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SPOILER ALERT: In August 2020, MicroStrategy, a well-established company in data analytics software, shocked everyone by converting $250 million of its treasury into Bitcoin. Michael Saylor, the CEO, announced, “Our investment in Bitcoin is part of our new capital allocation strategy, aimed at maximizing long-term value for our shareholders.” Four years on, continuing this strategy despite the crypto bear market, MicroStrategy now holds approximately 1% of the total Bitcoin supply, valued at around $15 billion, becoming the world’s leading holder!
MicroStrategy didn’t just use its cash reserves; it regularly raised funds through bonds, even convertible bonds, to acquire this treasure. For investors, the worst-case scenario was getting repaid at maturity with interest, and the best-case was exercising their option to convert into shares. It’s been a winning bet with a return of over +1200%.
MicroStrategy’s stock (in blue) vs. Bitcoin (in red) over 5 years
During this period, MicroStrategy’s stock allowed individual and especially institutional investors to expose themselves to Bitcoin (sometimes to circumvent anti-crypto compliances). The launch of spot Bitcoin ETFs in early 2024 now allows the purchase of ‘paper Bitcoin’, and some MicroStrategy shareholders have capitalized on this, taking their gains (since the market valuation is twice that of the Bitcoins owned). Hence, the likely decline in MSTR stock since then.
A Bitcoin Development Company
And it’s not over yet. On March 19, 2024, MicroStrategy announced the acquisition of an additional $623 million in Bitcoin, as its price neared its 2021 ATH. At this level, it’s no longer just treasury optimization or a short-term speculative bet but a clear and evident desire to accumulate as much Bitcoin as possible, by any means necessary.
Considering that nearly 94% of all Bitcoins that will ever exist have already been mined (19.67 million out of a maximum supply of 21 million), it seems evident that whoever holds the most will soon play a central role in the crypto game and not just in Bitcoin. Indeed, with its anti-inflationary scarcity and position as a value reserve like gold, Bitcoin is becoming the default collateral in the broader blockchain world, and for upcoming Layer2 and Layer3 services aimed at democratizing the topic for the mass market.
In short, will MicroStrategy be the central bank or the SpaceX of blockchain?
I’m betting on both. Buckle up !
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