Michael Saylor: Bitcoin collateralized bonds yield 10% annually, 90 trillion retirement market opportunity is huge

The corporate layout of Bitcoin reserves is continuing to heat up. Recently, many companies are accelerating the promotion of Bitcoin reserve strategies, typical cases include:

• Nasdaq-listed company Profusa: announced that it has signed an equity credit agreement with Ascent Partners Fund LLC, planning to raise up to $100 million through the issuance of common stock, and will use all net proceeds to purchase Bitcoin.
• H100 Group: Additional funding of approximately $54 million raised, which will be used to seek investment opportunities under its Bitcoin reserve strategy framework.

In addition to the above cases, many traditional enterprises are also actively raising funds to build Bitcoin strategic reserves. At the same time, the potential "battlefield" of the pension market is also becoming evident.

On July 18, the Financial Times reported that the Trump administration is considering opening up cryptocurrency, gold, and private equity investment channels to the U.S. retirement market, which manages $9 trillion in assets. It is said that Trump plans to sign an executive order allowing 401(k) retirement plans to invest in alternative assets beyond traditional stocks and bonds. If this policy is implemented, publicly traded companies that focus on Bitcoin reserves or hold a large amount of Bitcoin are expected to become popular investment targets in the pension market, and their appeal may even surpass existing methods like spot ETFs.

In this trend, Strategy(, formerly known as MicroStrategy), is moving towards a broader stage in its business model. Previously, Strategy announced the "BTC Credits Model"( for evaluating the equity value priced in Bitcoin, and founder Michael Saylor elaborated on the application and significance of this model in a recent interview. The key points are as follows:

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What is the next business model for the Bitcoin reserve company? Why is this model so simple yet powerful? How can maximum results be achieved by focusing on execution?

I once said in Las Vegas that businesses are the most effective wealth creation machines we have designed so far. If we consider the spread of Bitcoin as a monetary virus or a super idea, then when Bitcoin comes into contact with individuals, the spreader of the virus is a business. When a business undergoes capital restructuring through Bitcoin, the real opportunity for any publicly traded company is to sell equity or issue credit.

All equity capital in the world is valued based on expectations of future statutory cash flows. For example, every company in Nigeria is valued based on expectations of cash flows in Nigeria. Brazilian companies are based on cash flows in Brazil. Companies in the United States are based on cash flows. But we know that the value of cash is declining.

Facing long, heterogeneous, and uncertain risks, such as credit risk or stock risk, and in terms of credit, the value of all creditors is based on future expectations of cash flow. I have no money to borrow from you, I guarantee to pay you back, and I plan to get this money in 10 years. Therefore, the existing market is based on future expectations of business operations. We are evaluating real-world assets, we are assessing future cash flows, and we are evaluating equity or opportunities.

The Bitcoin treasury company has the most elegant business model. I have some Bitcoin ) worth 10 million USD ###. I started issuing stocks based on my ability to acquire more Bitcoin, followed by credit, fixed credit, convertible credit, and other credits, which I used to buy Bitcoin. For example, a certain company reserves Bitcoin through frequent stock issuance, resulting in exponential growth in its market value, while Strategy announced a $21 billion ATM plan last year to purchase Bitcoin. If we achieve this within three years, it will become the most successful stock plan in the history of the capital market.

I just want to say that a company is simply a gathering of someone who understands finance, someone who understands law, and a leader - a CEO, a CFO, and a Chief Legal Officer come together to form a Bitcoin treasury company. If you put Bitcoin into it, then your company can grow as quickly as issuing securities and purchasing Bitcoin.

In other words, this is also an investment cycle that is 1000 times faster and more uniform than the cycles of physical assets, real estate, or business. The main point of conflict is the issuance of securities, which requires compliance and is also a regulatory challenge. If you are Japanese, the situation is different from that of the French. In the UK, you need a Bitcoin treasury company that understands UK law, and in France, Norway, Sweden, and Germany, you also need one in each respective country.

Moreover, these companies have local advantages. If you are a Japanese company, it is much easier to issue securities in Japan than for an American company to issue securities in Japan. I know this because I called a certain CEO. I said, you might be able to issue preferred stock in the Japanese market earlier than I can, so go ahead and do it.

So I think this is the simplicity of the business model. I just want to issue billions of dollars in securities and then buy billions of dollars in Bitcoin. I want to transform the stock and credit capital markets from the 20th century's analog physical cash ( based on cash ) into the 21st century's Bitcoin ( based on cryptocurrency ).

( About the BTC Credit Model

We have established a set of indicators to assess the equity value priced in Bitcoin. Since we are using the Bitcoin standard, simple US dollar accounting methods are not applicable, as dollar accounting is designed for companies that generate revenue through operations. Therefore, we created the BTC yield, which is essentially the appreciation and percentage per Bitcoin.

The idea is that if you can achieve a 20% BTC return, you can multiply it by a factor, such as 10, which allows you to obtain a premium of 200% relative to the net asset value )NAV###. To calculate what the premium is relative to the net asset value, this is a very simple method that depends on whether the company generates a return of 220%, or 10% or 200%. For example, bonds that pay 200% interest after tax are worth much more than bonds that pay 5% interest after tax. Therefore, BTC returns or USD returns are an equity metric.

The dollar revenue of Bitcoin is essentially equal revenue. A Bitcoin company is based on Bitcoin, and if you generate 100 million dollars in Bitcoin dollar revenue, that is equivalent to 100 million dollars in after-tax revenue, which is directly accounted for in shareholder equity, bypassing the profit and loss statement (PnL). However, a company that can generate billions of dollars in BTC revenue is the same as a company that can generate a billion dollars in revenue; you can use PDE for this, and then say, I should set the value of PDE to 10, 20, 30, or any other number multiplied by that revenue.

This helped me understand the enterprise value of this business and the ability of the enterprise to execute this business. The current question is, how to generate BTC-based returns or BTC U-based returns? There are several ways to achieve this:

The first method is to manipulate cash flow by investing all operating profits into Bitcoin, which will yield corresponding returns, involving a cash flow of 100 million dollars. I use this money to purchase Bitcoin. In this way, I achieve 100 million dollars in Bitcoin profits without diluting any shareholder equity, but it requires an operating company that can generate a large amount of cash flow to do this.

The second method is that if you sell equity at a price higher than the net asset value of (M times NAV), for example, selling 100 million USD of equity at 2 times NAV, you will earn a profit of 50 million USD in BTC. Of course, if you sell equity for an amount lower than NAV, you are actually diluting the shareholders' stakes and will incur a negative return.

I believe that the BTC yield and returns are important because they provide investors with a simple, transparent, and immediate way to understand whether the management team engaged in value-added transactions or dilution transactions on any given date. As long as a public company is willing to dilute shareholder equity, they can raise almost any amount of funds. The real trick is that these must be done in a value-added manner. So these two indicators are important, but now we have solved this problem.

For example, my cash flow has run out. What would you do if the BTC price goes up? If M is 10, 5, or 8, this is not a complicated question. When M is 10, you gain about 90% of the price difference, so selling 1 billion dollars in equity can generate 900 million dollars in profit, which is a risk-free instant gain. Essentially, this is not complicated.

The question is, what happens if M drops to 1 or below? If you have no cash flow and M drops to 1, but you have a billion dollars in Bitcoin on your balance sheet, what will you do? If you are a closed-end trust fund like some institutions, or if you are an ETF(, especially a closed-end trust fund), you will be powerless. Therefore, your trading price will be below M times the NAV.

And this is exactly what people want to avoid. However, the operating company has the special power to issue credit instruments. Therefore, if the discounted trading price or trading price drops to the normal market price, the real way to get out of the predicament is to start selling credit instruments, which are collateralized by the company's assets, leading to the concept of the BTC credit model.

If I have 1 billion US dollars worth of Bitcoin, I can sell 100 million US dollars of bonds or 100 million US dollars of preferred stocks, with a dividend yield of 10%. This amounts to 10 times collateral. Therefore, the rating of Bitcoin is 10, and you can now calculate the risk, which is that your 1 billion US dollars worth of Bitcoin could shrink to less than 100 million US dollars when the instrument matures. You can calculate it using statistical methods like an options pricing model, inputting volatility and BTC rating to derive the risk, and then calculate the credit spread, which we refer to as BTC credit.

BTC credit represents the theoretical credit spread you need to offset risk ( relative to the risk-free rate ), and of course, there is the credit spread itself. If the BTC rating is 2, the credit spread will be higher than in the case of a rating of 10; if the predicted volatility of Bitcoin is 50, then the credit spread must be higher than in the case where the Bitcoin volatility is 30.

Therefore, if you fill in your expected return rate or annualized yield on Bitcoin into the BTC credit model, along with your expectations of Bitcoin's volatility and the price of Bitcoin, you will get a BTC rating, and the risk will pop up, and the BTC credit model will pop up. What we are doing is to start issuing credit instruments for Bitcoin, and our idea is to sell securities to a market that is orthogonal to the stock market and Bitcoin market ( completely unrelated ) to the market, or a non-correlated market.

In the dollar yield market for retirees in the United States. Many people do not know what Bitcoin is, do not know what Strategy is, and are completely unaware of our business model. However, if we offer them preferred shares with a face value of 10% dividend, providing them with a 10% dividend yield and qualified income distribution, a type of qualified tool, if your annual income is below $48,000, you can purchase this tool in the United States and receive a 10% tax-free return.

Many people want 10%. The current issue is risk; if it is 5 times or 10 times collateral, then it doesn't seem so dangerous. If you are optimistic about Bitcoin, my thought is simple: provide someone with high fixed returns at very low risk. I believe collateral is a killer application of Bitcoin. Strategically, what we have done is create a type of convertible preferred stock called "Strike"( stock code: STRK), which allows you to gain 40% upside on the stock and an 8% coupon yield.

We then created a convertible preferred stock named "Strife" (STRF), offering a 10% yield. These two stocks are the two most successful preferred stocks of the century. They are the most liquid and highest performing, rising 25% when other preferred stocks fall by 5%.

They are the most successful because any security purely bound by Bitcoin is always better. These equities are more valuable, convertible bonds are more valuable, and these preferred stocks are more valuable because you are connecting to an asset that appreciates 55% annually. We put it into those tools, and they will be very successful, listed, and achieve a rise in stock prices. The current idea is that we can market it to people.

We can sell people a 40% increase in stocks, while Bitcoin might increase by 80%, with downside protection and guaranteed dividends. So we call it "Strike". It's like Bitcoin.