MicroStrategy Executive Chairman Michael Saylor compared his company’s aggressive Bitcoin strategy to Manhattan’s real estate sector during an interview with CNBC interview on Monday.
“Every time Manhattan real estate goes up in value, they issue more debt to develop more real estate,” Saylor told CNBC Money Movers. “That’s why your buildings are so tall in New York City. It’s been going on for 350 years. I would call it an economy.”
Saylor’s comments come in as the alpha crypto briefly touched new highs above $107,000 in the early hours of Tuesday.
MicroStrategy is fresh off of being confirmed for listing in the Nasdaq-100 index, an inclusion which observers have noted to be the 40th largest holding on the index at an estimated 0.47% weighting. This would also add the firm to the heavily-traded Invesco QQQ Trust ETF.
The defense of MicroStrategy’s intent to keep buying comes after the firm announced the purchase of an additional 15,350 Bitcoin this Monday. That’s brought the company’s total holdings to 439,000 BTC, valued at approximately $46 billion.
The company has been adding Bitcoin to its balance sheet since 2020, often through leveraged purchases using convertible notes.
MicroStrategy’s stock jumped more than 5% to close at $408.50 on Monday following the announcement of its latest Bitcoin acquisition, data from Nasdaq shows. As of this writing, just ahead of the opening bell in New York, MSTR shares are trading just below yesterday’s closing price.
Every day is ‘a good day to buy Bitcoin’
Every day is a “good day to buy Bitcoin,” Saylor said during the interview, after being asked how long MSTR intends to keep stockpiling BTC.
MicroStrategy’s Bitcoin purchasing strategy centers on maximizing shareholder returns through strategic financing. The company issues convertible bonds and equities above asset value, generating a 72.4% yield on Bitcoin investments (for 2024) without diluting ownership, he argued.
This leveraging strategy allows the company to expand its Bitcoin reserves while growing shareholder value through price appreciation.
The strategy isn’t without risks though, particularly during extended market downturns.
As Decrypt previously noted, following analysis from media outlet Sherwood on the “real math problem” around MicroStrategy’s moves, this could fail hard and push the stock below conversion prices on its $4.8 billion in outstanding notes.
In effect, the company’s limited cash reserves of $46.3 million are then forced toward Bitcoin sales to meet debt obligations.
Looking ahead, Saylor remains committed to the strategy, stating “We’ll just keep buying the top forever,” characterizing Bitcoin as “cyber Manhattan,” whose value proposition mirrors that of prime real estate in a major financial hub.
Edited by Stacy Elliott.
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Vince Dioquino
https://decrypt.co/297075/buying-bitcoin-microstrategy-michael-saylor
2024-12-17 13:34:44
