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MicroStrategy’s co-founder and executive chairman, Michael Saylor, pushed back against critics who label the company a “Ponzi scheme” for its strategy of issuing equity and debt to buy more Bitcoin as its price rises.
“Every time Manhattan real estate goes up in value, they issue more debt to develop more real estate,” Saylor said in an interview with CNBC on Dec. 16. “That’s why your buildings are so tall in New York City. It’s been going on for 350 years. I would call it an economy.”
This comes as Bitcoin hit an all-time high of $107,000 on Dec. 16, driven by optimism surrounding President-elect Donald Trump’s incoming administration, which is expected to adopt a crypto-friendly regulatory stance and advance plans for a strategic national Bitcoin reserve.
Saylor explained that MicroStrategy's Bitcoin acquisitions are designed to deliver massive returns for its shareholders. He explained that the company has issued financial instruments, such as convertible bonds and equities, at prices above the value of its underlying assets. This strategy, executed without diluting shareholder ownership or incurring additional costs, has generated a 72.4% yield on Bitcoin investments year-to-date.
To put this into perspective, Saylor noted that this approach effectively added approximately 136,965 Bitcoin to MicroStrategy's balance sheet, valued at $14.38 billion based on a Bitcoin price of $105,000. In simpler terms, MicroStrategy leverages its Bitcoin holdings to raise capital while benefiting from Bitcoin's price appreciation. This method allows the company to grow its Bitcoin reserves and amplify shareholder value.
On plans to keep buying Bitcoin, Saylor noted that he will keep “buying the top forever.”
“Every day is a good day to buy Bitcoin. We look at it as cyber Manhattan. I would have bought Manhattan 100 years ago, 200 years ago. Every year for the past 300 years, you pay a little bit more than the person that bought before you. But it's always a good investment to invest in the economic capital of the free world,” Saylor added.
Bitcoin as a U.S. Strategic Reserve
Trump reiterated on Dec. 12 that the United States “wants to be ahead” of other nations like China in embracing Bitcoin.
Saylor believes Trump is serious about creating a strategic Bitcoin national reserve.
“I think he is [serious]. If you think about the Louisiana Purchase, California, and Alaska, we paid $40 million to buy 75% of the United States. Nobody remembers the $40 million, but if you know where the money is going, you should buy the property. In this case, the Lummis plan calls for a million Bitcoin acquisition—that's worth $16 trillion to the country,” Saylor explained.