27 ms·

MicroStrategy's Bitcoin Debt Bet

193 points by 123six 6y ago

bob33212 6y ago
Sounds like they are pivoting into a hedge fund.
- formalsystem 6y ago
  I keep hearing this point, why can't you be a revenue generating business that wants to hold money that doesn't melt over time?
  - atian 6y ago
    > Why the negative reaction? Because this time the Bitcoin would be bought with other people's money, instead of the cash reserves already on MicroStrategy's balance sheet.
  - romanoderoma 6y ago
    Do dollars really melt over time?
  - rjknight 6y ago
    Why not hold TIPS[1], or a diverse basket of securities, or invest the money in something productive? Is it a good thing if sitting on a large cash pile is rewarded? [1] https://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm https://www.treasurydirect.gov/indiv/products/prod_tips_glan...
    - formalsystem 6y ago
      TIPS is measured via CPI not Asset inflation Sure they can invest in something more productive but the whole point of having reserves is to be more robust to negative changes e.g: COVID or jump on new opportunities (some company goes up for sale).
    - diegocerdan 6y ago
      Value sitting on dollars or government bonds is being devaluated. Not all value can be invested in the present, thus people want to invest in the future (savings theory). If governments do not offer fiat money or bonds as savings vehicle, assets like Gold or Bitcoin will inevitable soar. MicroStrategy, and others, understand the situation and want to get in early to make multiply their actual savings.
      - bluedevil2k 6y ago
        You sound like you think Bitcoin will only go up. The last 4 years have shown that to be WILDLY incorrect. Bitcoin price history has shown 0 correlation to the market or macroeconomic conditions. Gold, as well, is not a safe haven either. The US Government keeps printing money, yet gold is nowhere near it's all-time high (adjusted for inflation). You shouldn't offer these statements as inevitabilities when history has shown them to be completely wrong.
        diegocerdan 6y ago
        I'm just reasoning why it will happen. Macro markets do not always react fast to these kind of trends. I agree with your description of the present and close past, thus calling an imminent bull market. The more time this present situation holds, the bigger is the buying pressure. I'm guessing you have a computer tech background and still don't share my view: imagine all the macro-investors not having this knowledge. They can't predict magic-internet-money eating their lunch. Cool thing about free markets: they find out the correct solution out of the greed and collective inteligence of the group. <3
        rjknight 6y ago
        "Zero correlation to the markets" is one of the things that makes Bitcoin desirable. Diversifying your portfolio is all about having things that do not move in the same direction at the same time.
        joosters 6y ago
        And yet Bitcoin plummeted in value at the same time as everything else at the start of the pandemic, so it's hardly uncorrelated. Buying lottery tickets would be uncorrelated. And you've less chance of being scammed or hacked when you do that...
    - vmception 6y ago
      As of 2020 Bitcoin can almost-instantly be used as an interest bearing and yield producing asset, which is what "productive" means in this context. There are both centralized custodial options as well as decentralized permissionless but custodial options, as well as decentralized permissionless noncustodial options. And yes, the yield is risk adjusted.
    - wcoenen 6y ago
      Note that TIPS currently have a negative yield for all durations. So even though they protect you against potential inflation as measured by CPI, there's still a cost. https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield https://www.treasury.gov/resource-center/data-chart-center/i...
    - xiphias2 6y ago
      Because the inflation definition is changing all the time (look at shadowstats). The CEO likes yachts and houses on the beach, and how he describes it: inflation baskets contain what you don't care about, and miss the scarce assets that you really want.
    - ur-whale 6y ago
      Because TIPS is denominated in USD. Even if there is an actual yield, you're still a net value loser.
    - csomar 6y ago
      I'm not sure if you are being sarcastic. If you have been investing for a while, you'll know that the official numbers are a scam. TIPS pay less than 0.1% yearly. If you have been paying your bills, shopping for a house, or buying new stuff; you should know that real inflation is probably in the 5-25% range depending where you live. Heck, even in this crisis house prices can't get down. The world economy is inflating like crazy.
  - UK-Al05 6y ago
    Business should either invest the money for growth, or release the money to investors to do as they please. Now you have invest in the business and invest in bitcoin by default.
    - xur17 6y ago
      A lot of companies have very large cash reserves (ex: Apple). Should these companies distribute this cash to investors?
      - nemo44x 6y ago
        Doesn’t Apple pay a dividend? They also use it to buyback shares, which is essentially the same.
        Scoundreller 6y ago
        Token foreigner here: I prefer buybacks. Dividends have all kinds of messy tax implications. Cap gains don’t! e.g.: Most countries tax foreign dividends at full income tax rates. 15-30% IRS withholding taxes on dividends.
    - xiphias2 6y ago
      Not really. I have personal savings that helped me a lot this year. If you want to see what happens when the treasury is empty, just look at how hard it was for Tesla to survive the Model 3 launch: they were heavily shorted, and oil companies attacked Tesla on every front they could to destroy it. Now that Tesla has enough treasury to survive a stock crash (and a little bit profitable), shorts went away. Btw MicroStrategy was attacked the same way and its stock crashed by 95% in the past. Also just look at 2020 how many businesses that didn't have treasury went bankrupt.
    - ur-whale 6y ago
      >Business should either invest the money for growth, or release the money to investors to do as they please. Businesses should increase shareholder value. How they get there is up to them. You opinion on how that should be achieved is one of many possible strategies and very much your own opinion.
  - segmondy 6y ago
    ... and what evidence do you have that bitcoin will retain it's value over time?
    - ur-whale 6y ago
      11 years worth of evidence so far. That's a fairly decent sized prior in my book. But then, for some people, that's very little. YMMV.
  - ineedasername 6y ago
    I think it's not uncommon for large corps to keep assets in other currencies for a variety of reasons. In the case of BTC though, the "melt over time" I'm not sure quite applies yet. It's still be fairly volatile, and if you're leveraged to make those purchases then there could be a risk of the loans getting called in if the asset plummets. I'm not anti BTC, but I think it needs a few years of stability before it represents safe asset in that respect. Secondary is that in order for me to really consider it "money" rather than an asset, I think the ability to spend it as such needs to improve. Until then it strikes me as little different than any other security that you need to sell to convert into negotiable currency. Though I don't know, maybe that's a distinction without (much of) a difference.
- trident1000 6y ago
  They see it as replacing useless low yield treasuries with something else. Bitcoin also isnt a security. I understand what you mean though.
  - bluedevil2k 6y ago
    Exactly - Bitcoin is not a safe place to store cash as others in this thread are arguing. It's certainly not anywhere close to as safe as the US Dollar. It's well within possibility that Bitcoin will drop 80% over the next 6 months.
    - trident1000 6y ago
      I actually disagree with you. With bonds you are virtually guaranteed to lose value over time as real yields are negative (against inflation). Thats a risk. Getting poor slowly and not keeping up with other rising assets is a threat to wealth even when you might feel safe from low vol. With bitcoin the long term moving average is up despite short term volatility and network effects are quite difficult to overcome. Bitcoin is a good holding if you plan to lock it up for 10 years vs bonds. It was crazy to think this 5 years ago, now its less crazy, and tomorrow it will be normal. That my thesis and its also why billionaires are pouring in right now. If you asked me to hold a bitcoin vs a bond equivalent for long term the decision is easy for me especially knowing that global debt monetization is essentially a necessity at this point.
    - ur-whale 6y ago
      Over the next 6 months, quite possibly. Over then next 5 years, highly unlikely. If your investing horizon is 6 months, Bitcoin is certainly not for you.
      - bluedevil2k 6y ago
        > Over the next 5 years, highly unlikely This is the problem with the Bitcoin enthusiasts - they think they can predict the future price with near certainty. You don’t think that rosy picture of BTC is held by thousands of others and already baked into the share price? “Highly unlikely” only describes Bitcoin’s potential as a store of value. If your investing horizon is any amount of time, Bitcoin is not for you. Bitcoin is not an investment, it’s a pure speculation. As another comment perfectly summed it up, lottery tickets are not an investment.
howlgarnish 6y ago
Fun fact: MicroStrategy's CEO (claims to) personally hold some $250M worth of Bitcoin. https://www.theblockcrypto.com/linked/82566/microstrategy-ceo-personally-hold-bitcoin https://www.theblockcrypto.com/linked/82566/microstrategy-ce... It might not be terribly cynical to assume that having his own company purchase some of those holdings from himself would be a pretty nice way to turn the theoretical valuation (currently near an all time high) into cold hard cash before Tether hits the rotary ventilator.
- 123six 6y ago
  It's actually worth $343 million now (he paid $175M earlier this year) Here is a table of all publicly available Bitcoin holdings as of December 12th: https://www.kevinrooke.com/bitcoin https://www.kevinrooke.com/bitcoin
  - meowster 6y ago
    That website has two different metrics: "current value" and "fair value". Are they saying the market price of a coin isn't "fair"?
    - SilasX 6y ago
      Hm I only see “current value” now.
      - meowster 6y ago
        It's mentioned in the different Holding History charts a little further down the page.
    - mey 6y ago
      Those appear to be the value of their holdings as USD trade at that moment in time. Check the date on the far left.
- dustingetz 6y ago
  So succinctly, the bear case for crypto is Tether gets shut down by USA (or international treaty) and then any hard cash left in crypto markets after that is slowly drained by miners paying electric bills? (Ignoring 51% attack and attack by hostile tax policy.)
NotEvil 6y ago
Why don't try other gdb frontends like gef, gdbfrontend, e.t.c..
- howlgarnish 6y ago
  Wrong thread?
  - NullPrefix 6y ago
    The State of Linux Debuggers https://news.ycombinator.com/item?id=25406541 https://news.ycombinator.com/item?id=25406541
sixQuarks 6y ago
I’m disappointed to not see comments saying how bad of an investment Bitcoin is. The only reason I didn’t buy Bitcoin when it was $1 was because of the HN comments. I try to do the opposite of what people are commenting here now.
- Circumnavigate 6y ago
  Just shows how early we still are in all this.
- easymovet 6y ago
  Still plenty of comments about how to “make money” with bitcoin, completely missing the point the bitcoin is money. Ironic really since this group has been digitizing everything else in the world to make money they miss that software now actually is money!
  - ur-whale 6y ago
    Thank you for this, and to add to it: BTC is hard money. Thinking of the price of Bitcoin is a fairly irrelevant endeavour. Thinking how much BTC it costs to buy one USD (not hard money by a huge margin) over time is a much more productive way of looking at it. (yes, I've heard of f(x)=1/x I'm talking about a psychological stance here)
  - Scott_Sanderson 6y ago
    My skeptic friend is always asking me how will I know when to dump on the suckers. Answer: I don't want to dump on anyone, I want to hodl my coins!
    - zucker42 6y ago
      What's the point of accumulating Bitcoin if not to spend it?
      - capnorange 6y ago
        The whole point is to move your idle capital to Bitcoin so you preserve it's value over time.
bluedevil2k 6y ago
Yeah, if I was a shareholder I'd be upset as well at their plan to borrow money and purchase a highly volatile asset at its historical peak price. Plus, if I was a shareholder who did think that Bitcoin was an asset worth investing in, I'd rather do it with my own money and reap all the rewards than let a tech company do it and get the watered down returns (after they pay all their bonuses and everything).
- vmception 6y ago
  and yet the credit market gobbled it all up! om nom shareholders can and should do whatever they want, that is the point of being so forthcoming "I want to do X" => market agrees or market disagrees => X does or doesn't happen
  - bluedevil2k 6y ago
    But they didn't get a chance to do what they want, the CEO (and I would presume the board...hopefully) made this decision to drastically reduce shareholder value on their own.
    - vmception 6y ago
      they're in a leveraged bitcoin play they can sell now or buy puts, they've had a week
    - xiphias2 6y ago
      Actually they were offered to sell their stocks at a premium. Everything was clearly communicated to the shareholders. Sure, MSFT lost some shareholders, but so far it looks like it was a win for everyone.
      - vmception 6y ago
        MSTR
  - s17n 6y ago
    Of course the credit market is ok with it, they aren't taking on the risk. Shareholders on the other hand are down almost 20%
firekvz 6y ago
Really wonder why HN community nowdays completely ignores tether discussion everytime a bitcoin thread comes, I get it, some love the whole "blockchain is the future" topic and others hate it, that was pretty much the discussion here, but both parts should be again talking about tether and it just doesn't happen anymore, what happened? tether is even worse than before edit: yeah, for everyone outthere, don't forget about tether please, remember that it exist, it gets printed by billions without any clear evidence of it being backed and its being used to increase bitcoin price.. So go make your research before you getting heavily invested in bitcoin Anyways, I am still in bitcoin, but everyday im thinking more about getting out, it baffles me how with certain volume, the price goes down 10% in the course of 3 days and then with 1/8 of that very same volume it recovers the % lost plus additional %. I am starting to enjoy betting money on markets, thus im visiting WSB every other day and picking up the trends there and betting them on robinhood, it hasnt gone bad at all for me, it's a steady income if you don't really depend on it or risk anything you can't lose, but I am not getting that feeling from bitcoin at all, everytime I check the coinbase APP when I wake up, my hands literally shake because of the fear that while I slept the price went down some insane %
- xur17 6y ago
  Tether is discussed, multiple times in almost every post about Bitcoin on here.
  - firekvz 6y ago
    it might be, but it's not getting the same visibility as it was getting before (i.e during the 2017 pump), while clearly the impact of it on bitcoin price its even higher than in 2017.
- hn_throwaway_99 6y ago
  > Really wonder why HN community nowdays completely ignores tether discussion everytime a bitcoin thread comes. Not sure why you think this, the first time I discovered the relationship and theories as to how Tether influences Bitcoin price was from previous HN discussion threads.
jt2190 6y ago
This article is really well-reasoned. I’ve been watching the BTC community recently, and there’s a widespread misunderstanding that all investors have the same goals, risk profile, and strategy. This looks something like “$BIGFINTECH is buying $HUGEAMOUNT, buy everything you can get before it’s too late!”, without considering that $BIGFINTECH is playing a completely different game. (Edit: Even this thread has comments that assume there’s only one way to make money with BTC — typically buy low, sell high.)
- deleted 6y ago
  [deleted]
- xur17 6y ago
  > Even this thread has comments that assume there’s only one way to make money with BTC — typically buy low, sell high. What other ways exist?
  - dvtrn 6y ago
    Same ways that exist with other securities: buy and hold, I would presume?
    - blueline 6y ago
      in order to actually make money, you'd still need a third step of "sell" (or you could spend the BTC directly, i guess)
      - scottmsul 6y ago
        As a bitcoiner myself, I like to think of dollars and BTC as just two currencies. Buying BTC is equivalent to selling dollars. If you think that BTC is the better money, it makes sense to move into it and stay there perpetually.
        Proven 6y ago
        It's not. You must declare and pay tax on BTC "gains" even if you haven't gained anything counted in BTC.
StratusBen 6y ago
The CEO of MicroStrategy is either going to look incredibly smart or incredibly dumb as a result of all of this.
thrower 6y ago
This is where the bubble pops folks. You watched it here live.
- ionwake 6y ago
  Which one of the bubbles?
  - thrower 6y ago
    People over-leveraging themselves to buy Bitcoin, which anyone with real experience has already moved on from for better designed crypto by the way, is a clear sign that right now we are at peak hype in this space. This is me speaking as someone who read the white paper on Bitcoin in 2010, and then mined on my GPU for all of 2011-2012 to help build out the network. I have since moved on, as have other practitioners. The only people that remain on Bitcoin are retail speculators, governments with seized assets, and financial institutions. It’s not a healthy makeup, and extraordinarily toxic to the greater crypto community as a whole in my honest opinion.
    - ionwake 6y ago
      Which is a better designed crypto? It cant be too toxic if its a well performing investment asset right?
      - nullc 6y ago
        Oh jesus don't bait the shills into pumping their premined scam garbage in every thread that discusses Bitcoin. They do it enough without encouragement.
    - nullc 6y ago
      > and then mined on my GPU for all of 2011-2012 to help build out the network I suppose you also expect us to believe that you're in line for the British crown?
      - 6y ago
ionwake 6y ago
Im confused how anyone can think its a good inventment to buy an asset at 19k when it was at 4k a few months earlier.
- ur-whale 6y ago
  The price of Bitcoin is not as relevant as you think.
  - microtherion 6y ago
    It seems to me that the price is the ONLY case that can be made for Bitcoin. "It has never traded down over a 5 year span" etc.
jcfrei 6y ago
It's not surprising at all that the entities which benefit the most from the money printing by central banks (issuers of corporate debt) want to convert their funds into one of the most deflationary asset (bitcoin). It is simply a hedge against monetary debasement, where the upside is much larger than the downside - as outlined nicely in the article.
- Traster 6y ago
  The article does a terrible job of considering the downsides. It includes comical phrases such as "Bitcoin has never traded down over a 5 year period". Bitcoin is 12 years old. It also talks about what happens if BTC goes down, and says MSTR could service the debt- which misses the point that if BTC goes down MSTR's value goes down. Sure, they won't go bankrupt, they'll still have a bad invesstment. Let me spell out a clearer downside: If Bitcoin goes to 0, you're left holding a boring business analytics company that punted off its entire cash balance on a risky bet. Or another downside: The SEC launches a second investigation into the CEO. After the last settlement the CEO of this company saw his net worth drop $6Bn which is double the market cap of MSTR.
  - solotronics 6y ago
    Even if the stock prices goes to zero they have a billion dollars worth of bitcoin...
- TooSmugToFail 6y ago
  Exactly. And if you listen to Michael Saylor's interview with Binance [1], the store-of-value argument is at the core of his rationalle/narrative (it's a rather long video, but he gives a complete explanation of his motivation in the first 5 minutes, I think). I believe MicroStrategy's first investment into BTC was really a case of their corporate treasury making a rather bold (desperate?) move to preserve their asset value in the wake of an absolutely gigantic recent expansion of M2 money supply, and a sign of more of the same rolling beyond the horizon. Basically, they decided it was worth taking all the the risks of BTC (regulatory, operational, technical, market risk) to get away from the certainty of their fiat assets getting essentially debased by the looming inflation. But this business of levering up to go even longer is a pure balls-to-the-wall bet tho. It's completely nuts, and I love it. The guy obviously believes in his investment thesis, and you have to give him the credit for being the risk taker in the best tradition of The American Dream. OK, he didn't exactly bet the company on it, but it's still a ballsy business move, if there ever was one. [1] https://youtu.be/Jb48Q5e4WVg https://youtu.be/Jb48Q5e4WVg
heisenbit 6y ago
Money for nothing. It is a sign of our times that one can borrow such amounts of debt and be reasonable sure to pay it back by purely investing them in so called "assets". It used to be the case that assets were things that generated tangible income but bitcoin is not such a thing but purely a handle to be bought and sold down the line to someone who is able to pay a higher price as in the meanwhile a lot of additional money has been injected in the system.
nobrains 6y ago
Yes, past performance is not a predictor of the future, but how does one reconcile with this: https://i.imgur.com/96bngmB.png https://i.imgur.com/96bngmB.png (If seeing on mobile, use "desktop mode" to see the HQ image) - It goes up. - Falls. - Recovers to last high. - Then moves up again. - Repeat. Yes, period of recovery varies. Yes, every cycle percentage highs are getting less and less. But one thing is constant: once the price recovers to the last high, a bull market starts.
- simias 6y ago
  It works every single time until it stops working. Playing the numerology game with charts and trends is astrology for people investing in the stock market. The only question you should be asking yourself is: is Bitcoin actually valuable or is it a pure speculative bubble that's bound to burst sooner or later.
  - ativzzz 6y ago
    > The only question you should be asking yourself is: is Bitcoin actually valuable or is it a pure speculative bubble that's bound to burst sooner or later. You could say the same thing about the US stock market
    - simias 6y ago
      I can say the same think about any stock ever. That's the point.
    - dodobirdlord 6y ago
      Sure, you can ask that question about literally anything. In the case of the US stock market though the answer is obviously yes, so what's the point?
  - qot 6y ago
    You can say that about gold. The metallurgical / industrial value is no where near $1,800/oz. It's a speculative bubble that's bound to burst sooner or later. Maybe after another 5000 years.
loufe 6y ago
I don't doubt the author's point that the offering the company a loan for this foray is a good deal. Does anyone with a good amount of knowledge in the field think there is an actual basis for assuming Bitcoin is worthy of someone calling $1M per coin? Last I heard bitcoin was not technically able to be used as a payment processor subsitutes. My impression then is the whole affair is a bit of a playing-chicken racket.
- sgeisler 6y ago
  I'm not commenting on the 1M$ price prediction, but rather the technical challenges and possibilities. > Last I heard bitcoin was not technically able to be used as a payment processor subsitutes. My impression then is the whole affair is a bit of a playing-chicken racket. The fundamental features of Bitcoin are its limited supply [1], programmability and not being controlled by any single entity, not allowing policy enforcement on-chain. While it is true that on-chain (layer 1) Bitcoin transactions provide very limited throughput, there are other approaches to provide scaling that are built on top of Bitcoin (layer 2) using said programmability. To date there are two major approaches for trust-minimized L2 systems: 1. Payment channel networks (Lightning [2]) that basically use the blockchain only when joining or leaving the network or on conflicts/fraud attempts. In theory millions of transactions can happen on Lightning without ever needing an on-chain transaction. The main limitation is the onboarding capacity, which (with Bitcoin's current limits) is not sufficient to make Bitcoin a global retail currency. There are also some logistical issues with running a Lightning node that make still trustless, but semi-centralized apps preferable (e.g. Phoenix [3]). Don't get me wrong, Lightning is awesome and the best solution for retail Bitcoin adoption we have right now, but I think if Bitcoin is going be used in retail by everyone globally then that will require other solutions. Luckily that won't happen over night. 2. Federations are another way to scale Bitcoin. Fundamentally they are just a group of entities that jointly hold Bitcoin in a wallet such that transactions can only be made if a quorum is reached (using m-of-n "multisig" wallets) and enforce certain rules on those coins. One example of such a Federation is Liquid [4], which is a federated sidechain by Blockstream (full disclosure, I contract for them [6]). One can transfer in and out bitcoins to and from this sidechain and transfer the bitcoin-backed sidechain tokens. Such federations allow for easier upgrades (only federation members have to agree), so Liquid is used to test ideas that can't be implemented in Bitcoin (yet?) such as Confidential Transactions which hides transaction amounts through homomorphic commitments. But other federations that don't run their own blockchain are also imaginable (e.g. based on chaumian e-cash). The fundamental idea stays the same: they create a more efficient, cheaper way to transfer tokens verifyably and fully backed by real bitcoins that are redeemable at any time. The fact that multiple entities enforce the rules and hold the collateral jointly makes them relatively resistent to few of these going rogue. While this sounds a lot like early banking verifyable backing and permissionless, potentially anonymous founding of such federations makes it more robust against regulatory capture imo. So I think there is a good chance that Bitcoin will at least capture some of the market share of gold, and potentially some of the failing nation state currencies (they always fail eventually because it's too tempting to print your way out of recessions until it doesn't work anymore [5]). You can do the math on where that would put the price. [1] Some economists disagree that it's a feature for a currency on the basis that it's bad for the economy as a whole. I'd argue that at least on an individual basis a money with little/none and predictable inflation is preferable. [2] https://en.wikipedia.org/wiki/Lightning_Network https://en.wikipedia.org/wiki/Lightning_Network [3] https://phoenix.acinq.co/ https://phoenix.acinq.co/ [4] https://liquid.net/ https://liquid.net/ [5] https://www.principles.com/the-changing-world-order/#chapter2 https://www.principles.com/the-changing-world-order/#chapter... [6] If you are wondering if that's why I'm slightly critical of Lightning, it's not, it's just my personal opinion/observation (as is this whole post), Blockstream also develops a Lightning node implementation https://blockstream.com/lightning/ https://blockstream.com/lightning/
RichardHeart 6y ago
Bitcoin was invented to remove middlemen. Not your keys, not your coins. Things like this are the exact opposite of why Bitcoin was invented in the first place.
Traster 6y ago
I mean... ok. There are two things going on here. The first is that MSTR can get really cheap loans because they're essentially a profitable business that can service those loans. Although I would caution that the "But it's got a track record dating back to 1989" stuff - the only reason MSTR is in this position is because it hasn't really grown in pace with the market. They're an income stock not a growth stock, and their business analytics experience tells you nothing about their investment experience. The second part though is - does investing in bitcoin make any sense? Well in my opinion no. MSTR has no strategic advantage in buying BTC. It's also extremely worrying that they've crossed the rubicon, they are now leveraging up to buy more. You don't just have to factor in whether this current debt looks like it's servicable. You have to question whether this company is going to continue levering up to buy bitcoin. Also, the down side risks the article mentions are like "Let's assume no downsides". Ok assuming that BTC goes down they can service the debt with other income. Fine. As long as they don't issue more debt which they likely will. Also, even if they can service the debt that doesn't change the fact they've made a bad investment of several hundred million dollars. It also doesn't include downsides such as "Someone hacks you and all your BTC are gone" or "The US issues a new regulation changing the tax regime massively increasing your tax exposure". The reason people are bearish on this move is because it's a guy with no busines in investing just punting everything he can onto BTC, which is fine for him to do, but it's not a particularly smart thing for him to do. I mean one obvious concern is that this company is probably trading at a significant discount vs it's assets now, so what's going to stop someone coming along and saying "Hey, $X a share, I'll liquidate the BTC and hand it back to investors" when BTC has it's next dip?
- UShouldBWorking 6y ago
  Here comes the unfounded HN Bitcoin hatred. Every post mentioning Bitcoin gets treated the same.
- anton000 6y ago
  i wish there's was a remind me bot for hn
- mrhyyyyde 6y ago
  "Also, even if they can service the debt that doesn't change the fact they've made a bad investment of several hundred million dollars." -- Um, you're going to have to explain your opinion here, because it sounds like you believe their returns are not indicative of a good investment. I'm of the opinion that making 290M+ from 475M is a good investment, I don't live near Wall Street so maybe that's not a lot of money these days?
m3kw9 6y ago
A million a coin would be over 20 Trillion of market by that time. How would that make sense? It would if many large governments abandoned their own currency system and used bitcoins. Compare that to golds 1.9trillion practical market size. To match that Bitcoin would be 100k$. Which seem to be a stretch in 5 years by many imaginations, one that requires US to pretty much hyper inflate. A more realistic upper price could be 50k$ in 5 years based on regulatory risk, volatility and realistic cap, half of all of golds theoretical cap. The down side is a side way risk where Bitcoin will stay around this 20k-30k mark, may as well invest that in equities or ETFs.
- ur-whale 6y ago
  >It would if many large governments abandoned their own currency According to Google, there were ~ 2825 billionaires in the world in 2019. That's 2.825 T right there, and we're talking: - Billionaires the world actually knows about - Not counting folks who have 10's or 100's of billions - Private individuals as opposed to large retirement funds There's also the oft-and-widely forgotten fact that market cap is wildly different from actual invested funds: jut because two dudes somewhere decide to swap one AMZN share for 30K USD doesn't mean Bezos is suddenly 10x richer. All in all, while I believe 1M BTCUSD to be unrealistic, if a sizable fraction of that stashed money moves to BTC because they're looking for, e.g, an inflation hedge, there's easily another 10x to be had. My opinion, not investment advice, goes without saying.
  - notahacker 6y ago
    So if literally every known billionaire in the world decided to convert $1 billion of their assets to BTC in the next five years, which in many cases would be most of their assets including control of the businesses that actually made them billionaires, then BTC would be a bit over a tenth of the way towards Raoul Pal's prediction. I'm not sure that makes it sound more realistic. Market cap doesn't equal actually invested funds, but two dudes swapping one AMZN share for 30k USD doesn't actually make AMZNs market cap when other trades are happening at normal prices either. BTC's current market price is obviously more subject to manipulation than AMZN, but its price isn't dictated by two dudes swapping one BTC at an absurd multiple of what everyone else is willing to sell for either.
contravariant 6y ago
> In its 12 year history, Bitcoin has never traded down over a five year period I guess investors will be pleased to know they're betting on something that happened at least twice...
- mszcz 6y ago
  I think he meant at least seven times ;)
  - drdeca 6y ago
    If we pretend (which is of course not accurate, which is why I say pretend) that the price follows a Wiener process, so that on each time interval the net change across that interval is a normally distributed random variable with mean 0, where the difference across different disjoint intervals are independent, well, under that inapplicable model, said "7 different times" wouldn't be independent (while the difference across the first 5 years, and across the second 5 years, would be independent, and so that would count as 2 independent observances of that. I wonder, if you have such a process W, what would the probability of "For all t in [0,7], W_{t+5} > W_t" be? It would of course be less than (1/4) because it would imply W_5 > W_0 , and also W_12 > W_5 , which would be independent events each with probability 1/2 , and so the probability has to be at most 1/4 . But I assume it probably has a much smaller probability than that. If instead of a Wiener process, we model it as a Wiener process with drift, as X_t = \mu t + \sigma W_t , how does the probability of "For all t in [0,7], X_{t+5} > X_t" vary with \mu ? (well, obviously, as \mu increases, the probability goes up, but I mean stuff like "how big does \mu have to be in order for it to not be unlikely?" and "how quickly does the probability increase as \mu increases?", etc. . )
    - mszcz 6y ago
      Isn't the point he tried to make that if you've chosen an entry point into Bitcoin anywhere in the last -12 - -5 years you'd still be ahead 5 years later? So that if your time horizon is at least 5 years and if history is any indicator (here is the real fallacy imho) investing in Bitcoin is a good idea? (Sure, that's way more than 7 entry points :)
microtherion 6y ago
The article makes a compelling argument that MicroStrategy can afford to service the debt, no matter what happens. Opinions differ over whether the investment was good, and I doubt anyone's mind was changed in this discussion. But there is a third element that should be discussed, I think: Does the investment fit with the company's business strategy? I haven't seen the article make an argument that it does. Apple has cash. Tuna fishing is profitable. But does this mean Apple should invest in a tuna fishing fleet?
- cyphertruck 6y ago
  Bitcoin is a scarce asset with little to no execution risk. A tuna fleet is a business subject to the whims of the market with execution risk. Since equities have been the primary investment medium fir years, people think of Bitcoin like a stock — it even has a ticker. But it is a genuinely new thing. Like gold it is a scarce asset. Unlike gold its scarcity is deterministic, and it can be transacted over the internet.
  - zucker42 6y ago
    If a company is investing in non-synergistic assets with excess cash, why not just instead convert that cash to shareholder profits?
    - gxon 6y ago
      Tax advantage? If you pay out a dividend, you force your shareholders to pay income tax rates. But, if you can use company profits in a way that pumps the stock valuation, your shareholders can effectively take the same profits with long term cap gains tax. My understanding is that a stock buyback is basically this strategy, and MicroStrategy's CEO has said that he also considered that. MSTR is up ~100% since they first bought bitcoin. This is at least, my amateur understanding that could be wrong.
  - microtherion 6y ago
    > Bitcoin is a scarce asset Bitcoins themselves are available in limited quantity, but new cryptocurrencies are created all the time. > with little to no execution risk. You've got to be kidding me! Cryptocurrencies are notoriously difficult to even store safely.
sheeshkebab 6y ago
Michael Saylor (MSTR’s CEO) is nuts. Also, sorry for employees working there.
- simonebrunozzi 6y ago
  Yours could have been an interesting comment, if you explained why you think the CEO is nuts, instead of just dropping it there without explanation.
nmlnn 6y ago
HN is hilarious. Even after 10 years, majority of people here are unable to grasp that bitcoin IS money. MS and MSTR are performing a speculative attack on a soft fiat currency (supply increased >20% in 2020) using the hardest money ever. This strategy will only become more popular over time as it continues to pay off. Bitcoiners have understood this part of the game theory for a while (see: https://nakamotoinstitute.org/mempool/speculative-attack/ https://nakamotoinstitute.org/mempool/speculative-attack/). Have fun staying poor.
- tuberelay 6y ago
  Based comment, 10/10. Feel bad for these rubes. We're currently in the "giant sucking sound and harbor incomprehensibly drains" phase of the hard money tsunami, and people can't see it.
neves 6y ago
I'd like to see they focusing in improving their product. My company use MS visualization tools and everybody complains of bugs and missing features. Seeing that all the company hype is about Bitcoin, I really think the product will never improve to compete with Tableau or Power BI.
worik 6y ago
Crooks. Or fools. It is Other People's Money. Definitely crooks
cyphertruck 6y ago
It’s really fascinating to see these comments about bitcoin being “near all time high” from people who seem to imply that means it us risky. In 2017, bitcoin hit the high $19,000 price on huge volume, intraday during a bubble. Now it has taken months to go from $10k to $19k, with many pull backs and many dips being bought. If you average daily closing prices over a sliding 30 day window, this is currently bitcoins all time high by a fair bit. Yet no mainstream media attention, low trading volume, etc etc. The current situation is analogous to December 2016 when bitcoin was flirting with it’s 2013 All time high of $1,000.
- Zarath 6y ago
  The US stock market is nearly always at or near an all time high
  - MR4D 6y ago
    That’s not correct. See the “Drawdowns” tab here [0]. The market is at a high only when it’s equal to the line at the top of the graph. [0] - https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2020&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&showYield=false&reinvestDividends=true&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=Vfinx&allocation1_1=100#drawdowns https://www.portfoliovisualizer.com/backtest-portfolio?s=y&t...
    - fredophile 6y ago
      How near does it need to be to be near an all time high? If we say within 5% then it looks like, outside of the catastrophic period between 2000 and 2012, the graph spent the vast majority of its time there.
    - WA 6y ago
      What does drawndown have to do with ATH? The SPX is ~50 points (1.3%) from its ATH right now (3663 as of Friday close) vs ATH of 3715 on 12/9. It's reasonable to say "close to ATH". Edit: Corrected points and added percentage.
aazaa 6y ago
> Why the negative [stock price] reaction? Because this time the Bitcoin would be bought with other people's money, instead of the cash reserves already on MicroStrategy's balance sheet. How about a correction after a face-ripping rally? Check out this chart: https://www.tradingview.com/symbols/NASDAQ-MSTR/ https://www.tradingview.com/symbols/NASDAQ-MSTR/ That's liftoff for the month of November. Sooner or later profits will be taken. Also, check out that price-to-earnings ratio (P/E) of over 2,500. That's stratospheric and not even Amazon can match it right now. Clearly it was caused at least in part by vast appetite among certain investors for some way, any way, to gain exposure to Bitcoin price moves. What's more interesting about Microstrategy is that it could be a preview of things to come. Large and/or public companies holding cash need a way to preserve its value from erosion due to the avalanche of government deficit spending to come and the inflation that will come with it. The range of options is rather limited, and Bitcoin has some unique properties that make it especially good at the job. That said, a public company buying Bitcoin on credit sounds absolutely bonkers. That's not capital preservation. It's a sign that management can't figure out how to grow the company. And it might be a boat that an increasing number of companies find themselves in.
- solotronics 6y ago
  Actually it's pretty funny and shows the Sisyphean task that central banks have of promoting productivity and growth when their only tool is printing. If you can loan billions of dollars for nearly no cost why not put it into something speculative? With a low enough interest rate it would even make sense to take out loans to buy gold, the fiat cost of your loan is impacted by inflation. Take out a $50k loan this year. Buy gold and bitcoin with it. If the assets appreciate pay off the loan and either collect your profit or let the "free" investment sit. Look at the historical price of bitcoin and there is literally no point you could have bought it and held for a few years and not made money. Take out another loan and repeat.
georgewfraser 6y ago
This is really bizarre. MicroStrategy is a solid BI tool, it's been solid for a long time, and the company basically operates as a cash machine. This is when you start issuing a dividend. If the founder-CEO is bored, he should promote one of the many people who have made their careers at MicroStrategy and retire. Instead, he's decided to use the existing business he founded decades ago as an outlet for his enthusiasm for Bitcoin. This is why God created activist investors, I think.
- deleted 6y ago
  [deleted]
- otoburb 6y ago
  >>Instead, he's decided to use the existing business he founded decades ago as an outlet for his enthusiasm for Bitcoin. This is why God created activist investors, I think. In MSTR's case an activitist shareholder will be ignored because as per MSTR's latest 10-Q: "As of October 19, 2020, Mr. Saylor, our Chairman of the Board of Directors & Chief Executive Officer, beneficially owned 2,011,668 shares of class B common stock, or 73.4% of the total voting power. Accordingly, Mr. Saylor can control MicroStrategy through his ability todetermine the outcome of elections of our directors, amend our certificate of incorporation and by-laws, and take other actions requiring the vote or consentof stockholders, including mergers, going-private transactions, and other extraordinary transactions and their terms."[1] [1] https://ir.microstrategy.com/static-files/dfe9fb22-b4d0-4d49-b4c5-795ebafc5abb https://ir.microstrategy.com/static-files/dfe9fb22-b4d0-4d49...
randmeerkat 6y ago
Bitcoin is up 170% over the past year. Tesla is up 737%. If I’m going to invest it will be in a real company with real assets and real vision, not a hyped up crypto scheme that takes as much power to maintain as Switzerland. https://www.bbc.com/news/technology-48853230 https://www.bbc.com/news/technology-48853230 What I’m saying is, if you’re going to make an insane, risky move with your money, dump it in Tesla, at least there’s a real product there _and_ it’s outperforming Bitcoin.
zz865 6y ago
Its about time MicroStrategy just floated off their business and concentrated on buying bitcoin.
quickthrower2 6y ago
By the same logic anyone with cashflow to service debt should get as much debt as possible, and buy Bitcoin (and nothing else??).
nathanyz 6y ago
Is there someone who has extensively used MicroStrategy that would be able to explain what/how they compete with Tableau or even the old Crystal Reports? Seeing this bitcoin buying set off some weird red flags. When I look into the company's G2 reviews[1], it just looks like a lot of buzzword bingo with limited specifics around what exactly the product is so highly rated for. Just curious since it looks like they have built a really great and profitable company. I was expecting much more concrete info on how they are outcompeting in this space. [1] https://www.g2.com/products/microstrategy/reviews#reviews https://www.g2.com/products/microstrategy/reviews#reviews
oillio 6y ago
Did investors really sell because of this news? It just so happened that bitcoin dropped about 5% on the same day. Microstrategy is quickly turning into a defacto bitcoin ETF. Maybe the bitcoin price drop had something to do with the stock price drop.
- muzika 6y ago
  Bitcoin chart was set up for a short, and many traders shorted it that day. Once they closed their positions (after pushing the price down as far as they could) the price have quickly rebound.
- Traster 6y ago
  Man it would be so juicy to do an arb trade of the stock against the price of Bitcoin. I’d bet there’s a great lead lag relationship.
Tepix 6y ago
One point that i haven't seen mentioned here today is the ecological damage that bitcoin causes. We're in the middle of a climate catastrophe. A lot of investors are defunding industries and assets that are harmful for the climate. In my opinion, bitcoin is one of these assets. If you want to invest in crypto, find better alternatives.
- muzika 6y ago
  New cryptocurrencies are using much less resources due to proof of stake model, Etherium 2.0 being one example. It’s possible that some day in the future bitcoin may he converted to proof of stake also.
  - alwillis 6y ago
    It’s possible that some day in the future bitcoin may he converted to proof of stake also. That's not going to happen. The core reason Bitcoin is the hardest money that's ever existed is because of proof of work. Part of why Bitcoin has monetary value is due to the energy used to produce Bitcoin and to secure the blockchain. Eth 2.0 is unproven so far; it certainly wouldn't be trusted as a global reserve asset in its current form.
    - qes 6y ago
      I think 2017 showed that it will be damned difficult politically to make any change that requires a hard fork to Bitcoin anymore. Pure proof of stake is fantasy. That's not "Bitcoin" and it never will be. My personal hope would be that mixed proof of work and stake with on-chain governance, like Decred (their devs have built much of the Lightning Network tooling, performed the first cross-chain atomic swap, etc.) - could be adopted; but, realistically, I think that's also a fantasy.
- alwillis 6y ago
  This is one of the most consistent misconceptions about Bitcoin. The growth of Bitcoin mining in America is due to miners partnering with oil and natural gas producers to use the energy that would be otherwise wasted. Instead of excess natural gas being flared, it's being used to run Bitcoin miners [1]. Everyone should read Lyn Alden's "7 Misconceptions About Bitcoin" [2], where she addresses the energy use; here's an excerpt: Furthermore, a significant portion of the energy that Bitcoin uses could otherwise be wasted. Bitcoin miners seek out the absolute cheapest sources of electricity in the world, which usually means energy that was developed for one reason or another, but that doesn’t currently have sufficient demand, and would therefore be wasted. Examples of this include over-built hydroelectric dams in certain regions of China, or stranded oil and gas wells in North America. Bitcoin mining equipment is mobile, and thus can be put near wherever the cheapest source of energy is, to arbitrage it and give a purpose to that stranded energy production. Bitcoin mining converts the output from those cheap stranded sources of energy into something that currently has monetary value. [1] https://www.coindesk.com/energy-giant-equinor-to-cut-gas-flaring-with-bitcoin-mining-tie-up-report https://www.coindesk.com/energy-giant-equinor-to-cut-gas-fla... [2] https://www.lynalden.com/misconceptions-about-bitcoin/ https://www.lynalden.com/misconceptions-about-bitcoin/

193 points by 123six 6y ago

bob33212 6y ago

Sounds like they are pivoting into a hedge fund.

formalsystem 6y ago
I keep hearing this point, why can't you be a revenue generating business that wants to hold money that doesn't melt over time?
- atian 6y ago
  > Why the negative reaction? Because this time the Bitcoin would be bought with other people's money, instead of the cash reserves already on MicroStrategy's balance sheet.
- romanoderoma 6y ago
  Do dollars really melt over time?
- rjknight 6y ago
  Why not hold TIPS[1], or a diverse basket of securities, or invest the money in something productive? Is it a good thing if sitting on a large cash pile is rewarded? [1] https://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm https://www.treasurydirect.gov/indiv/products/prod_tips_glan...
  - formalsystem 6y ago
    TIPS is measured via CPI not Asset inflation Sure they can invest in something more productive but the whole point of having reserves is to be more robust to negative changes e.g: COVID or jump on new opportunities (some company goes up for sale).
  - diegocerdan 6y ago
    Value sitting on dollars or government bonds is being devaluated. Not all value can be invested in the present, thus people want to invest in the future (savings theory). If governments do not offer fiat money or bonds as savings vehicle, assets like Gold or Bitcoin will inevitable soar. MicroStrategy, and others, understand the situation and want to get in early to make multiply their actual savings.
    - bluedevil2k 6y ago
      You sound like you think Bitcoin will only go up. The last 4 years have shown that to be WILDLY incorrect. Bitcoin price history has shown 0 correlation to the market or macroeconomic conditions. Gold, as well, is not a safe haven either. The US Government keeps printing money, yet gold is nowhere near it's all-time high (adjusted for inflation). You shouldn't offer these statements as inevitabilities when history has shown them to be completely wrong.
      - diegocerdan 6y ago
        I'm just reasoning why it will happen. Macro markets do not always react fast to these kind of trends. I agree with your description of the present and close past, thus calling an imminent bull market. The more time this present situation holds, the bigger is the buying pressure. I'm guessing you have a computer tech background and still don't share my view: imagine all the macro-investors not having this knowledge. They can't predict magic-internet-money eating their lunch. Cool thing about free markets: they find out the correct solution out of the greed and collective inteligence of the group. <3
      - rjknight 6y ago
        "Zero correlation to the markets" is one of the things that makes Bitcoin desirable. Diversifying your portfolio is all about having things that do not move in the same direction at the same time.
        joosters 6y ago
        And yet Bitcoin plummeted in value at the same time as everything else at the start of the pandemic, so it's hardly uncorrelated. Buying lottery tickets would be uncorrelated. And you've less chance of being scammed or hacked when you do that...
  - vmception 6y ago
    As of 2020 Bitcoin can almost-instantly be used as an interest bearing and yield producing asset, which is what "productive" means in this context. There are both centralized custodial options as well as decentralized permissionless but custodial options, as well as decentralized permissionless noncustodial options. And yes, the yield is risk adjusted.
  - wcoenen 6y ago
    Note that TIPS currently have a negative yield for all durations. So even though they protect you against potential inflation as measured by CPI, there's still a cost. https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield https://www.treasury.gov/resource-center/data-chart-center/i...
  - xiphias2 6y ago
    Because the inflation definition is changing all the time (look at shadowstats). The CEO likes yachts and houses on the beach, and how he describes it: inflation baskets contain what you don't care about, and miss the scarce assets that you really want.
  - ur-whale 6y ago
    Because TIPS is denominated in USD. Even if there is an actual yield, you're still a net value loser.
  - csomar 6y ago
    I'm not sure if you are being sarcastic. If you have been investing for a while, you'll know that the official numbers are a scam. TIPS pay less than 0.1% yearly. If you have been paying your bills, shopping for a house, or buying new stuff; you should know that real inflation is probably in the 5-25% range depending where you live. Heck, even in this crisis house prices can't get down. The world economy is inflating like crazy.
- UK-Al05 6y ago
  Business should either invest the money for growth, or release the money to investors to do as they please. Now you have invest in the business and invest in bitcoin by default.
  - xur17 6y ago
    A lot of companies have very large cash reserves (ex: Apple). Should these companies distribute this cash to investors?
    - nemo44x 6y ago
      Doesn’t Apple pay a dividend? They also use it to buyback shares, which is essentially the same.
      - Scoundreller 6y ago
        Token foreigner here: I prefer buybacks. Dividends have all kinds of messy tax implications. Cap gains don’t! e.g.: Most countries tax foreign dividends at full income tax rates. 15-30% IRS withholding taxes on dividends.
  - xiphias2 6y ago
    Not really. I have personal savings that helped me a lot this year. If you want to see what happens when the treasury is empty, just look at how hard it was for Tesla to survive the Model 3 launch: they were heavily shorted, and oil companies attacked Tesla on every front they could to destroy it. Now that Tesla has enough treasury to survive a stock crash (and a little bit profitable), shorts went away. Btw MicroStrategy was attacked the same way and its stock crashed by 95% in the past. Also just look at 2020 how many businesses that didn't have treasury went bankrupt.
  - ur-whale 6y ago
    >Business should either invest the money for growth, or release the money to investors to do as they please. Businesses should increase shareholder value. How they get there is up to them. You opinion on how that should be achieved is one of many possible strategies and very much your own opinion.
- segmondy 6y ago
  ... and what evidence do you have that bitcoin will retain it's value over time?
  - ur-whale 6y ago
    11 years worth of evidence so far. That's a fairly decent sized prior in my book. But then, for some people, that's very little. YMMV.
- ineedasername 6y ago
  I think it's not uncommon for large corps to keep assets in other currencies for a variety of reasons. In the case of BTC though, the "melt over time" I'm not sure quite applies yet. It's still be fairly volatile, and if you're leveraged to make those purchases then there could be a risk of the loans getting called in if the asset plummets. I'm not anti BTC, but I think it needs a few years of stability before it represents safe asset in that respect. Secondary is that in order for me to really consider it "money" rather than an asset, I think the ability to spend it as such needs to improve. Until then it strikes me as little different than any other security that you need to sell to convert into negotiable currency. Though I don't know, maybe that's a distinction without (much of) a difference.
trident1000 6y ago
They see it as replacing useless low yield treasuries with something else. Bitcoin also isnt a security. I understand what you mean though.
- bluedevil2k 6y ago
  Exactly - Bitcoin is not a safe place to store cash as others in this thread are arguing. It's certainly not anywhere close to as safe as the US Dollar. It's well within possibility that Bitcoin will drop 80% over the next 6 months.
  - trident1000 6y ago
    I actually disagree with you. With bonds you are virtually guaranteed to lose value over time as real yields are negative (against inflation). Thats a risk. Getting poor slowly and not keeping up with other rising assets is a threat to wealth even when you might feel safe from low vol. With bitcoin the long term moving average is up despite short term volatility and network effects are quite difficult to overcome. Bitcoin is a good holding if you plan to lock it up for 10 years vs bonds. It was crazy to think this 5 years ago, now its less crazy, and tomorrow it will be normal. That my thesis and its also why billionaires are pouring in right now. If you asked me to hold a bitcoin vs a bond equivalent for long term the decision is easy for me especially knowing that global debt monetization is essentially a necessity at this point.
  - ur-whale 6y ago
    Over the next 6 months, quite possibly. Over then next 5 years, highly unlikely. If your investing horizon is 6 months, Bitcoin is certainly not for you.
    - bluedevil2k 6y ago
      > Over the next 5 years, highly unlikely This is the problem with the Bitcoin enthusiasts - they think they can predict the future price with near certainty. You don’t think that rosy picture of BTC is held by thousands of others and already baked into the share price? “Highly unlikely” only describes Bitcoin’s potential as a store of value. If your investing horizon is any amount of time, Bitcoin is not for you. Bitcoin is not an investment, it’s a pure speculation. As another comment perfectly summed it up, lottery tickets are not an investment.

howlgarnish 6y ago

Fun fact: MicroStrategy's CEO (claims to) personally hold some $250M worth of Bitcoin. https://www.theblockcrypto.com/linked/82566/microstrategy-ceo-personally-hold-bitcoin https://www.theblockcrypto.com/linked/82566/microstrategy-ce... It might not be terribly cynical to assume that having his own company purchase some of those holdings from himself would be a pretty nice way to turn the theoretical valuation (currently near an all time high) into cold hard cash before Tether hits the rotary ventilator.

123six 6y ago
It's actually worth $343 million now (he paid $175M earlier this year) Here is a table of all publicly available Bitcoin holdings as of December 12th: https://www.kevinrooke.com/bitcoin https://www.kevinrooke.com/bitcoin
- meowster 6y ago
  That website has two different metrics: "current value" and "fair value". Are they saying the market price of a coin isn't "fair"?
  - SilasX 6y ago
    Hm I only see “current value” now.
    - meowster 6y ago
      It's mentioned in the different Holding History charts a little further down the page.
  - mey 6y ago
    Those appear to be the value of their holdings as USD trade at that moment in time. Check the date on the far left.
dustingetz 6y ago
So succinctly, the bear case for crypto is Tether gets shut down by USA (or international treaty) and then any hard cash left in crypto markets after that is slowly drained by miners paying electric bills? (Ignoring 51% attack and attack by hostile tax policy.)

NotEvil 6y ago

Why don't try other gdb frontends like gef, gdbfrontend, e.t.c..

howlgarnish 6y ago
Wrong thread?
- NullPrefix 6y ago
  The State of Linux Debuggers https://news.ycombinator.com/item?id=25406541 https://news.ycombinator.com/item?id=25406541

sixQuarks 6y ago

I’m disappointed to not see comments saying how bad of an investment Bitcoin is. The only reason I didn’t buy Bitcoin when it was $1 was because of the HN comments. I try to do the opposite of what people are commenting here now.

Circumnavigate 6y ago
Just shows how early we still are in all this.
easymovet 6y ago
Still plenty of comments about how to “make money” with bitcoin, completely missing the point the bitcoin is money. Ironic really since this group has been digitizing everything else in the world to make money they miss that software now actually is money!
- ur-whale 6y ago
  Thank you for this, and to add to it: BTC is hard money. Thinking of the price of Bitcoin is a fairly irrelevant endeavour. Thinking how much BTC it costs to buy one USD (not hard money by a huge margin) over time is a much more productive way of looking at it. (yes, I've heard of f(x)=1/x I'm talking about a psychological stance here)
- Scott_Sanderson 6y ago
  My skeptic friend is always asking me how will I know when to dump on the suckers. Answer: I don't want to dump on anyone, I want to hodl my coins!
  - zucker42 6y ago
    What's the point of accumulating Bitcoin if not to spend it?
    - capnorange 6y ago
      The whole point is to move your idle capital to Bitcoin so you preserve it's value over time.

bluedevil2k 6y ago

Yeah, if I was a shareholder I'd be upset as well at their plan to borrow money and purchase a highly volatile asset at its historical peak price. Plus, if I was a shareholder who did think that Bitcoin was an asset worth investing in, I'd rather do it with my own money and reap all the rewards than let a tech company do it and get the watered down returns (after they pay all their bonuses and everything).

vmception 6y ago
and yet the credit market gobbled it all up! om nom shareholders can and should do whatever they want, that is the point of being so forthcoming "I want to do X" => market agrees or market disagrees => X does or doesn't happen
- bluedevil2k 6y ago
  But they didn't get a chance to do what they want, the CEO (and I would presume the board...hopefully) made this decision to drastically reduce shareholder value on their own.
  - vmception 6y ago
    they're in a leveraged bitcoin play they can sell now or buy puts, they've had a week
  - xiphias2 6y ago
    Actually they were offered to sell their stocks at a premium. Everything was clearly communicated to the shareholders. Sure, MSFT lost some shareholders, but so far it looks like it was a win for everyone.
    - vmception 6y ago
      MSTR
- s17n 6y ago
  Of course the credit market is ok with it, they aren't taking on the risk. Shareholders on the other hand are down almost 20%

firekvz 6y ago

Really wonder why HN community nowdays completely ignores tether discussion everytime a bitcoin thread comes, I get it, some love the whole "blockchain is the future" topic and others hate it, that was pretty much the discussion here, but both parts should be again talking about tether and it just doesn't happen anymore, what happened? tether is even worse than before edit: yeah, for everyone outthere, don't forget about tether please, remember that it exist, it gets printed by billions without any clear evidence of it being backed and its being used to increase bitcoin price.. So go make your research before you getting heavily invested in bitcoin Anyways, I am still in bitcoin, but everyday im thinking more about getting out, it baffles me how with certain volume, the price goes down 10% in the course of 3 days and then with 1/8 of that very same volume it recovers the % lost plus additional %. I am starting to enjoy betting money on markets, thus im visiting WSB every other day and picking up the trends there and betting them on robinhood, it hasnt gone bad at all for me, it's a steady income if you don't really depend on it or risk anything you can't lose, but I am not getting that feeling from bitcoin at all, everytime I check the coinbase APP when I wake up, my hands literally shake because of the fear that while I slept the price went down some insane %

xur17 6y ago
Tether is discussed, multiple times in almost every post about Bitcoin on here.
- firekvz 6y ago
  it might be, but it's not getting the same visibility as it was getting before (i.e during the 2017 pump), while clearly the impact of it on bitcoin price its even higher than in 2017.
hn_throwaway_99 6y ago
> Really wonder why HN community nowdays completely ignores tether discussion everytime a bitcoin thread comes. Not sure why you think this, the first time I discovered the relationship and theories as to how Tether influences Bitcoin price was from previous HN discussion threads.

jt2190 6y ago

This article is really well-reasoned. I’ve been watching the BTC community recently, and there’s a widespread misunderstanding that all investors have the same goals, risk profile, and strategy. This looks something like “$BIGFINTECH is buying $HUGEAMOUNT, buy everything you can get before it’s too late!”, without considering that $BIGFINTECH is playing a completely different game. (Edit: Even this thread has comments that assume there’s only one way to make money with BTC — typically buy low, sell high.)

deleted 6y ago
[deleted]
xur17 6y ago
> Even this thread has comments that assume there’s only one way to make money with BTC — typically buy low, sell high. What other ways exist?
- dvtrn 6y ago
  Same ways that exist with other securities: buy and hold, I would presume?
  - blueline 6y ago
    in order to actually make money, you'd still need a third step of "sell" (or you could spend the BTC directly, i guess)
    - scottmsul 6y ago
      As a bitcoiner myself, I like to think of dollars and BTC as just two currencies. Buying BTC is equivalent to selling dollars. If you think that BTC is the better money, it makes sense to move into it and stay there perpetually.
      - Proven 6y ago
        It's not. You must declare and pay tax on BTC "gains" even if you haven't gained anything counted in BTC.

StratusBen 6y ago

The CEO of MicroStrategy is either going to look incredibly smart or incredibly dumb as a result of all of this.

thrower 6y ago

This is where the bubble pops folks. You watched it here live.

ionwake 6y ago
Which one of the bubbles?
- thrower 6y ago
  People over-leveraging themselves to buy Bitcoin, which anyone with real experience has already moved on from for better designed crypto by the way, is a clear sign that right now we are at peak hype in this space. This is me speaking as someone who read the white paper on Bitcoin in 2010, and then mined on my GPU for all of 2011-2012 to help build out the network. I have since moved on, as have other practitioners. The only people that remain on Bitcoin are retail speculators, governments with seized assets, and financial institutions. It’s not a healthy makeup, and extraordinarily toxic to the greater crypto community as a whole in my honest opinion.
  - ionwake 6y ago
    Which is a better designed crypto? It cant be too toxic if its a well performing investment asset right?
    - nullc 6y ago
      Oh jesus don't bait the shills into pumping their premined scam garbage in every thread that discusses Bitcoin. They do it enough without encouragement.
  - nullc 6y ago
    > and then mined on my GPU for all of 2011-2012 to help build out the network I suppose you also expect us to believe that you're in line for the British crown?
    - 6y ago

ionwake 6y ago

Im confused how anyone can think its a good inventment to buy an asset at 19k when it was at 4k a few months earlier.

ur-whale 6y ago
The price of Bitcoin is not as relevant as you think.
- microtherion 6y ago
  It seems to me that the price is the ONLY case that can be made for Bitcoin. "It has never traded down over a 5 year span" etc.

jcfrei 6y ago

It's not surprising at all that the entities which benefit the most from the money printing by central banks (issuers of corporate debt) want to convert their funds into one of the most deflationary asset (bitcoin). It is simply a hedge against monetary debasement, where the upside is much larger than the downside - as outlined nicely in the article.

Traster 6y ago
The article does a terrible job of considering the downsides. It includes comical phrases such as "Bitcoin has never traded down over a 5 year period". Bitcoin is 12 years old. It also talks about what happens if BTC goes down, and says MSTR could service the debt- which misses the point that if BTC goes down MSTR's value goes down. Sure, they won't go bankrupt, they'll still have a bad invesstment. Let me spell out a clearer downside: If Bitcoin goes to 0, you're left holding a boring business analytics company that punted off its entire cash balance on a risky bet. Or another downside: The SEC launches a second investigation into the CEO. After the last settlement the CEO of this company saw his net worth drop $6Bn which is double the market cap of MSTR.
- solotronics 6y ago
  Even if the stock prices goes to zero they have a billion dollars worth of bitcoin...
TooSmugToFail 6y ago
Exactly. And if you listen to Michael Saylor's interview with Binance [1], the store-of-value argument is at the core of his rationalle/narrative (it's a rather long video, but he gives a complete explanation of his motivation in the first 5 minutes, I think). I believe MicroStrategy's first investment into BTC was really a case of their corporate treasury making a rather bold (desperate?) move to preserve their asset value in the wake of an absolutely gigantic recent expansion of M2 money supply, and a sign of more of the same rolling beyond the horizon. Basically, they decided it was worth taking all the the risks of BTC (regulatory, operational, technical, market risk) to get away from the certainty of their fiat assets getting essentially debased by the looming inflation. But this business of levering up to go even longer is a pure balls-to-the-wall bet tho. It's completely nuts, and I love it. The guy obviously believes in his investment thesis, and you have to give him the credit for being the risk taker in the best tradition of The American Dream. OK, he didn't exactly bet the company on it, but it's still a ballsy business move, if there ever was one. [1] https://youtu.be/Jb48Q5e4WVg https://youtu.be/Jb48Q5e4WVg

heisenbit 6y ago

Money for nothing. It is a sign of our times that one can borrow such amounts of debt and be reasonable sure to pay it back by purely investing them in so called "assets". It used to be the case that assets were things that generated tangible income but bitcoin is not such a thing but purely a handle to be bought and sold down the line to someone who is able to pay a higher price as in the meanwhile a lot of additional money has been injected in the system.

nobrains 6y ago

Yes, past performance is not a predictor of the future, but how does one reconcile with this: https://i.imgur.com/96bngmB.png https://i.imgur.com/96bngmB.png (If seeing on mobile, use "desktop mode" to see the HQ image) - It goes up. - Falls. - Recovers to last high. - Then moves up again. - Repeat. Yes, period of recovery varies. Yes, every cycle percentage highs are getting less and less. But one thing is constant: once the price recovers to the last high, a bull market starts.

simias 6y ago
It works every single time until it stops working. Playing the numerology game with charts and trends is astrology for people investing in the stock market. The only question you should be asking yourself is: is Bitcoin actually valuable or is it a pure speculative bubble that's bound to burst sooner or later.
- ativzzz 6y ago
  > The only question you should be asking yourself is: is Bitcoin actually valuable or is it a pure speculative bubble that's bound to burst sooner or later. You could say the same thing about the US stock market
  - simias 6y ago
    I can say the same think about any stock ever. That's the point.
  - dodobirdlord 6y ago
    Sure, you can ask that question about literally anything. In the case of the US stock market though the answer is obviously yes, so what's the point?
- qot 6y ago
  You can say that about gold. The metallurgical / industrial value is no where near $1,800/oz. It's a speculative bubble that's bound to burst sooner or later. Maybe after another 5000 years.

loufe 6y ago

I don't doubt the author's point that the offering the company a loan for this foray is a good deal. Does anyone with a good amount of knowledge in the field think there is an actual basis for assuming Bitcoin is worthy of someone calling $1M per coin? Last I heard bitcoin was not technically able to be used as a payment processor subsitutes. My impression then is the whole affair is a bit of a playing-chicken racket.

sgeisler 6y ago
I'm not commenting on the 1M$ price prediction, but rather the technical challenges and possibilities. > Last I heard bitcoin was not technically able to be used as a payment processor subsitutes. My impression then is the whole affair is a bit of a playing-chicken racket. The fundamental features of Bitcoin are its limited supply [1], programmability and not being controlled by any single entity, not allowing policy enforcement on-chain. While it is true that on-chain (layer 1) Bitcoin transactions provide very limited throughput, there are other approaches to provide scaling that are built on top of Bitcoin (layer 2) using said programmability. To date there are two major approaches for trust-minimized L2 systems: 1. Payment channel networks (Lightning [2]) that basically use the blockchain only when joining or leaving the network or on conflicts/fraud attempts. In theory millions of transactions can happen on Lightning without ever needing an on-chain transaction. The main limitation is the onboarding capacity, which (with Bitcoin's current limits) is not sufficient to make Bitcoin a global retail currency. There are also some logistical issues with running a Lightning node that make still trustless, but semi-centralized apps preferable (e.g. Phoenix [3]). Don't get me wrong, Lightning is awesome and the best solution for retail Bitcoin adoption we have right now, but I think if Bitcoin is going be used in retail by everyone globally then that will require other solutions. Luckily that won't happen over night. 2. Federations are another way to scale Bitcoin. Fundamentally they are just a group of entities that jointly hold Bitcoin in a wallet such that transactions can only be made if a quorum is reached (using m-of-n "multisig" wallets) and enforce certain rules on those coins. One example of such a Federation is Liquid [4], which is a federated sidechain by Blockstream (full disclosure, I contract for them [6]). One can transfer in and out bitcoins to and from this sidechain and transfer the bitcoin-backed sidechain tokens. Such federations allow for easier upgrades (only federation members have to agree), so Liquid is used to test ideas that can't be implemented in Bitcoin (yet?) such as Confidential Transactions which hides transaction amounts through homomorphic commitments. But other federations that don't run their own blockchain are also imaginable (e.g. based on chaumian e-cash). The fundamental idea stays the same: they create a more efficient, cheaper way to transfer tokens verifyably and fully backed by real bitcoins that are redeemable at any time. The fact that multiple entities enforce the rules and hold the collateral jointly makes them relatively resistent to few of these going rogue. While this sounds a lot like early banking verifyable backing and permissionless, potentially anonymous founding of such federations makes it more robust against regulatory capture imo. So I think there is a good chance that Bitcoin will at least capture some of the market share of gold, and potentially some of the failing nation state currencies (they always fail eventually because it's too tempting to print your way out of recessions until it doesn't work anymore [5]). You can do the math on where that would put the price. [1] Some economists disagree that it's a feature for a currency on the basis that it's bad for the economy as a whole. I'd argue that at least on an individual basis a money with little/none and predictable inflation is preferable. [2] https://en.wikipedia.org/wiki/Lightning_Network https://en.wikipedia.org/wiki/Lightning_Network [3] https://phoenix.acinq.co/ https://phoenix.acinq.co/ [4] https://liquid.net/ https://liquid.net/ [5] https://www.principles.com/the-changing-world-order/#chapter2 https://www.principles.com/the-changing-world-order/#chapter... [6] If you are wondering if that's why I'm slightly critical of Lightning, it's not, it's just my personal opinion/observation (as is this whole post), Blockstream also develops a Lightning node implementation https://blockstream.com/lightning/ https://blockstream.com/lightning/

RichardHeart 6y ago

Bitcoin was invented to remove middlemen. Not your keys, not your coins. Things like this are the exact opposite of why Bitcoin was invented in the first place.

Traster 6y ago

I mean... ok. There are two things going on here. The first is that MSTR can get really cheap loans because they're essentially a profitable business that can service those loans. Although I would caution that the "But it's got a track record dating back to 1989" stuff - the only reason MSTR is in this position is because it hasn't really grown in pace with the market. They're an income stock not a growth stock, and their business analytics experience tells you nothing about their investment experience. The second part though is - does investing in bitcoin make any sense? Well in my opinion no. MSTR has no strategic advantage in buying BTC. It's also extremely worrying that they've crossed the rubicon, they are now leveraging up to buy more. You don't just have to factor in whether this current debt looks like it's servicable. You have to question whether this company is going to continue levering up to buy bitcoin. Also, the down side risks the article mentions are like "Let's assume no downsides". Ok assuming that BTC goes down they can service the debt with other income. Fine. As long as they don't issue more debt which they likely will. Also, even if they can service the debt that doesn't change the fact they've made a bad investment of several hundred million dollars. It also doesn't include downsides such as "Someone hacks you and all your BTC are gone" or "The US issues a new regulation changing the tax regime massively increasing your tax exposure". The reason people are bearish on this move is because it's a guy with no busines in investing just punting everything he can onto BTC, which is fine for him to do, but it's not a particularly smart thing for him to do. I mean one obvious concern is that this company is probably trading at a significant discount vs it's assets now, so what's going to stop someone coming along and saying "Hey, $X a share, I'll liquidate the BTC and hand it back to investors" when BTC has it's next dip?

UShouldBWorking 6y ago
Here comes the unfounded HN Bitcoin hatred. Every post mentioning Bitcoin gets treated the same.
anton000 6y ago
i wish there's was a remind me bot for hn
mrhyyyyde 6y ago
"Also, even if they can service the debt that doesn't change the fact they've made a bad investment of several hundred million dollars." -- Um, you're going to have to explain your opinion here, because it sounds like you believe their returns are not indicative of a good investment. I'm of the opinion that making 290M+ from 475M is a good investment, I don't live near Wall Street so maybe that's not a lot of money these days?

m3kw9 6y ago

A million a coin would be over 20 Trillion of market by that time. How would that make sense? It would if many large governments abandoned their own currency system and used bitcoins. Compare that to golds 1.9trillion practical market size. To match that Bitcoin would be 100k$. Which seem to be a stretch in 5 years by many imaginations, one that requires US to pretty much hyper inflate. A more realistic upper price could be 50k$ in 5 years based on regulatory risk, volatility and realistic cap, half of all of golds theoretical cap. The down side is a side way risk where Bitcoin will stay around this 20k-30k mark, may as well invest that in equities or ETFs.

ur-whale 6y ago
>It would if many large governments abandoned their own currency According to Google, there were ~ 2825 billionaires in the world in 2019. That's 2.825 T right there, and we're talking: - Billionaires the world actually knows about - Not counting folks who have 10's or 100's of billions - Private individuals as opposed to large retirement funds There's also the oft-and-widely forgotten fact that market cap is wildly different from actual invested funds: jut because two dudes somewhere decide to swap one AMZN share for 30K USD doesn't mean Bezos is suddenly 10x richer. All in all, while I believe 1M BTCUSD to be unrealistic, if a sizable fraction of that stashed money moves to BTC because they're looking for, e.g, an inflation hedge, there's easily another 10x to be had. My opinion, not investment advice, goes without saying.
- notahacker 6y ago
  So if literally every known billionaire in the world decided to convert $1 billion of their assets to BTC in the next five years, which in many cases would be most of their assets including control of the businesses that actually made them billionaires, then BTC would be a bit over a tenth of the way towards Raoul Pal's prediction. I'm not sure that makes it sound more realistic. Market cap doesn't equal actually invested funds, but two dudes swapping one AMZN share for 30k USD doesn't actually make AMZNs market cap when other trades are happening at normal prices either. BTC's current market price is obviously more subject to manipulation than AMZN, but its price isn't dictated by two dudes swapping one BTC at an absurd multiple of what everyone else is willing to sell for either.

contravariant 6y ago

> In its 12 year history, Bitcoin has never traded down over a five year period I guess investors will be pleased to know they're betting on something that happened at least twice...

mszcz 6y ago
I think he meant at least seven times ;)
- drdeca 6y ago
  If we pretend (which is of course not accurate, which is why I say pretend) that the price follows a Wiener process, so that on each time interval the net change across that interval is a normally distributed random variable with mean 0, where the difference across different disjoint intervals are independent, well, under that inapplicable model, said "7 different times" wouldn't be independent (while the difference across the first 5 years, and across the second 5 years, would be independent, and so that would count as 2 independent observances of that. I wonder, if you have such a process W, what would the probability of "For all t in [0,7], W_{t+5} > W_t" be? It would of course be less than (1/4) because it would imply W_5 > W_0 , and also W_12 > W_5 , which would be independent events each with probability 1/2 , and so the probability has to be at most 1/4 . But I assume it probably has a much smaller probability than that. If instead of a Wiener process, we model it as a Wiener process with drift, as X_t = \mu t + \sigma W_t , how does the probability of "For all t in [0,7], X_{t+5} > X_t" vary with \mu ? (well, obviously, as \mu increases, the probability goes up, but I mean stuff like "how big does \mu have to be in order for it to not be unlikely?" and "how quickly does the probability increase as \mu increases?", etc. . )
  - mszcz 6y ago
    Isn't the point he tried to make that if you've chosen an entry point into Bitcoin anywhere in the last -12 - -5 years you'd still be ahead 5 years later? So that if your time horizon is at least 5 years and if history is any indicator (here is the real fallacy imho) investing in Bitcoin is a good idea? (Sure, that's way more than 7 entry points :)

microtherion 6y ago

The article makes a compelling argument that MicroStrategy can afford to service the debt, no matter what happens. Opinions differ over whether the investment was good, and I doubt anyone's mind was changed in this discussion. But there is a third element that should be discussed, I think: Does the investment fit with the company's business strategy? I haven't seen the article make an argument that it does. Apple has cash. Tuna fishing is profitable. But does this mean Apple should invest in a tuna fishing fleet?

cyphertruck 6y ago
Bitcoin is a scarce asset with little to no execution risk. A tuna fleet is a business subject to the whims of the market with execution risk. Since equities have been the primary investment medium fir years, people think of Bitcoin like a stock — it even has a ticker. But it is a genuinely new thing. Like gold it is a scarce asset. Unlike gold its scarcity is deterministic, and it can be transacted over the internet.
- zucker42 6y ago
  If a company is investing in non-synergistic assets with excess cash, why not just instead convert that cash to shareholder profits?
  - gxon 6y ago
    Tax advantage? If you pay out a dividend, you force your shareholders to pay income tax rates. But, if you can use company profits in a way that pumps the stock valuation, your shareholders can effectively take the same profits with long term cap gains tax. My understanding is that a stock buyback is basically this strategy, and MicroStrategy's CEO has said that he also considered that. MSTR is up ~100% since they first bought bitcoin. This is at least, my amateur understanding that could be wrong.
- microtherion 6y ago
  > Bitcoin is a scarce asset Bitcoins themselves are available in limited quantity, but new cryptocurrencies are created all the time. > with little to no execution risk. You've got to be kidding me! Cryptocurrencies are notoriously difficult to even store safely.

sheeshkebab 6y ago

Michael Saylor (MSTR’s CEO) is nuts. Also, sorry for employees working there.

simonebrunozzi 6y ago
Yours could have been an interesting comment, if you explained why you think the CEO is nuts, instead of just dropping it there without explanation.

nmlnn 6y ago

HN is hilarious. Even after 10 years, majority of people here are unable to grasp that bitcoin IS money. MS and MSTR are performing a speculative attack on a soft fiat currency (supply increased >20% in 2020) using the hardest money ever. This strategy will only become more popular over time as it continues to pay off. Bitcoiners have understood this part of the game theory for a while (see: https://nakamotoinstitute.org/mempool/speculative-attack/ https://nakamotoinstitute.org/mempool/speculative-attack/). Have fun staying poor.

tuberelay 6y ago
Based comment, 10/10. Feel bad for these rubes. We're currently in the "giant sucking sound and harbor incomprehensibly drains" phase of the hard money tsunami, and people can't see it.

neves 6y ago

I'd like to see they focusing in improving their product. My company use MS visualization tools and everybody complains of bugs and missing features. Seeing that all the company hype is about Bitcoin, I really think the product will never improve to compete with Tableau or Power BI.

worik 6y ago

Crooks. Or fools. It is Other People's Money. Definitely crooks

cyphertruck 6y ago

It’s really fascinating to see these comments about bitcoin being “near all time high” from people who seem to imply that means it us risky. In 2017, bitcoin hit the high $19,000 price on huge volume, intraday during a bubble. Now it has taken months to go from $10k to $19k, with many pull backs and many dips being bought. If you average daily closing prices over a sliding 30 day window, this is currently bitcoins all time high by a fair bit. Yet no mainstream media attention, low trading volume, etc etc. The current situation is analogous to December 2016 when bitcoin was flirting with it’s 2013 All time high of $1,000.

Zarath 6y ago
The US stock market is nearly always at or near an all time high
- MR4D 6y ago
  That’s not correct. See the “Drawdowns” tab here [0]. The market is at a high only when it’s equal to the line at the top of the graph. [0] - https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2020&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&showYield=false&reinvestDividends=true&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=Vfinx&allocation1_1=100#drawdowns https://www.portfoliovisualizer.com/backtest-portfolio?s=y&t...
  - fredophile 6y ago
    How near does it need to be to be near an all time high? If we say within 5% then it looks like, outside of the catastrophic period between 2000 and 2012, the graph spent the vast majority of its time there.
  - WA 6y ago
    What does drawndown have to do with ATH? The SPX is ~50 points (1.3%) from its ATH right now (3663 as of Friday close) vs ATH of 3715 on 12/9. It's reasonable to say "close to ATH". Edit: Corrected points and added percentage.

aazaa 6y ago

> Why the negative [stock price] reaction? Because this time the Bitcoin would be bought with other people's money, instead of the cash reserves already on MicroStrategy's balance sheet. How about a correction after a face-ripping rally? Check out this chart: https://www.tradingview.com/symbols/NASDAQ-MSTR/ https://www.tradingview.com/symbols/NASDAQ-MSTR/ That's liftoff for the month of November. Sooner or later profits will be taken. Also, check out that price-to-earnings ratio (P/E) of over 2,500. That's stratospheric and not even Amazon can match it right now. Clearly it was caused at least in part by vast appetite among certain investors for some way, any way, to gain exposure to Bitcoin price moves. What's more interesting about Microstrategy is that it could be a preview of things to come. Large and/or public companies holding cash need a way to preserve its value from erosion due to the avalanche of government deficit spending to come and the inflation that will come with it. The range of options is rather limited, and Bitcoin has some unique properties that make it especially good at the job. That said, a public company buying Bitcoin on credit sounds absolutely bonkers. That's not capital preservation. It's a sign that management can't figure out how to grow the company. And it might be a boat that an increasing number of companies find themselves in.

solotronics 6y ago
Actually it's pretty funny and shows the Sisyphean task that central banks have of promoting productivity and growth when their only tool is printing. If you can loan billions of dollars for nearly no cost why not put it into something speculative? With a low enough interest rate it would even make sense to take out loans to buy gold, the fiat cost of your loan is impacted by inflation. Take out a $50k loan this year. Buy gold and bitcoin with it. If the assets appreciate pay off the loan and either collect your profit or let the "free" investment sit. Look at the historical price of bitcoin and there is literally no point you could have bought it and held for a few years and not made money. Take out another loan and repeat.

georgewfraser 6y ago

This is really bizarre. MicroStrategy is a solid BI tool, it's been solid for a long time, and the company basically operates as a cash machine. This is when you start issuing a dividend. If the founder-CEO is bored, he should promote one of the many people who have made their careers at MicroStrategy and retire. Instead, he's decided to use the existing business he founded decades ago as an outlet for his enthusiasm for Bitcoin. This is why God created activist investors, I think.

deleted 6y ago
[deleted]
otoburb 6y ago
>>Instead, he's decided to use the existing business he founded decades ago as an outlet for his enthusiasm for Bitcoin. This is why God created activist investors, I think. In MSTR's case an activitist shareholder will be ignored because as per MSTR's latest 10-Q: "As of October 19, 2020, Mr. Saylor, our Chairman of the Board of Directors & Chief Executive Officer, beneficially owned 2,011,668 shares of class B common stock, or 73.4% of the total voting power. Accordingly, Mr. Saylor can control MicroStrategy through his ability todetermine the outcome of elections of our directors, amend our certificate of incorporation and by-laws, and take other actions requiring the vote or consentof stockholders, including mergers, going-private transactions, and other extraordinary transactions and their terms."[1] [1] https://ir.microstrategy.com/static-files/dfe9fb22-b4d0-4d49-b4c5-795ebafc5abb https://ir.microstrategy.com/static-files/dfe9fb22-b4d0-4d49...

randmeerkat 6y ago

Bitcoin is up 170% over the past year. Tesla is up 737%. If I’m going to invest it will be in a real company with real assets and real vision, not a hyped up crypto scheme that takes as much power to maintain as Switzerland. https://www.bbc.com/news/technology-48853230 https://www.bbc.com/news/technology-48853230 What I’m saying is, if you’re going to make an insane, risky move with your money, dump it in Tesla, at least there’s a real product there _and_ it’s outperforming Bitcoin.

zz865 6y ago

Its about time MicroStrategy just floated off their business and concentrated on buying bitcoin.

quickthrower2 6y ago

By the same logic anyone with cashflow to service debt should get as much debt as possible, and buy Bitcoin (and nothing else??).

nathanyz 6y ago

Is there someone who has extensively used MicroStrategy that would be able to explain what/how they compete with Tableau or even the old Crystal Reports? Seeing this bitcoin buying set off some weird red flags. When I look into the company's G2 reviews[1], it just looks like a lot of buzzword bingo with limited specifics around what exactly the product is so highly rated for. Just curious since it looks like they have built a really great and profitable company. I was expecting much more concrete info on how they are outcompeting in this space. [1] https://www.g2.com/products/microstrategy/reviews#reviews https://www.g2.com/products/microstrategy/reviews#reviews

oillio 6y ago

Did investors really sell because of this news? It just so happened that bitcoin dropped about 5% on the same day. Microstrategy is quickly turning into a defacto bitcoin ETF. Maybe the bitcoin price drop had something to do with the stock price drop.

muzika 6y ago
Bitcoin chart was set up for a short, and many traders shorted it that day. Once they closed their positions (after pushing the price down as far as they could) the price have quickly rebound.
Traster 6y ago
Man it would be so juicy to do an arb trade of the stock against the price of Bitcoin. I’d bet there’s a great lead lag relationship.

Tepix 6y ago

One point that i haven't seen mentioned here today is the ecological damage that bitcoin causes. We're in the middle of a climate catastrophe. A lot of investors are defunding industries and assets that are harmful for the climate. In my opinion, bitcoin is one of these assets. If you want to invest in crypto, find better alternatives.

muzika 6y ago
New cryptocurrencies are using much less resources due to proof of stake model, Etherium 2.0 being one example. It’s possible that some day in the future bitcoin may he converted to proof of stake also.
- alwillis 6y ago
  It’s possible that some day in the future bitcoin may he converted to proof of stake also. That's not going to happen. The core reason Bitcoin is the hardest money that's ever existed is because of proof of work. Part of why Bitcoin has monetary value is due to the energy used to produce Bitcoin and to secure the blockchain. Eth 2.0 is unproven so far; it certainly wouldn't be trusted as a global reserve asset in its current form.
  - qes 6y ago
    I think 2017 showed that it will be damned difficult politically to make any change that requires a hard fork to Bitcoin anymore. Pure proof of stake is fantasy. That's not "Bitcoin" and it never will be. My personal hope would be that mixed proof of work and stake with on-chain governance, like Decred (their devs have built much of the Lightning Network tooling, performed the first cross-chain atomic swap, etc.) - could be adopted; but, realistically, I think that's also a fantasy.
alwillis 6y ago
This is one of the most consistent misconceptions about Bitcoin. The growth of Bitcoin mining in America is due to miners partnering with oil and natural gas producers to use the energy that would be otherwise wasted. Instead of excess natural gas being flared, it's being used to run Bitcoin miners [1]. Everyone should read Lyn Alden's "7 Misconceptions About Bitcoin" [2], where she addresses the energy use; here's an excerpt: Furthermore, a significant portion of the energy that Bitcoin uses could otherwise be wasted. Bitcoin miners seek out the absolute cheapest sources of electricity in the world, which usually means energy that was developed for one reason or another, but that doesn’t currently have sufficient demand, and would therefore be wasted. Examples of this include over-built hydroelectric dams in certain regions of China, or stranded oil and gas wells in North America. Bitcoin mining equipment is mobile, and thus can be put near wherever the cheapest source of energy is, to arbitrage it and give a purpose to that stranded energy production. Bitcoin mining converts the output from those cheap stranded sources of energy into something that currently has monetary value. [1] https://www.coindesk.com/energy-giant-equinor-to-cut-gas-flaring-with-bitcoin-mining-tie-up-report https://www.coindesk.com/energy-giant-equinor-to-cut-gas-fla... [2] https://www.lynalden.com/misconceptions-about-bitcoin/ https://www.lynalden.com/misconceptions-about-bitcoin/