Author|Coinage

Translation| Wu Talks Blockchain

Market Reaction and Long-term Logic: Short-term is a Voting Machine, Long-term is a Weighing Machine

Zack Guzman: The recent sell-off of 32 Bitcoin has attracted global attention. In light of the market reactions, what is one point you most want to clarify?

Phong Le: There's an old saying on Wall Street: “In the short run, the market is a voting machine, but in the long run, it is a weighing machine.” We are not seeking a vote on “how we can increase our Bitcoin holdings per share”; we are simply providing KPI and a long-term perspective transparently. There will always be short-term overreactions, but I won’t spend too much time scrolling through every comment on X (Twitter). Our decision-making considers the daily, annual, and long-term perspectives, with the long-term view being the most important.

We are focused on whether we are continuously creating value for different categories of shareholders, such as common stockholders, preferred stockholders, and debt holders, while also promoting the development of the Bitcoin ecosystem itself. This isn't even our first time selling Bitcoin; we sold around 2.5 million dollars' worth of Bitcoin in 2022 and bought it back later. This time we also sold 32 Bitcoin (approximately 2.5 million dollars), bought about 100 million dollars the previous week, and around 1.5 billion dollars the week before that. We voluntarily disclose this information weekly through 8-K filings. As the largest corporate holder of Bitcoin globally, handling positive and negative market feedback is part of our commitment to transparency.

Proving Liquidity to the Market: Breaking the “Death Spiral” Narrative

Zack Guzman: Some see this sell-off as a “vaccination” for the market. Others compare you to Terra, concerned that STRC (Strategy Preferred Stock) being leveraged by other DeFi protocols could trigger a cascading sell-off “death spiral.” Was this a concern you heard before selling?

Phong Le: That was not a driving factor at all. We are not concerned that DeFi protocols built on STRC will cause a cascading crash because approximately 80% of STRC is held by retail investors, and a significant portion is long-term institutional holdings, with the proportion held by DeFi protocols being very small, less than 10%.

When we say “vaccinate the market,” it carries two main meanings: first, our debt holders (digital creditors and bondholders) want assurance that with almost 100% of our assets being Bitcoin, if we really need to pay dividends or for other purposes, we have the capability and willingness to utilize those assets. Meanwhile, rating agencies want to see that we are not selling Bitcoin arbitrarily. So, we sell a small number to prove to creditors that we can sell and to rating agencies that we have discipline. Second, we are testing our internal business processes. We have disclosed custodian information but not specific Bitcoin addresses. Once we move Bitcoin from cold storage to a hot wallet, there will be countless people in the market watching, trying to guess which are our wallets. We want to see how the entire selling process operates in a real environment and how the market reacts. We hope that when we sell millions of dollars' worth of Bitcoin in the future, the market will not overreact.

Bidding Farewell to the Black Box: Michael Saylor and the Strategy Decision-Making Mechanism

Zack Guzman: We’ve seen all sorts of experiments in the crypto space, and to be honest, we've also reported on highly centralized founders like SBF and Do Kwon. But Strategy is different; how exactly are decisions like “selling 32 Bitcoin” made internally?

Phong Le: As a well-known Nasdaq-listed company, Michael Saylor does not hold a majority stake. We have 8 board members, representing both common stockholders and preferred stockholders, as well as debt holders, and we are somewhat accountable to the wider crypto community.

On a macro level, we discuss the “options” of funds at each quarterly earnings call with the board – we can issue shares, preferred stocks, convertible bonds, buy and sell Bitcoin, or repurchase bonds. Consensus is reached at this level before executing. On a micro level, we run extremely complex financial models every month, analyzing the effects of different operations on the equity quality and credit quality; every week, Michael and I discuss the objectives for that week; each morning, we coordinate with the funding team, investor relations team, and traders to determine the daily directives. We even utilize sentiment analysis from the Grok platform on X, website traffic, and usage data of the Strategy App to assist in our decisions. This is by no means a spur-of-the-moment decision; it is a rigorous approach that a data analytics company should employ.

Fundraising Mechanism and the Highest Philosophy: “Doing Nothing”

Zack Guzman: Apart from Bitcoin, what other fundraising mechanisms will you utilize if STRC continues to trade below par?

Phong Le: We have many options: issuing new shares (our shares trade at $2.7 billion daily, making it one of the most liquid stocks globally), issuing other preferred stocks, or offering more convertible debt; the market is very receptive to us. But I want to emphasize that we currently hold 845,000 Bitcoin, and we could very well choose to “do nothing.” This was indeed our core strategy during the bear market in 2022: we repaid part of our senior secured notes and Bitcoin-backed debt, and then we quietly sat on this massive Bitcoin vault. As Bitcoin warms up, the company's valuation and Bitcoin holdings per share naturally rise. In a bear market, the most dangerous temptation is often to feel compelled to “do something,” such as panic-selling on a large scale, but we will never do that. “Doing nothing” is one of our extremely important strategic options.

Facing Volatility and Beliefs: Great Companies Have All Endured “Near-Death Experiences”

Zack Guzman: When you choose to “do nothing” while watching your book losses accumulate into billions, what is your personal feeling about it?

Phong Le: People sometimes forget that this company, once named MicroStrategy, was founded by Michael Saylor in 1989 and went public in 1998; we didn’t add Bitcoin to our balance sheet until 2020. For 31 years from 1989 to 2020, our Executive Chairman has extensive experience leading the company through numerous ups and downs, which is the cornerstone of our resilience and strength. I have served as CFO since 2015 and became CEO in 2022; I have also weathered 11 years of storms. Michael’s hair has turned gray a lot, and mine has too.

Look at Amazon; if it hadn't experienced a few near-death experiences and extreme fluctuations, it wouldn't be the Amazon it is today; Tesla also had its “funding secured” tweet controversy. 2022 was indeed a tough time, but it forged resilience for those who held on. Why am I unwavering? Because I believe in the underlying logic. I believe Bitcoin can create sovereignty and freedom for people worldwide, that it is a superior way to transfer funds through digital rails, and that it is a programmably superior scarce asset. Just as Jeff Bezos firmly believes Amazon creates real value for millions of consumers, as long as you believe in the underlying logic, all other fluctuations will be resolved.

The Evolution of AI: From Establishing STRC to 60 Trillion Agentic Transactions on Mars

Zack Guzman: Rumor has it that the inspiration for the STRC product comes from the exploration of internal AI tools; what long-term plans do you have for combining AI with finance?

Phong Le: Yes. When generative AI first appeared, everyone thought it could only write meeting minutes. But we found it could help us design revolutionary products that would normally take months and could be outright rejected by lawyers and banks. AI helped us find applicable case law and financial KPIs, shortening the development cycle of STRC from three years to eight months.

But this is just the beginning. What's even more exciting is Agentic AI. Internally, we are deploying agents to automatically summarize information, repair code (self-healing code), etc. Ultimately, the world will evolve from 6 billion humans to 60 trillion automatically decision-making agents—imagine if SpaceX deployed a million humanoid robots on Mars and the Moon; when they engage in commercial interactions and value exchanges, they would absolutely not use traditional financial networks like Visa, Mastercard, or SWIFT, but rather use decentralized crypto rails and seek high-yield products that store value in Bitcoin. This will be an immeasurable boon for the crypto world and Bitcoin.

Breaking the Divide: Crypto Fundamentalism vs Capital Markets

Zack Guzman: There has been a sense of division in the crypto world: one camp is the fundamentalists who only believe in Bitcoin, while the other is aware that they must connect to traditional capital markets. How does Strategy balance the two?

Phong Le: When I deeply engaged with Bitcoin, I wanted to promote it to everyone around me, but I never asked them to take an IQ test or loyalty test, nor did I inquire about their religion, nationality, sexual orientation, or professional background. If Bitcoin is to win the world, it must allow as many people as possible to gain exposure in various ways. Whether through self-custody with hardware wallets, buying on Coinbase, holding Strategy shares, holding STRC, or via DeFi protocols or ETFs, these are all great ways to spread Bitcoin. Our philosophy is: “Spread Bitcoin with love.”

Can STRC Return to a 100 Dollar Par Value?

Zack Guzman: Will STRC compete with USDC/USDT in the stablecoin market? What do you think is the roadmap for returning to a 100-dollar par value?

Phong Le: STRC has only been established for 10 months, while Bitcoin has been around for 18 years; it is still in its infancy, and we are continuously learning and improving. Our goal is to have it trade between 99 and 101 dollars. Recently, we utilized our dollar reserves to repurchase 1.5 billion in convertible bonds, which caused a temporary decrease in reserves and pressure on STRC prices. Moving forward, we will replenish reserves, and with the first half-month interest payment mechanism starting on June 30, it will gradually return to par value. The product is extremely over-collateralized, and paying dividends is not an issue that will keep me up at night.

Polymarket Controversy Resolution

Zack Guzman: The debate on Polymarket about whether you “sold Bitcoin before May 31” has caused significant controversy; did you really sell?

Phong Le: I paid attention to the whole process. What I can clearly state is that we did sell Bitcoin the week before May 31, and it was accurately recorded in the 8-K filing released the following Monday morning at 8 AM. As for how the prediction market interprets the contracts, that is their business, but I am very clear about what the company actually did internally.

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