In a recent revelation, Michael Saylor, founder of MicroStrategy, detailed the bold strategy that led his company to become the first public corporation to invest heavily in Bitcoin (BTC). Speaking about the decision, Saylor highlighted the initial $250 million purchase of Bitcoin in August 2020. This move was seen as an unprecedented move in the corporate world.
Michael Saylor Opens Up On MicroStrategy’s Bitcoin Investment
The MicroStrategy founder deemed Bitcoin as the “solution for 8 billion people’s problem.” Furthermore, he added, “It’s the biggest innovation in money or property rights in the history of the human race. It’s like fire or electricity, it’s this new monetary protocol which is going to elevate humanity to new levels.”
Additionally, Saylor highlighted that the move was initiated by MicroStrategy out of “desperation.” In a recent interview by The Iced Coffee Hour, he revealed that the Bitcoin acquisition was their ultimate decision to prevent shutting the company.
However, Saylor admitted concerns about Bitcoin’s notorious volatility, fearing significant drops could alarm shareholders and invite legal challenges. Hence, to mitigate these risks, MicroStrategy paired its Bitcoin acquisition with a $250 million stock buyback at a premium, structured as a Dutch auction.
Moreover, this maneuver allowed shareholders who opposed the Bitcoin strategy to exit at a premium, thereby realigning the shareholder base to include only pro-Bitcoin investors. Surprisingly, only $60 million worth of shares were tendered, leaving $175 million available for further Bitcoin purchases.
Consequently, MicroStrategy increased its Bitcoin holdings to $425 million. This decisive action positioned MicroStrategy as a trailblazer, as no other public company had invested more than a few million dollars in Bitcoin. As the news spread, MicroStrategy declared Bitcoin as its primary treasury reserve asset. Hence, they challenged traditional approaches to capital allocation, such as investments in bonds or cash reserves.
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The Move Turned Out To Be A Boon For MicroStrategy
The company’s stock price doubled following this announcement, enabling the raising of an additional $650 million. Within six months, MicroStrategy issued a convertible debt offering at 0% interest, raising another billion dollars to invest in Bitcoin.
Moreover, the company’s aggressive Bitcoin acquisition strategy caught the attention of other public companies. Subsequently, there was news of Square and Tesla making their Bitcoin investments. Despite the volatile market and regulatory uncertainties, including China’s bans on Bitcoin mining and trading, Saylor remained steadfast in his belief in Bitcoin’s potential.
Furthermore, he argued that Bitcoin represents a revolutionary innovation in money and property rights. Over four years, MicroStrategy continued to raise funds through debt and equity offerings to expand its Bitcoin holdings. By June 2024, the company had invested $7.5 billion in Bitcoin, with a market value fluctuating between $14 to $15 billion.
This bold strategy significantly increased the company’s market capitalization from $1 billion to $30 billion, and its enterprise value soared from $600 million to over $30 billion. Remarkably, MicroStrategy’s stock outperformed major indices and tech giants, including Nvidia, Tesla, Amazon, and Apple.
Saylor concluded by acknowledging the emotional and financial rollercoaster of Bitcoin’s price fluctuations. Whilst, he also emphasized the transformative impact of Bitcoin on MicroStrategy’s fortunes. The company’s journey from a position of desperation to becoming a leader in corporate Bitcoin investment underscores a remarkable story of strategic innovation and resilience.
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The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
