Bitcoin At $58K Despite JPMorgan & White House Backing Clarity

**Scott Melker** (0:00)
Bitcoin is trading at $58,000 despite JPMorgan and the White House backing Clarity, and of course, despite the new strategy framework for how their company is going to operate into the future. We're going to talk about all of that today, of course, with Andrew Intelman, but with someone else who's much smarter than all three of us, one, Mr. Austin Campbell. Let's go.
What is up, everybody? Welcome to Tuesday. We like to self-deprecate here, but Tillman and Andrew are actually very intelligent. I can't speak for myself. Now, one of you guys needs to say how smart I am. Go ahead. Okay, don't do it. Thank you, thank you, Tillman. Can't say it about yourself. Today, I'm drinking a La Croix that is called, I don't, do you guys speak French?
Pas de Croix, I think it's a watermelon. It's a watermelon. Pas de Croix, sponsored by La Croix. All right, gentlemen, let's start. Listen, I wasn't actually, we kind of talked about it yesterday, but maybe we should just start at strategy. I'll get a little article up over here in a second, but they obviously have completely changed what they're going to be doing moving forward. And I think a lot of people thinking it's a good thing, a lot of people thinking it's a bad thing, we seem to be emotionally detached along those lines. So Austin, maybe we'll start with you, give your thoughts. I can also break down what it is if people don't know, but maybe just give your thoughts first.

**Austin Campbell** (1:44)
Yeah, I mean, fundamentally all of this is just managing a math problem that strategy has, right? Like let's, as you said, remove the emotion from it and think about what's going on. You have a large stack of Bitcoin behind the company's balance sheet, and then you have a set of debt obligations, convertible debt at the top of the stack, and then a bunch of preferred equity, and you have cash flow requirements coming out of the debt, cash flow requirements at some indefinite point of time coming out of the preferreds because I will remind everybody in extreme situations, they can pause the dividends there.
But fundamentally, you're asking, is Bitcoin going to go up faster than their cash flow obligations are going to run? Because strategy does not really generate cash flow from operations in the traditional sense of the thing. So part of the problem, I think that Saylor and team created for themselves, issuing the preferreds and to some extent the converts, is it changes strategy from being a bet on Bitcoin over an indefinite time frame because now you have these cash flow requirements. Like today, as we're doing this show, Bitcoin was just at 59k but is now at 58k.
If it chops sideways for another five years, strategy is paying out a ton of money without any gains. It's just decaying the amount of Bitcoin available to the common stock. This is fundamentally the problem. So Scott, what they put out is a management framework as to how we're going to manage this. But it is essentially we're going to try to keep cash on hand. We're going to try to issue common stock when we're at a premium. But the reality is, as you read through, if the market doesn't go their way, there is a point in the future which they become a force seller of Bitcoin.

**Scott Melker** (3:39)
Right, and they've approved 1.2-ish billion, which is to cover those obligations that you mentioned. But I kind of in the fine print, there's also a billion-dollar buyback of MSTR and a billion-dollar buyback of STRC. And it doesn't take a rocket scientist to understand that that's 2 billion more dollars in potential Bitcoin selling that's effectively been approved. But you nailed the point I keep making to all of the critics. I think the part that drives me nuts is people use words like bankrupt and insolvency and all these things. I'm like, you have $50 billion in the bank in Bitcoin and you idiots are talking about bankruptcy. They have duration risk, and that's it.
It's Bitcoin going down and how long it stays there. And the part that makes me kind of bullish is that nobody seems to even be entertaining the argument that Bitcoin just kind of goes up.

**Tillman** (4:28)
Go ahead, Austin.

**Austin Campbell** (4:30)
I was going to say, I do agree that all of these problems for strategy fundamentally go away and a Bitcoin up, especially Bitcoin significantly up world because remember the cash flow part, that covers that, no problem.
But the thing that I would ask that I think a lot of people have missed in this debate, Scott, I agree with you, strategy is nowhere near going bankrupt. And anybody who's arguing that is crazy. Like they have a huge amount of Bitcoin. The real question to ask yourself is, will I do better holding strategy stock or will I do better just owning Bitcoin myself? Because even if you want the equity, you can just buy an ETF. By the way, if you want leverage, you might be able to get it cheaper than what strategy has done, depending on how you're structuring it. I think the real comparison, at least as I'm trying to conceptualize this thing, is between strategy versus just owning Bitcoin outright.