MicroStrategy continues its aggressive Bitcoin acquisition strategy, recently purchasing an additional 15,400 Bitcoin at an average price of $96,000, totaling $1.5 billion. Executive Chairman Michael Saylor, appearing on CNBC’s “Squawk Box,” reiterated the company’s commitment to Bitcoin, emphasizing its role as a “Bitcoin treasury company” bridging traditional capital markets with the crypto economy. He also hinted at a potential price surge, suggesting Bitcoin could reach $180,000, although acknowledging the likelihood of significant volatility along the way.
Saylor explained MicroStrategy’s approach of issuing stock and convertible debt to acquire Bitcoin, effectively securitizing the cryptocurrency. This strategy allows traditional investors exposure to Bitcoin through familiar financial instruments like equities and bonds. With over 400,000 Bitcoin now held, MicroStrategy’s average acquisition cost stands at $58,000 per coin, reflecting the company’s consistent buying activity since August 2020.
Saylor highlighted Bitcoin’s unique characteristics as a scarce, digital commodity with a legally capped supply. He argued that its historical performance, exceeding that of the S&P 500, coupled with its higher volatility, makes it an attractive treasury asset. He compared Bitcoin’s volatility to fire, a powerful force that can be harnessed for growth, drawing an analogy to Henry Ford’s revolutionary use of the combustion engine.
Addressing concerns about Bitcoin’s price fluctuations, Saylor acknowledged its inherent volatility, attributing it to the 24/7 global nature of the crypto market. He predicted continued price swings, suggesting Bitcoin could “surge through the roof to $180,000” followed by significant corrections, potentially dropping to $140,000. However, he emphasized that this volatility presents opportunities for sophisticated investors and traders.
Saylor also detailed MicroStrategy’s recent financial maneuvers, explaining how the company generated a 2.55% Bitcoin yield, equivalent to almost 10,000 Bitcoin, for shareholders through arbitrage. This involved selling $1.5 billion worth of stock, buying back $500 million worth of Bitcoin, and then repurchasing $1.5 billion worth of Bitcoin, resulting in a near $1 billion arbitrage gain.
Furthermore, Saylor described how MicroStrategy leverages debt financing, issuing $3 billion in zero-coupon convertible debt backed by $600 million in Bitcoin. This allows the company to acquire $3 billion worth of Bitcoin, realizing a $2.4 billion arbitrage gain upfront. The strategy relies on Bitcoin’s anticipated price appreciation over the five-year debt term, further amplifying returns. Saylor pointed to Marathon Digital Holdings (Mara) as another example of a company successfully employing this strategy.
