Michael Saylor: Digital credit is Strategy's product; MSTR equity is merely a byproduct.

October 20 - Strategy founder Michael Saylor said in an interview: "What we're doing is creating a very valuable product—digital credit. If this credit product works, we can sell billions of dollars of credit. When we sell $1 billion of digital credit, we only need to see Bitcoin outperform our hurdle rate, which is around 10.5%. So, if we sell $1 billion of credit and Bitcoin appreciates 10% per year, the company effectively earns $1 billion in net profit, and we never need to repay this money.

Imagine if we sell $10 billion of credit each year and Bitcoin appreciates 10.5% annually—this is like a company that generates $10 billion in net profit. Now imagine this number can grow 20% or 30% each year. How much is this company worth? Maybe 10 or 20 times that net profit figure? That's the premium to net asset value (NAV).

So, the future of MSTR depends on converting capital and Bitcoin into credit, digital credit, thereby generating digital equity. If the credit product is good, the equity will outperform Bitcoin. Therefore, credit is the product, and equity is just a byproduct.

For us, repurchasing credit is a better use of funds because if the credit works, the company's stock should trade at a premium to net asset value (NAV). If we let the credit disappear, we are just a holding company, and the stock price would only fluctuate around net asset value. That's why we must defend this credit product."