economy, and they return to us Bitcoin. And Bitcoin is 121 million-th of all of the capital in that economy.

And so the credit investors get their yield, we get our Bitcoin and then we're shipping and delivering BTC yield to the equity investors. So the equity investors want to outperform Bitcoin. And so the equity investors get amplified BTC exposure, which you can quantify via BTC yield. The credit investors, they get their USD yield.

The equity investors, they're getting tax deferred growth. The credit investors get tax deferred dividends. It all creates a very powerful feedback loop. And our long-term forecast as Bitcoin outperforms the S&P, I expect it will go up 30% over a year for the next 20 years. So we're generating BTC NAV growth, and we're generating operating income and that is tax deferred. And so it's a very powerful business model once you understand it.

Let's go to the next slide. If you want to quantify ROC dividends a little bit better. If you actually have a $100 instrument, $100 credit instrument that pays you 10% at par. If you reinvest those dividends every quarter, and it's a taxable dividend or it's a taxable coupon at 37% tax rate, and that's what a bond would be or a money market or a corporate bond or a junk bond, you're going to have $187 at the end of the 10 years.

If you get that payment in a qualified dividend and you pay a 20% tax rate, you're going to have $221 at the end of the 10 years, so it's 18% more. And of course, if you receive those dividends as ROC dividends and reinvest the ROC dividends every quarter for 10 years, you're going to end up with $269 at the end of the period, that's 44% more.

So clearly, ROC dividends are compelling for the investor, and they get more compelling as you live in a higher tax jurisdiction, and as the tax rates go up, they get even more compelling.

Let's go to the next slide. So digital credit opportunities, how do you break this down?

Next, this is Stretch versus every other credit instrument in the United States on average. While you can see a Stretch is offering 16.5% tax equivalent yield, the hottest thing in traditional credit is private credit, it's 7.6%; investment-grade bonds, 4.7%; money markets, 4.1%; commercial paper, 3.9%; your bank account, 40 basis points.

So what you can see is stretches offering more than double anything in the traditional credit market, but it looks sort of like 4x better in the U.S. Let's think about all the digital credit instruments. What you see here is that digital credit is simply superior to conventional credit like the worst instrument or the lowest yielding instrument we have, STRF, Strife, a tax equivalent yield of 14.4%, it's double the best thing in the traditional credit market. Stretch is quadruple, Stride is 5x what you'll get from a money market; and Strike is even higher after you adjust for the equity component.

So you can see these numbers are off the charts, and it's going to take a while for credit investors and for the market in general to adjust and digest this, but we believe the digital credit is the killer app of digital capital, and we believe that the most compelling business model is a digital treasury company built on digital capital issuing digital credit, and this chart shows you why.

Now this is the U.S. The U.S. has the highest risk-free rates in the Western world. So let's look at the next chart. What I'm showing you here is the Stretch rate, it's our short duration sort of 1-month adjusting credit instrument versus the 1-month rate for the U.S. dollar and then let's look at the currency in Australia, it's 3.5%; Canadian 1-month rate is 2.7%; Korean won, 2.5%; European, 1.9% and falling; Singapore, 1.4% JPY; the yen is 50 basis points; and the Swiss franc is negative.

So what you might take away from this is that we have an opportunity not just in the U.S., but in the Middle East and Great Britain in Australia and Canada and Korea and everywhere in Europe, in Singapore, in Japan and in Switzerland, and we're studying each of these markets, and we're thinking very hard because we can create a digital credit instrument in Great British pound or in Canadian or in euros or in Swiss franc.

So we create the currency we want. We put the appropriate amount of risk on it. we strip away the duration and then we start selling pure yield. That is the compelling use case. And so are we on a mission Yes. We're on a mission. We're on a mission to basically give everybody a bank account that yields 10% or in this case, a money market that yields 16.5% tax equivalent, right?

We want to change people's view toward money, change their view toward credit. And it's not very complicated to figure out why you might want to do it, and I don't think it will be complicated for people to figure out why they might want to own these instruments.

Next slide. Let me just end with an observation. We're in the business of creating digital equity by harnessing digital capital and using the digital capital to create digital credit instruments. So the equity MSTR is digital equity. If you want amplified BTC because you kind of want to enhanced exposure to digital capital and you want exposure to digital credit, then you would buy the equity. The price you'll pay is 62 It will be very volatile.

Now the next option you have is to -- is Bitcoin. And so let's look at that. If what you want is to strip away the counterparty risk and the currency risk, right, and you want a long-term store value, you don't buy the equity, you buy BTC, and that's 42

Now what if you want a mixture of upside and quarterly income, you would buy Strike 28 If you just want to maximize your cash flows, then you would buy STRD, 16 And if your idea is you want the highest seniority and the greatest degree of investor protection, then you would go to Strife and you get a lower 14

And then the final option, of course, is -- if you're looking for stability, simplicity and minimal volatility, you go to a treasury credit instrument, which is SDRC, Stretch. And when you put all these things on the same chart, I think it becomes pretty clear what we're doing and why we're doing it.

And every one of these instruments is aimed at a different type of investor. We couldn't create the credit without the equity and without the capital. And of course, they're all reflective, right? The more credit we sell, the better it is for BTC and for the equity. And as the equity appreciates, that's good for the credit, and that's good for BTC and as Bitcoin appreciates, that's good for the credit, that's good for the equity. So it's a very elegant business. We're very blessed and we feel honored to have the opportunity and couldn't be more excited about it.

Let's go to the next slide. So what I would say here is if you're not sure what you want, and you've listened to me so far, then you want Stretch, right? For those people that aren't sure what they think about Bitcoin or how they feel about the company or digital credit or anything, right, the simplest idea is 10.5% dividends paid monthly for those who like money, that's simple.

You like money, you trust the company, but you don't understand anything else, you collect 10.5% dividends, they're tax deferred, they're paid monthly, tell your friends.

And I'll just end with our last slide, which is our principles, and I want to remind everybody, our principles are to buy Bitcoin, hold Bitcoin, treat all our investors with respect, prioritize the equity, generate positive yield, innovate with fixed income securities, maintain a healthy robust balance sheet, promote global adoption of BTC as a treasury reserve asset. And I want to thank everybody for your time and also for your support. We couldn't do it without you. Thank you.

Thank you, Michael. We are now going to proceed to the interactive live Q&A session of our webinar. I would like to invite all of our Q&A guests to come on video, and we look forward to hearing your questions. We'll go one at a time. I'll call your names and you can direct your question to the management team.

For the first question, I would like to invite Andrew Harte, our research analyst from BTIG. Andrew?

Jim, thanks for having me on. I appreciate all the details in the presentation as always. So a lot of our investor questions are focused on the company's ability to pay dividends, especially as the preferred equity strategy continues to grow. Can you just shed some additional color and light on plans to fund those dividends? And then if there was a period where the mNAV compressed or was even below 1x, how could that plane potentially change?

Yes, I can cover this one. And Andrew talked about this a little bit earlier. Right now, our dividends and interest on our convertible notes totaled $689 million annually and our primary strategy when our mNAV is above 1 is to fund that through ATM issuances.

And just to remind everybody, in the last 12 months, we've issued about $27 billion of equity, which means that that's about the $650 million-or-so, it's about 2.6% of how much equity we've raised. So we clearly have the ability to raise equity to cover our dividend payments and our interest.

Now the big question is what happens when it becomes dilutive to shareholders to issue equity and when we're below 1x and NAV or if we go below 1x, what would we do? And there are other things that we've explored and talked about, we would -- we could sell equity derivatives. We could sell bitcoin derivatives, and we could sell high basis Bitcoin to cover our dividend needs for our preferreds.

What's important when we do those things, and we've talked about it, is we want to preserve the rock dividends on our preferreds, so we'd have to do them in ways that are avoid positive tax E&P right? We wouldn't do things like sell equity or Bitcoin derivatives that would cause our E&P to be above 0. We are able to sell high basis Bitcoin potentially at a loss and cause negative E&P and offset that with other Bitcoin that would cause positive E&P. We wouldn't sell the software business.

I know there are questions about that because that would cause income and positive E&P. And so we want to preserve the rock dividends, the preferable tax deferred treatment of our preferreds. So those are some of the things that we would do in that scenario. We don't anticipate that scenario, but we do have plans in place.

Thank you. For the next question, I'd like to invite Pierre.

It was mentioned that there would be marketing and advertising around the preferreds. What do you anticipate that expense looking like and what the return on investment would be for those efforts?

I can cover that. We're just starting to get into this. Actually, you saw one of our advertisements for those who like money Stretch, right? And so we'll start to experiment with paid advertising on platforms like an X or YouTube.

I think whatever the expenses it would be quite minimal compared to the increased inflows that we hope to drive into our preferreds, right? And I think we've gone through in the past we're able to raise an incremental $1 billion in our preferred. We immediately turn around by Bitcoin, and that's immediately accretive to Bitcoin yield and Bitcoin per share.

I don't expect we're going to spend a ton of money upfront to all experiment, see what are the right channels and what causes what causes people to wake up and understand the Bitcoin credit machine that we have.

And then in addition to just digital marketing, we're out meeting with investors, meeting with potential investors quite a bit now. And I think there's just an about a feet on the street between Mike, myself, Andrew, Sharish, CJ and the entire team.

Yes, I would just piggyback on that by saying I just spent a lot of time in the Schwab studios and recording content to go on the Schwab network. I was in Vegas at Money 2020. I was in Austin at a credit conference. I'll be in Naples, Palm Beach. Got a big road show throughout the Middle East for 1.5 weeks coming up. So there's a lot of outreach. We get invited to speak at a lot of conferences.

We also get invited to speak on television, right? So some of the better marketing channels is just go on Bloomberg, go on Fox, go on CNBC. And I think that the difference between what we're doing now and what we're doing a year ago is a year ago, people said, well, what is Bitcoin, is it going away and can you sell me on Bitcoin?

Now we're beyond the Bitcoin going away. Everybody has embraced it as digital gold. Now when we go on Bloomberg or Fox or CNBC, we're saying, Stretch, it's 10.5% dividend tax deferred. You might want to check it out. So we have -- by the way, you know how I used to say it takes like 1,000 hours to understand Bitcoin or 100 hours to figure this out. It doesn't take that many hours to figure out that some of that yields 10.5% tax deferred is better than your existing money market or bank account.

So we've got simpler messages, and we're taking them to every channel. We will try We don't think we can sell the Bitcoin message in 30 seconds to 70-year-old conservative traditional retirees. But we do think that we can sell Stretch in 15 seconds or 30 seconds to military retirees live happily ever after. And we know this anecdotally because it's happening everywhere we go, everybody we talk to.

It's the simplest product for us to explain. It's hard to sell convertible bonds, it's hard to sell 30-year crypto bonds, it's hard to sell Bitcoin to the rank and file. But everybody wants a bank account that pays 10% that you don't have to pay tax on. So we're going to work every possible marketing channel in order to get the word out.

And the good news there is we're getting an avalanche of request to speak. Everybody wants to talk to us now. right? So just around the time that everybody wants to interview us, everybody wants to talk to us, we have the simplest message, you can put it in 30 seconds. And so it's a very exciting time for marketing.

Thank you, Pierre. For the next question, I'd like to invite Mark Palmer, our research analyst from Benchmark.

Yes. We have already seen the beginnings of consolidation within the digital asset treasury space. Is there a circumstance under which strategy would step into the market as an acquirer of a Bitcoin treasury company that was trading at a materially lower mNAV in a transaction that would be, by definition, accretive as a means of accelerating its acquisition of Bitcoins?

I'll give my opinion, and then Phong can chime in. We've done 84 acquisitions of Bitcoin, and every one of them was homogeneous transparent, and you could instantly calculate whether it's accretive or dilutive and they were general all accretive.

And our focus is to do high-speed transparent digital transactions and sell digital credit and buy Bitcoin. And we think that it's a big advantage of the company that the business model is so transparent, predictable, clear. Because the business model is predictable, that makes it easy for the equity analysts to make their decisions.

And it also makes it easy for the credit analysts to assess the credit quality. So generally, we don't have any plans to pursue M&A activity even if it would look to be potentially accretive. It might be, but there's just a lot of uncertainty and these things tend to stretch out 6 to 9 months or a year and an idea that looks good when you start, it might not still be a good idea 6 months later, and it can be very distracting for the management team, while you're either integrating or pursuing those things.

So our management team is laser-like focused on selling the 4 credit instruments that we have and then expanding the reach of our digital credit instruments internationally, and, of course, improving the quality of our balance sheet, equitizing in convertible bonds, those are all the things that we're very excited about.

As an operating company, the great thing about operating company is, yes, you have the option sometime in the indefinite future to do something. And if you're walking down the street, and there's $1 billion and you can bend over and pick it up for a $0.05. You have the option to do it. And I don't think we would ever say we would never, never, never ever. But what we would say is the plan, the strategy, the focus is sell digital credit, improve the balance sheet, buy Bitcoin and communicate that to the credit and the equity investors. Phong, do you have anything to add on that?

No, I don't have anything to add. I would generally agree with what you said. We've been a software company for nearly 30 years or over 30 years. And software technology M&A is very difficult. There's always something hiding behind what you actually think you purchase. And I think that I would say that the same thing is about acquiring the Bitcoin treasury companies .

And just 1 more question. With regard to your intention to tap international markets from a capital raising perspective, is the idea that you would effectively market the same for perpetual preferred instruments that you currently have, but just to different markets around the world? Or would you be designing new instruments that were specific to those geographies?

It will be the latter. We will design -- if we're going into Canada, we would design an instrument that's denominated in Canadian CAD and we would offer it to Canadian investors on a Canadian exchange. So it will be a native product because if you're the investor there, you don't want to take currency risk. And if we go into Europe, we would create a euro-denominated instrument, so -- and we would offer something that represents everything we've learned from the first 4 credit instruments.

If we can improve it, we would. But primarily, the Europeans want a euro currency instrument in Europe and every international investor does. What we've discovered is a lot of European investors, they can buy the American instruments. So if they wanted a U.S. dollar-based treasury credit instrument, they would buy Stretch. And so they can already get to it.

In fact, one of the more pleasant surprises I learned is we accumulated a ton of European and British investors in 2020 because they could buy MSTR and they couldn't buy Bitcoin. So our digital credit instruments are already global. If you want U.S. dollar credit instruments, then you're already buying them globally.

We think the big unlock is that we can create a digital credit in any currency. We can take JPY risk or we can take euro, we can solve that problem. And there's people that will buy $1 billion of something if they don't have to take the currency risk and they'll buy nothing if they have to take the currency risk. So our job is to bridge that capital divide. And so when we do it, we'll do it with a native instrument and a native currency on a native exchange that is going to be presumably the most compelling credit instrument in that capital market that anybody has ever seen.

Thank you, Mark. For the next question, I would like to invite [ Natalie Brunel ].

Beyond Bitcoin price action, can you identify 2 or 3 very specific challenges that are serving as headwinds for the growth and performance of strategy and even the Bitcoin treasury industry more broadly? And what actions can be taken to overcome those?

I think Phong highlighted some of them in the discussion of S&P credit ratings issues, right? The fact that Bitcoin is not viewed as capital by the traditional credit ratings industry. So I think the view of Bitcoin as -- and the collateral value of Bitcoin and the traditional views under Basel rules, under the rules that govern our banking system, our insurance companies and our credit rating agencies I think that, that's a structural thing.

Like when when FASB didn't allow you to recognize gains, but they made you recognize losses, you didn't have -- and you had indefinite intangible accounting, that was pretty crippling. I think that we fixed that, and I think that fixing capital risk rules will be a big one.

I think the second is banking acceptance, custody and credit -- banks issuing credit on Bitcoin. So we're hearing rumors and we've heard that a number of major banks in the U.S. in the first half of 2026 will start to buy Bitcoin, sell Bitcoin, custody Bitcoin and issue credit and margin lines against the native Bitcoin asset.

That will be great for them, that will be great for Bitcoin, that will be great for us. That will accelerate adoption. And so I would say neither of these are things that I would ask for government help for, like we don't need a law to fix it. What we do need to do is lobby the banks, lobby the insurance companies, maybe I should replace that word would educate, educate the banks, educate the insurance companies, educate the credit rating agencies, and then finally, educate the traditional fixed income investor, the retiree and the corporate treasurer, educate them that they're actually now is a better option.

And so I think that's what we need to do in order to grow the industry right now and that's going to be our focus over the next few years.

Thanks, [ Natalie ]. For the next question, I would like to invite Brian Dobson, research analyst from Clear Street.

Yes. So you received a credit rating, and I agree that that's a very important first step to opening doors at pension funds and insurance companies. I know it's very early days, but are you already having conversations with those investors? And if so, what's the feedback?

And then as a second part to that question, would you have the preferreds and converts rated separately? I mean I think a lot of investors will probably just infer instrument ratings from the general company rating. But what are your thoughts on that?

I can start on that, Brian. We had, before we received a rating, conversations with large institutions, insurance companies, pension funds that said that they could not easily, without a significant capital penalties, invest in an unrated instrument and that they are quite interested in the structure of what we provided, but just couldn't do it.

So that was why we went and pursued a rating with the major rating agencies, one of the reasons. So I do think this opens up doors to some of the categories that you just mentioned before. And I think it's not going to be an avalanche like tomorrow, but as we go out and market it and Mike has discussions and I and Andrew all go out in the market when we start talking to these folks, I think their thought process will certainly change over time.

Yes. And then I just wanted to follow up on an earlier question about selling into Asia and Europe. Both of those markets represent -- or have rather unique regulatory hurdles. I guess how far along are you in those markets?

We're pretty far along. And you're right, but that's part of the reason why we need to create products that are very specific. What exchange, is it retail focused, is that institutional focused, is it regulated, is it unregulated, what is the tax regime?

Look, what we've done since the beginning of the year with preferreds as we went uphill against a market that wasn't familiar with a Bitcoin-backed perpetual preferred with a return of capital tax structure and it took us 9 months and we were able to raise $6.5 billion or $6 billion, right?

And because we did that, I think we sort of cornered this market for a good period of time. I think our ability to go understand the regulatory structures, the tax structure is it's harder than in the U.S. But once we've broken through that, that creates a competitive moat for us to be able to offer products that clearly are superior to what's out there. So we welcome the challenge, I guess, is what I'd say.

Thanks, Brian. For the next question, I would like to invite [ Adam Livingston ].

Congrats on the great quarter and the credit rating. The Japanese Bitcoin treasury company has recently announced a share buyback program with the intention of being able to strategically deploy buybacks at times that would increase Bitcoin per share for the equity holders. Would Strategy ever consider adopting a similar program as a means to increase Bitcoin exposure for shareholders if MSTR ever trades below a 1x mNAV?

Phong, do you want to start?

Yes, I'll start with that. I don't think there is anything that we wouldn't do that would create incremental Bitcoin yield, that increase more been per share for our shareholders and preserves our ROC dividends for our preferred holders, right?

And so we have an open buyback authorization already. We've done it a long time ago. I think the last buyback we did was 2018-or-so. It's not our primary strategy, but it's an option if we would go down that path. Mike, do you want to add anything?

Yes. I would say we're open-minded toward a variety of options. Right now, our preference is to grow the capital base. But if it was compelling enough, we would look at it.

Thanks, Adam. We have 2 more questions to go. So for the next one, I will invite Lance Vitanza, our research analyst from TD Cowen.

The 30% BTC yield target for 2025, I'm surprised you maintained it given the recent decel in Bitcoin accumulation. Getting to 30%, which seem to require you to raise at least another couple of billion dollars, and we only have 2 months left in the year, you're not going to get there on ATMs alone. Are you currently contemplating a big underwritten transaction perhaps in an overseas market? Is that sort of how you get to the 30%?

Yes, we need to raise roughly $2 billion in a nondilutive fashion to our -- of capital. And you've seen us do that at a quick pace in a short period of time. We have 2 months left to go. And so we'll be racing and we'll see what we can accomplish, right? We're always working, always trying new things, developing new things and this credit factory that Mike talks about, we're very bullish on.

Obviously, we can't say exactly what we're going to do when, but it's 2 good months, 60 days, right before the holidays.

Great. And for the last question, I will invite [ Ben Werkman ] from Strike.

Over the last 12 months, Strategy has been extremely successful at building the capital base and expanding the balance sheet using primarily equity in the IPOs from the preferred markets. And over that 12 months, you saw MSTR underperformed Bitcoin in a fairly significant manner. Do you guys view the strategic priorities moving forward as focusing more on increasing amplification and less on expanding the balance sheet? And how is this past year informed our go-forward strategy and how you might prioritize the preps over the common equity moving forward?

Yes, that's an open-ended question. So I'll start and then Phong or Andrew may have something to add. Yes, clearly, with equity, I would say if you're going to own Bitcoin 4-year a longer time horizon, if you're going to own amplified Bitcoin, a company that aims to be more volatile than Bitcoin, you can't have a lower time horizon. So you probably need a longer time horizon.

So we manage the company such that we think 10 years from now, we're going to create an insane amount of shareholder value and that doesn't mean we're looking for 10-year payoffs, we're generally thinking if it doesn't return what we expected within 4 years, we'd be very disappointed. But we never do anything where we demand to get the payback in 4 months.

And so we don't have a 4-month time horizon or even a year time horizon. And we think that generally, I would say if your time horizon is 12 weeks, you should own the STRC, right? You really should go to the short end of the risk curve and the short end of the duration curve because that one we're trying to strip volatility away.

And if your time horizon is 10 years and if you are a Bitcoin Maxi, then maybe you like the equity or you like Bitcoin. The credit instruments, I would say, if we wanted to raise the max amount of capital, then we could do 2 things that we don't do. One thing we could do is we could just open up the ATM, and we could sell stock at any mNAV, any week all the time. And what you've seen is we don't do that.

After the red sweep, when there was a massive enthusiasm, we would sell $1 billion or $2 billion or $3 billion of stock, like $1 billion in a week or $2 billion in a week. And so you see we're not shy when the market is strong and the premiums are high. We would go very hard, but you see a lot of weeks where we sell nothing. And we could have sold $1 billion of equity a week.

We chose not to sell any equity. If the equity is weak and it's crashing, it's almost certain. In fact, it is certain we're not the ones doing it. right? We're watching, right? Because our view is we only sell into strength and we only sell in the strength when we like the premium. So we have actively decided we don't want to maximize capital by selling equity.

And then I think the other thing is just like we could raise $1 billion of equity in a few days if we wanted to. I could also pick up the phone and I could raise $1 billion overnight in debt. If I just said we wanted to do a pipe deal with a debt investor, I would have 12 firms over the weekend and by Monday morning, we could have raised $2 billion, $3 billion, $4 billion, $5 billion, $6 billion, they would be licking their chops and delighted to give us the capital.

They would want to be senior to all the other creditors in the capital structure. And what they would do is they would underline the creditworthiness of the preferred instruments that we actually want to sell. So you could just assume with our $75 billion of capital right now, we've already chosen not to raise $20 billion or $30 billion. We could be $100 billion, but we'd be $100 billion in the risk profile, the leverage wouldn't be 11% and the leverage would go up.

And so we actively decided that we don't want to generate leverage, right? We're literally on a path to drive leverage down. We're also on a path, we've decided we don't want to do deals that don't have positive BTC yield. But more importantly, we're on a mission. The mission is to create the digital credit market. So I think the company has 2 speeds.

Well, maybe more than 2 speeds. When we're coasting, when the credit markets don't offer us anything compelling and the equity markets aren't compelling, we are coasting. And in my mind, I think that, that is a $75 billion company growing 30% a year for the next 20 years. So that is in idle. And then I -- for those of you who know me, know I believe in the hippocratic oath, do no harm.

And so the risk-free rate, the rate -- the company is going to get to 30% a year for 20 years if we take no risk. So how do -- what can we do where we feel like it's worthwhile? And of course, if we sell credit, we can take that 30% to 40% or to 50%, but we have an agenda here. The agenda is not to artfully manage the balance sheet.

And it's like if you told me, well, you could issue $10 billion of junk 5 to 7 years and roll them every year and roll them every quarter, and you could pursue a credit strategy based on debt that gets you a lot more capital and you're continually rolling it and you would do that with 144A offerings. We could like fire up a $2 billion 144A offering next week and we just got to do it.

But the point is we don't want to be the revolutionary company that adopted digital capital that grew the company with conventional traditional credit. We want to be the revolutionary company that discovered digital capital that then went on to discover and found the digital credit market. And when you're just rolling a bunch of 5- to 7-year bonds and when you're opportunistic, then you're careening toward the future with an advantage.

I want MSTR to stand for a monster. We want to create a monster company. We don't want to careen toward the future with an advantage. We don't want to be the talented fighter that kind of wins and loses and mostly wins and is a little bit slopping on discipline. We want to create the digital credit instruments that are 2x to 4x better than everything in the $300 trillion market, and we want to eat the world, right?

And we want to sell $100 billion of them. And after we sell $10 billion, then $20 billion, then $40 billion, then $80 billion. When people go, well, aren't you levered? We want to say, "Well, actually, our leverage is 0." What? Wait, what? We have 30% amplification, but we don't have $100 billion of debt. We have $100 billion of equity that happens to actually amplify the common equity, let me educate you on a new way to build the company.

So I would say you want to boil that down. It's a very disciplined growth strategy. We would rather coast and have a bulletproof balance sheet and a $75 billion company growing 30% a year than to stretch for capital or stretch for some kind of yield, but undermine the balance sheet and take on credit risk because someone says, I'll give you $10 billion tomorrow, and it's senior to STRC, we just created volatility and we crumble the credit of the instrument that is going to provide a comfortable retirement to 1 billion people.

I don't want to be the dude that made a good trade that made $25 billion or made $50 billion by trading Bitcoin by using cheap corporate money. We don't want to be the company the main $25 billion or $50 billion or a Hail Mary or maybe we lost it by whatever borrowing money however we can get it to buy Bitcoin.

We want to be the company that provided a comfortable retirement to 1 billion people and changed the world, right? We want to change the monetary system. I want everybody to get up in America and say, "I'm not getting paid 10% tax deferred from my bank or from my money market." That's not fair. That's an abomination I'm going to tell all my friends -- I'm so mad about it. I'm going to go tell my 100 people that I know.

They only need to pull their money out of the money market, they need to buy Stretch, and we want to be in a position where we can accommodate that demand. And so what you have is the money that comes easy is always the money that comes with strings attached. And I've learned that over 35, 40 years, and I think the people in the Bitcoin treasury market they're learning it now.

The easy money is the toxic money. What you really want is you want to create a revolutionary new product that solves a problem for $300 trillion of investors and for billions of people. And you know what, when we sell $1 billion worth of digital credit, they're giving us the money forever, and we're taking no credit risk, but the quid pro quo is we're giving them 10% tax deferred, right?

And so I would rather pay 10% tax deferred and get the money forever, than pay 5% and and get the money in the form of a junk bond and pay a taxable 5% coupon, even if you wanted to give it to me. And then, you can see the obvious reason why the world's full of 50,000 companies that will give you the 5% taxable.

How many companies are in the world that will give you 10% gleefully, enthusiastically as a ROC dividend and then do everything in their power to actually issue more dividends. So for us, the credit is the product, right? The aspiration or the offering is a comfortable retirement to everybody who's a credit investor. That's the offering. If we can do it by selling equity, we will, but when the equity is dilutive, we won't.

And we won't do debt because debt is a conventional credit idea. It's a 20th century idea. I think I laid out with my 7 differentiators for digital credit, we think that digital credit is an inversion of everybody's value system. Every other credit issuer in the world gets up and says, how do I cripple the credit and pay you the lowest coupon and maximize the advantages to my company?

And we get up every day and say, how do we create the greatest credit instrument that pays the highest tax equivalent cash flows that's going to be best for the buyer, right, for the investor? So that's the answer to your question, hopefully.

Excellent. So this concludes the Q&A portion of the webinar. I would like to thank all of our analysts for their questions and all the attendees for tuning in live. We had over 25,000 people across YouTube, X Livestream and the Zoom webinar. So thank you all for joining in. And I will now turn the call over to Phong for the closing remarks.

I also want to thank the analysts for joining us and being on video and asking the questions. I want to thank everybody who watched us our earnings call and all of our supporters and all our shareholders out there. And I invite you all to join us in Las Vegas, February 23 through 26 at the Resort. And for everybody else, have a great holiday season, and we'll see you in 3 months in our next earnings call. Thank you.