Digital Assets: MicroStrategy’s Labor of Love On Bitcoin

September 21, 2020 | Digital Assets, News
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Buying 16,796 BTC = 88,617 trades = 74 hours = $175 million (~39,414 BTC/Minute).

Michael Saylor, MicroStrategy’s (NASDAQ: MSTR) CEO, made waves with his bold decision to invest $425 million of the company’s cash reserves in bitcoin. He invested the money in two tranches of $250 million and $175 million, announced on August 11 and September 15, respectively.

On Friday, in characteristic style, he tweeted what it took (apart from the money) to buy $175 million of BTC.

That’s a lot of conviction, considering it took 74 hours to wrap up the trades.

What’s driving MicroStrategy’s bitcoin strategy?

Speaking on a Coin Desk podcast, Saylor said his company’s $500 million of cash reserves made him feel like he was sitting on a fast-melting 500-lb block of ice. (Coin Desk)

That’s because of the eroding purchasing power of all that money. What worried him was that his company had spent years of effort in building up that wealth. And it could just vanish due to inflation.

At the time of the first investment tranche, the company pointed to the fallout from the COVID-19 pandemic, the fiscal stimulus measures including quantitative easing adopted around the world, and global political and economic uncertainty.

The company warned that these factors “may well have a significant depreciating effect on the long-term real value of fiat currencies and many other conventional asset types, including many of the assets traditionally held as part of corporate treasury operations.”

On bitcoin MicroStrategy said: “We expect its value to accrete with advances in technology, expanding adoption, and the network effect that has fueled the rise of so many category killers in the modern era.”

Long term view

In the podcast, Saylor prided himself on his long-term vision for MicroStrategy – something which he brings to the investment in bitcoin.

“I didn’t buy it to sell it,” he says. “Ever.”

That resonates with Warren Buffett’s famous statement: “Our favorite holding period is forever.”

However, Buffett is known to be allergic to cryptocurrencies – so that’s where the similarity ends.

Saylor draws inspiration from a 2,000 year-old Spanish bridge called the Alcántara Bridge, at Cáceres, Extremadura (Spain).  The engineer, Gaius Julius Lacer fixed a plaque under the bridge. It said in Latin: “This bridge will stand for all times.”

In fact, Saylor’s named a personal holding company after the bridge.

Saylor says big enterprises, and visions, are built and proven over time.

Related Story:   Nasdaq-listed Company Microstrategy Bets $250M on Bitcoin                                               

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