MicroStrategy’s end game is to become a Bitcoin bank — sort of.
The company won’t be lending out Bitcoin any time soon, as a bank might. But, founder Michael Saylor said on Wednesday, it could make money off its core business of capital markets arbitrage.
“The end game is to be the leading Bitcoin bank or merchant bank, or you could call it a Bitcoin finance company,” Saylor said during a fireside chat hosted by Bernstein.
MicroStrategy is one of the world’s largest holders of Bitcoin, with $16 billion — or about 1.3% of the world’s supply, according to Bernstein.
Its strategy essentially relies on issuing debt to buy Bitcoin. That’s founded on a belief in long-term value appreciation while inflation takes a bite out of fiat currencies.
Saylor said he projects Bitcoin will by 2045 make up 7% of the world’s total financial capital — it’s currently at 0.1%.
At that point, Bitcoin’s price would hit $13 million.
“Bitcoin wants to borrow your money. Lend your capital to Bitcoin, and receive returns in Bitcoin,” Saylor told the Bernstein client event.
It’s “much more intelligent” to borrow, say, a billion dollars from the fixed-income market and buy Bitcoin for good returns than to lend it out for less good ones, he said.
“Lending to individuals, corporations, and governments is riskier than lending to Bitcoin,” Saylor said.
“We don’t currently plan to lend out our Bitcoin,” he said.
Instead, he suggested borrowing $10 billion from Bitcoin holders, giving them up to 1% more yield, and then “lend to Bitcoin” for up to 50% interest “with no counterparty risk.”
Saylor founded MicroStrategy as a software company in 1989. The firm began buying Bitcoin in 2021, and now holds so much of it that its stock is a de facto crypto proxy.
Gold rush
Saylor, making the case for Bitcoin’s long-term value, said it’s achieving legitimacy as financial firms pile in and regulators embrace it.
“You’re watching the birth of a new asset class,” he said.
“We went through a stage of idealism, then the crazy years, and now we’re in the stage of institutional and corporate adoption,” Saylor said.
‘You’re watching the birth of a new asset class.’
Michael Saylor
“It’s the first time in 100 years that we’ve actually had a new asset class and a new way to think about money and capital that’s being embraced by the regulators.”
He pointed to the approval of Bitcoin spot exchange-traded funds in the US, and the political will to allow Wall Street to custody Bitcoin.
Plus, the embrace of crypto by US presidential candidates “was a big deal,” he added.
This mainstream adoption starts the clock on the “digital gold rush.”
From the beginning of 2025, Investors will havegot 10 years to buy Bitcoin before there’s none left on the open market, he said. Ninety-nine percent of it will have been mined and sold by 2035.
“Once you get to January 1, 2035, you’ve only got 1% of Bitcoin trickling out over 106 years. That’s less than MicroStrategy already owns,” Saylor said.
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