Isabella García
In a recent discussion with analysts from Bernstein, Michael Saylor, the founder and executive chairman of MicroStrategy, outlined the company’s ultimate goal: becoming the top Bitcoin-focused bank. Since 2020, MicroStrategy has been heavily investing in BTC, utilizing both debt and equity strategies to enhance returns, surpassing many traditional investment options. With its latest purchase of 7,420 BTC, the firm now holds 252,220 BTC, worth over $15 billion. This massive accumulation represents approximately 1.2% of BTC’s total supply, positioning MicroStrategy as the largest corporate BTC holder globally.
Saylor’s investment thesis is rooted in the belief that BTC is the highest-performing asset of the 21st century. He views it as a transformative digital asset, providing a strong defense against inflation and serving as a premier long-term store of value. According to Saylor, bitcoin’s inherent volatility attracts investors seeking substantial returns, and he believes it will eventually become a staple in both institutional and retail investment portfolios.
Guided by Saylor’s leadership, MicroStrategy has fully embraced this outlook, positioning itself for significant growth in the BTC space. If successful, the company could hold hundreds of billions of dollars in BTC, realizing its vision of becoming a bitcoin-focused financial institution.
Saylor envisions MicroStrategy evolving into a BTC merchant bank, creating various financial instruments such as equity, convertible bonds, fixed-income securities, and preferred shares. He sees this strategy driving the company’s bitcoin holdings to between $100 billion and $150 billion, establishing it as a dominant force in the cryptocurrency sector.
Saylor anticipates that MicroStrategy can continue to grow by capitalizing on bitcoin’s market volatility and its premium trading value. He predicts that MicroStrategy could expand to a market value of $300 billion to $400 billion by tapping into additional financial markets, including fixed income, while steadily accumulating more BTC. He also projects that bitcoin’s value will rise into the millions per coin, eventually turning MicroStrategy into a trillion-dollar company.
The company’s strategy is firmly anchored in Saylor’s long-term belief in BTC as the best deflationary currency. Presently, bitcoin constitutes just 0.1% of global financial capital. However, Saylor forecasts this figure could rise to 7% by 2045, leading to an estimated price of $13 million per bitcoin.
If U.S. capital markets continue to provide opportunities for raising funds through various financial instruments, Saylor is confident that MicroStrategy can scale its operations and take advantage of the gap between traditional financial markets and the bitcoin ecosystem. He expects BTC to grow by approximately 29% annually under his base scenario.
When asked about the scalability of the firm’s debt strategy, Saylor responded that he sees no limitations, envisioning the potential to raise hundreds of billions in capital. He considers BTC to be a trillion-dollar asset class with the potential to grow to $100 trillion. Saylor emphasized that the primary risk involved is simple: the future of BTC itself. Investors must decide whether they believe in bitcoin’s value or not.
A Bitcoin Bank Focused on Borrowing, Not Lending
According to Michael Saylor, founder of MicroStrategy, the company’s approach to leveraging BTC focuses on borrowing rather than lending, differing from traditional banking models. Saylor emphasized that bitcoin’s average annual growth is substantial enough to generate profit through capital markets arbitrage, without the need to lend out their BTC holdings.
Saylor explained that borrowing $1 billion from the fixed-income market and investing it in BTC, which offers a 50% annual rate of return (ARR), presents less risk than lending that money to individuals or governments at lower interest rates. He highlighted that MicroStrategy’s strategy is not to lend bitcoin but instead borrow substantial amounts of capital from willing lenders, offering them slightly higher returns, and invest that capital into BTC for a significantly higher interest rate—30% to 50%—with minimal counterparty risk.
Saylor believes that, once the market volatility is managed, even in a conservative scenario, bitcoin’s value could grow by 22% annually over the next decade. He rhetorically questioned, “Who would offer you 22% interest?”
Challenges for Competitors to Imitate MicroStrategy’s Model
MicroStrategy’s success stems from bridging the gap between the USD and BTC markets, offering financial instruments that provide exposure to BTC volatility while protecting investors on the downside. Chhugani noted that MicroStrategy has benefited from low-cost debt and attractive conversion premiums, a structure that smaller companies would find difficult to replicate, while larger firms with diversified business models may lack focus.
Currently, the second-largest corporate BTC holder after MicroStrategy is the Bitcoin mining company MARA, holding 26,842 BTC valued at $1.6 billion. Meanwhile, Japanese investment firm Metaplanet has also adopted a similar strategy, albeit with significantly smaller holdings of 748.5 BTC, equivalent to $45.7 million.
Saylor advocates for all companies in the crypto industry, including BTC miners and exchanges like Coinbase and Block, to adopt bitcoin as a treasury reserve asset. He argues that these companies are simultaneously destroying and creating shareholder value through poor balance sheet management. MicroStrategy, by contrast, is seeing gradual success in influencing companies such as Semler Scientific and Marathon, who have begun to adopt a pro-BTC stance. Saylor expects that more miners and exchanges will follow suit in the near future.
Gautam Chhugani, a digital asset expert, holds long positions in various cryptocurrencies. Bernstein and its affiliates may also receive compensation for investment banking services from MicroStrategy.
