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So enlighten me (and I don't mean it sarcastically - I genuinely don't know) how Saylor and/or MSTR is going to pay interest on that debt and repay the debt itself? Dump some corn? What if corn lags around $30k?
I surely do not claim to be any kind of expert on the topic, suchmoon. Since we are in a public thread, I was largely attempting to respond to some of your seemingly dire proclamations regarding the idea that Saylor/MSTR was putting itself in peril in terms of its behaviors of issuing debt instruments (and you seemed to also be implying that Saylor/MSTR might be going beyond acceptable limits of the law.. .so I mentioned that I believe that they likely have good counsel on the matter).
Regarding the possible dire financial angle that you are suggesting in this follow-up, I am not even sure if I understand the difference between the various kinds of financial instruments that MSTR had been issuing over the past year.
I thought that the first two financial instruments that were issued around the end of 2020 were forms of debt that had to be paid back after 5 years, and those two financial instruments requested up to a certain amount of investors, and ended up getting oversubscribed and ended up rising to the level of around $1 billion each (perhaps a bit less than $1billion each).
From my memory, the first debt instrument had an interest rate of 0.75% and the second one had a zero% interest rate.
Upon glancing at the third one for $400 million, it does not appear to be a debt instrument, but instead like just issuing stock in the company.. so they would not have to pay that back and the investors would merely be taking risk on the company in terms of performance and value of any of those securities that they were to buy... presuming that they could be traded on the market..
So as far as I can tell MSTR ONLY has to pay back the first two debt instruments, and presuming that they have not agreed to payments along the way, those two would come due 5 years after they issue.. let's just say slightly less than $1billion each.
I am not exactly sure about their average costs per BTC in connection with MSTR's purchases in connection with each of the times that they issued the debt, but it seems that one was around $10k and the other was around $20k, but around a month ago, Saylor had announced that MSTR had an average BTC purchase price of around $24k per BTC for all of their BTC holdings.
So your scenario of BTC lingering at $30k for 5 years (or let's say another 4.5 years when those notes would come due) does not even put MSTR in the negative regarding their use of debt for those purchases.
Over nearly the past year that Saylor/MSTR has been in the press, we have learned that MSTR had been a company that had pretty high level (relatively speaking) of cash reserves, including around $10 million to $30million in monthly cashflows from profits of its company sales. Surely, it is the bailiwick of MSTR to try to figure out how they want to play their corn, to analyze their business in terms of cash reserves, cashflow from sales and bitcoin value and how to manage such assets including which ones to sell first, if they were to sell any to service their debts. So, sure they are free to sell corn, if they feel that they need to in order to service their debts in the event that they do not have cash/or abilities to service those debts with other moneys or assets that they might have.
Of course, they would have a BIGGER problem if BTC prices were to go below their average purchase price of $24k per BTC and they were forced to sell their BTC at a loss or at time that is NOT of their own choosing (presuming that the BTC price does not significantly rise and just continues to spiral down for the next 4.5 years). So, in that regard, MSTR (and Saylor et al) are making a speculative bet that the value of the bitcoin that they purchased with that debt is going to be higher than the price that they paid for the bitcoin with that debt (plus the 0.75% interest on the first one, and the second one was issued without interest, as I already mentioned).
Saylor, MSTR et al seems to be assessing the situation of their buying BTC is NOT considerably risky, even though of course, there is risk with any investment or business strategy that any company might take in terms of how to use their assets and their resources and what kinds of bets to make towards the future. Of course, company's bet in differing ways, and some companies end up profiting more than other from their speculative bets and some companies end up losing their asses to their speculative bets. Time will tell whether Saylor / MSTR is able to profit from their use of debt to buy BTC as they had calculated/speculated that they should be able to do.
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