Gold bugs argue (correctly in my opinion) that price is suppressed and the physical is easily co-opted by the State. How and why have the unholy alliance of State and Corporation done that? How and why would they seek to do similar to Bitcoin?
Corporations are, by definition, co-opted by the State. They exist at the whim of the lawmakers. While it cannot be stopped in any meaningful way, massive accumulation of bitcoin in the hands of corporates (especially those who do not use it or accept it as payment) diminishes the utility of bitcoin as a monetary network, and I suspect it is also a drag on price.
Saylor very well could be a plant, marketed as a bitcoiner when, in fact, he is a Trojan horse for the State. It doesn’t really matter if true or not, because the end result is largely unchanged, but it is worth thinking through what happens if one entity ends up owning 50% of the btc in circulation? What happens if they own 60%/70%/100% …? does it diminish the network? Why does Saylor only advertise BTC as a SoV and not a MoE when the distinction is faux anyway?
Why was he allowed to pursue this strategy (pun) when barely anyone else has followed and people like Ulbright et al were prosecuted and put behind bars? It’s worth questioning and remaining cautious.
I’m a skeptic, always will be. I prefer to see individuals owning and using bitcoin. The freedom and the privacy are far more valuable than anything else.
Thanks Andoni. The beautiful thing about bitcoin is that individuals owned it first the countries and the corporations came later. I’ve met him. I’ve been to his house. He isn’t a plant.
I’m a gold bug too. I love gold. I’ve written an entire book about it. There is room for both in your portfolio and I urge you to buy a small amount of bitcoin and try it out and consider the implications of this extraordinary technology. :).
Thanks for the response. I do like Saylor and your opinion adds a lot of weight, but I still maintain that corporate balance sheet adoption is inferior to man on the street.
And, as you say, the beauty is individuals were first movers by a long margin so we have the advantage.
I am very much a holder of btc. I wish I could spend it in more places, I wish people would pay me using bitcoin. It is underappreciated and underutilized and Saylor is missing a big part of the mission when he only emphasizes SoV.
Thanks Andoni. I jumped to conclusions and thought you were a gold bug saying bitcoin is a scam etc.
I think in the world of digital nomadery and cross border payments bitcoin finds a lot of use as a medium of exchange, but the reversion does seem to be fiat.
And if we are not careful at a certain point Saylor will own every bitcoin if we are not careful which is another danger but the network is growing which is the main thing
If I sell off my bitcoin which is on Etoro would take me well over the £3000 cap gains allowance, but maybe that is a better option than having the whole lot taken from me.
If they did that it would be nothing other than theft in my mind.
If I do sell then I would use the cash to buy Coinbase and maybe Microstrategy which they could not touch but I suppose could tax how they think fit?
I bought recently a very small Part of CEP (Cantor Equity Partners) which is teaming up with Tether, Bitfinex & Softbank to Launch a new BTC Investment Company, Twenty One Capital. Feels like the institutional BTC Wave is just getting started.
Small point but my info (earnings whispers) is that GME earnings are June 24 AMC for anyone thinking of doing an earnings diagonal option trade. (although Barchart also says 6 June - confusing huh?)
My dissenting voice: I think this shows every sign of a mania, like the South Sea Bubble, the Mississippi Company, tulips etc.
The market capitalisation of MSTR is USD 113bn - 2x the value of its Bitcoin holdings. The company is very indebted with a term loan of nearly USD10 bn paying 5.2% (the company generates no material cash) and a welter of convertibles (totalling a further USD 9bn), deeply out of the money, including a Perpetual 8% Convertible Preferred for which they have authority to issue up to USD 21bn. A cherry on the cake: there is a separate class of equity (B shares) reserved for insiders like Saylor - because he's a genius, no doubt.
Why is the stock trading at a 100% premium to an asset base of bitcoin and only bitcoin? It must be based on an assumption that the value of bitcoin will continue to rise. Even if it does, surely there are better ways to own Bitcoin than via this conflagration waiting to happen? Because, with this capitalisation structure, if it falls then MSTR's leveraged structure ensures all those convertible debt holders are going to want to redeem in cash and not convert. When the company cannot afford it, it must sell assets - BTC - into a weak market. A vicious circle will ensue.
MicroStrategy’s debt-driven Bitcoin accumulation mirrors the catastrophic financial alchemy of the manias mentioned above, and many more like them (read Extraordinary Popular Delusions and the Madness of Crowds by MacCay), where speculative leverage and crowd mania eclipsed rationality. Like John Law’s 18th-century promises of colonial riches, Saylor peddles Bitcoin as a “digital gold” panacea, enticing retail investors into a precarious debt spiral. The company’s 'strategy' creates a feedback loop where rising Bitcoin prices justify more borrowing, inflating both crypto markets and MicroStrategy’s stock. This echoes the South Sea Company’s debt-for-equity swaps, which collapsed in 1720, ruining smallholders who bought into illusory wealth.
I have watched the video - very interesting. So many thoughts! I need a while to get my head around mNAV (or tevNAV, which is better), BTC yield and the connected months to mNAV cover.
I feel there is some clarity to be had in thinking about our unit of account. Is it USD or other fiat currency (in which the share prices of the BTC Strategy companies are expressed) or is it BTC? I think we might be at risk of fooling ourselves by mixing them. But I'm just an old-fashioned ex corporate financier and as I said need some cold-towel time...
BTW I am not a holder of BTC and made that decision in 2015 after reading an excellent book (yours!) on the topic but too influenced by the Mt Gox event and the practical difficulties of becoming a BTC owner. My standard $1,000 punt would have bought me 4 coins back then. Oh well.
Hi Dominic, great piece as usual. I just wondered if you were aware of the Smarter Web Company. They IPO'd last month on Aquis and are the first company in the UK to dedicate to a Bitcoin treasury. They are Bristol-based and like Strategy are a real-life company doing the btc treasury as a strategic sideline. Such has been their popularity they have just done a second raise just a few weeks after listing. CEO Andrew Webley is very approachable. Best regards, Chris True
If I could offer my somewhat dissenting opinion:
Gold bugs argue (correctly in my opinion) that price is suppressed and the physical is easily co-opted by the State. How and why have the unholy alliance of State and Corporation done that? How and why would they seek to do similar to Bitcoin?
Corporations are, by definition, co-opted by the State. They exist at the whim of the lawmakers. While it cannot be stopped in any meaningful way, massive accumulation of bitcoin in the hands of corporates (especially those who do not use it or accept it as payment) diminishes the utility of bitcoin as a monetary network, and I suspect it is also a drag on price.
Saylor very well could be a plant, marketed as a bitcoiner when, in fact, he is a Trojan horse for the State. It doesn’t really matter if true or not, because the end result is largely unchanged, but it is worth thinking through what happens if one entity ends up owning 50% of the btc in circulation? What happens if they own 60%/70%/100% …? does it diminish the network? Why does Saylor only advertise BTC as a SoV and not a MoE when the distinction is faux anyway?
Why was he allowed to pursue this strategy (pun) when barely anyone else has followed and people like Ulbright et al were prosecuted and put behind bars? It’s worth questioning and remaining cautious.
I’m a skeptic, always will be. I prefer to see individuals owning and using bitcoin. The freedom and the privacy are far more valuable than anything else.
Thanks Andoni. The beautiful thing about bitcoin is that individuals owned it first the countries and the corporations came later. I’ve met him. I’ve been to his house. He isn’t a plant.
I’m a gold bug too. I love gold. I’ve written an entire book about it. There is room for both in your portfolio and I urge you to buy a small amount of bitcoin and try it out and consider the implications of this extraordinary technology. :).
Thanks for the response. I do like Saylor and your opinion adds a lot of weight, but I still maintain that corporate balance sheet adoption is inferior to man on the street.
And, as you say, the beauty is individuals were first movers by a long margin so we have the advantage.
I am very much a holder of btc. I wish I could spend it in more places, I wish people would pay me using bitcoin. It is underappreciated and underutilized and Saylor is missing a big part of the mission when he only emphasizes SoV.
Thanks Andoni. I jumped to conclusions and thought you were a gold bug saying bitcoin is a scam etc.
I think in the world of digital nomadery and cross border payments bitcoin finds a lot of use as a medium of exchange, but the reversion does seem to be fiat.
And if we are not careful at a certain point Saylor will own every bitcoin if we are not careful which is another danger but the network is growing which is the main thing
I do believe ( as usual ) your right. More and more are seeing the Saylor model
Thank you!
Hi Dominic
I'm worried now being from the UK and having owned BTC for a few years.
Can the government take it from me?
they can try
If I sell off my bitcoin which is on Etoro would take me well over the £3000 cap gains allowance, but maybe that is a better option than having the whole lot taken from me.
If they did that it would be nothing other than theft in my mind.
If I do sell then I would use the cash to buy Coinbase and maybe Microstrategy which they could not touch but I suppose could tax how they think fit?
Anything is possible with Labour.
I bought recently a very small Part of CEP (Cantor Equity Partners) which is teaming up with Tether, Bitfinex & Softbank to Launch a new BTC Investment Company, Twenty One Capital. Feels like the institutional BTC Wave is just getting started.
Nice!
Small point but my info (earnings whispers) is that GME earnings are June 24 AMC for anyone thinking of doing an earnings diagonal option trade. (although Barchart also says 6 June - confusing huh?)
Has it rebranded / renamed? My holding doesn’t reflect this yet.
A minor point…
I saw Charlie Morris is not a fan.
But possibly only because it trades at a premium.
He doesn’t like it. I don’t think he describes as much value to the Saylor premium as others.
Another really interesting insight from you Dominic, I wonder if a small trade in GME might be an idea.
Awesome piece! And Saylor got only 3 minutes from Microsoft! not even 5 :)
That is terrible! - Their loss. Thanks Efrat
My dissenting voice: I think this shows every sign of a mania, like the South Sea Bubble, the Mississippi Company, tulips etc.
The market capitalisation of MSTR is USD 113bn - 2x the value of its Bitcoin holdings. The company is very indebted with a term loan of nearly USD10 bn paying 5.2% (the company generates no material cash) and a welter of convertibles (totalling a further USD 9bn), deeply out of the money, including a Perpetual 8% Convertible Preferred for which they have authority to issue up to USD 21bn. A cherry on the cake: there is a separate class of equity (B shares) reserved for insiders like Saylor - because he's a genius, no doubt.
Why is the stock trading at a 100% premium to an asset base of bitcoin and only bitcoin? It must be based on an assumption that the value of bitcoin will continue to rise. Even if it does, surely there are better ways to own Bitcoin than via this conflagration waiting to happen? Because, with this capitalisation structure, if it falls then MSTR's leveraged structure ensures all those convertible debt holders are going to want to redeem in cash and not convert. When the company cannot afford it, it must sell assets - BTC - into a weak market. A vicious circle will ensue.
MicroStrategy’s debt-driven Bitcoin accumulation mirrors the catastrophic financial alchemy of the manias mentioned above, and many more like them (read Extraordinary Popular Delusions and the Madness of Crowds by MacCay), where speculative leverage and crowd mania eclipsed rationality. Like John Law’s 18th-century promises of colonial riches, Saylor peddles Bitcoin as a “digital gold” panacea, enticing retail investors into a precarious debt spiral. The company’s 'strategy' creates a feedback loop where rising Bitcoin prices justify more borrowing, inflating both crypto markets and MicroStrategy’s stock. This echoes the South Sea Company’s debt-for-equity swaps, which collapsed in 1720, ruining smallholders who bought into illusory wealth.
Hi Keith, if you've time, have a listen to this:
https://open.spotify.com/episode/3FfU1Yeu1wTDseWcHYXXQR?si=R14yM6gWT46c5nDMDd5R-Q&context=spotify%3Ashow%3A0lGHjQatdvGbRMaKD7716y
Hi Dominic
I have watched the video - very interesting. So many thoughts! I need a while to get my head around mNAV (or tevNAV, which is better), BTC yield and the connected months to mNAV cover.
I feel there is some clarity to be had in thinking about our unit of account. Is it USD or other fiat currency (in which the share prices of the BTC Strategy companies are expressed) or is it BTC? I think we might be at risk of fooling ourselves by mixing them. But I'm just an old-fashioned ex corporate financier and as I said need some cold-towel time...
BTW I am not a holder of BTC and made that decision in 2015 after reading an excellent book (yours!) on the topic but too influenced by the Mt Gox event and the practical difficulties of becoming a BTC owner. My standard $1,000 punt would have bought me 4 coins back then. Oh well.
Hi Dominic, great piece as usual. I just wondered if you were aware of the Smarter Web Company. They IPO'd last month on Aquis and are the first company in the UK to dedicate to a Bitcoin treasury. They are Bristol-based and like Strategy are a real-life company doing the btc treasury as a strategic sideline. Such has been their popularity they have just done a second raise just a few weeks after listing. CEO Andrew Webley is very approachable. Best regards, Chris True
I wasn’t aware of that company. I shall take a look. Thank you.
Cool, I think he'd be up for an interview
No kick it out