Michael Saylor, founder and executive chairman of MicroStrategy, has unveiled the company’s ambitious endgame: to become the world’s leading Bitcoin bank.
In a recent interview with Bernstein analysts, Saylor outlined a strategy that leverages MicroStrategy’s aggressive Bitcoin acquisition policy, which began in 2020.Â
They have been utilizing debt and equity in the process to maximize the returns and have beaten many traditional investments. In Saylor’s thesis, Bitcoin is seen as the top performing asset of the 21st century, not just as a digital commons.
They aim to have a revolutionary form of digital capital, far superior to traditional money, a superior tool for long term value storage, and a powerful hedge against inflation. MicroStrategy has since followed this strategy and recently purchased 7,420 BTC, making them once again a leading inbound player in the cryptocurrency space.
The Bitcoin Bank Model
Saylor envisions MicroStrategy evolving into a Bitcoin bank, focusing on creating Bitcoin capital market instruments across various financial products, including equity, convertibles, fixed income, and preferred shares.
His ambitious goal is to build a company with $100-$150 billion worth of Bitcoin, potentially growing into a $300-400 billion entity with the largest options and equity markets in the sector. This vision extends to penetrating fixed income markets and continually acquiring more Bitcoin. Saylor’s bullish outlook predicts Bitcoin’s value will reach “millions a coin,” potentially transforming MicroStrategy into a trillion-dollar company.
The strategy is rooted in a deeply held belief that Bitcoin will be the best deflationary money in the long term. Also affirming that Bitcoin will become a culmination of the world’s financial capital, 0.1% in present day, rising to 7% by 2045, $13 million per Bitcoin.
Scalability and Risk Management
Saylor believes this strategy is “infinitely scalable,” expressing confidence in the company’s ability to raise significant capital – potentially $100 billion or more – to invest in Bitcoin. He sees the risk as binary: either Bitcoin is “something” or it’s “nothing.” MicroStrategy’s approach diverges from traditional banking models by focusing on what Saylor terms “lending to Bitcoin” – essentially investing in Bitcoin rather than lending it out.
He argues that this strategy offers higher returns with lower risk compared to traditional lending practices. Saylor contends that even in a bear-case scenario, Bitcoin’s annual growth rate of 22% over the next decade surpasses traditional interest rates, making it a more attractive investment option.
Industry Impact and Future Outlook
MicroStrategy’s strategy has positioned it as a bridge between USD and Bitcoin markets, offering investable instruments that provide exposure to Bitcoin’s volatility while offering downside protection.
According to Bernstein analyst Gautam Chhugani this is a difficult model for smaller companies to replicate, and difficult for large names to provide because they are diversified. Â
Saylor advocates for other companies in the crypto ecosystem, including Bitcoin miners and exchanges, to adopt Bitcoin as a treasury reserve asset. He sees this as crucial for preserving shareholder value and expects more companies to follow MicroStrategy’s lead over time.
As MicroStrategy continues to execute its vision, it stands at the forefront of a potential paradigm shift in corporate treasury management and the broader integration of cryptocurrency into traditional financial systems.