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

[fillippone]

Finally, Microstrategy announced their latest buying:


https://twitter.com/saylor/status/1465305537210458115?s=21


Looking into. details we discover this is a buy from the ATM facility, as the activity has been spread over a considerable amount of time, like the last buys:

As previously disclosed, on June 14, 2021, the Company entered into an Open Market Sale AgreementSM (the “Sale Agreement”) with Jefferies LLC, as agent (“Jefferies”), pursuant to which the Company may issue and sell shares of its class A common stock, par value $0.001 per share (“Shares”), having an aggregate offering price of up to $1.0 billion from time to time through Jefferies. On November 29, 2021, the Company also announced that during the fourth quarter of the Company’s fiscal year to date (the period between October 1, 2021 and November 29, 2021), the Company had issued and sold an aggregate of 571,001 Shares under the Sale Agreement, at an average gross price per Share of approximately $732.16, for aggregate net proceeds to the Company (less sales commissions and expenses) of approximately $414.4 million.

In the following spreadsheet the ATM facility buys have a Tan shade:



Link

[1714024029]

1714024029

[1714024029]

1714024029

[Daltonik]

Finally, Microstrategy announced their latest buying:


https://twitter.com/saylor/status/1465305537210458115?s=21


Looking into. details we discover this is a buy from the ATM facility, as the activity has been spread over a considerable amount of time, like the last buys:

As previously disclosed, on June 14, 2021, the Company entered into an Open Market Sale AgreementSM (the “Sale Agreement”) with Jefferies LLC, as agent (“Jefferies”), pursuant to which the Company may issue and sell shares of its class A common stock, par value $0.001 per share (“Shares”), having an aggregate offering price of up to $1.0 billion from time to time through Jefferies. On November 29, 2021, the Company also announced that during the fourth quarter of the Company’s fiscal year to date (the period between October 1, 2021 and November 29, 2021), the Company had issued and sold an aggregate of 571,001 Shares under the Sale Agreement, at an average gross price per Share of approximately $732.16, for aggregate net proceeds to the Company (less sales commissions and expenses) of approximately $414.4 million.

In the following spreadsheet the ATM facility buys have a Tan shade:



Link

Yes, according to the SEC, MicroStrategy bought these bitcoins starting from October 1 to November 29, this leads to a total stock of 121,044 BTC from MicroStrategy.
https://www.sec.gov/Archives/edgar/data/1050446/000119312521341815/d191335d8k.htm

[fillippone]

In general, Saylor has picked a good time for the next investment. That is to say, the last opportunity to buy at a low price, before the continuation of the bullrun. And if, again, you look at the chart, then he makes large purchases always before growth.

What it is important to underline here is that the buying wasn’t made by MSTR using their own funds, rather they raised new capital from new shares issuing, and used this proceeds to buy more Bitcoin.
This is quite an important difference. They are diluting previous shareholders issuing new shares, also, they are not using their free cash flow to buy bitcoins.
Also, as this is a flow coming outside the firm, I doubt that the can decide when to buy, as they have to “cover” when they issue new shares.

[shogun47]

Finally, Microstrategy announced their latest buying:

Wow, has Microstrategy started buying again. If I'm not mistaken, their last purchase was in September. Personally, I was waiting for them to make a new purchase. The $ 414 million purchase was ranked #4 according to a chart I posted recently here.

In general, Saylor has picked a good time for the next investment. That is to say, the last opportunity to buy at a low price, before the continuation of the bullrun. And if, again, you look at the chart, then he makes large purchases always before growth.

In the service  Bitcoin Supply Visualized you can also track that part of the bitcoin supply owned by MicroStrategy and compare with other major holders.

Now I come across this thread the only thing I ever in the news is that Microstrategy is buying and buying. Is it publicly known whether they also sell at times? I mean they can't get it right all the time, but if they sell at $68k and rebuy at $55k, that's a lot of money given the amounts we are talking about here. So do they also sell? Is that known?

[fillippone]

So do they also sell? Is that known?

Of course they can also sell.
The point is that their “Bitcoin Playbook” doesn’t include selling amongst the viable options.
Their bitcoin guru, Micheal Saylor, believes in a bitcoin super cycle, thus believing any sell around currrebt level would be an historical error for the firm.

Anyway I guess any sell would’ve potentially known via the usual channels, like SEC filings, exactly as it is currently happening with the buys.

[Dabs]

Now I come across this thread the only thing I ever in the news is that Microstrategy is buying and buying. Is it publicly known whether they also sell at times? I mean they can't get it right all the time, but if they sell at $68k and rebuy at $55k, that's a lot of money given the amounts we are talking about here. So do they also sell? Is that known?

Buying and selling would be considered trading. That's not what they do or what their strategy is. The whole point is for them to buy forever. They don't need to ever sell it as a corporation. They can always borrow against it because it is considered an asset.

One company that bought and sold was Tesla. Any public company that buys or sells have to disclose them all.

[Daltonik]

In another interview with Coindesk tv on Wednesday, MicroStrategy CEO Michael Saylor explained why the dollar is the world currency, while bitcoin is a global reserve asset, and this is their main difference.
"You don't want to pay for coffee with your bitcoin, but prefer to pay with currency" he said.

[fillippone]

"You don't want to pay for coffee with your bitcoin, but prefer to pay with currency" he said.

Don’t make any bitcoiner started on bitcoin being a currency or a store of value, unless you are ready for a fight and lose a few hours debating, only to see both of them leave the debate with the same idea.

Regarding the fact you should pay your coffee with USD, it’s not Saylor’s idea, but Gresham’s Law

"bad money drives out good

[Dabs]

Maybe use Lightning to pay for your coffee. The rest of your bitcoin should be in cold storage.

[JayJuanGee]

In another interview with Coindesk tv on Wednesday, MicroStrategy CEO Michael Saylor explained why the dollar is the world currency, while bitcoin is a global reserve asset, and this is their main difference.
"You don't want to pay for coffee with your bitcoin, but prefer to pay with currency" he said.

This interview with Christine Lee reminds me that a couple of days ago, I did a fairly extensive commenting upon Saylor's interview with Tucker Carlson.. which would have been from a day or two before that the Tucker Carlson interview took place.  So, yeah.. I should have put some kind of cross-reference to my post in this thread, so here's a link to my commentary for ease of reference....and so such link also contains a youtube link to the TCarlson interview.

[fillippone]

https://twitter.com/saylor/status/1468930815421820932

As in the previous occasion, this is not a “deep pocket” buy, but an ATM buy:

As previously disclosed, on June 14, 2021, the Company entered into an Open Market Sale AgreementSM (the “Sale Agreement”) with Jefferies LLC, as agent (“Jefferies”), pursuant to which the Company may issue and sell shares of its class A common stock, par value $0.001 per share (“Shares”), having an aggregate offering price of up to $1.0 billion from time to time through Jefferies. On December 9, 2021, the Company also announced that, during the period between November 29, 2021 and December 8, 2021, the Company issued and sold an aggregate of 119,828 Shares under the Sale Agreement, at an average gross price per Share of approximately $693.10, for aggregate net proceeds to the Company (less sales commissions and expenses) of approximately $82.4 million.
 

This means it’s not Microstrategy’s money, but investors’ money.
MSTR is slowly transitioning in an investment company.
A new Berkshire Hathaway.

[fillippone]

Microstrategy held an investor event, as advertised by Micheal Salyor.



Bloomberg summarized the event:


MicroStrategy Floats Lending Out Its Bitcoin Trove to Generate Yield


The idea of lending Bitcoins is not what I would have expected from a bitcoin maxi like Micheal Saylor:

While Saylor said the company hasn’t taken any formal steps yet toward putting its Bitcoin cache to use, he added that “there may be opportunities to either put a mortgage against it and generate long-term debt under favorable circumstances, which we could leverage up against the Bitcoin, or we think that we could lend it to a trustworthy counterparty.”

[JayJuanGee]

Microstrategy held an investor event, as advertised by Micheal Salyor.



Bloomberg summarized the event:


MicroStrategy Floats Lending Out Its Bitcoin Trove to Generate Yield


The idea of lending Bitcoins is not what I would have expected from a bitcoin maxi like Micheal Saylor:

While Saylor said the company hasn’t taken any formal steps yet toward putting its Bitcoin cache to use, he added that “there may be opportunities to either put a mortgage against it and generate long-term debt under favorable circumstances, which we could leverage up against the Bitcoin, or we think that we could lend it to a trustworthy counterparty.”

Your framing as if you are surprised or shocked in regards to Saylor is strange fillippone..

Saylor has already been criticized for NOT sufficiently holding his own keys.. so he is NOT very much of the camp of "not your keys not your coins," and hopefully he will not have to learn any lessons the hard way in regards to that.

Furthermore, he has already been discussing all kinds of ways that property can be leveraged.. so his increasingly going down the leveraging road (bitcoin or otherwise) does not come off as surprising to me...

In some sense, I can see that his current ideas on leveraging thoughts would merely serve as further means to create financial devices (even if he invents them himself) in order to get more and Moar and MOAR bitcoins.

[Lucius]

The idea of lending Bitcoins is not what I would have expected from a bitcoin maxi like Micheal Saylor:

A few pages back, the attitude towards lending was completely different, and it is also more than clear that the company has its own custody of the BTC they bought. Is this a strategy change or just a test to see if there are any interested clients for this type of service?

Lastly, a declaration of Micheal Saylor spoke vaguely about “self-custody” without going much into details.
 MICHAEL SAYLOR: WE CUSTODY OUR BITCOIN AND DO NOT LEND IT OUT

In a recent interview at ETF Think Tank, Michael Saylor explained why his company purchases bitcoin directly, custody it themselves, and doesn't lend it out.

[fillippone]

Another Buy from Microstrategy:



As the latest buys, this was done through their ATM Facility program.



 It is interesting what they add in their filing:

The cumulative aggregate offering price of the Shares sold under the Sale Agreement as of the close of business on
December 29, 2021 was approximately $1.0 billion, inclusive of fees and expenses, constituting the maximum
program amount under the Sale Agreement.

So this very successful program has now ended. Given the hefty fees it produced, I bet they are going to renegotiate it.

[cAPSLOCK]

I wonder if SAYLOR ever wonders at what level his control of Bitcoin becomes a liability.

Say he bought ALL the Bitcoin.  Well it would be worthless because he will have taken all the ability to coordinate away from the system.  And obviously this will never happen, but at what point is his stake "too big"?

Personally I think there are no issues with the size of their stake currently. But is there a point at which there WOULD be issues?

(I assume this topic has been previously covered in this thread somewhere...)

[Lucius]

I wonder if SAYLOR ever wonders at what level his control of Bitcoin becomes a liability.

I wonder how much BTC his company would have now if he didn’t have such a negative opinion some 7-8 years ago? Although this outcome is certainly better for all of us, because let's imagine a scenario in which a dozen large companies have in their possession more than 50% of BTC and that amount is only increasing. I never liked the idea that Bitcoin would become a toy of the rich, although it is quite clear that in the open market anyone who has money can buy as much as BTC wants.

[JayJuanGee]

I wonder if SAYLOR ever wonders at what level his control of Bitcoin becomes a liability.

For sure, I can appreciate what Saylor is doing in terms of using various kinds of debt to leverage into bitcoin, yet even his very first sets of BTC purchases that were like more than 70% of their then cash reserves started to challenge my own thinking regarding how much allocation into bitcoin would be too much.

Actually looking at cash reserves, I started to understand that many of us would not necessarily need to have a lot of cash reserves so long as we can project out our cashflows for 6 months to 24 months and have various contingency plans if some of the incoming cash were to dry up... so in a large number of cases we do not have have even close to 100% out as far as 24 months, yet of course, the closer the timeline (such as within the next three months) it is probably best to have those 100% covered, and for a business or a more complicated cashflow situation, it may even be prudent to have 100% covered for up to 6 months.

Otherwise, when looking at cashflows, there would be needs to look at how liquid is the asset, so how long would it take us to liquidate various kinds of assets in the event that various aspects of our anticipated cashflows were to dry up, and so having 100% covered for several months does end up giving lead time, so if some kind of negative events were to start to happen, we would already be working on shoring up converting some of our assets into cash further out on the timeline that our reserves are getting bought into... and of course, there should be some appreciation for Gresham's law principles in terms of spending the less likely to appreciate assets first.

I understand that your questions are a wee bit different cAPSLOCK, and you are kind of getting at the mere size of the MSTR holdings, and we likely realize that even though Saylor has been quite public about what he has been doing, there are going to be some difficulties for any other companies or individuals to amass so many bitcoin's without moving the BTC price, and frequently the really BIGGER players systematically seem to aim to not only attempt to get cheap coins but also to NOT move the market in the UPwards direction while they are getting them.  A public company does have to disclose quite a bit more of the details in a fairly timely manner, but they do not necessarily need to disclose all of their acquisition of BTC details so long as shareholders cannot validly accuse them of engaging in deceptive practices by leaving out material information from their disclosures.

For sure we can appreciate that we do not know who owns which coins except if they have disclosed at one point or another, and so there are some ideas about some of the BIGGER of the coin holders.. and surely Saylor would be quite high on any list - even if some entities and individuals might not be revealing their holdings and secretly attempting to accumulate large quantities like Saylor/MSTR has been doing. 

By the way, in around August 2020 when Saylor disclosed that he had front run his company and personally acquired around 17k bitcoins, it seems that he was disclosing that level of detail out of an abundance of caution, but now that MSTR has been in the BTC accumulation practice for a longer period of time, he likely does not need to continue to disclose various aspects of his personal BTC accumulation to the extent that he may well be continuing to personally accumulate more BTC on an ongoing basis.

Regarding risk of acquiring so many BTC.. I do seem to get your points..and you seem to be referring to a kind of variety of risks in terms of both systematic risks and personal risks, and there is likely no way that I can really answer that question nor do I really want to.. because surely there would be some scariness in terms of how to spread out the coins to maybe attempt to maintain control and even figure out if there might be ways to avoid any small number of people running off with the coins risk in terms of glitches in the systems that are implemented or maybe even glitches in some kind of software that ends up allowing one person or a small group to gain control.. and maybe even then they could claim that it was a hacker.

Some of those supposed hacked 119k Bitfinex coins have still not moved, but I had sometimes come across some posts or threads that claim that some of these older hacked coins from x, y or z location are moving, and maybe even people lose interest in following whether hacked coins are moving after several years.

Say he bought ALL the Bitcoin.  Well it would be worthless because he will have taken all the ability to coordinate away from the system.  And obviously this will never happen, but at what point is his stake "too big"?

10% or more would be pretty damned BIG.. even assuming that he could get a hold of that many coins.

Let's say that there are only about 14 million BTC in total in circulation. .due to lost coins ...

Currently his company's 124k acquisition is barely getting to 1% of the coins if we were to throw in his personal coins too.  By the way, we also know that the structure of MSTR does give Saylor a lot of control over MSTR and therefore those coins.

Personally I think there are no issues with the size of their stake currently. But is there a point at which there WOULD be issues?

For sure, it could be argued that their current stake size is already problematic in a variety of ways, and some folks have already presented some of those kinds of claims in this thread.

(I assume this topic has been previously covered in this thread somewhere...)

Some variations of the topics have come up in this thread, and of course, there is a difference in terms of talking in theory and then seeing that he is getting up to 124k.. I think that I heard him say that he wants at least 200k coins .. or maybe he said that he wants 2%?  Maybe Saylor believes that some of his protections come from being so damned public and giving so many interviews, and cannot completely argue with that strategy, either.  So maybe sometimes he might also contradict himself, and would that be a bad thing in terms of OPsec?  Surprisingly he has been considerably consistent given his so many interviews and also his variety of ways of disclosing and attempting to provide a variety of interesting spins on matters.  Of course, he is likely the brainchild behind a lot of his own words and his decent ways of articulating matters, but he has to have some pretty decently smart and creative folks on his team too to pull off some of his research into various legal, strategic, public relations, execution and even rolling with the punches matters.

[fillippone]

A weird tweet surfaced a few days ago on Reddit:

All of MicroStrategy's bitcoin is stored in 2 single sig addresses 1FzWLkAahHooV3kzTgyx6qsswXJ6sCXkSR 1P5ZEDWTKTFGxQjZphgWPQUpe554WKDfHQ
https://monitor.breadcrumbs.app/dashboard/46/transactions

https://www.reddit.com/r/Bitcoin/comments/rvr2v2/all_of_microstrategys_bitcoin_is_stored_in_2/hr8if3j/


All was relaunched via Twitter:


So, according to this theory, all of MSRT stash belongs only to those two addresses.

https://bitinfocharts.com/bitcoin/address/1FzWLkAahHooV3kzTgyx6qsswXJ6sCXkSR
https://bitinfocharts.com/bitcoin/address/1P5ZEDWTKTFGxQjZphgWPQUpe554WKDfHQ

First test: during the last period, between Dec 9 and Dec 29, MSRT bought 1914 BTC.

Let's see what happened to those two addresses:



Close, but no cigar.


Also, looks very very unlikely that Microstrategy holds all of their fund on a single signature address.

But when I have time, I will try to expand my investigation on this and will revert.
Of course, we can also wait for the end of January as we have seen those addresses definitely quite active in the last few days.
This also rings a bell to me, as the agreement with Barrons to finance the ATM Facility has just been fully utilized and has yet to be renewed. So technically, they could only buy all those bitcoins with their own money. Something they haven't done for a few months.

last but not least, the first transaction on these wallets is dated back to Feb 2019, while the first Microstrategy purchases are from August 2020: why not use a new address?

So four different reasons why I tend to suspect that statement.




 

[Daltonik]

A sad case because of the desire to get fast money happened to a youtube user, that's shit how gullible people can be. a fake YouTube channel posing as the head of MicroStrategy, Michael Saylor, lured 26 BTC from the user by promising to double his investments by sending the crypt to the specified address. Saylor commented on the incident, noting that he receives reports of such cases too often, saying that 489 scam channels have been created on youtube in the last week alone.