Michael Saylor Reveals MicroStrategy’s Strategy to Dominate Bitcoin Markets
Michael Saylor, founder and executive chairman of MicroStrategy, recently articulated the company’s ambitious goal of becoming the leading bitcoin bank. In a conversation with analysts at Bernstein, Saylor outlined a vision where MicroStrategy not only grows its holdings but aims to evolve into a trillion-dollar company by leveraging bitcoin as a core asset.
Innovative Financial Strategy
Unlike traditional banks that lend out funds, MicroStrategy plans to borrow at low rates and invest the capital directly into bitcoin, with an estimated average annual return of 29%. The firm has been aggressively acquiring bitcoin since 2020, amassing a total of 252,220 BTC, which is currently valued at over $15 billion. This positions MicroStrategy as the largest corporate holder of bitcoin globally, despite having a total cost of around $9.9 billion and $4 billion in debt.
Saylor’s Bitcoin Thesis
Saylor believes that bitcoin is the top-performing asset of the 21st century, viewing it as a revolutionary form of digital capital. He argues that bitcoin serves as a hedge against inflation and a superior long-term value storage tool. He anticipates that as bitcoin’s volatility attracts more investors, it will become essential for both institutional and retail portfolios.
The Endgame: A Bitcoin Bank
According to Saylor, MicroStrategy’s core business will involve creating a variety of bitcoin capital market instruments, including equities, convertibles, fixed income, and preferred shares. He envisions that if MicroStrategy manages to secure significant financial instruments amounting to around $100-$150 billion in bitcoin, it could build a company valued at $300-$400 billion.
“This is the most valuable asset in the world. The endgame is to be the leading bitcoin bank, or merchant bank, or you could call it a bitcoin finance company,” Saylor stated. He believes that with strategic growth, bitcoin could eventually reach prices in the millions per coin.
Long-Term Belief in Bitcoin
Saylor’s strategy hinges on a long-term belief that bitcoin is the best deflationary money. Currently, bitcoin constitutes only 0.1% of global financial capital, but Saylor projects this could rise to 7% by 2045, potentially elevating bitcoin prices to $13 million each.
If U.S. capital markets allow MicroStrategy to raise funds effectively, Saylor plans to exploit arbitrage opportunities between USD capital markets and bitcoin, projecting a 29% annual growth for bitcoin under his base case scenario.
Rethinking Lending Strategies
Saylor also emphasized that borrowing funds to invest in bitcoin is more beneficial than traditional lending practices. He stated, “My view is that it’s much more intelligent to borrow a billion dollars from the fixed income market and lend it to bitcoin at a 50% ARR, with no counterparty risk, than to reverse that.”
MicroStrategy does not intend to lend its bitcoin holdings; instead, Saylor argues that the focus should be on capitalizing on bitcoin’s potential for high returns without the risks associated with traditional lending.
The Challenge for Other Companies
Saylor pointed out that MicroStrategy has effectively bridged the gap between USD and bitcoin markets by offering investment instruments that provide exposure to bitcoin volatility. This model, which includes low-cost debt and attractive conversion premiums, is difficult for smaller firms to replicate.
Currently, MARA is the second-largest corporate holder of bitcoin, with 26,842 BTC ($1.6 billion), while the Japanese firm Metaplanet holds 748.5 BTC ($45.7 million).
Encouraging Industry Adoption
Saylor advocates that all companies in the crypto ecosystem should adopt bitcoin as a treasury reserve asset. He argues that many are missing out on shareholder value by not doing so. As he continues to engage with companies, Saylor expects a growing trend of bitcoin adoption among miners and exchanges.
In conclusion, MicroStrategy’s innovative approach and strong belief in bitcoin as a foundational asset position it uniquely in the cryptocurrency landscape, aiming not only for substantial growth but also to redefine the role of financial institutions in the digital age.
FAQ
What is MicroStrategy’s main business strategy?
MicroStrategy’s primary strategy is to become the leading bitcoin bank by acquiring and holding bitcoin, borrowing at low interest rates, and investing those funds into bitcoin to generate higher returns.
How much bitcoin does MicroStrategy currently hold?
As of now, MicroStrategy holds 252,220 BTC, valued at over $15 billion, making it the largest corporate bitcoin holder in the world.
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