MSTR Leverage: Why Fiat Naysayers Are Wrong

Listen to the True North kid analysts destroy the FUD on MSTR's leverage. Learn why Bitcoin-backed credit crushes fiat debt & why panicking is for staying poor.

Timestamped Overview

[00:00:53 - 00:07:17] Intro & MSTR Leverage 101

• Jeff Walton kicks off the show, reminding everyone that True North is the investment-grade Bitcoin podcast for people who actually understand capital markets, not for crybabies in the chat.
• He states clearly that this isn’t financial advice and trolls will get booted. The goal is to give you a master’s level education without the useless academic theory from professors who have never taken a real risk.
• Jeff breaks down Strategy’s balance sheet. He shows that with over $71 billion in Bitcoin and only $8.2 billion in debt, the company is incredibly healthy.
• He explains that even if Bitcoin’s price got chopped in half, Strategy’s balance sheet would still be stronger than almost any company in the S&P 500.

[00:07:17 - 00:14:24] Why MSTR’s Debt Isn’t Scary

• Grain of Salt simplifies the leverage concept for the smooth-brained. He compares MSTR’s 20% leverage to buying a house, where you are typically 5x more levered. MSTR’s leverage is laughably low.
• The crew discusses why the FUD-peddlers who scream about “billions in debt” are wrong. They only look at the big scary number without comparing it to the mountain of Bitcoin assets securing it.
• Jeff explains that the dividends on the preferred stock are a tiny fraction of the total assets, making them easy to manage.
• Grain of Salt makes a key point: unlike the 2008 housing crisis caused by adjustable-rate loans, Strategy’s debt is fixed-rate. As long as they can make payments, they can’t be called, which makes their position rock-solid.

[00:14:24 - 00:39:41] Navigating the MNAV Guidance FUD Storm

• Dan Hillery shows the change in MSTR’s guidance about using its stock (ATM) to raise capital. The change added a phrase allowing them to issue stock when “deemed advantageous,” which caused the market to panic.
• The crew discusses why MSTR made the change. Ben Werkman argues that the initial, rigid guidance was a mistake. Big institutional investors—the ones with real money—likely pushed back, wanting MSTR to keep all its tools available.
• Grain of Salt points out there’s no playbook for what Strategy is doing. They are inventing the Bitcoin Treasury strategy in real-time, and sometimes they have to adjust course.
• Mason Foard notes that the market’s negative reaction to the initial guidance was the ultimate feedback, forcing MSTR to pivot back to a more flexible strategy.

[00:39:41 - 00:51:04] Bitcoin-Backed Credit vs. Fiat Garbage Bonds

• Ben Werkman points out that the real decision-makers are the massive institutions that own billions in MSTR stock, not random accounts on X. When they get unhappy, they sell, and you feel it.
• Dan Hillery, wearing his strife hat, explains why MSTR’s preferred stock is a vastly superior investment compared to the bonds of a failing company like JetBlue.
• Dan highlights that JetBlue has almost as much debt as assets, operates in a dying industry, and struggles to make payments. In contrast, MSTR’s debt is backed by a mountain of Bitcoin.
• The group agrees that risk is completely mispriced in the traditional bond market. Investors are buying junk from dying fiat companies instead of high-yield, over-collateralized Bitcoin-backed securities.

[00:51:04 - 01:11:24] The Corporate Bitcoin Revolution

• The panel discusses the trust element in buying any equity. Jeff Walton states that if you want a trustless asset, you should just buy Bitcoin and hold your own keys. Equities require trust in management.
• Grain of Salt explains how Saylor created the entire Bitcoin Treasury playbook and gave it away for free. Now, over 100 publicly traded companies are following his lead.
• The success of the Bitcoin Treasury ecosystem means there are now other options besides MSTR, which can affect its price but also validates the entire strategy.
• Jeff Walton marvels at how Saylor simply announced his plan to the world and then executed it, turning a $500 million company into a $71 billion juggernaut.

[01:11:24 - 01:22:00] The Bitcoin Army Needs to Unite

• Mason Foard calls out the irony of Bitcoiners attacking Bitcoin treasury companies instead of focusing on the dumpster fire that is the traditional financial system.
• Ben Werkman agrees, stating that the infighting is a waste of energy when the real mission is to educate the world about Bitcoin and why the fiat system is broken.
• The crew discusses how Bitcoin is the ultimate rabbit hole. It starts with number-go-up, but it leads you to question monetary policy, inflation, and the entire economic system.
• Ben emphasizes that the younger you figure this out, the wealthier you will be. Mason and Dan are going to be richer than everyone else because they got the message early.

[01:22:00 - 01:44:15] Fishing for Whales & S&P 500 Inclusion

• Jeff Walton uses an analogy: Strategy is fishing for capital at different depths. The common stock is for one type of fish, but the preferreds and other instruments are hooks dropped deep into the ocean to catch the giant institutional whales who would never buy Bitcoin directly.
• The panel debates the odds of MSTR being included in the S&P 500 index.
• Jeff argues that MSTR doesn’t need the S&P 500; the S&P 500 needs MSTR to stay relevant. He gives it a low probability on the first try, expecting the committee of fiat dinosaurs to be afraid.
• Grain of Salt shares that he thinks the odds are low but that if it happens, it will be a massive validation of the entire strategy.

[01:44:15 - 02:07:44] 444k Bitcoin, Final Thoughts & Signing Off

• The crew has some fun with the idea of Bitcoin going to $444k, with Soleil Nitu pointing out it’s an “angel number.”
• They discuss the FUD machine on social media and how it’s often driven by bots, paid actors, and engagement farmers. This is why you need a source of high-signal information like True North.
• The panel gives their final thoughts: Mason says the stock is undervalued if you have long-term conviction. Ben tells everyone to stick to their thesis and ignore the noise.
• Jeff Walton concludes that they are at the birth of a new era of “digital risk,” and they are writing the playbook. The show will take a break until late September.

Notable Quotes

TradFi Clowns

I cannot say this to somebody that's a CFO of a public traded company, that you're...the dumbest person I've met in the past six months. I just can't say that out loud.

Grain of Salt @Z06Z07

Corporate Control

They don't depend on anyone. If they want more leverage, they have more leverage on demand...they basically just control their own destiny at this point.

Soleil Nitu @nithusezni

The Bitcoin Standard

If you do not want to buy a product where you have to have trust, go buy Bitcoin.

Jeff Walton @punterjeff

Creditworthiness

With the converts out of the picture, that is the most credit worthy instrument in the entire market.

Dan Hillery @hillery_dan

Misplaced Rage

Bitcoiners are spending a lot of time criticizing Bitcoin treasury companies, but they're not talking about JetBlue or they're not talking about the rest of the landscape, which is awful.

Mason Foard @MasonFoard

The Real Mission

The penetration of awareness for Bitcoin out there in the broader community and the broader corporate landscape is still effectively zero.

Ben Werkman @benwerkman

The S&P 500

The S&P 500 needs MSTR. MSTR doesn't need the S&P 500.

Jeff Walton @punterjeff

The Hardest Part

The hardest part about investing, not trading, is waiting.

Grain of Salt @Z06Z07

Conviction

If you've built a thesis on your own...then you stick to your guns and you don't need to change with the tides as other people do.

Ben Werkman @benwerkman

Risk Models

They break models. They break risk models. It doesn't fit into anything else.

Jeff Walton @punterjeff

Corporate Adoption

If you believe that, one, Bitcoin is gonna become a global asset...and number two, that you believe companies will exist in the future, then obviously companies are going to adopt Bitcoin.

Mason Foard @MasonFoard

Pioneering Risk

We're on the verge and the birth of digital risk. And the market hasn't conceptualized it yet. And we're literally writing the playbook of what digital capital risk looks like.

Jeff Walton @punterjeff

Questions & Answers

Question 1: Why isn’t Strategy’s (MSTR) leverage as risky as the FUD claims?

Answer: The speakers explained that MSTR’s leverage is fundamentally misunderstood by critics. Grain of Salt noted their liability-to-asset ratio is around 20%, which is five times less leveraged than a standard home mortgage. Furthermore, their debt instruments are mostly fixed-rate and not callable, meaning as long as they make their interest payments, the principal isn’t a near-term risk. Jeff Walton added that their massive Bitcoin holdings provide a huge cushion against volatility, making the balance sheet far healthier than most traditional companies.

Question 2: Why did Strategy change its MNAV guidance so quickly?

Answer: The panel concluded that the initial, rigid guidance was a mistake. Ben Werkman suggested the rapid reversal was likely due to powerful feedback from large institutional investors who own billions of MSTR stock. These major shareholders would want the company to maintain maximum flexibility, including the ability to issue equity whenever it is advantageous, rather than being handcuffed by a rigid framework. Soleil Nitu added that it was better to “fix the glitch” quickly rather than operate under flawed guidance for optics.

Question 3: What is the significance of Bitcoin-backed credit compared to traditional corporate bonds?

Answer: Dan Hillery argued that Bitcoin-backed credit is a vastly superior asset class. He contrasted MSTR’s preferred stock with the bonds of a company like JetBlue. While both might offer a similar yield, MSTR’s payments are backed by a massive, liquid, and appreciating collateral base (Bitcoin), whereas JetBlue’s are backed by a weak balance sheet in a struggling industry. The discussion highlighted that risk is mispriced across the fiat bond market, and Bitcoin-backed securities offer a more creditworthy alternative.

Question 4: What are the odds of MSTR joining the S&P 500?

Answer: The group expressed mixed opinions, leaning towards it being unlikely on the first attempt in September. Jeff Walton was most skeptical, giving it a 25% chance and framing it as the S&P 500 needing MSTR’s exposure to a high-growth asset more than MSTR needs the inclusion for validation. The consensus was that while inclusion is inevitable in the long term, the committee that makes the decision is likely too conservative and unfamiliar with Bitcoin to approve it immediately.

People and Organizations Mentioned

• Strategy (MSTR): The OG Bitcoin treasury company, led by gigabrain Michael Saylor, showing corporations how to escape the fiat ponzi scheme.
• Jim Chanos: A notorious short-seller and fiat clown who was caught spreading fear, uncertainty, and doubt (FUD) about MSTR.
• Lynn Alden: A respected macro analyst mentioned in the context of her public interactions with financial dinosaurs like Jim Chanos.
• Goldman Sachs & JP Morgan: Bulge-bracket TradFi banks whose analysts are still struggling to comprehend the Bitcoin revolution MSTR is leading.
• Financial Accounting Standards Board (FASB): The accounting rule-makers who finally got orange-pilled, thanks to Saylor’s efforts, into changing the archaic rules for reporting digital assets on corporate balance sheets.
• Elon Musk: CEO of Tesla, mentioned as an example of the kind of founder-led company where investors must place their trust in the leader’s vision.
• Semler Scientific (SMLR): A healthcare company that became one of the first to bravely follow Strategy’s Bitcoin treasury playbook.
• JetBlue: A dying fiat airline used as the prime example of a company with a garbage balance sheet, whose junk bonds are inexplicably bought by investors over superior Bitcoin-backed instruments.
• Kenneth S. Rogoff: A Harvard economist and classic intellectual-yet-idiot who was famously wrong about Bitcoin’s price a decade ago and is still doubling down on his failed thesis.
• S&P 500: A legacy stock market index composed of fiat companies. The panel argued it needs to add MSTR to maintain its relevance in the digital age.

Events Mentioned

• Tim Kotzman’s Bitcoin Unconference in New York City on September 17th and offered the promo code TRUENORTH15 for a discount.