Bitcoin / Bitcoins / Crypto Currency

We need Stonehedge back, damn you Mashton!

Ah
Skipped the strategy bits in the middle and thought we were still on ‘on the face’ vs ‘in hindsight’

Teaches me to not take the crypto chat seriously

Sounds daft when you put it like that, but if you developed a system which enabled you to successfully run across the road with your eyes closed every day for four years and, in doing so, created nearly $30bn of shareholder value, I would be forced to conclude that you might be on to something!

Is it "developed a system" so much as "continued taking the same one way bet"?

They aren't taking some new risk every time they buy more BTC. They just continually increase exposure, and this will seem like a good idea while prices are going up but a bad one if they don't sell before they go down again

Indeed, and the BTC book isn't huge, so any attempt to sell off a large amount of BTC on the way down will rapidly drop the price.

Glad it's not my money/pension/etc that is at risk.

But this is where it gets weirder / even more interesting. Saylor has said publicly many times that the goal is only ever to accumulate more. Plus their cost basis is down at about $30k per coin, and their margin call is even lower at about $3k per coin.

So microstrategy's share price is now linked to bitcoin price...so what happens in the dip that comes?

Same as last time the dip came, it goes down, Saylor uses his diamond hands to hodl and buys the dip

Is it "developed a system" so much as "continued taking the same one way bet"?

this will seem like a good idea while prices are going up but a bad one if they don't sell before they go down again

It is a system - they've refined it by using different ways to get the cash to buy bitcoin. eg selling more shares when they feel their own share price is overvalued. The hard bit was not buying the bitcoin, but getting enough money to have been able to buy the amount of bitcoin that they have done.

And they started in 2020 so they've been through a cycle.

https://cryptonews.com/news/microstrategy-plans-another-500-million-private-offering-of-convertible-senior-notes-will-use-proceeds-to-buy-bitcoin.htm

So wile we were talking about it yesterday, they announced another $500m fundraising.

I'm not going to pretend to know if Salyors strategy is a good one or not but I am going to go out on a limb and say his profile pic on twitter is so awful that he deserves nothing in this world and only the very basics in the next.

No doubt plenty of other public companies will be looking at MicroStrategy’s BTC strategy in awe.

As in "shock and awe"?

I can’t figure out if some of the posts on this the last week are parody.

no you don't

if I was barking up the wrong tree, he'd have put me on ignore and got on with his life on here.

Saylor has said publicly many times that the goal is only ever to accumulate more.

If I was accumulating massive amounts of Bitcoin, and I didn't want people trying to second-guess when I am going to sell, this is exactly what I would say.

Oh, and chat like that is also going to help pump the market after I've bought tonnes of the stuff. Win win!

Yes but is there any strategy to making money other than "punt that bitcoin goes higher"?

The company becomes a listed proxy for BTC. I can see how that works as a strategy for the CEO etc - this is a way for them to get paid off the back of BTC price movements, and they're relatively insulated from price falls (their income could suffer but it's not their capital they're playing with). Just not sure that's worth celebrating

Someone correct me here, but right at the start, wasn't the very original point of him buying btc because their business was making a decent profit - more than they needed for reinvestment. So they needed a home for cash at a time when bonds were shit?

Where I'm going with this is (and again please correct me) is from the businesses pov rather than the shareholders', it isn't critical for btc to be up. They are still viable without this ludicrous share price.

I agree with much of that (@andyfallsoff). It's basically financial engineering.

My opening point was that it's not as different to what lots of companies do as people posting seemed to believe. And I think the same applies here because the fortunes of many companies are higly dependent on a particular indicator heading in the right direction. eg the oil price, or price of other commodities if they are mining them, interest rates for lots of financial services businesses, etc.

My view is that the main difference is not the principle of what he is doing vs loads of other big corporates, but that he has had a lot more success as measured by financial metrics than others.

Does that necessarily make him a nice person, a force for good in the world, guaranteed to be successful in the future - no to all of those.

Exactly. It's already the biggest publicly traded business intelligence company – independent of its holdings. And that's why some people are so worried. They're gaming the system, and if others realise, it could kick off a major cascade of corporate treasuries adopting the same strategy (and indirectly shorting the dollar).

EDIT: This is a bit tinfoil-hatty, but Saylor's been hanging out with Bezos... another company making more profit than they can preserve through traditional methods.

1. Profit,
   
2. Buy BTC,
   
3. Inflate crypto bubble because volume,
   
4. Inflate own share price because crypto go brrrrrr,
   
5. Raise debt capital cheap because share price,
   
6. Buy crypto, crypto go brrr
   
7. Rinse,
   
8. Repeat.
   
   
   

(1a. remuneration tied to share price performance)

Yes - the vision of bitcoin going really high is twinned to the dollar - and by extension £, €, etc - basically sinking. People wishing for bitcoin to go to the moon might find out that the destination is not a very comfortable place!

Just wish this pump would pump up the stuff I want shot off.

exactly this.

only slight issue is deciding when to step off.

When 1a. is maximised, I expect.

it isn't critical for btc to be up

Maybe but it needs to not go to 0 as well