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.
I meant that they would be under water with this latest debt-financed purchase (e.g at ~$34k) if BTC gets stuck in a prolonged bear season... but if you're saying they don't have to repay it - weird, but what do I know LOL - then I guess they have some breathing room.
Ok. We might have been talking passed each other a bit, and I can ONLY follow so much, too. I just did a superficial glance at the situation, and on the surface, the first two looked like debt instruments and the last one looks like issuing shares in the company.
I also had not realized that you were wanting to focus ONLY on the last one in terms of finances because companies make all kinds of financial decisions based on factors and considerations that might not exactly be in front of us.
There is a bit of prematurity in your suggesting that MSTR should not buy on the dip because the BTC price could dip some more, but seems to me that Saylor (and sure MSTR) is a bull's bull in terms of at least having his actions follow his word, and buying on the dip is a pretty solid strategy. Sure, using credit in various kinds of ways, including if there is a desire to use company credit in order to sell shares, then people are ONLY going to pay for those shares if they believe that the shares are going to be worth the price.
So, sure there would always be some kind of short term issue that whenever you buy, whether it is at $40k, or $35k or $30k if the BTC price is going to dip more and if you have a plan for that, but if the price has already dipped, then there could be some presumption (that might end up being incorrect) that the bottom of $30,066 is either already "in" or close to being "in."
Still, being a public company I think there is a risk of a minority shareholder lawsuit or some shit like that, which could unravel the whole scheme. Not being a hedge fund or some other investment vehicle and trying to gamble on a very volatile asset seems like asking for trouble.
These are also calculations that need to be made, and probably through advise of counsel as well. For sure, there were all kinds of disclosures that Saylor/MSTR did in Summer 2020 in terms of both offering to buy out anyone who did not agree with the intended company direction and then thereafter making disclosure of the company direction at the time and subsequent disclosures. Seems to me that Saylor has been going overboard on various disclosures, and even if that might not give him a complete pass on getting sued, it does probably make it much more difficult for him to get sued by either a shareholder or even if some government agency were to proclaim that he is engaging in chicaneries.
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).
Well, that's just that - if Bitcoin does well then surely they'll be able to refinance the debt and keep going possibly without ever selling any coins. But if it doesn't do well enough
at the right time for MSTR and they have to dump a large chunk... that'll hurt quite a bit more than Musk's trolling.
I suppose any of us BTC HODLers or investors can consider these various factors in terms of trying to figure out our own allocations, as well as our own other various individual factors. 4-5 years into the future does seem like a considerable time to be considering that any of us would be placing a lot of importance on that (or including that some peeps may have overleveraged in their BTC - what else is new) in terms of our decisions about whether to hold BTC and/or how much to hold.
I am not even going to proclaim that your concern about some companies such as microstrategies overleveraging as being a non-concern, but you do seem to be focusing quite a bit on a large number of strings of events that would need to come true before your hypothetical about a possible situation would end up playing out 4-5 years down the road... not a non-issue, but many of us are going to make our investment choices based on more likely scenarios rather than less likely scenarios.. and sure, maybe you are starting to come to the conclusion that investing in BTC is just a big smoke and mirror situation and we got goofballs like Saylor and MSTR holding it up.. but that seems like exaggerated nonsense too.. almost as bad as the Tether FUD that has not really gone away yet either.
I'm still puzzled how we despise debt here - we do, right? -
I am not sure if we despise debt, because there are a variety of ways that debt can be considered - in terms of how governments might use it and in terms of how individuals might use it.
For example, any of us who were heavily in debt during the March 2020 liquidity event and subsequent reactions would have been punished the fuck out of because of our debts.. especially when the government reacted the way that it did... but if any of us were in a position leverage our cash during that time, we may could have done quite well... I am surely not claiming to be any kind of expert, but I know a lot of people who have figure out a variety of ways to leverage debt to their advantage whether that is buying bitcoin or real estate or business ventures or getting an education that lands them a position or a salary that they would have never been able to achieve without such debt leverage..
There are also people who consume the fuck out of things, and never get out of debt slavery, and there continues to be considerable differences between using debt to invest in appreciating assets versus investing in depreciating assets and living way beyond your means.. I would not lump all of that into a big "debt is bad" category, because each of us has to figure out ways to live within the system that we have and try to be smart about our choices rather than getting fucked by the system or engaging in dumbass behaviors that increase our likelihood of getting fucked rather than protecting ourselves in variety of ways including investing in ourselves (or perhaps likely appreciating assets) in various ways.
but still cheer debt-fueled speculation.
Again.. depends upon the type of speculation... It is quite crazy that the various governments have engaged in a behavior to blindly print the dollar while denying that there is inflation. and if there are some peeps who are in a position to see what is happening or what is likely to happen, they can both engage in behaviors to attempt to protect themselves or to engage in various kinds of speculative attacks, which seems to be a kind of variation that Saylor is attempting t accomplish.. and even that is not guaranteed, but seems to be a pretty solid bet in the various ways that he has been doing it, so far.. will he get in trouble either financially or through government or shareholder charges (which may also involve government behavior through the judicial system), time will tell, and each of us have choices in terms of considering if we believe that we are able to use any of those kinds of tactics.. too or if we want to be on the other side of such trade, if the matter ends up blowing up in a direction that was not anticipated.
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