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 DeYani, will be looking out for new topics and angles that haven't already been covered by the submissions we received over the last week. 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. 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 3rd, 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. 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 describe 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 a non-sovereign store of value bearer instrument, like gold. That's a classical Austrian economist view of money. The current conventional view of money is that money is a USD equivalent or a fiat currency equivalent asset, like the USD, that holds its peg against a fiat currency. 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 is gold. Some of them think money is silver and money is Bitcoin. 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 is actually invested in the Bitcoin network right now. 99.9% 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's metallic capital, like gold. Some of it is credit. Hundreds of trillions of USD of credit. 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. For the people that have not yet bought Bitcoin, the ones that we are actually working to serve, their view is that money is a medium of exchange or unit account of store of value, and they would think that that is the Japanese yen in Japan or a yen money market in Japan. They would think it is a USD money market in the U.S. They think it is a euro money market or a euro in the European Union. The TradFi or the Keynesian view of money is money is a fiat currency or a fiat currency equivalent that pays yield. The chart that I am illustrating is the digital assets taxonomy. We think that 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. Again, 99% or 99.9% of the economic value of the capital in the world is not Bitcoin. If you want to get it, you need to compete against those things. You need to tell people why Bitcoin is better than gold or art or real estate or equity, like the S&P index, or bar gold. STRC is digital credit. We have extracted a credit instrument from capital. It is semi-volatile. It is not as volatile as Bitcoin, but it is more volatile than a fiat currency. The next step is to take STRC and create something that looks like a digital money. A digital money would be the mythical Bitcoin-backed stablecoin. It is a fiat currency stable asset, whether it is a stable dollar or stable yen or stable euro, but pays yield. The difference between digital currency and digital money is digital currency is deemed to be stable coins. It is like Tether or Circle or any other digital stablecoin in whatever currency system is out there. Digital currencies don't pay yield. Digital currencies are the winners of medium exchange in the crypto ecosystem and the digital assets ecosystem. I think there are some fundamentalist Bitcoin OGs that wish that wasn't the case, or they have 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 99.999999% of the prices in the world are in fiat currency, I might be understating the case. It is just to somewhere between six and 100 significant digits after the decimal place, all the prices are in fiat currencies, which means that the medium exchange is generally the USD. If you are holding stable coins, they don't pay a yield. Though, it makes a good medium exchange. It makes a very poor store 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 a fiat currency but pays a yield. If you can actually create a yield on a stable currency instrument, then you have got something which serves as much better store of value. That particular asset that I put in my chart, that is the first example. Well, one of the first examples, maybe the first example of someone creating a digital money asset, and they are 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 USD. I expect there will be dozens, if not hundreds, of different types of monetary assets that people build. It is not the only one. I think there is about a dozen different organizations that are building digital monetary assets in the digital assets ecosystem. I do not think digital money will be limited to tokens. I actually think that you will see digital money funds created as ETFs in the U.S. and probably as ETPs and other types of publicly traded funds that trade on exchanges all around the world. I also think that we will see private funds, just like there are money market funds that are private, that do not trade publicly. There are money market funds that are public, that trade as ETFs. There are monetary instruments like currencies that are stablecoins. The thing that we think is really important is that if 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. Right now, what is 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 is all backed by fiat currency like US dollars. 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. The companies that create digital credit, like Strategy and Strive, will have equities, and the equities will attract capital flows, which will also flow into Bitcoin. Companies that create digital monetary instruments, the instruments that will be on top of digital credit, they will have equity as well, and they will attract capital flows into the ecosystem. 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 either backed by BTC or tied into the Bitcoin ecosystem. That was an example of the first of what I think will be many digital money instruments. It is not the only one, and certainly I am not endorsing that particular one as an investment. It is a security-type investment. But I think that it is a seminal event in the same way that when people first created money market funds, that was a pretty important event. When people created ETFs backed by money market funds, I think that is 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 three 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 Michael can add. 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 number one priority. How do we do that? We do that by outperforming Bitcoin. Since the beginning of our strategy of putting Bitcoin on our balance sheet, that was August of 2020, Bitcoin's been up 32%, MSTR has been up 41%. 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's 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've experienced is when Bitcoin goes down, we tend to go down more. Bitcoin's seen a drawdown of 50% from all-time highs. MSTR has seen a drawdown roughly of 75% of all-time highs. Because Bitcoin's our underlying asset. Increasing Bitcoin per share increases the value of MSTR when Bitcoin goes up, and we'll see sharper drawdowns. How do we increase Bitcoin per share? We increase Bitcoin per share historically through leverage, through convertible bonds, and more recently through what Michael talked about, which is digital credit and amplification through STRC. Ultimately, if we want the common to go up, we have to increase Bitcoin per share. An increased Bitcoin per share means making STRC work, which is why it may seem like we're talking primarily about STRC right now, getting STRC 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 get STRC to work to buy Bitcoin and put it on our balance sheet, and that's ultimately the objective of the company. Over time, if you believe in the underlying asset, Bitcoin, and Bitcoin starts to rise for all the characteristics Michael 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? Yeah. What I'd say is if you want a dividend, you should buy one of the preferred stocks. STRD pays almost a 15% effective yield. If you're looking for a stable instrument that pays a dividend, then I would look to STRC or STRK. They were designed to pay dividends and give some upside. If your time horizon is less than four months, you probably should own a money market. If you are making an investment and want the money back or want to see a good return on your investment in four months to four years, you're probably a credit investor, and you ought to consider one of the credit instruments. If you're holding the equity, then you need a time horizon minimal of four years. Ideal seven to 10 years. Bitcoin was at an all-time high about a year ago. When we're in a bear market, you're going to get more amplified Bitcoin. If Bitcoin's down 50%, we're going to be down 75%, and in a bull market, we expect to outperform Bitcoin. When you're buying MSTR, you're getting amplified Bitcoin. When you're buying Bitcoin, you're getting on a roller coaster. If you are going to get on a roller coaster then probably you want to use a metric that's like a four-year blended metric. When we look at Bitcoin, we look at the 200-week simple moving average, and that way we take a four-year cycle view, and we consider how is it trading versus the four-year average. I think that MSTR is going to be more volatile than that. I think the whole point of the equity is to generate the amplification. 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. 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 that we sold starts to look like net income to the common stock equity holders. 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. 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. The equity will actually come later, right? We are in investment mode to build the credit. If we do the things that are good for the equity in the near term, they are bad for the equity over the long term. 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. Ultimately, the product of the company is the credit, and the better the credit is the more valuable the company is. We think the company will be very, very valuable if we make the credit, especially STRC, successful. So we are making a long-term investment. It is not unlike Netflix or Amazon. When Amazon was building out Amazon 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, then Amazon won the market. Our view is the same. We want to win the digital credit market, and ultimately, we want to create the world's best credit. If we do that, then the primary beneficiaries will be the equity holders of which I am 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 one year, it might be two years. We would not think it would be four years, but we might have to actually ride through some number of months or a year or two 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. 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 is 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 could 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 credit negative. 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 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 a trillion. The single most important thing for us to do is make the credit work. 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 John Schmidt. CEO Phong Le has cited JP Morgan 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 JP Morgan represents. Doesn't modeling Strategy's business, including STRC, after a centralized institution like JP Morgan contradict the decentralized principles that Bitcoin was built on? How do you reconcile pursuing a JP Morgan style corporate structure while staying true to Bitcoin's founding philosophy? Yeah, 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 the dividend. It's highly accretive to our shareholders. If we issue equity that's greater than 1x m NAV, and we're currently about 1.07 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 mNAV, and we buy STRC back at $95, that's also accretive to our shareholders. It's accretive to Bitcoin per share. That's what matters. I just want to make sure that that's understood, because a lot of times people are like, "Saylor's hitting the ATM. That's dilutive to shareholders." That's not necessarily correct on a Bitcoin per share basis. The last trade is if we sell the equity at a premium to NAV to buy USD, that's also accretive to the shareholders. So all the trades we're doing are accretive. Yeah. They're strengthening the balance sheet of 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? 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. It continues with then having other players in the digital asset world build products on top of ours, like digital money, which Michael mentioned earlier. We believe that being the largest holder of Bitcoin allows us to have the stature that JPMorgan has. But we are not modeling our business after that. That was really the point there. It is much like when Michael says that STRC is the iPhone, our iPhone moment. Obviously, we are 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. Yeah, we could use the capital to. We could swap STRC for MSTR, or 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. There are probably other things we could do with it as well, but we are 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? 3% - 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 to Bitcoin, it's 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, the 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. 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 and the asset class. 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-$30 billion USD reserve, mainly through STRC, to deploy aggressively during future bear markets? 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. Over time, we expect the US dollar reserve balances to grow. We expect BTC reserves to grow. We expect the operating cash or U.S. cash balance that's unrestricted to 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. The company's optionality is growing. 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. On the question around S&P inclusion, there's two different things here. One is S&P, the ratings. The second is S&P, the index. On the ratings, we currently have a B- corporate rating. I think increasing the cash reserve will help with that, and could, over time, improve our rating. Ultimately, what'll 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, and it's rated as zero value. If that changes, then our rating will go up, and that's probably the most important thing, more important than having US dollars. Index inclusion, I don't think is directly correlated to the US dollars on our balance sheet. Jerry Asks, "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. 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 a trillion. 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 it on our website every 15 seconds. The duration of the company, the duration is 33 years, and so the business of the company is we're sort of betting some time over the next 10 - 30 years that we're right. We are not really traders from day to day, so the reason you should buy the equity is not because we trade Bitcoin. If you really think that you have 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 or $10 or $20 billion a year of credit, and if Bitcoin beats the hurdle rate, that means the company makes $20 billion a year. If you want to own a company that makes $20 billion a year, that can grow 30% a year, then we are that company, right? 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 if Bitcoin is trading at an extreme premium to the 200-week moving average, we will probably tend to acquire cash rather than BTC when we sell credit. If Bitcoin is trading at a low premium or a discount to the 200-week moving average, we would probably lean toward a bit more BTC than cash. I think that where Bitcoin is in the cycle may drive our cash-to-BTC allocations. But ultimately, we are not traders, and I think what people oftentimes miss is they do not realize that in a bull market, our equity premiums expand. Demand for the equity expands, the equity premium expands, demand for the credit expands, the credit risk on the credit falls. Both the equity and the credit businesses explode, and capital flows to the company. 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 will buy a lot more Bitcoin because that is when the capital comes. 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 is less demand for the equity. 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 are selling the equity at a premium to the underlying Bitcoin, if Bitcoin rallies and we are selling the equity at a massive premium, the fact that we paid double when we sold the equity for triple is not a problem. It was still accretive to the company. The price of Bitcoin when we are swapping equity for Bitcoin does not matter, and the price of Bitcoin when we swap credit for Bitcoin only matters over the duration of the credit. Over a decade, if we are wrong, then we will be wrong in 10 years on the credit. But with the equity, we can never be wrong. If Bitcoin rallies and our equity premium expands, we could pay $1 million a coin for Bitcoin and we would pay for it with a massive stock price of $25,000 a share. We'd swap it. Bitcoin might crash from $1 million to $200,000, and people would say, "You're crazy. You bought 5X more than it is." The point is, we swapped equity for the Bitcoin at the top of the market. At the bottom of the market, the question is not well, did Bitcoin draw down? The question is, over the next 10 years, will Bitcoin outperform our hurdle rate or the cost of the credit? At the end of the 10 years, we'll know. 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 the equity markets, the demand for MSTR, and even to a certain degree, the derivatives market. Those capital markets, they're all moving independently, and sometimes they're correlated, and we are participating in all of them every day. 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's from Tim Fiacco. 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? Yeah, we won't do it. It's a perfectly fine business model for other people to do. For Orange Juice, it's perfectly fine, and there are other businesses that are in the business, and there are investors that 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'd be distracting ourself or diluting our focus. It creates all sorts of operational complications of different types. 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'd have to have an opinion on every single thing we owned. Right now, if you're an equity investor, you just have to have a model for BTC. It would also undermine the derivatives markets, people that trade the call options and the put options, that's a massive $30 billion-$40 billion interest business. They would be undermined if we started to diversify into cash flowing business. 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. 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, you want to take that? I'll start with the biggest lesson is the importance of having USD liquidity on our balance sheet as a backstop to the dividends, right? That's why we now have $4.8 billion of US dollars. I think that's the biggest lesson, and we'll apply that going forward, right? The question of would we use Strategy for something other than Bitcoin? Yeah, potentially, when we raise money from Strategy going forward, we would add to the USD reserve or some other form of USD liquidity so that we backstop the dividends and we create confidence in institutional investors, especially buying into Strategy. Yeah, I would say we learned we have to be prepared to buy or sell anything at any time. The company needs to be able to sell Bitcoin as well as buy Bitcoin for the Bitcoin to be fairly valued. 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 were very good at buying BTC, but now we have illustrated to the market that we can sell BTC and we can buy STRC. It's kind of like you can't just have a right hand. You got to have a left hand and a right hand, or maybe the car has to be able to turn left and turn right. I think that we also, to Phong's point, we have to show that we can dynamically manage our reserves. The USD reserve, the unrestricted cash, the restricted cash, and the BTC. All of those things were 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% of Strategy holders at the time were retail. This question comes from Stuart. 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 one, two, sometimes even three years of track record of the product paying dividends. They want to see 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 declined. Retail doubled. Institutions just increased significantly over that time. We're already seeing institutional adoption start to increase. I think our Digital Credit Capital Framework created more confidence in institutions. As good as it is to have retail, institutions tend to be longer-term holders. They tend to take on less leverage, so they'll stabilize STRC over time. We've had a couple of investors curious about whether STRC could move to daily dividends like SEDA, 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. We expect that'll remain that way for the foreseeable future. We're watching SEDA cheerfully and enthusiastically. We don't have any plans to go to daily dividends at this point. Our primary focus is on improving the credit quality of STRC and focusing upon the balance sheet of the company. Phong, you have any thoughts on this? No, that's it. I think daily dividends is an interesting concept, and we're watching SEDA, 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 returns to health, then we want that credit instrument to be stable and to grow in a predictable fashion. 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 and 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. Because the things that we're doing that are good for STRC are also good for STRK. A question came in from John Lee Dumas. Under what circumstances would Strategy be comfortable letting STRC trade materially above $101, rather than taking actions to bring it back to par? What would be the strategic rationale for allowing that premium to persist? We won't do that. Our target range is $99-$100, but we have no interest in allowing it to trade substantially above $100. 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. Then you can buy pretty much whatever amount you need at $100 and a penny, and you can sell into the market at $100. If we allow the price to fluctuate ± X dollars, then you paralyze the market. Someone that was thinking about selling at $100 would think, "Well, maybe I shouldn't, because it might go to $102 or $101." 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 three months to make a decision that they would make in three seconds if it trades stably. 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 four days. 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. 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." That would drive everybody insane, if you randomly got plus or minus 1% of what you thought you should get. The primary value added of the company, the reason that we're here is to strip the volatility off the instrument and extract the yield. If I use an example of Standard Oil, like, I have a barrel of crude oil and I create kerosene, and the reason it was called Standard was because it was the kerosene that didn't blow up in your face. If someone came along and said, "You know, one out of 100 gallons of the kerosene blows up in people's faces. 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'?" People would say, "That's not a good business." It's not 1% less good, it's like 100 times less good. 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 USD of this, we're not going to make you pay 110 bucks a share. We're going to sell it to you at $100 and a penny or $100. That's a value, and that would cause someone to come in. On the other hand, somebody wants to know that if they sold at 100, they didn't make a mistake. 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. 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 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 bad for the shorts. 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. We welcome that. Because if someone wants to come in the market and pay 12% dividend to create liquidity, 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. We're not trying to discourage short selling. If someone wants to short $10 billion of this thing when it hits 100, then we will have $10 billion of credit and someone else will be paying 12% interest on their $10 billion. You can see someone else would be paying $1.2 billion of dividends to make STRC a $20 billion AUM instrument. 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 is consistent with the highest liquidity, and since that's the highest liquidity, that makes it the best credit instrument. If it's the best credit instrument, then the demand is going to be higher. Everybody wants the best thing. 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. 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. 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. What you'll see is if you look at it is the demand and liquidity for it is 20x less than STRC. 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. When that happened, confidence would collapse. 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 am 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 do not 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 are 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 are a short-term price predictor, you are a trader, I do not really have much useful wisdom for you. My advice is do not invest in Bitcoin unless you are going to hold it for more than four years. Ideally hold it for 10 years. What we think is the more Bitcoin we buy, the higher the price will go. 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 will start with, we custody with three of the largest institutional-grade custodians in the world. 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. By the way, these are the same custodians that custody most of the Bitcoin ETFs in the world. So they are evaluated by a lot of folks. We have advocated for all of them, and just the open source Bitcoin community in general, to have access to the frontier models. Some of them do, and they do run the frontier models against some of their software. We are 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. I am sure some have seen, we have also become part of the Bitcoin Security Consortium, which puts together some of the largest Bitcoin custodians, issuers, exchanges, holders, banks in the world. We are working together with them too, and taking sort of the strength of all of our institutions to work on this together. This question is from Jim. It is directed to you, Michael. Did you ever believe in Bitcoin's ethos of separating money from state, regardless of how long that takes? Could you pay dividends in Bitcoin rather than the USD? Well, I think Bitcoin's valuable because it is a non-sovereign store of value, just like gold. It separates capital, it separates money from state. The larger it gets, the greater portion of the global capital is sitting in a non-sovereign digital asset. That is why we are enthusiastic. We do not 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. If BTC is appreciating 30% a year, we expect it will always appreciate, say, faster than the S&P 500. 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. The problem with paying Bitcoin dividends is your cost of capital becomes the strongest money. It is kind of like agreeing to pay 30% yield and then investing in a bond from a country that pays you 4%. It is kind of a risk. If you get the trade that direction, it is the wrong direction you will go bankrupt. I do not recommend it to anybody. The right thing to do is to borrow money in dollars or yen, and to invest it in BTC. That way you are capturing the spread in the right direction. Of course, there is 1,000X more money to borrow in yen and dollars than there is money to borrow in BTC. 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. The "This Is Spinal Tap" parody, and a mock-up of some traders discussing STRC. What were the results of the advertising campaign, and is 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. If you look at those as metrics, they were all quite positive. I do think it led to greater retail adoption of STRC. Look, just using AI and discovering all the capabilities it had was fun, and it created a narrative. 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 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. Well, Me speaking Korean, Japanese, That's right. Italian and French. That is right. I think I heard you say on a show, Michael or during an interview, that a picture can say a thousand words, right? 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 Michael just only works, but I do some fun things. I have three kids a wife that I love to spend time with and travel with. I play basketball. I love to cook, as you know. I do play video games and watch mindless shows from time to time, but I try to be pretty fastidious about protecting my time from doing things that don't create much value. Guard your time. That is 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 will 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 am Natalie Brunell. Please check out my book, Bitcoin is For Everyone. Take care. We will see you next time. Thanks, Natalie. Thanks, everyone.