Michael Saylor: BTC collateralized bonds yield 10% annually, the $90 trillion pension battlefield is ready.

The corporate layout of Bitcoin reserves is continuing to heat up. Recently, many companies have accelerated the promotion of Bitcoin reserve strategies, with typical cases including:

• Nasdaq-listed company Profusa: announced the signing of an equity credit agreement with Ascent Partners Fund LLC, planning to raise up to $100 million through the issuance of common stock, with all net proceeds to be used for purchasing BTC.
• H100 Group: Raised an additional approximately 54 million USD, the funds 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. Meanwhile, the potential "battlefield" of the pension market is also beginning to show signs.

On July 18, reports emerged that the Trump administration is considering opening up the U.S. retirement market, which manages $9 trillion in assets, to cryptocurrency, gold, and private equity investment channels. It is reported 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 focused on Bitcoin reserves or holding large amounts of Bitcoin are likely to become popular investment targets in the retirement market, with their appeal potentially surpassing existing options such as spot ETFs.

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

What is the next business model for Bitcoin reserve companies? 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 view the spread of Bitcoin as a currency virus or a super idea, the spreader of the virus when Bitcoin comes into contact with individuals is a business. When businesses undergo 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 future expectations of statutory cash flows. For example, every company in Nigeria is valued based on expectations of Nigerian cash flows. Brazilian companies are based on Brazil's cash flows. American companies are based on cash flows. But we know that the value of cash is declining.

Facing bullish, heterogeneous, and uncertain risks, such as credit risk or equity risk, 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 assure you I will pay you back, 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, assessing future cash flows, and evaluating equity or opportunities.

The Bitcoin treasury company has the most elegant business model, and I have some Bitcoin (worth $10 million). I started issuing stocks based on my ability to acquire more Bitcoin, then credit, fixed credit, convertible credit, and other credits, which I used to purchase Bitcoin. For example, a certain company reserves Bitcoin through frequent stock issuances, resulting in an exponential increase 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 the law, and a leader together------a CEO, a CFO, and a Chief Legal Officer coming together forms 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, 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 poses 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 similarly, you need one in France, Norway, Sweden, and Germany.

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 launch preferred shares in the Japanese market earlier than I would, so go ahead and do it.

So I believe this is the simplicity of the business model. I just want to issue tens of billions of dollars in securities and then purchase tens of billions of dollars in BTC. I want to transform the stock and credit capital markets from the physical cash simulation of the 20th century (based on cash) to BTC of the 21st century (based on cryptocurrency).

About BTC Credit Model

We have established a set of metrics to evaluate the equity value priced in BTC. Since we are using the BTC standard, simple USD accounting methods are not applicable, because USD accounting is designed for companies that generate profits through operations. Therefore, we created the BTC yield, which is essentially the appreciation and percentage per BTC.

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 200% premium relative to the net asset value (NAV). To calculate what the premium relative to the net asset value is, it's a very straightforward method that depends on whether the company generates a 220% return, or 10% or 200% return. For example, bonds that pay 200% interest after tax are worth much more than those that pay 5% interest after tax. Therefore, BTC returns or USD returns are an equity metric.

The dollar earnings of Bitcoin are essentially equal earnings. A Bitcoin company is based on Bitcoin, and if you generate 100 million dollars in Bitcoin dollar earnings, it is equivalent to 100 million dollars in after-tax earnings, which is directly included in shareholders' equity, bypassing the profit and loss statement (PnL). However, a company that can generate billions of dollars in BTC earnings is the same as a company that can generate a billion dollars in earnings; 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 earnings.

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

The first method is to manipulate cash flow by investing all operating profits into BTC, which will yield corresponding returns, involving 100 million USD in operating cash flow. I use this money to purchase BTC. In this way, I obtain 100 million USD in BTC gains without diluting any shareholder equity, but it requires an operating company that can generate substantial cash flow to do this.

The second method is that if you sell equity at a price higher than the net asset value (M times NAV), for example, selling $100 million worth of equity at 2 times NAV, you will earn $50 million in BTC profit. 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 importance of BTC yield and returns lies in the fact that they provide investors with a simple, transparent, and immediate way to understand whether the management team has engaged in value-added transactions or dilution transactions on any given date. As long as a publicly listed company is willing to dilute shareholder equity, they can raise almost any amount of funds. The real trick is that these need to be done in a value-added manner. So these two metrics are important, but now we have resolved this issue.

For example, my cash flow has run out. What would you do if the BTC price increases? If M is 10 or 5 or 8, this is not a complicated question. When the M value is 10, you gain about 90% of the price difference, so selling $1 billion in equity can generate $900 million 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 worth of Bitcoin on your balance sheet, what will you do? If you are like some closed-end trust funds, 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 transaction price drops to the normal market price, the real way for you to get out of trouble is to start selling credit instruments, which are secured by the company's assets, leading to the concept of the BTC credit model.

If I have 1 billion dollars worth of Bitcoin, I can sell 100 million dollars of bonds or 100 million dollars of preferred stocks, with a dividend yield of 10%. This is equivalent to 10 times collateral. Therefore, the rating of Bitcoin is 10, and now you can calculate the risk, which is that your 1 billion dollars worth of Bitcoin may shrink to less than 100 million dollars by the time the instrument matures. You can calculate it using statistical methods like some option pricing models by inputting volatility, 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, 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 of a Bitcoin volatility of 30.

Therefore, if you input your return rate or annualized yield for Bitcoin into the BTC credit model, and fill in your expectations for Bitcoin's volatility, and then input the price of Bitcoin, you will obtain a BTC rating, and the risk will pop up, and the BTC credit model will also 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 (completely unrelated) to the stock market and the Bitcoin market, or to an unrelated market.

In the market for dollar yields for retirees in the United States. Many people do not know what Bitcoin is, do not know what Strategy is, and they know nothing about our business model. However, if we offer them preferred shares with a 10% dividend face value, providing them with a 10% dividend yield and qualified income distribution, a qualified type of tool, if your annual income is below $48,000, you can purchase this tool in the United States and receive a 10% tax-free yield.

Many people want 10%. The question now is risk; if it's 5 times or more than 10 times collateral, then it doesn't seem that dangerous. If you're optimistic about BTC, my thought is simple: offer someone high fixed income with extremely low risk. I believe collateral is a killer application for BTC. Strategically, what we've created is a convertible preferred stock called "Strike" (stock code: STRK), which allows you to gain 40% upside and an 8% coupon dividend.

We then created a convertible preferred stock called "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 drop by 5%.

They are the most successful because any security purely constrained 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, going public and achieving a rise in stock prices. The current idea is that we can market it to people.

We can sell people stocks up 40%, while Bitcoin may rise 80%, with downside protection and guarantees.