MicroStrategy Acquires Additional 19,452 Bitcoins for $1.026B
microstrategy.com
microstrategy.com
> “We believe our bitcoin strategy, including our bitcoin holdings and related activities in support of the bitcoin network, is complementary to our software business, by enhancing awareness of our brand and providing opportunities to secure new customers.”
One might imagine there are more effective ways to run an advertising campaign. At any rate, it sure makes those superbowl advert campaigns look cheap.
I don't believe it, though, as all I know about MicroStrategy is they're betting on Bitcoin.
Then again, for some of the hard problems in their space, it's not like we've seen much evolution... the BI space is dominated by fads.
The economy is currently in the middle of an enormous asset bubble. Them buying SP500 Index Funds or Real Estate would probably raise more eyebrows, but they're a tech company and Bitcoin is tech stuff so it's ok or something.
It's sad how little faith some of these companies have in humanity - surely a billion dollars could result in better performance by investing in their own labor?
First of all, Bitcoin is not a currency and it doesn't need to be a currency, it wasn't designed to be one, it was engineered to be an scarce digital asset that could be electronically transfered between two parties without the need of a middleman. These transfers can't be censored by nobody. Probably you don't see value in any of that because your country economy is right on track to recovery from the pandemic, you have inflation rate of 0%, or you went to a the bank with your parents when you was a child and they opened an account for _you_ .
Well, that's not how it works in many other parts of the world, where you don't have access to banks, where you have staggering inflation rates that destroy your savings, where you don't have access to the financial markets where you can benefit from the inflation of stock prices caused by the money that the goverment gives Wall Street for almost free.
Bitcoin is optional, you don't have to be part of this network. Probably the second scenario is what most countries in the world are living right now and that's why Bitcoin will thrive there.
Bitcoin's value would plummet to almost nothing, virtually overnight.
The ONLY reason bitcoin exists is because the government LETS it.
They can shut down the exchanges, block ISP traffic but only in their jurisdiction. They cant't stop Bitcoin mining in every other country. They can't stop people from Africa doing business with Bitcoin. Or people in Venezuela where you see an real use case for this technology.
The network will continue to grow without US if they choose that path.
Or US Goverment realizes that Bitcoin might be the tool they need to revitalise the economy, and to avoid loosing influence and allowing China to continue growing stronger.
Before the Civil War, thousands of businesses, local governments, and private banks issued paper currency in the US. This enabled all sorts of scams (banks that didn't exist or wouldn't pay full value, etc.) The federal government was barely a player in the space, with sporadic and limited issues until 1861.
With the National Banking Act in the 1860s, the federal government slapped a 10% tax on privately issued notes. The industry collapsed virtually overnight, federal government notes take over the ecosystem, and we start to see a currency ecosystem which resembles the dollar we know today.
If crypto becomes a serious logistical problem for state actors, we'll see the equivalent trick. Spinning up a state-backed digital coin is a relatively modest technical task, because it doesn't have to solve the decentralized/trustless problem. Just take existing banking infrastructure and scale it horizontally. Any s such state-backed currency just has to be cheaper than (your favourite crypto) + (penalty taxes) to immediately win the mainstream market.
This model also puts a significant direct motive into deanonymizing privatecoins. The revenuers may not care you're using XMR to buy fentanyl, but once they can demand a 10% cut of it, they care about who owns them.
States can create their own digital currencies, but as long as they can create an unlimmited ammount of it, then your savings in that currency will loose purchasing power, and it would be no different to the system we currently have.
Bitcoin is a savings technology, you can also have other assets as real state, gold. I don't see the Goverment excessively taxing those other assets. Bitcoin should be and will be taxed similarly to those.
This world already broken beyond repair.
You would do well to take the time to understand why MSTR did what they did.
You have read Lyn's post on QE - great!
Here's how I view it, and I believe Saylor as well: cash loses double digit % purchasing power annually for the things you want to buy and hold.
You can hold on to your melting pile of cash, or you can deploy that capital elsewhere. Art, wine, stonks, negative/0 yielding bonds, real estate, crypto kitties, or an asset that has been appreciating at a clip of 200%/yr.
Question is not why btc, but why would you put yourself at a disadvantage by holding fiat reserves.
- Why is the Company holding so much cash? Most companies do not hold 60% of their market value in cash or other assets unrelated to their core lines of business. Why is MicroStrategy making this choice?
- Why will the Company not return the excess cash to shareholders instead of running an investment book on the side?
- Revenue is declining in a market that is experiencing growth. Why is management focused on the minutiae of treasury management instead of fixing the core business?
It's not fiat vs BTC, it's about why is the company holding so much cash in the first place?
As an investor, if I want to bet on BTC, I can just buy BTC. Why would I buy this weird hybrid of business intelligence software company and holding company?
MSTR is becoming sort of like that. It very well could still be overvalued, but people aren't buying it for its earnings, they are buying it for the assets it holds (bitcoin).
I'm really not trying to be pro or anti BTC/MSTR here, just explaining whats going on. It's valid to think it's stupid/overvalued, but I'm just pointing out that its P/E ratio isn't the reason. And comparing MSTR's P/E to Apple's doesn't really make sense at face value.
The grayscale trust is actually trading at a discount to its bitcoin holdings, so thats not much of a reason (today, at least). https://grayscale.co/bitcoin-investment-trust/#market-perfor...
This is a recipe for misreporting and accounting fraud too.
MicroStrategy BTC holdings: $4.5B
62% of the market value of MicroStrategy is its BTC holdings. Saylor is, intentionally or not, making MSTR a proxy investment vehicle for BTC.
He goes into great detail his logic and reasoning for doing the purchase, why he thinking it’s a good investment, etc. Going to give you a much richer understanding than the spitballing you’ll find in these comments.
Edit to add: the suppression tactics of downvoting counter-narrative comments instead of engaging with them is most common as well, financially incentivized to suppress counter-narratives.
But markets are about expectations above anything else, and this people knows that.
Off topic: Apple makes it very hard to find the name of the podcast and episode on iOS if you don’t have their podcast app installed.
They are a services company, not a speculative investment fund.
If you had a strong core business anyway you wouldn’t do this, it’s just a sign that their core business is failing and that pivoting to a Bitcoin investment company is a Hail Mary.
"We will continue to pursue our strategy of acquiring bitcoin with excess cash and we may from time to time, subject to market conditions, issue debt or equity securities in capital raising transactions with the objective of using the proceeds to purchase additional bitcoin."
So their new purchase has currently lost 7% but their stock is up 9% today. It all makes perfect sense!
Who will be the people left holding the bag, will regulatory capture lead us to forcing people to need to buy Bitcoin to function in society?
If you hate VCs, buy btc.
Some believe in btc, others don't.
Who's gonna be left holding the bag? The people at the bottom who have (meager) savings in cash. Their assets will get inflated away by endless QE.
I do think blockchain plays a role, just not like this - not like this.
https://decrypt.co/28560/quantum-computers-could-crack-bitco...
A quantum computer could reverse this process and derive the private key from a public one. And voila! Bitcoin’s claim of inviolability and unhackability is gone, and you have access to any Bitcoin wallet you want."
This is both right and completely wrong at the same time. It does mention that addresses are hashes of the public key, but then goes on to the unjustified leap that quantum computers would let you access "any Bitcoin wallet you want." That's absolutely false: addresses which have received Bitcoins but never sent them have not revealed their corresponding public key. There's no technique I'm aware of that would let a quantum computer efficiently invert the hash to find the public key. Most Bitcoin wallets are configured such that each time you send bitcoins to someone, the "change" of the transaction goes to a different address.
The risk comes from when a single address is re-used multiple times for multiple transactions, and has sent those proceeds to other addresses. Such multi-use addresses have revealed their public keys, and thus would be susceptible to a quantum computing attack. This is way, though, the advice since the inception of Bitcoin has been never to re-use addresses in this way, but instead always to generate new ones as needed.