Key Points
- MicroStrategy Inc aims to reach a $1 trillion valuation by becoming the world’s top Bitcoin bank.
- The firm currently holds 252,220 BTC, worth over $15 billion, making it the largest corporate Bitcoin holder.
MicroStrategy’s Ambitious Bitcoin Strategy
MicroStrategy Inc (NASDAQ: MSTR) has set its sights on a $1 trillion valuation. This bold objective was shared by the company’s founder and executive chairman, Michael Saylor, during a recent discussion with Bernstein analysts.
Since 2020, MicroStrategy has been amassing Bitcoin, leveraging both debt and equity to enhance returns beyond conventional investments. Just last month, the firm added 7,420 BTC to its portfolio, bringing its total holdings to 252,220 BTC. This Bitcoin stash is now valued at over $15 billion.
Transforming into a Bitcoin-Focused Merchant Bank
Saylor believes that Bitcoin is the premier asset of the 21st century. He views it as a digital form of capital that offers protection against inflation and holds long-term value. He argues that the volatility of Bitcoin attracts investors seeking substantial gains and expects it to become a staple in both institutional and individual portfolios.
Under Saylor’s leadership, MicroStrategy has demonstrated a firm belief in the future of Bitcoin. If his vision holds true and the company manages billions in Bitcoin, the results could be transformative. The goal is for MicroStrategy to evolve into a Bitcoin-focused merchant bank, providing financial products like equity, debt, and convertibles centered around Bitcoin.
Saylor’s strategy relies on Bitcoin’s role as deflationary money. At present, Bitcoin represents just 0.1% of global financial capital. However, Saylor predicts this figure could rise to 7% by 2045, pushing Bitcoin’s value to $13 million per coin. This rapid expansion is feasible if US capital markets continue to support MicroStrategy’s fundraising through debt and equity.
Capitalizing on Bitcoin’s Returns
Saylor is confident about scaling their debt strategy. He believes it’s smarter to borrow large sums from fixed-income markets and invest in Bitcoin at a 50% annual return without taking on external risk, rather than searching for someone to pay 12%-14%.
Saylor argues that lending to traditional entities, such as individuals or governments, carries greater risks than Bitcoin investments. He confirmed the company has no plans to lend its Bitcoin. Instead, they aim to borrow large amounts of capital and invest directly in Bitcoin for high returns without counterparty risk.
Saylor further explained that borrowing $10 billion, offering slightly higher returns to lenders, and investing in Bitcoin at 30%-50% yields is more profitable and secure. He predicted that even accounting for volatility, Bitcoin could grow by 22% annually over the next decade, a return difficult to match elsewhere.
