SUMMARY
- Michael Saylor informed Bernstein analysts that MicroStrategy aims to become the top bitcoin bank, targeting a trillion-dollar valuation.
- Instead of traditional lending, MicroStrategy plans to borrow at low rates, offer slightly higher returns to lenders, and invest in bitcoin, projecting an average annual return of 29%.
MicroStrategy founder and executive chairman Michael Saylor recently shared with Bernstein analysts that the company aims to become the leading bitcoin bank, focusing on a trillion-dollar valuation. Since 2020, MicroStrategy has aggressively procured bitcoin, leveraging debt and equity, with its recent buy of 7,420 BTC raising its total possessions to 252,220 BTC, estimated at over $15 billion against a cost of roughly $9.9 billion and $4 billion in debt. This positions MicroStrategy as the largest corporate bitcoin holder, controlling 1.2% of bitcoin’s total supply.
Saylor accepts that bitcoin is the best-performing resource of the 21st century, seeing it as a progressive digital capital that gives a hedge against inflation and a long-term value store. He envisions MicroStrategy as a bitcoin bank centered on creating capital market instruments over different financial products. Concurring to Bernstein’s Gautam Chhugani, Saylor expressed, “This is the most important resource in the world,” as he outlined a procedure that incorporates raising capital through debt and equity whereas contributing intensely in bitcoin.
Saylor clarified that if MicroStrategy succeeds in raising $100 billion to $200 billion in capital, it might possibly scale its operations essentially. He predicts that bitcoin’s share of global financial capital will increase from 0.1% to 7%, driving to a anticipated price of $13 million per bitcoin by 2045. The firm plans to borrow money at lower rates, offer marginally higher returns to lenders, and invest in bitcoin, aiming for a 29% yearly return.
Saylor contends against conventional banking practices, preferring to borrow funds to invest in bitcoin rather than lending it out. He emphasizes that loaning to people or governments poses more risk than investing in bitcoin itself. The firm’s approach is centered on capital markets arbitrage, capitalizing on bitcoin’s development whereas minimizing counterparty risks.
Chhugani noted that MicroStrategy’s model of bridging USD and bitcoin markets is troublesome for smaller firms to duplicate. He highlights that companies in the crypto environment ought to adopt bitcoin as a treasury reserve resource, as numerous are missing out on potential value creation. Saylor communicated optimism that more companies, including bitcoin miners and exchanges, will follow MicroStrategy’s lead over time.