MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’

[fillippone]

If anyone believes in Bitcoin at the moment then it’s Michael Saylor, because I have a feeling he’s willing to sell his skin too to buy at least 1 BTC more. Looking at the spreadsheet, it is easy to notice that the amounts in the last 3 purchases have decreased significantly - does that mean that there is less and less money, or could a purchase of 10 000 BTC or more happen again?

It may be a stupid question, but this new stimulus that is just happening in the US is not only aimed at ordinary citizens but also at companies? Does anyone know if MicroStrategy is among those who will receive part of this stimulus? If by any chance they get it, there is no doubt where the money will end up

That is a very interesting question. Well, I guess that we will soon know. The 1.4K deposits are going to be actually on every US citizen bank account from Wednesday. And that is 1.4K x 330 mios= 440 Billions. The other 1.5 Tln will follow to Bitcoin, and if any of those dollars will be in MSTR hands, for sure they will buy bitcoins with that.

After all, nobody remembers Berkshire Hataway being a textile company. Soon nobody will remember MSTR used to sell software. 

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[oHnK]

If anyone believes in Bitcoin at the moment then it’s Michael Saylor, because I have a feeling he’s willing to sell his skin too to buy at least 1 BTC more. Looking at the spreadsheet, it is easy to notice that the amounts in the last 3 purchases have decreased significantly - does that mean that there is less and less money, or could a purchase of 10 000 BTC or more happen again?

It may be a stupid question, but this new stimulus that is just happening in the US is not only aimed at ordinary citizens but also at companies? Does anyone know if MicroStrategy is among those who will receive part of this stimulus? If by any chance they get it, there is no doubt where the money will end up

Yes, seeing the stimulus in the US is indeed quite crazy, with large amounts of cash money for stimulus in their handling of making huge inflation plans in the future.  How can a large amount of money be circulated to the public without safeguarding inflation in the future.  In the past, money was printed on gold guarantees, now it is printed just like that without any pride.

[Vatimins]

     If this doesn't boost the worth and credibility of Bitcoin, I don't know what will. Clearly, bitcoin is getting bigger and bigger as bigger names and companies decide to join the bitcoin community, and possibly the entire community of this industry and not just in bitcoin alone. After this, we can only expect to see better things. Obviously including more big names being involved along with common people who were also skeptical once upon a time. I can't wait to see how bitcoin along with this entire cryptocurrency industry will turn out after at least 3-5 years from now

[jaysabi]

PE ratio is not a metric relevant to valuing a bond investment.

Yes, I understand that P/E is used for stock evaluation (and I'll admit that when I wrote that post I'd momentarily forgotten that he hadn't bought the stock)--but wouldn't value investors still shy away from even buying debt from companies with a metric that high?  It still means that essentially the stock is expensive--but I'll also admit that I don't understand bond trading all that well, or at least how value investors know which bonds are attractive.

Not necessarily because unrealized gains don't show on the income statement, and debt holders are first in line in liquidation, so bonds are a safer investment than equity from a risk perspective.  The P/E ratio takes into account profits, but the unrealized gain from btc is kind of a double whammy from a P/E perspective.  First, it causes the stock price to rise (because the stock price takes into account the total value of the firms assets) but the stock price rise happens without a corresponding rise in profits, so P/E gets out of whack.  But if you're a bond owner, you look at the firm's total assets and say "P/E is 500 but there are $5b in liquid assets on the balance sheet" and decide that it's a safe investment.  The risk to the bond holder is that bitcoin price drops and the assets you were counting on with it, leaving the firm with a lot of debt and not enough underlying business to service debt obligations.  In essence, the bond holders are counting on btc not to lose value by continuing to buy MSTR's debt offerings.

Well, of course the P/E is something that affects primarily the stock investment, and on a lesser extent the bond-holder. Take the GameStop drama: now the P/E dramatically surged to nonsense valuation. Has the stock investment outcome changed? Yes, now investing in the stock is far more dangerous.
Has the scenario changed for a bond holder? Well, not much, as those P/E valuation are not impacting the creditworthiness of the firm: they were on the brink of collapse before, and probably so are now in this pump ( something different could be said for firms with astonishing P/E for completely different reasons, like TSLA, but I tone want to swerve OT too much).

In this specific case, please remember we are talking about a convertible bond, hence something that can be, under some determined circumstances, redeemed in stocks. Hence, valuing those hybrid instruments, P/E must be taken into account.

I'm not explicitly familiar with the bonds in this case, but usually the bonds are convertible at the option of the bond holder.  The bond holders could decide they'd rather have cash than equity in the company, and even if they don't, the PE ratio is still rather irrelevant because the company is valued on its assets at this point, not its cashflow.

[Lucius]

The 1.4K deposits are going to be actually on every US citizen bank account from Wednesday. And that is 1.4K x 330 mios= 440 Billions.

However, not everyone will receive checks, there are some restrictions, so we can't talk about a total of 330 million Americans - that number will certainly be smaller. It just means that more money will be left for the economy, and one part will surely end up in the wrong hands.

The checks will be a maximum of $1,400 per individual, or $2,800 per married couple, plus $1,400 per dependent. Payments will be capped at $80,000 per individual, $120,000 for heads of household and $160,000 for married couples. People at those adjusted gross income levels and above will receive nothing.

After all, nobody remembers Berkshire Hataway being a textile company. Soon nobody will remember MSTR used to sell software. 

That's true, I didn't even know it until now, and in today's world, all companies, as we can see, can change completely very quickly. Yet what MS is doing is still something unique for now, which of course can be thanked to their CEO who is certainly the biggest convert given what he has talked about BTC in the past. I wonder if someone will be brave enough to follow his example - everything in BTC is still a risk, no matter how positive someone was when it comes to such an investment.

[fillippone]

MicroStrategy Buys Tranche #11:



https://twitter.com/michael_saylor/status/1379042960994668548

Spreadsheet updated!



Microstrategy is now a 77% Bitcoin Company!

[fillippone]

Badge of honour for Microstrategy:

HSBC prohibits the purchase of MicroStrategy shares

The original news surfaced on Twitter:


https://twitter.com/DocumentingBTC/status/1380285286178041857?s=20

Apparently, the reason might be another one:

The fact is that HSBC has been adopting an extremely restrictive policy towards cryptocurrencies for several months now, whereas it seems to be very much in favour of central bank digital currencies. So its hostility is probably not due to a resistance to technological innovation, but to the new global financial system that cryptocurrencies could help build.

Funny how HSBC care about compliance after a track record like the following:




They are slow learner, and apparently, they should focus on more compelling violations.

[Karartma1]

Spot on as always. I read it this way:
As we at HSBC already have our compliance troubles let's not add more shit to the fan as it might fire back again. Let's keep our shady business into the real world as we can't keep up with the virtual one.
Something like it, I think.

[Dabs]

MicroStrategy is NOT a virtual currency product. It is a stock of a market intelligence software company. I wonder if they will prevent you from buying Tesla too. They are a car manufacturer.

[Anonylz]

I remember reading a thread where the @OP describe btc as "the institutional coin" and seeing this post just made me reflect back to the post,
Is it a good thing to have few rich and influential investors have so much btc under their control! I mean it is exciting to see all this institutions and corporations investing on btc (which also make me wonder why the sudden change of mind, is it because btc is so high compare to 10 years ago and there is a lot profitto be made, or they are truly interested in the technology which has always been around since 10 years ago  )

I can't help but wonder what their plans are, do they plan to hold for a longer period and what will be their strategy to liquidate when the time comes, just brainstorming over all this institutional investors sudden display of interest and what impact it might have later on , nonetheless,  good to hear.

[Dabs]

I remember reading a thread where the @OP describe btc as "the institutional coin" and seeing this post just made me reflect back to the post,
Is it a good thing to have few rich and influential investors have so much btc under their control! I mean it is exciting to see all this institutions and corporations investing on btc (which also make me wonder why the sudden change of mind, is it because btc is so high compare to 10 years ago and there is a lot profitto be made, or they are truly interested in the technology which has always been around since 10 years ago  )

I can't help but wonder what their plans are, do they plan to hold for a longer period and what will be their strategy to liquidate when the time comes, just brainstorming over all this institutional investors sudden display of interest and what impact it might have later on , nonetheless,  good to hear.

You've been around since 2013, you could have gotten a few hundred to a few thousand coins back then right? Or ... ... ...

I could be saying something similar about myself too. The quick answer is I did not.

[perfect999]

If you have 90k+ bitcoins at around 27k+ bitcoin price, and someone else says that you are too dangerous to be bought, that place is very wrong. HSBC is known to launder money for criminals and they have done this for decades and paid tens of billions of dollars in fines for a very long time.

Even the start of HSBC is dark, they were started because all the British companies that went to southeast Asia and murdered people there and took their resources had to use some kind of banking to help them move the money around, how did they do that? They created HSBC so that their dark blood money could be transferred back to UK in order to keep their bosses at UK who never left and just ordered people to be murdered for profit could collect their money from their local branch right around the corner. You are telling me that this company find something else too dangerous for being involved in crypto? Don't make me laugh.

[JayJuanGee]

I remember reading a thread where the @OP describe btc as "the institutional coin" and seeing this post just made me reflect back to the post,
Is it a good thing to have few rich and influential investors have so much btc under their control! I mean it is exciting to see all this institutions and corporations investing on btc (which also make me wonder why the sudden change of mind, is it because btc is so high compare to 10 years ago and there is a lot profitto be made, or they are truly interested in the technology which has always been around since 10 years ago  )

I can't help but wonder what their plans are, do they plan to hold for a longer period and what will be their strategy to liquidate when the time comes, just brainstorming over all this institutional investors sudden display of interest and what impact it might have later on , nonetheless,  good to hear.

You've been around since 2013, you could have gotten a few hundred to a few thousand coins back then right? Or ... ... ...

I could be saying something similar about myself too. The quick answer is I did not.

Yeah.. but Anonylz seems to be latching onto the selling aspect of these various BIG companies, and considering that they might not be up to any good.

Perhaps, as you suggest Dabs, Anonylz is largely just talking himself out of making sure that he is adequately pee paring his lil selfie for UPpity, when he is so busy thinking about DOWNity?

Likely, you Dabs, are no longer thinking about the matter in the same way, so even if you feel that you did not buy a sufficient number of coins in 2013, you are engaging in MOAR and better UPpity preparations currently.

I agree with the overall point that I seem to be reading into your post Dabs, and that each of us should be attempting to make sure that on a personal level we are adequately preparing for UPpity, even though there are a variety of DOWNity scenarios that may or may not play out.. so in that regard, if we want to read the overall situation as a way to prepare for DOWNity, then we may well NOT be adequately considering the story in a way that helps us to really prepare ourselves for the real story.. and that is to be preparing for UPpity.   

On a personal, level I have no regrets about my ongoing preparations for UPpity, even when the BTC price went down many times over the years, and even in 2014, 2015 and 2016, my BTC holdings were largely in the red for a large amount of that time, but I continued to prepare for UPpity... and sure, after 2017, we got a lot of downity too.. so those people who were overly weighting their preparations for UPpity, got a pretty decent beating in terms of value that might not have recovered until sometime in the late 2020s when BTC prices reached and surpassed their late 2017 levels again.. so there might be two kinds of scenarios there that end up working out o.k., and one would be to sit on your hands for the whole time and just ride out the 2018 to 2020 negative periods, and another would be to continue buying BTC along the way and even buying more BTC on dips, which likely would have ended up being the better scenario.

We cannot really know where BTC prices are going to be 4 years (or longer.. maybe 10 years) from now.. but does not seem to be a bad practice to continue to buy BTC (especially if you do not have many) and consider that BTC prices will be UP in 4 years (and even more likely to be up 10 years or longer).. and yeah, if your investment timeline is shorter than 4 years, then likely you would be quite a bit more conservative in terms of your BTC investment.. but people are going to come to differing price considerations .. including considering how much weight to give to currently valid BTC price prediction models that suggest that this UPpity price cycle is not over, and who gives any shits about how much BTC some institutions or richie peeps might be HODLing and whether they are planning to dump that BTC on the rest of us HODLers....

[fillippone]

MicroStrategy board of directors decided to put their money where their mouth is:


https://twitter.com/michael_saylor/status/1381579120354717699?s=20

on the attached document:



Actually, if Bitcoin is a reserve currency, it makes sense for someone who believe in this statement to be paid directly in such a currency, leaving the option to convert it into the shitty fiat at a later stage.

[acquafredda]

If Bitcoin is superior to cash what a better move than starting playing your people in the best performing store of value ever created in human history?
Saylor is applying everything he studied in the Bitcoin Standard and paving the way to the famous hyperbitcoinization!
And you would you accept all of your salary in BTC?
I would! If then I could be free from the capital gain that could be heaven (as in that case I will be taxed already for my work income!)

[Lucius]

Nothing surprises me anymore when it comes to MicroStrategy - so I wouldn't be surprised if the company name changes to BitcoinStrategy, which of course would make sense if you go all in to BTC

It’s impressive to see someone really believe in something, but I still wonder if there’s any insurance in case the past repeats itself - and that, say, a 50% or more correction happens? I'm actually wondering how the company will behave in that case, will it sell part of BTC or maybe all of it?

[JayJuanGee]

Nothing surprises me anymore when it comes to MicroStrategy - so I wouldn't be surprised if the company name changes to BitcoinStrategy, which of course would make sense if you go all in to BTC

It’s impressive to see someone really believe in something, but I still wonder if there’s any insurance in case the past repeats itself - and that, say, a 50% or more correction happens? I'm actually wondering how the company will behave in that case, will it sell part of BTC or maybe all of it?

I doubt that there is any need to wonder, even if the BTC price corrects 85%.  Microstrategy has cashflow, but sure it would be an interesting experiment, but I doubt that they would be selling on the dip because that is not their strategy, and seems that they would continue to buy.

Now, if there happens to be some major bug in bitcoin or actual reason for the price to dip 85% from here, that might be another story.. and hard to imagine because some kinds of major catastrophes make it difficult for normies to sell, and I have my doubts if MicroStrategy would frontrun - but of course, if you have information before others, you should act upon such information.. which is the rational thing for anyone to do, if they are able to do it, whether company or individual.

Anyhow, it seems to be a fantasy to be dickering around with what-ifs regarding scenarios that are quite likely way less than 1% of happening - instead of focusing on way more likely scenarios.. in which they are not fucking selling.. just like they said fairly straight-forwardly and unambiguously and they gave sound ass arguments for why they are not playing around with the UPs and DOWNs and more likely just continuing to buy or HODL if they were to run out of cashflows, which also does not seem like a major issue.

[acquafredda]

For once I agree with JayJuanGee 
Also, I would add that it is not just marketing because Saylor is doing all sort of crazy stuff with bitcoin for MicroStrategy so this might not be the end of the experimenting phase.
We are hovering around yet another new ATH and therefore we are seeing a completely new and wild territory: I personally do not make any more predictions and I am only leaving the door open for the infinite possibilities that could arise.
By the way, great move Michael!

[JayJuanGee]

For once I agree with JayJuanGee 

I don't believe you for a minute.. but whatevers.. if you want to suggest that I am wrong more then right (from your perspective) than so be it.. whatever floats your boat.   

Also, I would add that it is not just marketing because Saylor is doing all sort of crazy stuff with bitcoin for MicroStrategy so this might not be the end of the experimenting phase.
We are hovering around yet another new ATH and therefore we are seeing a completely new and wild territory: I personally do not make any more predictions and I am only leaving the door open for the infinite possibilities that could arise.
By the way, great move Michael!

In regards to suggesting that we are getting into wild-ass territory that is beyond any kind of framework or predictability, that sounds like nearly pure nonsense (or at least a near baseless exaggeration).  We have at least three BTC price prediction models (I argue, a combination of such BTC price prediction models**) that pretty much put BTC prices in the exact ballpark of where we are at, so if BTC prices were so hard to predict, then why are these models tracking with such precision and have been tracking for a damned long period of time, in spite of the crazy-ass unpredictable actions of humans such as Michael / MicroStrategies.  In other words, even though it appears that the behaviors of Michael and Microstrategies is "out of this world" the models largely predict the price to be where it is at.. go figure.

**By the way, the current valid and persuasive BTC price prediction models are: stock to flow, four-year fractal and exponential s-curve adoption based on Metcalfe principles and networking effects

[fillippone]

Microstrategy just announced their 21Q1 results.
Nothin major here, bar the positive effect Bitcoin had on their Balance sheet.

You can read more here:

MicroStrategy® (Nasdaq: MSTR), the largest independent publicly-traded business intelligence company, today announced financial results for the three-month period ended March 31, 2021 (the first quarter of its 2021 fiscal year).

"MicroStrategy’s first quarter results were a clear example that our two-pronged corporate strategy to grow our enterprise analytics software business and acquire and hold bitcoin is generating substantial shareholder value. We had one of our strongest operational quarters in our software business in years, highlighted by 10% revenue growth and continued improvement in non-GAAP profitability. The investments we have made in our platform in recent years are driving greater customer adoption of MicroStrategy, particularly in the cloud," said Michael J. Saylor, CEO, MicroStrategy Incorporated.

Here you can see what I was talking about: Bitcoin had a massive impact on their balance sheet:

Digital Assets: As part of MicroStrategy’s previously announced treasury reserve policy and bitcoin acquisition strategy, a total of approximately 20,857 bitcoins were purchased at an aggregate purchase price of $1.086 billion in the first quarter of 2021 for an average purchase price of approximately $52,087 per bitcoin. As of March 31, 2021, the carrying value of MicroStrategy’s digital assets (comprised solely of bitcoin) was $1.947 billion, which reflects cumulative impairment charges of $264.8 million since acquisition. As of March 31, 2021, the average cost and average carrying value of MicroStrategy’s bitcoin were approximately $24,214 and $21,315, respectively.

Further, in the second quarter of 2021 to date, MicroStrategy has purchased approximately 253 bitcoins at an aggregate purchase price of $15.0 million for an average purchase price for such additional bitcoins of approximately $59,339 per bitcoin.  As of April 28, 2021, at 4:00 p.m. EDT, MicroStrategy held approximately 91,579 bitcoins and the market price of one bitcoin in MicroStrategy’s principal market was approximately $55,492.  In future periods, MicroStrategy may purchase additional bitcoins and increase its overall holdings of bitcoin or sell its bitcoins and decrease its overall holdings of bitcoin.