Topic: MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’ - page 33. (Read 18602 times)

The financial director of MicroStrategy, Fong Le, also supports the position of CEO Michael Saylor (well, it would be strange if he had a different opinion) and says that MicroStrategy plans to continue to only buy bitcoin, despite its price drop and claims from regulators, but not to sell it.

A very optimistic attitude certainly causes respect and hope for the future, by the way, there is a mention in the article that even with the existing price, MicroStrategy has already earned more than $750 million on its investments in bitcoins.
https://www.wsj.com/articles/microstrategy-to-continue-buying-bitcoin-despite-market-tumble-cfo-says-11643106608

So, I had my try at the accounting exam.
First iRead what's written everywhere on Microstrategy's balance sheet:



So pi corocceded in the following way:

• I downloaded the Historical Coinbase (which I presume is the "relevant Market") time series, and focused only on the daily the low price.
• I Checked such low price, every quarter with the initial price.
• I valued each tranche with the following revaluation price:
  revaluation price(t)=min(initial price, minimum observed price in quarter(t), revaluation price (t-1))
  
  
• I computed the eventual impairment in case of diminishing revaluation price

What I got is available here:




What I got is pretty similar to Microstrategy's report:



The only (big) difference is in Q420, where I get an impairment of 5 millions only, while Microstrategy accounts for a total of 26.5 millions.

Here you can see, that with the current minimum, in Q122 they will take another 155 mins impairment, to be added to the 146 bios to be reported into Q421.

For sure, I am not attempting to make any of my comments personally directed against you, even though I concede that I have been ongoingly noticing and asserting that your mindset in regards to bitcoin seems to show that you are missing some ways of thinking about the whole bitcoin matter  - that's increasingly my assessment based on some of the ways that you post about how you think about bitcoin - and it is likely reflected in your personal investments into bitcoin to..

You have said that you do not own very much bitcoin, even though you have been registered on this forum nearly as long as me (sure a one-year difference in registration time, but that one year is not very much time, especially if we were to look at and appreciate at where the BTC prices were when you registered onto this forum as compared to where they were when I registered on the forum).

So yeah, our ways of thinking about matters and our ways of framing our discussion points are likely somehow connected with our own historical experiences, perceptions and approaches to our investments into bitcoin, too.  i am not blaming you for your perspective but attempting to incorporate what I seem to see about your perspective (and it is not ONLY what you say, but what you say that you have done, too) into my speculations regarding why you might sometimes be making some of your assertions about bitcoin in the ways that you are making them.

For example, take your last phraseology in the above sentence that I have bolded.  You seem to believe that currently/recently bitcoin is "getting slaughtered," and that is quite far removed from how I am thinking about what is going on in bitcoinlandia, currently.  

Sure we have been having some pretty severe BTC price corrections in recent times, and even we are witnessing quite a bit of panic from certain HODLers in the space - but I would hardly characterize what has been happening in recent times anything close to "getting slaughtered" -  even though you are sharing the same language that is used by other folks in a lot of places, whether we are talking about mainstream media (superficial assessements), and especially folks who don't seem to understand bitcoin very well or to be able to appreciate a larger vision where bitcoin is, from where bitcoin came and where it might be going - even looking at 4-year cycles or just zooming back at history - where were we at in September 2020.. for example..?

Of course, you could look at various other jumping off BTC price points too... and frequently, the ones who are getting quite screwed up in their framing of where bitcoin is are seemingly overly focused on short-term timeframes and also are putting way too much weight to the various short-term doom and gloom scenarios.. and even seeming to overly reading into the ramifications of such short-term doom and gloom scenarios if they were to happen..  For sure, you seem to fall into such a camp of doomer/gloomers and who easily seem inclined to see that bitcoin could fail (or die) at any moment, and continuously causes me to wonder how well you either understand or appreciate fundamental aspects of bitcoin.


Sure we are... yet there are also ways that individuals and governments can model their behaviors in similar ways as some of the stuff we discuss here - but for sure some of the tools that are available to corporations can differ too, depending upon how it is structured - which surely causes Microstrategies to have some unique characteristics in the corporate world.


Sure.. all of that stuff could happen.  Let's see if it does happen.


For sure, MSTR does seem to have an approach that is different from those other companies that you listed, and sometimes it might be relevant to make comparisons, but of course, there are aspects that are specific to MSTR that needs to be accounted to the extent that any of us understands, and surely, Saylor continues to be very public regarding what he is doing and whether any of his thoughts or strategies are changing in the short-term.. which is also nice to see..

A couple of days ago, I did watch one of Saylor's recent interviews.. linked below.... and he just continues to be a very interesting person to watch who is ongoingly grappling with ideas in this space and continues to have great ongoingly bullish bitcoin conversations.

I think you're misinterpreting what I've written in this thread, because I don't mean to tell anyone here "I told you so", nor am I panicking about anything.  I love bitcoin and everything it stands for, and I hate to see it get slaughtered like it has in the past few weeks. 

Long game or not, we're talking about a corporation in this thread, and the brutal fact is that while Michael Saylor may not plan to ever sell the bitcoin he's bought for MSTR, the company's stock is taking a beating because of those purchases.  MSTR shareholders might not share his zeal for bitcoin and may not have the patience to wait for either bitcoin or MSTR's stock price to recover--and if enough of them end up selling, it could tank even worse than bitcoin (assuming btc keeps sliding downward) because of market forces alone.

I share passions for the stock market and bitcoin, which is why I've posted so many times in this thread--not because I'm rooting for MSTR's demise or because I don't like Michael Saylor or anything he's said or done.  I've been keeping an eye on a few other bitcoin-related stocks as well, such as MARA, RIOT, and Coinbase.  They just don't happen to be relevant to this thread.

As far as I could see, I had only used the term "normie" in the context of my comment on the accounting, so in that regard, I am suggesting that more sophisticated persons are going to likely recognize that an asset such as BTC is marked way down.. and then perpetually stuck in such marked down status, but regular people are not likely going to understand that.. I was referring to normies as regular people who are less sophisticated, and I supposed if you are reading a 10k or any kind of prospectus, you might already be outside of the category of "normie," perhaps?

I though that you would be more concerned about my comment that was more directed at you, and I see that I started out the post without really having much of an intent to say very much, but then I could not really stop myself once I got going..;. so I will admit that I said quite a bit more than I had originally intended to say.. ... and gosh I suppose in these kinds of considerable correction times, there can be a lot of concern about when the correction is going to stop... not saying that I have any kind of answer to that.. even though for sure, many of us deal with the situation differently in terms of buying, holding or selling.

I don't understand what you said in the above statement, and one reason for my confusion is that what Michael Saylor says about what he's going to do with anything MSTR owns (bitcoin included) has nothing to do with accounting principles.  The only thing that matters is whether any bitcoin is sold and profits/losses are realized, i.e., what MSTR does and not what it or Saylor says.

And if mark-to-market accounting has to be used, it doesn't even matter if bitcoin is sold or not.  It'll be treated as an appreciating or depreciating asset based on what the market dictates.

Can you define that term in the context of this discussion?  I'm really curious.

There probably could be ways to work this kind of weird accounting to your advantage.. .. and probably smart investors are going to recognize that certain companies are undervalued merely because of both the carrying of certain kinds of assets on their balance sheets (bitcoin in this case) and the appreciation that some normies are not going to appreciate such a unlisted value  I will note that for a few days I have been maxed out on my 50 per month with you.. so I have a few of your posts building up until I get back below the 50 max...


I almost feel like responding to your ongoing panic regarding the seeming gambling tendencies of MSTR and your ongoing desires to want to say "I told you so," and surely the fact of the matter is this is a long BTC play in which guys like you are going to look foolish with the passage of time, including only a few years down the road (if not sooner) for not recognizing and appreciating the likely low risk payoff for such a play of aggressively allocating into BTC..

You have been registered on the forum for almost as long as me, and actually came to BTC at a much better time than me in terms of being able to get in at the bottom of a trend for pretty much the whole of 2015 (except for parts in the end of 2015), and you even admitted that you do not hold very many BTC... so seems that you are having some of the same troubles in your own personal lack of BTC holdings... and likely sucks to be you that you have missed out on quite a few pretty BIG BTC upwards price moves in which you are likely not going to be able to buy BTC at such various low prices in terms of your continuing to be wrong and your likely ongoing continuing to be wrong in terms of considering that our current BTC dip that is merely about 50% from the November 9 top as if we are in a loss period.. and you are failing/refusing to recognize outloud and appreciate the facts of the matter for where we really are up 3.5x-ish from September 2020.. and also.. if we go back a wee bit further, it is pretty easily formulated that we are good 35x up... so looking at bitcoin as if it were down fails/refuses to appreciate where we are at.. how we got here and where we are likely going in the coming 4-10 years (if not sooner).

And through your ongoing comments about MSTR and seeming failure/refusal to appreciate the play(s) that it is making, you are likely ongoingly going to be failing/refusing to appropriately allocate yourself a bit more aggressively into BTC.. so let's see how your lack of aggressiveness in your mentality (and your likely lack of financial follow through) pays off for you.. and by the way, bitcoin is such an asymmetric bet, it does not take a whole hell of a lot of aggressiveness to pay of quite handsomely.,. BTC history has shown that, and our likely future - especially 4-10 years into the future (if not sooner) is going to continue to show that.

Too bad when someone involved in the forum so long (maybe distracted by meta nonsense rather than being here for actual bitcoin information) cannot seem to understand the value of ongoing aggressiveness (or would it be assertiveness?) in terms of bitcoin investing.

They simply have to value their stash at the lowest price observed during their holding period. Each day count.
I guess it’s not lowest intraday price, but observing closing prices only.
I wanted to double mech this, so I am looking at the historic OHLC serie on Coinbase, but for the moment I can’t find this information.

 

Who has any information on the wallet? It was in the news that 2 of the institutional owners of bitcoin were active in the market in the last 24 hrs. There are no further detail on the institution though. I also want to remind that the sale of Elon bitcoin was meant to be secret of the year review before it goes public. Institutions are not reliable in this market and that why we might still, need larger numbers of retail investors.

Does MSTR have to pick the lowest BTC price for the quarter for the GAAP accounting?  or do they pick the BTC price on a certain day of the quarter, such as the last day or some day that is within a parameter such as so long as it is a day in the last week of the quarter?

There's a reason why Microstrategy is falling like a rock: the GAAP accounting of their BTC stsh is going to hurt them on next earning report:

MicroStrategy Plummets as SEC Rejects Its Bitcoin Accounting (3)



Why this underperformance?



So basically as the BTC must be accounted according to the formula:


The only possible adjustment is downward, but the price shoots, there is no way to impact positively the valuation until there is a sell.
And as Micheal Saylor told us they are never going to sell his bitcoin, the benefit will be.. never registered on the balance sheets.

Next thing to do: compute the GAAP adjustment for the next quarter. Accounting test for me. Given the low 34,000 USD print it is going to be big.

Since I've been closely watching bitcoin's nosedive (with clenched teeth, even though I don't own enough to be sweating right now), MSTR has been on my mind.  I've no doubt Michael Saylor will continue to justify his purchases and pump bitcoin, MSTR shareholders might be questioning whether it's worth holding their stock--I kind of have the feeling that at least some of them aren't familiar with how severe bitcoin's price swings can be or how much they can now affect MSTR's stock.

Here's my periodic chart dump, this one a 10-day chart:



It's Saturday in the US, so the stock market is closed for the weekend.  Since 4pm yesterday when the market closed, bitcoin has dropped over $2000 in value, and it was falling all throughout the trading day as well.  If bitcoin doesn't show some sort of recovery by Monday morning, my guess is that there's probably going to be a flood of sell orders for MSTR stock.  Yikes.

Currently 120% of $MSTR marketcap is $BTC exposure.


https://twitter.com/DylanLeClair_/status/1484624414587211785

I first of all, a brief update on those two addresses.

As of today, the two addresses hold more than 126,561 BTC, with an increase of 3,821 since last  Dec 29.

In second place actually being a single signature doesn’t mean too much.
Many custodian don’t use multi signature for their customer's wallet.
They rather use proprietary algorithms, to “split” the secret key, that is ultimately reconstructed on the fly at the time of the required signature and use to sign the transaction.
So the onchain result is only a single signature transaction.

This could explain how a multibillion account holds the stash on am single signature account.

https://archive.fo/pNr2Q

Behind paywall

Michael Saylor, in a conversation with Bloomberg, once again confirmed that he is not going to change his strategy for buying and holding bitcoin, and the price reduction by 40% of his ATH is not a cause for concern for him, but rather a consolation, given the current increase in inflation.
What, in my opinion, is a great motivation for those who are constantly worried about the current decline in the value of bitcoin, especially on the example of a company whose investments in bitcoin have already exceeded the capitalization of MicroStrategy itself.

A sad case because of the desire to get fast money happened to a youtube user, that's shit how gullible people can be. a fake YouTube channel posing as the head of MicroStrategy, Michael Saylor, lured 26 BTC from the user by promising to double his investments by sending the crypt to the specified address. Saylor commented on the incident, noting that he receives reports of such cases too often, saying that 489 scam channels have been created on youtube in the last week alone.

A weird tweet surfaced a few days ago on Reddit:

https://www.reddit.com/r/Bitcoin/comments/rvr2v2/all_of_microstrategys_bitcoin_is_stored_in_2/hr8if3j/


All was relaunched via Twitter:


So, according to this theory, all of MSRT stash belongs only to those two addresses.

https://bitinfocharts.com/bitcoin/address/1FzWLkAahHooV3kzTgyx6qsswXJ6sCXkSR
https://bitinfocharts.com/bitcoin/address/1P5ZEDWTKTFGxQjZphgWPQUpe554WKDfHQ

First test: during the last period, between Dec 9 and Dec 29, MSRT bought 1914 BTC.

Let's see what happened to those two addresses:



Close, but no cigar.


Also, looks very very unlikely that Microstrategy holds all of their fund on a single signature address.

But when I have time, I will try to expand my investigation on this and will revert.
Of course, we can also wait for the end of January as we have seen those addresses definitely quite active in the last few days.
This also rings a bell to me, as the agreement with Barrons to finance the ATM Facility has just been fully utilized and has yet to be renewed. So technically, they could only buy all those bitcoins with their own money. Something they haven't done for a few months.

last but not least, the first transaction on these wallets is dated back to Feb 2019, while the first Microstrategy purchases are from August 2020: why not use a new address?

So four different reasons why I tend to suspect that statement.




 

For sure, I can appreciate what Saylor is doing in terms of using various kinds of debt to leverage into bitcoin, yet even his very first sets of BTC purchases that were like more than 70% of their then cash reserves started to challenge my own thinking regarding how much allocation into bitcoin would be too much.

Actually looking at cash reserves, I started to understand that many of us would not necessarily need to have a lot of cash reserves so long as we can project out our cashflows for 6 months to 24 months and have various contingency plans if some of the incoming cash were to dry up... so in a large number of cases we do not have have even close to 100% out as far as 24 months, yet of course, the closer the timeline (such as within the next three months) it is probably best to have those 100% covered, and for a business or a more complicated cashflow situation, it may even be prudent to have 100% covered for up to 6 months.

Otherwise, when looking at cashflows, there would be needs to look at how liquid is the asset, so how long would it take us to liquidate various kinds of assets in the event that various aspects of our anticipated cashflows were to dry up, and so having 100% covered for several months does end up giving lead time, so if some kind of negative events were to start to happen, we would already be working on shoring up converting some of our assets into cash further out on the timeline that our reserves are getting bought into... and of course, there should be some appreciation for Gresham's law principles in terms of spending the less likely to appreciate assets first.

I understand that your questions are a wee bit different cAPSLOCK, and you are kind of getting at the mere size of the MSTR holdings, and we likely realize that even though Saylor has been quite public about what he has been doing, there are going to be some difficulties for any other companies or individuals to amass so many bitcoin's without moving the BTC price, and frequently the really BIGGER players systematically seem to aim to not only attempt to get cheap coins but also to NOT move the market in the UPwards direction while they are getting them.  A public company does have to disclose quite a bit more of the details in a fairly timely manner, but they do not necessarily need to disclose all of their acquisition of BTC details so long as shareholders cannot validly accuse them of engaging in deceptive practices by leaving out material information from their disclosures.

For sure we can appreciate that we do not know who owns which coins except if they have disclosed at one point or another, and so there are some ideas about some of the BIGGER of the coin holders.. and surely Saylor would be quite high on any list - even if some entities and individuals might not be revealing their holdings and secretly attempting to accumulate large quantities like Saylor/MSTR has been doing. 

By the way, in around August 2020 when Saylor disclosed that he had front run his company and personally acquired around 17k bitcoins, it seems that he was disclosing that level of detail out of an abundance of caution, but now that MSTR has been in the BTC accumulation practice for a longer period of time, he likely does not need to continue to disclose various aspects of his personal BTC accumulation to the extent that he may well be continuing to personally accumulate more BTC on an ongoing basis.

Regarding risk of acquiring so many BTC.. I do seem to get your points..and you seem to be referring to a kind of variety of risks in terms of both systematic risks and personal risks, and there is likely no way that I can really answer that question nor do I really want to.. because surely there would be some scariness in terms of how to spread out the coins to maybe attempt to maintain control and even figure out if there might be ways to avoid any small number of people running off with the coins risk in terms of glitches in the systems that are implemented or maybe even glitches in some kind of software that ends up allowing one person or a small group to gain control.. and maybe even then they could claim that it was a hacker.

Some of those supposed hacked 119k Bitfinex coins have still not moved, but I had sometimes come across some posts or threads that claim that some of these older hacked coins from x, y or z location are moving, and maybe even people lose interest in following whether hacked coins are moving after several years.


10% or more would be pretty damned BIG.. even assuming that he could get a hold of that many coins.

Let's say that there are only about 14 million BTC in total in circulation. .due to lost coins ...

Currently his company's 124k acquisition is barely getting to 1% of the coins if we were to throw in his personal coins too.  By the way, we also know that the structure of MSTR does give Saylor a lot of control over MSTR and therefore those coins.


For sure, it could be argued that their current stake size is already problematic in a variety of ways, and some folks have already presented some of those kinds of claims in this thread.


Some variations of the topics have come up in this thread, and of course, there is a difference in terms of talking in theory and then seeing that he is getting up to 124k.. I think that I heard him say that he wants at least 200k coins .. or maybe he said that he wants 2%?  Maybe Saylor believes that some of his protections come from being so damned public and giving so many interviews, and cannot completely argue with that strategy, either.  So maybe sometimes he might also contradict himself, and would that be a bad thing in terms of OPsec?  Surprisingly he has been considerably consistent given his so many interviews and also his variety of ways of disclosing and attempting to provide a variety of interesting spins on matters.  Of course, he is likely the brainchild behind a lot of his own words and his decent ways of articulating matters, but he has to have some pretty decently smart and creative folks on his team too to pull off some of his research into various legal, strategic, public relations, execution and even rolling with the punches matters.