Topic: MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’ - page 27. (Read 14637 times)

Even though I do largely agree with your overall post, your last sentence does seems to capture a kind of divergence in how you seem to be thinking about this matter and does not seem to capture the level of orange pilledness that Saylor has become within the past year and a half.

Accordingly, Saylor is not merely interested in "new types of investments," and your earlier uses of the term "crypto" in your post seems to also demonstrate that you might not understand Saylor's focus happens to be on bitcoin.. not such amorphous thing such as crypto...  no need to even use such dumbass vague term, especially if you are meaning to say bitcoin, but you just cannot bring yourself around to using the term bitcoin, because you do not quite understand what Saylor is doing and how he is considering the bitcoin matter...

I will concede that my point might come off as quibbling about a minor thing, but there is something specific and special about bitcoin that has lured Saylor into it.. and to cause his company to supplement its focus onto bitcoin, and maybe at some point, the company moves away from other aspects of its business, even though I believe that their software portion does remain quite profitable, but maybe even that part of their business ends up getting more intertwined with bitcoin, since Saylor surely does seem to appreciate the value in attempting to be creative in various ways to incorporate bitcoin into what he and his company is doing.....

Consider how much effort that Saylor had to employ to short-termedly (within about 6 months of his own getting into bitcoin) setting up some pretty sophisticated educating companies and rich peeps about bitcoin.. and Saylor did not need to engage in such an open-book approach to bitcoin in terms of sharing his journey and his (and his company's) journey into bitcoin, but he did because that shows some of the level of his obsession.. which is about bitcoin and not about "new types of investments" - even if bitcoin happens to fit within the category of a "new type of investment."

After looking at the chart of Bitcoin purchases by Microstrategy, it makes sense that this will have an impact on increasing the MSTR share price when the crypto market is bullish.  When BTC price conditions strengthen, their shares also strengthen.  Their investor psychology will always associate the company with BTC price conditions.  Their consistency in buying BTC as an investment gives a change in the structure of assets on the company's balance sheet.  Fundamentally, investors will see the value of the assets they have, so for stock investors who want to try new things in their portfolio but don't want to be directly in the crypto market, MSTR shares are very suitable to be owned and this is quite different from other companies that are also listed on the NASDAQ  like Greyscale.  MSTR's operational focus is not BTC, they are just companies interested in trying new types of investments.

Huh?

Have you even read any posts in this thread that include several times referring to the stated intentions of Saylor/MSTR?

In the past year, several times, Saylor has repeated on behalf of MSTR that they are buying for the long term and planning to hold for 100 years.. so interpret those kinds of bold statements as you will.. or read what some of us have been saying in this here thread in the past year or more in regard to those kinds of statements of intentions topics.

I'm an advocate of buying a small amount of bitcoin regularly but being able to HODL what you have bought for multiple months or even multiple years depending on your end game with the budget you set yourself.

So, there are two questions:  Is the MicroStrategy strategy of seemingly regular purchases an up-scaled version of what I wrote above?  And, if so, what is MicroStrategy's end-game for the coins?  (i.e. dump at a given price?  Dump on a given date?  Or just HODL indefinitely?)

I tend to disagree here.

I think they are buying every month, roughly, with their excess cash reserves.
They are doing the bigger purchases via Debit Issuing or their ATM facility.
It looks like they are following a pattern, basically because the price has been trending up since they bought their first stash.

Just remember what Michael Saylor once tweeted:

https://twitter.com/michael_saylor/status/1440302444752244736?s=21

10-15M might seems like alot of money but its pretty niche compared to their bigger purchases and those small purchases was kinda like sending messages to the mass that Microstrategy will keep on buying and accumulating bitcoin. Pretty smart move from Saylor, didnt he tweet them up everytime he made that small purchases?

Well bitcoin hits 51k right now, so MSTR lets see if Saylor is going to tweet another purchase huh

Well, Those are exchanges and their business is to exchange cryptocurrencies, not custody. I hope the elected place for custody is BitGo, the leader in the field of custody. Please note that BitGo is insured on their funds. and I don't see any downside in that, it appreciates adoption and encourages other institutions to join. But it's clear that it includes a lot of big names joining together with ordinary people who are also nostalgic. suspect. I can't wait to see how bitcoin and the entire crypto industry will work? out after that at least 2-3 years.

If I'm not mistaken (and I'm by no means an accountant), most corporations don't have to use mark-to-market accounting.  Financial companies do, or often do, but I'm not sure if MSTR is required to.

The reason I'm chiming in about this is because I remember reading a history of Enron, and Jeff Skilling was lobbying the company to use mark-to-market because it would allow Enron to value its assets however it wanted to (and they often overvalued the ones that were hard to value in order to inflate their balance sheet).

In any case, if a company is using that method of accounting, there's nothing really bizarre about having to report a profit/loss on a quarterly basis.  That's the whole point of m-2-m.

I don't think it's tax-inefficient.  Because it's treated as property, as long as they're buying and holding (not moving, not selling) there is no tax implication until they create a taxable event (either selling or potentially moving).  The bizarre thing is that GAAP accounting rules require them to book a profit or loss on the unrealized gains (it's called mark-to-market) on a quarterly basis, but as these gains are unrealized there is no tax implication associated with them. 

I think that this is not necessarily a bad thing.

If they wanted to invest in crypto they could do it themselves after cashing out their MicroStrategy shares.

Overall a company is a pretty bad structure to be holding long term bitcoin assets with. Lots of regulation risk & probably not the most tax efficient.

Michael Saylor is not concerned about the latest bans on bitcoin and cryptocurrencies that are taking place in China.

About this and other things concerning the restrictions on the part of the SEC, the Executive Director of MicroStrategy tells Bill Barhidt, CEO of the crypto asset management company Abra, in a new interview that he was one of the first shareholders of Google, Facebook and Twitter. He says that at that time he was not particularly concerned about Chinese restrictions and now he is doing the same.

“If you had given up Google, Facebook and Twitter shares in 2010 because you heard that China was going to ban them, you would have lost obscene amounts of money. Trillions of dollars have been earned on technologies banned by China. I think what China is doing is pretty much irrelevant here, and of course it's getting ridiculous because, like every quarter for the last five, six, seven years, there has been a ban in China”" says Michael Saylor.  https://dailyhodl.com/2021/09/28/microstrategys-michael-saylor-says-china-crypto-ban-largely-irrelevant-for-bitcoin-heres-why/

Michael Saylor and Raoul Pal discuss the changes that have occurred in the year since their first dialogue in the crypto industry, and also talk about digital property, digital energy, the introduction of bitcoin into the corporate segment, and the impact of regulation on the crypto world. https://www.realvision.com/shows/raoul-pal-adventures-in-crypto/videos/taking-the-sec-very-seriously

Thanks for posting this.  Although it doesn't seem likely to me, I agree it's possible they're literally custodying the bitcoin in a wallet that's not part of a professional service by themselves.  I just don't know why anyone would do this when it's billions of dollars at stake and it increases the risks.  Since he's couching the above quote though as a contrast to lending, I think it's more likely that he means that they keep the bitcoin (through a professional custodian like Coinbase) and do not lend it out, with the "custodying" just meaning the opposite of "lending".  In the article, he talks about how much that increases the risk for an extra 5% return.  But again, they could mean custodying it themselves in their own wallet, but I would be surprised if this is the case.

Exclusive CEO interview Michael Saylor to bitcoinmagazine about the advantages of storing cash spent on buying bitcoin over traditional loans about the increasing acceptance of bitcoin as a means of payment and an optimistic perception of the future of bitcoin. "We realized that Bitcoin is a high-quality real estate with the lowest maintenance costs," says Michael Saylor.

Previously, the company invested 90% in sovereign debt and only 10% in cash, now these 90% are investments in bitcoin. But the mention in the final part of the article of Putin's retrograde, even in the context of creating a hype around bitcoin, was unnecessary, well, my perception is simple, but the giant stone coin of the Yap people as a currency in Russia - I liked this trolling ..

MICROSTRATEGY CEO MICHAEL SAYLOR INTERVIEW: THE PREDATOR PREY DYNAMICS OF BITCOIN

Somehow I don't think so either, but if he bought $30 worth of bitcoin just for the hell of it, that says to me that the man is hardcore.  I wouldn't be surprised if he not only mined bitcoin on the side but claimed from faucets in his spare time.  Lol.

Boy, their stock got hammered today, down over 4%.  But it was a rough day all around on the stock market, so I'm not shocked.  Related to that, I was listening to AM radio in my Lambo (double LOL) and the mainstream media news mentioned that bitcoin dropped significantly and that bitcoin-related stocks were also down.  That surprised me that there was a mention of bitcoin's performance on the radio--its status certainly has gone up since 2009.  The broadcaster also mentioned something to the effect that bitcoin hadn't achieved "safe haven status" yet, and that made me roll my eyes.  I don't think it'll ever be a safe-haven asset, nor do I think Michael Saylor sees it as such either.

He personally owns roughly 17,000 bitcoins and still had to buy 30$ worth of bitcoin to test this new technology. I think this is commitment!

https://bitcoinmagazine.com/culture/microstrategy-ceo-michael-saylor-interview-the-predator-prey-dynamics-of-bitcoin



Whether or not Macrostrategy actually uses multi-sig or they trust a third party like Coinbase to custody it for them, it seems Michael Saylor understands how it works. It makes more sense to me that they're using multi-sig, but until they actually state that, we can only guess.

He is a rocket scientist after all.

Referring to other institutions he also says this:


And he did buy some bitcoin recently, personally:


So he's saying, cold storage and self custody might not work for others (implying that they are probably doing it) without clarifying that they are doing it.

He also knows about mining with an S19 miner .. or understands the math behind it. I don't think he's mining.

Crypto custody is quite in the rise. A local example in Spain is Prosegur, a company that traditionally had the armoured vans that carry money from banks and the like. That is obviously a business in decline, so they decided to open a branch to deal with crypto custody. If Microstrategy is doing its own custody, that could actually be a future line of business for an otherwise quite irrelevant company.

Not much is disclosed about MicroStrategy strategy holding their stash.

All I could find is a declaration is actually one of their subsidiaries, called Microstrategy holding their bitcoins, as they previously disclosed.


Digging on their website I also found a document with a checklist on the checklist used to determine which kind of custody of the coins:



Not much informations however on how this checklist should direct the decisions about this:


Lastly, a declaration of Micheal Saylor spoke vaguely about “self-custody” without going much into details.
 MICHAEL SAYLOR: WE CUSTODY OUR BITCOIN AND DO NOT LEND IT OUT


The fact that not many details about the custody scheme itself make me think. Security by obscurity is never a good approach, and this lack of details about the scheme makes me think it is way more weak than we think (thinking about the checklist mentioned in the first point).

Extremely unlikely there is multisig in any fashion going on.  I also agree with Fillippone that I would expect that the coins are professionally custodied by Coinbase since I believe that is the company that is buying the coins on MSTR's behalf.  It would make poor business sense and be extremely risky to have Coinbase execute the trades and then move billions of dollars worth of coins to another wallet controlled by Saylor personally, or some combination of Saylor and the Board in a multisig set up.  I would be extremely shocked if those coins ever left the custody of whatever platform placed the trades to buy them, because there's no logistical or business reason for them to and only increased risk associated with doing so.