“This is not a speculation, nor a hedge. It is a deliberate corporate strategy to adopt the Bitcoin Standard.”
These were the words of Michael Saylor following the announcement of MicroStrategy’s move to adopt a corporate bitcoin standard. First announced one year ago today, on August 11, 2020, the move was the first of its kind and was a significant step in the history of bitcoin.
Looking back after one year, MicroStrategy stock has gained 452.92%, while the price of bitcoin has increased by 306.66%. One of the reasons for the outperformance in MSTR shares is the speculative attacks executed, by leveraging up the company balance sheet to acquire more bitcoin.
In The Daily Dive #005, Writing The Corporate Bitcoin Accumulation Playbook, we covered the various ways that MicroStrategy has used its access to public capital markets to acquire more bitcoin:
08/11/20 - MicroStrategy Adopts Bitcoin As Primary Treasury Reserve Asset
08/11/20 - MicroStrategy Announces Commencement Of Modified Dutch Auction Tender Offer To Purchase Up To $250 Million Of Its Class A Common Stock
12/07/20 - MicroStrategy Announces Proposed Private Offering Of $400 Million Of Convertible Senior Notes
12/11/20 - MicroStrategy Completes $650 Million Offering Of 0.750% Convertible Senior Notes Due 2025
12/21/20 - MicroStrategy Announces Over $1B In Total Bitcoin Purchases in 2020
02/16/21 - MicroStrategy Announces Proposed Private Offering Of $600 Million Of Convertible Senior Notes
02/20/21 - MicroStrategy Completes $1.05 Billion Offering Of Convertible Senior Notes Due 2027 At 0% Coupon And 50% Conversion Premium With Bitcoin Use Of Proceeds
02/24/21 - MicroStrategy Acquires Additional 19,452 Bitcoins For $1.026 Billion
06/07/21 - MicroStrategy Announces Proposed Private Offering Of $400 Million Of Senior Secured Notes
06/14/21 - MicroStrategy Completes $500 Million Offering Of 6.125% Senior Secured Notes Due 2028 With Bitcoin Use Of Proceeds
06/14/21 - MicroStrategy Launches “At the Market” Securities Offering For Flexibility To Sell Up To $1 Billion Of Its Class A Common Stock Over Time
Saylor and MicroStrategy took a lot of heat in particular for the latest $500 million junk bond debt raise and subsequent bitcoin purchase, when the odds remain incredibly in favor of Saylor and MicroStrategy.
Below is a chart breaking down the breakeven price of bitcoin that was made using the proceeds from the $500 million debt raise, which carried a 6.125% coupon:
With a breakeven price below $47,000 BTC in 2024, the purchase price looks to be quite attractive as it stands. For reference, the December 2021 BTC/USD futures contract is currently trading at $48,076.
In total, the company currently holds 105,085 BTC, about 0.5% of all bitcoin that will ever exist — an absolutely massive amount of wealth.
Michael Saylor and MicroStrategy have shown over the last year that you cannot escape the immense opportunity cost of not operating, using the most sound monetary account.
Saifedean Ammous said it best in his classic, “The Bitcoin Standard:”
“This is a historical lesson of immense significance, and should be kept in mind by anyone who thinks his refusal of Bitcoin means he doesn't have to deal with it. History shows it is not possible to insulate yourself from the consequences of others holding money that is harder than yours.”