Michael Saylor elaborates on MicroStrategy‘s pioneering decision to heavily invest in Bitcoin, starting with a $250 million purchase in August 2020.
Michael Saylor, the founder of MicroStrategy, recently disclosed the audacious approach that enabled his organization to establish itself as the initial publicly traded company to make substantial investments in Bitcoin (BTC).
Saylor emphasized the initial $250 million purchase of Bitcoin in August 2020 when discussing the decision. This action was considered unprecedented in the business world.
The MicroStrategy founder deemed Bitcoin as the “solution for 8 billion people’s problem.” Furthermore, he added, “It’s the biggest innovation in money or property rights in the history of the human race. It’s like fire or electricity, it’s this new monetary protocol which is going to elevate humanity to new levels.”
Furthermore, Saylor emphasized that MicroStrategy executed the action in an act of “desperation.” He disclosed in a recent interview with The Iced Coffee Hour that the Bitcoin acquisition was their final recourse to avert the company’s closure.
Saylor, nevertheless, voiced apprehensions regarding the infamous volatility of Bitcoin, fretting that substantial declines might astonish investors and provoke legal disputes. As a result, MicroStrategy coupled its Bitcoin acquisition with a $250 million stock buyback at a premium, structured as a Dutch auction, to mitigate these risks.
Furthermore, this action enabled shareholders who were opposed to the Bitcoin strategy to sell their shares at a premium, effectively reallocating the shareholder pool to consist solely of investors who supported Bitcoin. Unexpectedly, the amount of shares tendered was a mere $60 million, thereby departing $175 million available for additional Bitcoin acquisitions.
As a result, MicroStrategy acquired an additional $425 million worth of Bitcoin. MicroStrategy was pioneered by this resolute action; before this, no other publicly traded corporation had allocated funds over a few million dollars towards Bitcoin.
MicroStrategy declared Bitcoin to be its principal treasury reserve asset as the news began to circulate. Consequently, they questioned conventional methods of capital allocation, including currency reserves and bond investments.
Following this announcement, the stock price of the company multiplied, facilitating the acquisition of an extra $650 million. To invest an additional billion dollars in Bitcoin, MicroStrategy issued a convertible debt offering at zero percent interest within six months.
Additionally, other public companies were intrigued by the company’s assertive approach to acquiring Bitcoin. Following this, reports surfaced regarding Square and Tesla’s Bitcoin investments.
Notwithstanding the capricious nature of the market and regulatory ambiguities, such as the prohibitions imposed by China on Bitcoin mining and trading, Saylor maintained an unwavering conviction in the potential of Bitcoin.
In addition, he posited that Bitcoin symbolizes a paradigm shift in the realms of monetary systems and property rights. To augment its Bitcoin holdings, MicroStrategy continued to raise capital over four years via debt and equity offerings.
The organization had allocated $7.5 billion towards Bitcoin as of June 2024, when its market value varied between $14 and $15 billion.
By implementing this audacious approach, the organization notably amplified its enterprise value from $600 million to more than $30 billion, and its market capitalization surged from $1 billion to $30 billion. MicroStrategy’s stock exhibited an exceptionally strong performance relative to esteemed tech giants, significant indices, Nvidia, Tesla, Amazon, and Apple.
In his conclusion, Saylor acknowledged the turbulent nature of Bitcoin’s price fluctuations, both in terms of sentiment and finances. However, he also underscored the profound implications that Bitcoin had on the financial success of MicroStrategy.
The organization’s ascent from a state of dire straits to a prominent position in corporate Bitcoin investment highlights an extraordinary account of foresight and perseverance.