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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 f

by 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

by jcfrei 6y ago

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