Michael Saylor says investing in MicroStrategy is the closest you’ll get
MIAMI — MicroStrategy may technically be in the business of enterprise software and cloud-based services, but CEO Michael Saylor says the publicly traded company is also the first and only bitcoin spot exchange-traded fund in the states. -United.
“We’re kind of like your non-existent spot ETF,” Saylor told CNBC on the sidelines of the Bitcoin 2022 conference in Miami.
So far, the Securities and Exchange Commission has only approved ETFs that track contracts that speculate on the future price of bitcoin, instead of the cryptocurrency itself. The commission has refused to give the green light to one of the formal demands for a pure bitcoin-based ETF – a financial instrument that would give investors the option to invest in bitcoin without having to go through the stages of l signing up for an exchange, opening a crypto wallet, or dealing with any other logistics involved in buying and holding bitcoin.
“If there was a cash ETF, you would pay a 1% fee and there would be no leverage. With MicroStrategy, we have a software company that generates cash flow, so we convert our bitcoin cash flows,” continued Saylor, who claims that the de facto MicroStrategy Bitcoin Spot ETF generates a 4-5% tax-deferred return.
MicroStrategy, which was started by Saylor in 1989, has added bitcoin to its corporate track record over the past two years. The company has now spent nearly $4 billion to acquire bitcoin at an average price of $30,700.
Saylor has no plans to stop buying bitcoin, which will only increase MicroStrategy’s exposure to the digital asset.
“Why would we stop? ” he said.
“As we generate cash flow, we believe the responsible thing for our shareholders to do is convert a devaluing currency into an appreciating asset,” said Saylor, who also noted that MicroStrategy is not diversify because he believes that the company owes its shareholders a coherent strategy.
“If you want 2% exposure to bitcoin, you would put 2% of your portfolio in MicroStrategy, and the other 98% of your portfolio you can invest in whatever you want. They don’t want the CEO of a listed company as being unpredictable and random.”
Normalize bitcoin-backed finance
When MicroStrategy first added bitcoin to its balance sheet in August 2020, it was a pretty unpopular thing to do.
It was late in the crypto winter when the coin was trading in the low $11,000 range, and many institutional investors and major Wall Street banks remained bearish on digital assets.
But Saylor’s decision quickly proved prescient.
As the bitcoin recovery began in earnest in October 2020, old-school billionaire hedge fund managers like Stanley Druckenmiller reversed course and started buying bitcoin. Big companies like Tesla, Block (formerly Square), and insurer MassMutual have also followed suit, pumping hundreds of millions of dollars into bitcoin.
This kind of widespread adoption is extremely important because cryptocurrencies like bitcoin are not backed by an asset, nor do they have the full trust and support of the government. They are valuable, in part, because people believe they are valuable. So it goes a long way when bitcoin gets buy-in from some of the biggest names on Wall Street.
Saylor’s evangelism of bitcoin has helped make him an A-lister in the community. Throughout the Bitcoin 2022 conference, Saylor would walk through the Miami Beach Convention Center followed by an entourage of fans, arguing with him for a selfie.
Blue chip CEOs also turn to the CEO of MicroStrategy for a practical guide to enterprise adoption.
MicroStrategy used the company’s debt to buy bitcoin, and in March Saylor decided to take another step towards normalizing bitcoin-backed financing when he borrowed $205 million using his bitcoin as collateral – to then buy more cryptocurrency.
“We have $5 billion in collateral. We’ve borrowed $200 million. So I’m not telling people to go out and get a highly leveraged loan. What I’m doing, I think, is do my best to pave the way and standardize the bitcoin-backed funding industry,” said Saylor, who added that publicly traded crypto miner Marathon Digital has also taken out a line of credit with Silvergate Bank. .
“As people realize they can borrow against something, they realize they’ll never have to sell it, and then they start extending their time horizon from – ‘It’s a 36-month speculation’ to – “It’s a 36-year stake,'” Saylor told CNBC.