This Public Company Just Ditched Cash For BTC

Plus the final word on Ethereum's #SupplyGate

Happy Tuesday, Blockfolians,

The Lede

This morning news broke that business intelligence company MicroStrategy Inc (NASDAQ:MSTR) was taking the (as yet) unprecedented move of moving a substantial part of its holdings out of cash and into bitcoin.

Now, shareholders had been made aware of the broad concept of this move a few weeks ago. Today we learned, however, just how big a move MicroStrategy was making.

Billion-dollar software firm MicroStrategy eyes big Bitcoin buy - Decrypt

The company has taken $250,000,000 in USD from its balance sheet and purchased 21,454 bitcoins. The explanation from CEO Michael Saylor is worth quoting at length

Our investment in Bitcoin is part of our new capital allocation strategy, which seeks to maximize long-term value for our shareholders. This investment reflects our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash. Since its inception over a decade ago, Bitcoin has emerged as a significant addition to the global financial system, with characteristics that are useful to both individuals and institutions. MicroStrategy has recognized Bitcoin as a legitimate investment asset that can be superior to cash and accordingly has made Bitcoin the principal holding in its treasury reserve strategy.

MicroStrategy spent months deliberating to determine our capital allocation strategy. Our decision to invest in Bitcoin at this time was driven in part by a confluence of macro factors affecting the economic and business landscape that we believe is creating long-term risks for our corporate treasury program ― risks that should be addressed proactively. Those macro factors include, among other things, the economic and public health crisis precipitated by COVID-19, unprecedented government financial stimulus measures including quantitative easing adopted around the world, and global political and economic uncertainty. We believe that, together, these and other factors may well have a significant depreciating effect on the long-term real value of fiat currencies and many other conventional asset types, including many of the assets traditionally held as part of corporate treasury operations.

In other words, the relevance of this move isn’t just the size of it (which is significant) but the motivation stemming from a concern that traditional treasury reserves - i.e. fiat cash - might be in for rough seas ahead.


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Final Thought

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