MicroStrategy (MSTR) is the world's largest listed company holding Bitcoin. Its founder and chairman Michael Saylor analyzed in detail "why Bitcoin is an ideal investment choice" in an exclusive interview with "Financial News". He shared how the company reorganized its capital structure through the acquisition of Bitcoin and emphasized Bitcoin's unique position in the digital asset market.
Table of contents
ToggleTransformation opportunities for micro-strategy
Michael Saylor said that in 2020, MicroStrategy had stable cash flow and loyal customers, but the capital market had little interest in its shares. Saylor explained that the company began to look for high-growth investment targets, and finally chose Bitcoin, viewing it as a monopolistic, high-growth digital asset.
Recapitalization and the Power of Bitcoin
Saylor emphasized that MicroStrategy raised $7 billion in four years and purchased $7.5 billion worth of Bitcoin, which has nearly doubled in value today. The company's market value and enterprise value increased 20 times and 40 times respectively. He said that digital assets can help change the capital structure of enterprises and cope with low growth and inflationary pressures.
The pitfalls of traditional capital strategies
Traditional capital strategies, such as stock buybacks and purchases of Treasury bonds, face high funding costs and double taxation issues. Saylor noted that Bitcoin, as an asset, can avoid these problems and provide higher long-term returns.
He said that before January 2024, Bitcoin was not clearly defined as a tangible asset, so Bitcoin cannot be reversed after impairment, which will have a negative impact on the profit and loss statement and balance sheet, so traditional financial chiefs do not support Bitcoin. currency strategy. Fair value accounting will begin in the first quarter of 2024, allowing companies to separate investment gains and losses from operating gains and losses, a significant change in the accounting world for Bitcoin. This year, the U.S. Securities and Exchange Commission approved 11 spot Bitcoin ETFs, which sent a signal to the market that Bitcoin is an institutional investment-grade asset and will allow large amounts of money to flow into the Bitcoin ecosystem.
The Bitcoin Spot ETF is a one-to-one unlevered investment tool. The issuer operates under the supervision of an investment credit company. If you invest $1 million, they will purchase Bitcoins of the same value, and investors will pay a small handling fee. MicroStrategy has business revenue, and like Tesla, Block, and Bitcoin miners, it can issue new shares to raise capital and use risk capital to take risks, unlike ordinary ETFs.
He said that MicroStrategy raises capital through convertible bonds, invests in Bitcoin at low cost, and generates interest spreads to shareholders, which is different from the operation of ETFs because we can convert the premium into shareholder interests. ETFs are like freighters and can be invested in large amounts quickly, but MicroStrategy can use the capital structure to create premiums and carry out arbitrage to buy back Bitcoin, creating more benefits for shareholders. MicroStrategy is securitizing Bitcoin, which allows our operations to lock large amounts of Bitcoin and benefit from market operations, which has a positive impact on Bitcoin demand and liquidity.
The Investment Value of Bitcoin: It’s Digital Manhattan
Saylor believes that Bitcoin is a scarce digital commodity whose value will steadily increase as demand increases. He compared Bitcoin to "Manhattan" in the digital world. It has a fixed number of blocks and is an ideal long-term investment target.
He said that Bitcoin is a great city in the digital world, with 276×276×276 blocks, and the total number will never exceed 21 million. Buying real estate in Manhattan has been a good deal in New York for the past 300 years, and we consider ourselves an online real estate development company and call ourselves a Bitcoin development company. With each transaction, we acquire more Bitcoins and create shareholder value by issuing securities at a premium to purchase Bitcoins. There is a certain elasticity to the general desire to collect rare things, such as a Leonardo da Vinci painting or the Magna Carta, or a piece of land in the Yolk District of London, Paris or New York. Bitcoin represents something completely price inelastic, so MicroStrategy's strategy is to keep buying digital Manhattan.
The future development of Bitcoin
Saylor looks forward to the future of Bitcoin, believing that it will become the core of the global digital asset market. He mentioned that the U.S. Securities and Exchange Commission has approved multiple Bitcoin spot ETFs, which will attract more funds to flow into the Bitcoin market and further enhance its value. Bitcoin’s decentralization and powerful computing network make it the safest and long-lasting digital assets. Saylor pointed out that Bitcoin has never been successfully hacked and its technical stability and security far exceed other digital assets.
Saylor believes that Bitcoin is not only an investment asset, but also a part of the global financial market. Its popularization and application will bring about changes in the economic structure and become an important cornerstone of the future digital economy.
Strategic Advice for Investing in Bitcoin
Finally, Saylor gave specific advice on investing in Bitcoin, emphasizing its value as a long-term capital asset. He believes that both businesses and individuals should consider converting some of their assets into Bitcoin to cope with future uncertainty and inflationary pressures.
