Bitcoin's Charging Bull, MicroStrategy CEO Michael Saylor
Saylor and MSTR are all in on Bitcoin, $4 billion worth.
Michael Saylor is all in on Bitcoin. $4 billion in.
Here’s how much Bitcoin MicroStrategy holds:
MicroStrategy Incorporated (MSTR), a publicly-held analytics and business intelligence company, now owns 105,085 Bitcoins, worth approximately $4.1 billion. That represents around .56% of all Bitcoins in existence. MicroStrategy’s average cost per coin is $26,080. At today’s Bitcoin price of around $39,000 the company is sitting on a 50% unrealized gain.
Saylor: “We feel like there is a land grab right now to acquire as much as we can.”
So, who is this Michael Saylor anyway?
The 56 year-old Saylor was an aeronautics major at MIT, and when a medical condition prevented him from becoming a pilot, he focused on computer simulation modeling for a software integration company. This led to consulting roles at Dupont, where he developed computer analytics models to forecast changes in market conditions. In 1991, Saylor co-founded MicroStrategy with an MIT fraternity brother, Sanju Bansal. Their first major contract was a $10 million deal to develop applications to assess the efficiencies of operations for McDonalds.
MicroStrategy went public in 1998, and Saylor’s net worth, by the early 2000’s, had reportedly reached $7 billion. Following an SEC investigation, however, over its earnings reporting, the stock declined in value and Saylor’s personal net worth fell by $6 billion. Today, MSTR has grown to over 2,000 employees and a market cap of $6.1 billion.
How did MicroStrategy acquire so many coins"?
During an earnings conference call in July 2020, Saylor announced that the company was exploring purchasing Bitcoin, gold or some other asset as an alternative to holding cash on the company’s balance sheet. MicroStrategy was producing $115 million per year in cash flow and had a balance on hand of around $500 million. In August of 2020, the company acquired 21,454 Bitcoins for $250 million, an average cost of $11,650 per coin. They later purchased $175 million worth of Bitcoin in September.
After putting most of the company’s reserves into Bitcoin, the company, in early 2021, really went all in. In February, the company sold $900 million of zero percent convertible notes, and plowed all of the proceeds into Bitcoin. The notes are unsecured and not collateralized by the Bitcoins. This was followed by another $600 million in .75% senior notes. Then in June, MSTR announced the offering of $500 million of 6.25% bonds, the proceeds of which would also be used to buy Bitcoin.
Saylor’s views on key questions involving Bitcoin:
So, why Bitcoin and not gold? Saylor: “Gold is no longer a store of value. The least risky, most diversified investment strategy is to simply hold Bitcoin.”
How did China’s ban on mining affect Bitcoin? Saylor: “The China exodus was a really good thing for Bitcoin. The result was a decentralization of mining. Long-term, the Westernization of Bitcoin is good for Bitcoin, the US dollar, and for Western technology.”
Will Bitcoin ever be legal tender, or currency, in the US? Saylor: “I don’t think Bitcoin will ever be currency in the US, nor do I think it should be. It’s like property, it’s like owning a share of stock.”
How do you see the future of bonds as an asset class? Saylor: “Debt has a negative real yield, and capital is being forced into riskier investments. The solution is to replace bonds with Bitcoin.”
How will Bitcoin evolve over the next few years? Saylor: “The network will decentralize, reorganize, upgrade and revitalize over the next 12-24 months as a result of the China exodus. Progressive miners, energy producers and political jurisdictions will take advantage of this opportunity.”
Michael Saylor, appearing on the “Wolf of All Streets” Podcast:
You can hear Saylor’s thoughts on Bitcoin, monetary policy and the economy on several podcasts and YouTube episodes. One excellent episode was with Scott Melker, aka, “The Wolf of All Streets.”
To sum up Saylor’s commitment to Bitcoin:
When asked if his leveraged strategy was putting the company at risk, and if they were overcommitted to Bitcoin, Saylor explains that the Bitcoin are not pledged as collateral and there can be no margin calls. His strategy was carefully formulated with safety in mind. He feels that shareholders who didn’t go along with the plan have been flushed out and have turned over. In addition, the stock price has gone from $120 to over $670 in less than a year. Nice return.
“Bitcoin is the most widely-held financial asset in the history of the world, growing at the fastest rate.”
“Bitcoin is digital property for 8 billion people and is going to change the earth.”
Michael Saylor is all in on Bitcoin.
Issue No. 15, August 6, 2021
Rick Mulvey is a CPA, forensic accountant and crypto consultant. He writes about all things Bitcoin, and yells at the Yankees and Giants. He also runs marathons and makes wine, neither professionally.
Follow on Twitter! The Bitcoin Files Newsletter