The inventor of MicroStrategy, Michael Saylor, recently came clean about the audacious plan that made his business the first to invest significantly in Bitcoin (BTC). Saylor emphasized the initial $250 million acquisition of Bitcoin in August 2020 while discussing the decision. This action was seen as novel in the business sector.
Michael Saylor Talks About MicroStrategy’s Investing in Bitcoin
According to MicroStrategy’s founder, Bitcoin is the “solution for 8 billion people’s problem.” He continued, “It’s the greatest invention of money or property rights in human history.” This new monetary system will raise humankind to unprecedented heights like fire or electricity.
Saylor further emphasized that MicroStrategy took the initiative out of “desperation.” In a recent interview with The Iced Coffee Hour, he disclosed that the purchase of Bitcoin was their final choice to keep the business open.
Saylor did, however, acknowledge his worries regarding the well-known volatility of Bitcoin, saying that large declines can frighten investors and lead to legal problems. Therefore, MicroStrategy combined its Bitcoin acquisition with a $250 million premium stock buyback set up like a Dutch auction to reduce these risks.
Furthermore, this move realigned the shareholder base to comprise pro-Bitcoin investors by enabling shareholders who opposed the Bitcoin plan to exit at a premium. Notably, only $60 million worth of shares were offered, freeing up $175 million for additional Bitcoin acquisitions.
As a result, MicroStrategy added $425 million to its Bitcoin holdings. Since no other public firm had invested more than a few million dollars in Bitcoin, MicroStrategy was positioned as a trailblazer due to this significant decision. MicroStrategy said that Bitcoin would be its main treasury reserve asset as soon as the news got out. As a result, they questioned established methods of allocating money, such as making bond or cash reserve investments.
The Decision Proved Beneficial For MicroStrategy
After making this statement, the company’s stock price doubled, making it possible to raise an extra $650 million. In less than six months, MicroStrategy raised an additional billion dollars to buy Bitcoin by issuing a convertible debt offering with 0% interest.
In addition, several public corporations were drawn to the company because of its aggressive acquisition strategy for Bitcoin. Then, there was news that Tesla and Square had invested in Bitcoin. Saylor persisted in trusting Bitcoin’s potential in the face of a tumultuous market and regulatory uncertainty, including China’s bans on mining and trading the cryptocurrency.
In addition, he maintained that Bitcoin is a revolutionary advancement in money and property rights. MicroStrategy raised more money throughout a four-year period through debt and stock issues to increase the amount of Bitcoin it owned. By June 2024, the corporation had invested $7.5 billion in Bitcoin; at that time, its market value was estimated to be between $14 and $15 billion.
With the implementation of this audacious plan, the company’s enterprise value skyrocketed from $600 million to over $30 billion, and its market capitalization surged dramatically from $1 billion to $30 billion. Surprisingly, MicroStrategy’s shares beat both large indexes and IT behemoths like Apple, Tesla, Nvidia, and Amazon.
In her conclusion, Saylor acknowledged the financial and emotional rollercoaster that comes with variations in the price of Bitcoin. However, he also underlined how Bitcoin has changed MicroStrategy’s fortunes. The company’s transformation from a desperate situation to a leader in corporate Bitcoin investment is an amazing tale of strategic ingenuity and tenacity.
