MicroStrategy head urges Microsoft to adopt bitcoin as a reserve asset

What’s new? Michael Saylor, the founder and chairman of analytics software company MicroStrategy, gave a presentation to the board of directors of Microsoft Corporation and its CEO Satya Nadella on the importance of adopting bitcoin. In his three-minute speech, Saylor called bitcoin the best asset a company can own. “Microsoft can’t afford to miss the next technology wave, and bitcoin is that wave,” the entrepreneur emphasized.

Source: X.com

What else is known? Saylor believes that Microsoft should buy and hold bitcoin instead of buying back its own stock or holding bonds.

“You’ve surrendered hundreds of billions of dollars of capital over the past five years, and you've just amplified the risks that your own shareholders face. If you want to escape that vicious cycle, you’re going to need an asset without counterparty risk,” Saylor told Microsoft’s board.

He claims that Microsoft could increase its stock price by $584 apiece and increase the value of the corporation by $4,9 trillion by 2034 if it converts its cash flow, dividends, buybacks, and debt into bitcoin.

Microsoft’s (MSFT) shares closed at $423,46 on the Nasdaq on November 30, having gained 0,11% over the day. Since the beginning of the year, the growth amounted to 13,27%.

In 2022, Microsoft founder Bill Gates attributed his reluctance to buy cryptocurrency to the fact that digital assets do not benefit society, unlike other investments.

In November on the PBD podcast, Saylor also criticized Warren Buffett’s Berkshire Hathaway cash management strategy. Buffett is a longtime critic of bitcoin: in recent years, he has stated that bitcoin produces nothing, is a game of roulette, and is incapable of becoming the world’s reserve currency. At the same time, back in 2022, Berkshire Hathaway invested in Brazilian neobank Nubank, which works with cryptocurrencies.

Despite Buffett’s very unambiguous position on bitcoin, Saylor said that during a personal conversation, he could convince the billionaire of the benefits of investing in the first cryptocurrency.

Saylor pointed out the inefficiencies of Berkshire’s $325 billion cash reserve, which he believes generates at best only a 3% after-tax return at a cost of capital of 15%. Based on Saylor’s assertions, a negative real return of 12% wipes out $32 billion a year or $3 billion a month.

In general, his criticism was directed at a wide range of companies that have significant cash reserves while failing to explore alternatives such as bitcoin.

Saylor said he is willing to explain the benefits of the first cryptocurrency to all firms that have $100 billion in cash and are losing $10 billion in shareholder value a year. He argues that bitcoin offers protection against inflation and currency depreciation.

MicroStrategy has been regularly investing in Bitcoin since 2020 to hedge against inflation. It has now accumulated 386 700 BTC, making it the largest holder of the asset on its own balance sheet among publicly traded companies.

Bitcoin investment has contributed to a huge rise in MSTR’s share price, with the cryptocurrency up 2279% since its first purchase, outperforming the securities of major US tech companies including Nvidia, as well as the S&P 500 index.

On November 25, Saylor reported that the company’s YTD treasury yield was 59,3%, providing shareholders with a net return of 112 125 BTC, or 341 BTC per day. At 100 000 per bitcoin, that equates to $11,2 billion for the year or $34,1 million per day.

Source: X.com

The company has been doing regular bond offerings this year, after another round, it raised $3 billion to buy BTC, after which it purchased 55 500 coins. The purchase price of all bitcoins for the company amounted to $21,9 billion or $56 761 per coin. Given the current exchange rate, the unrealized profit is $15,1 billion.

Source: X.com