Michael Saylor: Thermodynamic Savings

welcome back everyone all right whoa so it looks like people are just uh a little bit excited for this next one I can't imagine why you know it's really funny what people remember because you can have a four hour brilliant podcast full of signal and the main thing people latch on to is there is no second best and to be fair there really isn't but why is there no second best well Bitcoin is thermodynamic savings and here to explain exactly what that means we have Bill Miller the fourth of Miller value partners and Michael Saylor chairman of microstrategy please give them a warm welcome of applause [Applause] wow this is awesome I could not be more excited to be on stage with the leading monetary innovator thinker and educator Michael Saylor so Michael between the time you and I last met a few days ago to talk content and today I've been canvassing the crowd widely to figure out if you were in my shoes you could ask Michael Saylor one question what would it be and there's actually been a common refrain which is actually get some life advice from him and so I went and looked on Twitter and apparently you're 10 rules for for life right now are going viral and so people respect you not only for your thinking around Bitcoin but just your thought leadership in general because Bitcoin is about finding the signal through the noise I thought would be really interesting to start by reviewing Michael Saylor's 10 rules for life as they appeared appeared on the Peter McCormick podcast the other day so if I could I want to start with these 10 get through them quickly and transition then to bitcoin but Michael Saylor's first rule for Success focus focus your energy number two guard your time number three train your mind number four train your body number five think for yourself these these uh rules for life broadly align with the Bitcoin mindset by the way realize that so when thinking for yourself realize that everyone has an agenda and assemble your own Mosaic of Truth six curate your friends seven curate your environment eight keep your promises nine be cheerful and constructive and 10 upgrade the world so let's talk about upgrading the world let's talk about Bitcoin let's talk about the topic of our discussion which is thermodynamic savings you talk to me about a little bit about the importance of energy maybe the rules of thermodynamics and how they impact Bitcoin and how we should think about it okay well I think those rules are interesting because those are thermodynamic we sound rules first for life when you say curate your environment Focus your energy uh it's all about not dissipating energy keep your promise is exactly what Bitcoin does stay cheerful and constructive is is the Bitcoin message which is Bitcoin fixes things Bitcoin can help everybody um the reason that Bitcoin is so sound literally sound is because it's thermodynamically sound and uh it's it's this masterpiece of engineering because we've created a monetary asset where we've Stripped Away all the counterparty risk and so the idea that I want to create a digital Equity without Equity risk and I want to create a digital commodity without commodity risk and I want to create a computer network without computer risk and um I wanna I wanna create something which is so simple in its essence that there aren't many moving Parts left to break and yet it's so powerful and profound in its promise that everybody in the world and everything in the world can plug into it and benefit from it is what makes Bitcoin special um and you know the whole idea behind those rules for life and the idea of Bitcoin is they're essentially the same they're in a world where everyone is dissipating their energy the most rational strategy is to conserve your energy conserve it and Bitcoin is the ultimate conservative thing we are we're moving in a world where where uh we can't trust the data and we can't trust the networks and brain power is about to become a commodity where AIS can generate billions and billions of fake people and so the real promise of Bitcoin is it's a network that is backed by pure digital power measured in exahash 350 extra hash and that digital power is something that can't be spoofed can't be hacked can't can't be tricked there's no there's no way uh to take a shortcut through it the the if you have a hundred gigawatts of power and 100 million mining rigs you might just slow it down but it would take you 10 years to slow it down so what Satoshi created is the world's most secure database accessible via the world's most secure network and we're living in a world where everybody wants security you want to call it Financial Security National Security cyber security Social Security if you want security you need to find the most secure network or the most secure resource on Earth and it's not gold anymore and it's not land anymore and it's it's not anything that can be created by any human being anymore it has to be something that is uh that is transcending all of those human institutions and all human motivations in essence it needs to be a network that runs without human intervention and that is what Satoshi created when Satoshi created bitcoin [Applause] Bitcoin does change though so if we think about the past year not only has Bitcoin changed in certain ways in the potential optionality of it but the broader environment around Bitcoin has changed over the past year can you talk a little bit about those things yeah I think the past 12 months have been very auspicious what we're seeing is uh regular Clarity is coming to the entire crypto space and the clarity is Bitcoin is a commodity an asset without an issuer IT is ethical it is uh it is stable it is um it is virtuous and the rest of the crypto ecosystem the crypto exchanges the cryptocurrencies in the form of stable coins the crypto tokens the other crypto applications they're all all being viewed with increased skepticism and there's an awareness that that Bitcoin is not crypto there's an education process where all the Regulators all the legislators all the media figures all the investors are realizing the benefits of the Bitcoin Bitcoin is an asset an asset without an issuer and now they're beginning to realize why Bitcoin is a commodity and the reason why it's a commodity is because it it is backed by digital power and so the appreciation for bitcoin's energy use and bitcoin's computational power is growing the confusion between Bitcoin and crypto is shrinking disappearing capitals flowing from the crypto ecosystem into the Bitcoin Network uh development effort and Innovation is Flowing from the crypto ecosystem to the Bitcoin Network um there's an explosion and development effort on lightning there's going to be an explosion in all sorts of other development efforts anyone that wants to implement a cyber security application is going to have to ask the question how can there be any Security in cyberspace if I don't Peg it into the Bitcoin network if it's not built on bitcoin those interested in National Security are going to look to bitcoin to provide cyber security and cyberspace for National interest those interested in Financial Security are going to look for the most secure financial asset in the world and Bitcoin is the most fine secure financial asset in the world so in short although there are people that can focus on negatives the Mel there's the Meltdown of Terror the Meltdown of Luna the Meltdown of Celsius the Meltdown of blocked by the failure of Alameda the failure of FTX the failure of all the crypto tokens right the the Meltdown and failures of the defy exchanges the Meltdown of some crypto exchanges right and the skepticism that people are taking with regard to crypto tokens that are stable coins all of those things which could be viewed in a negative light are actually positive for Bitcoin because they're all accelerating the conclusion of the mainstream investor that Bitcoin is special and ethically sound technically sound and economically sound and it's accelerating the understanding of the technology community that Bitcoin is the world's most secure database in the world's most secure network and maybe in that way the most promising crypto Network in the world and you it was a very expensive marketing campaign to convince people in Congress in the Senate The Regulators and the media that uh that Bitcoin is the world's number one crypto network but Bitcoin is also the world's most promising new asset class but uh but if anything today if you look at all the utterances of the lawyers all the all of the talk on Capitol Hill if you look at all the regulatory Publications if you look at the mainstream media coverage what's pretty clear is that the consensus today is Bitcoin is an asset Bitcoin is special Bitcoin is a commodity Bitcoin is uh without an issuer Bitcoin is here to stay Bitcoin is the future [Applause] and microstrategy has been the biggest proponent on the corporate front of Bitcoin now I attended microstrategies conference the other week to learn more about what microstrategy is doing and how they're incorporating Bitcoin with regard to their client offerings and I was incredibly blown away and more bullish than ever about some of the new optionality being created that you all are working on can you talk a little bit about that and how it improves the case for Bitcoin sure microstrategy first embraced Bitcoin on its balance sheet and we used it to fix our balance sheet and there's a very interesting story there but the other half of the Bitcoin promises Bitcoin can fix your p l Bitcoin can make your products better can make your services better and so one of the most exciting things I've done over the last 12 months is I have actually gotten much more involved hand on Hands-On in the development of Bitcoin related products at microstrategy and and one product we rolled out two weeks ago or at least we announced two weeks ago is microstrategy lightning and the idea there is to allow all of our Major Brands all of our customers uh the big marketing companies instead of buying 50 million dollars of advertising and then running banner ads to drive clicks to their websites we're going to let them buy 50 million dollars of Bitcoin and then give it away in micro transactions via the lightning Network to 50 million of their customers to drive traffic to their website so the [Applause] the promise of lightning is that it is now possible to move money at the speed of light to move it for a 30th of a penny friction free to uh to to settle in a couple of seconds instead of a couple of months and so if I wanted to do direct marketing where I offer 10 million people some amount of money to show up and become a customer or do a referral I couldn't do it with a credit card because of credit card minimums I couldn't do it because of of the cost of the transaction but in a world where you have satoshi's running via lightning channels and you have a very a very healthy ecosystem of lightning wallets and you have an ethical money Bitcoin an ethical commodity then you can actually build all sorts of interesting employee incentive applications prospecting applications customer applications you can even redefine the product like and if you buy a book on Amazon and you pay for it where the or the credit card it gets shipped to you that was the old way but the new way might very well be that if you buy the book on Amazon I'll give you a Satoshi refund and if you post your review of the book I'll give you another Satoshi refund and if other people like your review I'll send you another Satoshi refund and if people buy the book based on your review I'll actually give you a percentage of that so I could Implement and I could Implement customer referral fees and ongoing Community engagement payments that will change the nature of the offering for the company that it that you know kind of puts frequent flyer miles into the obsolete obsolete trash bin of History and we replace them with satoshi's as universal Universal uh monetary units and your reward for engaging with me for buying my product for working to help support my community is to get immediate compensation and I I see a world a place where Amazon does that or Coca-Cola does that or Nike does that or McDonald's does that I I don't want McDonald's to give a hundred million dollars to a digital marketing company to run banner ads and send you spam emails or whatever it is I want McDonald's to buy a hundred million dollars worth of bitcoin and offer people Bitcoin rewards when they download the McDonald's apps when they engage in a McDonald's marketing campaign and I think if we can get the lvmhs and the McDonald's and the coca-colas and the Airlines and the hotel chains to embrace the idea that the universal frequent flyer mile is the Satoshi right and lightning is the method to deliver that to billions of people I think it's a chance to get thousands of companies to see the benefits of Bitcoin as a technology and as the benefits of Bitcoin to make their products and services better and Delight their customers and I think that will help us expand the ecosystem to the benefit everybody in the community thank you so the functionality of Bitcoin and micro strategies adoption of it and ability to make others understand how powerful and what what UniQue Ideas micro payments allow that's a really interesting concept and the decentralization of it has immense implications potentially for investment purposes around the decentralization of major centralized advertising firms today on the Internet or all kinds of other things so help me think through what that could mean from an Investor's perspective buying microstrategy stock today versus how someone may have thought about it four or five years ago and how it's different and how the options may have changed well Mike rashadi discovered Bitcoin we had a p l and our p l was the the source of shareholder returns we had a balance sheet of 500 million dollars that we had accumulated by a you know by cash flow over time but the shareholder looked at the company and said the balance sheet is a liability because 500 million dollars is never going to be worth more than 500 million dollars you're not going to get a 30 return on 500 million dollars right so the cash the conventional treasury strategy on a balance sheet man your balance sheet is a liability and your p l has to grow faster than the monetary inflation rate so I think of it as everybody's got a left arm and a right arm and when your balance sheet is weighed down with cash or sovereign debt is like putting your right arm behind your back and you're just fighting with your left arm and it's really really hard and so company and then when the the Federal Reserve raises the monetary inflation rate from 5 to 15 percent every company fighting with the one hand has got to grow 25 percent and they're trying hard and they're reaching beyond their fingertips and when they fail they crash and burn and it might be even worse they might actually say the 500 million is a liability so I'm going to give it all back to the shareholders I'm going to borrow a billion dollars I'll go to negative working capital and then not only are they fighting with one hand behind their back but they have a two billion dollar weight around their neck and that's why all these indebted companies fail in an inflationary environment so when we discovered Bitcoin we said well we're not going to like leave the right arm behind our back we're going to turn the 500 million dollars in of of liability into 500 million of an asset the long story short is we went from 500 million dollars of a liability yielding nothing to today we have a hundred and forty thousand Bitcoin which is four billion dollars plus and so we are able to convert our balance sheet from a nothing or a liability into an asset and once we did that we we provided our shareholders with um a benefit because all the you know if you wanted to actually buy ten thousand acres of Timber you would buy a company to invest in Timber and if you wanted to buy oil tankers you would buy a company invested in oil tankers and if you wanted to buy Bitcoin and you only had 30 seconds and you wanted 10 million dollars of Bitcoin and you're a hedge fund you pick up the phone you say buy me microstrategy because I know they're backed by Bitcoin and so we provided a on-ramp for institutional capital that allowed them to to buy some Bitcoin exposure quick and easy without the alternative would be three to five years of vetting and stress and Communications and so we let them do in uh three minutes what would take three years so that was our transition and over the last two and a half years we transitioned from a company with a 600 million dollar Enterprise Value that was uh was growing uh fairly conservatively in a very mature business to a company with a six and a half billion dollar Enterprise Value so 10x that has been growing steadily throwing off cash flow conservatively but we and this is stage two I'll get to stage three stage two is we showed the world that you don't have to grow twenty percent a year on the top line to not have to wind down the business right 98 of companies can't grow 25 percent Top Line If I told all of you if your salary doesn't go up 20 a year you're going to fail and then you all of a sudden have to do that three four years in a row you're going to have a lot of stress with your customers or or your boss or your organization and so I think that the Fiat world without Bitcoin on your balance sheet forces people to try too hard to grow and the result is they take risk that blows up in their face or they do bad Acquisitions or eventually they don't quite hit the growth Target and then their stock crashes and the business gets sold off and the result is a 99 mortality rate so so uh stage two was us using our balance sheet to show that it's okay to have a low growth business as long as you have a high growth balance sheet stage three is US putting Bitcoin and lightning into our product offering to offer to our customers so true Innovation so that we can drive our revenues up and so we can drive our cash flows up and begin to grow much more rapidly than we have but in the past and so ultimately the business is all about occasionally we sell Equity when it's accretive to buy Bitcoin occasionally we issue debt when it's accreted to buy Bitcoin always we sweep our cash flows into Bitcoin and now we focus on using Bitcoin and lightning and other apps to grow our cash flows to buy more Bitcoin and uh if we actually sweep if we keep innovating on the p l side then I think our growth rate will will continue to drive our revenues North over the next decade but we'll get a double benefit because we're reinvesting our cash flows into Bitcoin and we're getting the back end appreciation in our balance sheet such that you know today if um 100 with 140 000 Bitcoin when Bitcoin moves one thousand dollars we have a hundred and forty million dollars of investment appreciation which is equivalent to three years of after-tax cash flow of two thousand people working as hard as they can and so we have we have managed to fix the business with Bitcoin [Applause] and since the time you made the decision to put that Capital into Bitcoin in August of 2020. your Stock's up 140 percent and the Market's up 35 percent why haven't more companies done this or considered it and what do we need to do to get them to more seriously consider this I think uh there's some great Milestones coming I I think um the the fasby accounting of rendering Bitcoin indefinite intangible has been toxic for conventional CFOs because if they bought 20 billion dollars of Bitcoin they could never realize an investment gain only investment loss so the current move toward fair value accounting that's being pursued by fasbi is very very bullish and auspicious and and so the first Milestone will be the adoption of fair value accounting for Bitcoin sometime in the future the second that's a good one the second one is is I think The Regulators are hammering over and over again the theme that Bitcoin is an asset without an issue where it's a commodity and as the entire uh mainstream the crypto Community is they see that Bitcoin is special they will start to reorganize their portfolios and differentiate Bitcoin versus the Securities I think that's very auspicious and I think that causes the mainstream investors as they start to see that Bitcoin is distancing itself like Bitcoin is going to be the last crypto asset standing in the U.S and it's going to be the winner and they're going to right now they're looking at this confusing situation a year ago it wasn't clear whether Terra or luna or this yo-yo coin or that thing was the winner and a lot of people even know the difference between Bitcoin and crypto and I think right now there's a very expensive campaign being driven by the world to illustrate the diff between Bitcoin and crypto 12 months from now I think that most mainstream investors will have seen that that Bitcoin is here and embraced and a lot of the other things that were confusing that had bad reputation have been diminished diminuated or exited the market so I think the emergence of Bitcoin as uh the king crypto commodity I think will also cause the acceleration of institutional investors and also the acceleration of corporate adoption oh and the third thing I really should say this right the first is the accounting the second is the asset designation and the third is the emergence of Bitcoin applications on the on the layer twos and the layer threes the lightning applications even all cyber security applications National Security applications and uh and payment applications all of those are attracting a new class of Technology investors they know how to buy Google they know how to buy Facebook and Apple they see Bitcoin as the emergent technology Network and the most secure the most secure database and the most secure network you're going to want to own a piece of that of your technology investor and I think that will open the way for lots of corporate adoption thank you I have a very hard time understanding why more people don't own the fastest growing monetary payments and security technology Enterprise in the entire world growing at a rate of 70 a year massive amounts of adoption and optionality longer term and I personally couldn't be more excited about the future of Bitcoin we personally are as bullish and heavily invested as ever and we're excited to see where it goes over the next decade as are you Michael so with that I wanted to thank you very much for your time energy and support of an amazing technology I'm not all right I'd like to thank all of you and I would just say um uh keep building on bitcoin keep educating the public uh keep up the faith I mean everybody in this room is very inspirational to me um I said uh in my rules of success and life curate your friends and I think I've curated my friends here and I hope you do the same thank you for your friends welcome back to bitcoin 2023 at the Bitcoin magazine live desk brought to you by Marathon so we heard about curating our friends we've curated a great uh panel returning we got Dylan we got Matt and we got Jesse so that three-step analysis from someone from a product point of view thinking about on-ramps Jesse you were mentioning how much that struck you and how clear that was how clear his thinking is around that a little bit on that yeah I think he's thinking well so he talked about how there have been major strides now with accounting Clarity for Bitcoin for corporate adoption in particular um and and then he talked about uh the asset designation how Bitcoin is the asset without an issuer and that's very important because that that means it's a commodity there's no company that's keeping a pre-mine of Bitcoin and trying to Hype it up and get people to buy in on it that's that that's everything else that's not Bitcoin Bitcoin is a commodity and the SEC is getting much clearer about that in in how they're articulating what Bitcoin is and how it contrasts with everything else out there the third thing he talked about was um the applications the application layer that's developing and growing in Bitcoin and so I think in that three-part analysis he really focused in on what are the things that um the indicators of you know Bitcoin moving in the right direction of the barriers to entry for corporate adoption uh decreasing um the the quality of the infrastructure being built out and the clarity in terms of regulatory status being instrumental in those things so you know when when Michael Saylor's talking about Bitcoin I see you know his vision is quite clear about the direction it's moving in and the recent progress and how that points towards you know Clarity for the future of of where this whole thing is moving and so I think that he has like a a unique ability to to see from a corporate executive point of view what's needed and point to exactly what's happening that will make it easier for other treasuries corporate treasuries to adopt it and businesses in general he had a lot of advice out there he didn't say stay humble and stack SATs but he did talk about the auspicious nature of all these things that people say are murky and bad but somehow are just driving so many great things for Bitcoin he mentioned uh energy he mentioned Financial Security he mentioned people losing faith in crypto and that energy that economic enthusiasm all finding its way into Bitcoin and he talked about the apps right and so you're I have a bird's eye view of everything that's actually about to become fulfilled and blossoming on the network you know when you heard him say about that about crypto finally uh going away let's say and all that energy coming is that what you're seeing I think um if you're a technical person coming into Bitcoin you can verify the code uh you can use your own node you can read all the books you want to read you can listen to podcasts you can watch videos but for non-technical people there's really two main things that that brings confidence in Bitcoin as a as Freedom money as something that you can hold something that you can spend without permission on your own and that is time just simply time in the market so many people say um you know 21 million cap is going to be broken they're going to add more Bitcoin well if you can't verify that yourself in five years six years seven years eight years as that cap doesn't change you will get conviction and then the second thing is touching the stove right bitcoin's best marketing department is all the institutions breaking all around us as people touch the stove as they get burnt just like a child they will realize that they need to seek out better tools and one of those tools is Bitcoin and Dylan you're not just known as a market analyst on Twitter these days you've been talking a lot about the uh Spin and noticing spin noticing Moscow time being produced by the media regularly right complete fake news uh but we got a guy who's promising to destroy Moscow Time by telling the truth tell us what you think about RFK coming up next next uh yeah I'm excited for it I uh I mean he's obviously he's a politician right but uh you know someone that has uh you know uh anti-cbdc spin uh is someone that I can get behind so I'm for it well uh you're gonna hear all about it in a few minutes uh stay tuned because one of the highlights of this show is RFK Jr coming up to maybe talk about uh fauci maybe to talk about vaccines but most importantly we're going to hear his thoughts on bitcoin clear and unadulterated coming up in just a few minutes thanks everyone we'll see you back here after RFK

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Keywords: Bitcoin, Bitcoin 2023, Bitcoin 2023 Conference, Bitcoin Magazine, Bitcoin Miami, B23 Miami, Bitcoin Magazine Live, BM LIVE, Crypto news, cryptocurrency news, bitcoin news, btc news, crypto news today, bitcoin news today, Bitcoin Price 2023, Marathon, Marathon Digital Holdings, saylor, michael saylor, michael saylor bitcoin, microstrategy, microstrategy ceo

Id: q1IRY1XKfX0

Length: 35min 5sec (2105 seconds)

Published: Fri May 19 2023