Less than 48 hours ago the crypto world heard the news that they have been waiting for since 2009. The first public traded company, MicroStrategy Incorporated (Nasdaq: MSTR), has taken the leap of faith and converted their entire cash balance sheet to bitcoin as part of a two-prong capital allocation strategy, and who can blame them?
Put simply, this is how they plan to approach that strategy:
- MicroStrategy will offer up $250 million of their class A stock via an auction offer.
- MicroStrategy has swapped $250 million of their balance sheet capital in return for 21 454 bitcoin.
When approached shortly after the news aired, Michael Saylor, CEO, had the following things to say:
““Our investment in Bitcoin is part of our new capital allocation strategy, which seeks to maximize long-term value for our shareholders. This investment reflects our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash. Since its inception over a decade ago, Bitcoin has emerged as a significant addition to the global financial system, with characteristics that are useful to both individuals and institutions. MicroStrategy has recognized Bitcoin as a legitimate investment asset that can be superior to cash and accordingly has made Bitcoin the principal holding in its treasury reserve strategy.
MicroStrategy spent months deliberating to determine our capital allocation strategy. Our decision to invest in Bitcoin at this time was driven in part by a confluence of macro factors affecting the economic and business landscape that we believe is creating long-term risks for our corporate treasury program ― risks that should be addressed proactively. Those macro factors include, among other things, the economic and public health crisis precipitated by COVID-19, unprecedented government financial stimulus measures including quantitative easing adopted around the world, and global political and economic uncertainty. We believe that, together, these and other factors may well have a significant depreciating effect on the long-term real value of fiat currencies and many other conventional asset types, including many of the assets traditionally held as part of corporate treasury operations.”
A CEO hitting every nail on the head, understanding and trusting each component in the value chain – and yet still goes on to say the following:
“We find the global acceptance, brand recognition, ecosystem vitality, network dominance, architectural resilience, technical utility, and community ethos of Bitcoin to be persuasive evidence of its superiority as an asset class for those seeking a long-term store of value. Bitcoin is digital gold – harder, stronger, faster, and smarter than any money that has preceded it. We expect its value to accrete with advances in technology, expanding adoption, and the network effect that has fueled the rise of so many category killers in the modern era.”
My bet is that more will soon follow, with the Feds money printer spinning, an exhausted dollar and a desperate search for safety and value during these turbulent times – it just makes sense.