MicroStrategy Stock Soars Amid Michael Saylor's "Bitcoin Bank Endgame" But It's Not an Original Concept
MicroStrategy shareholders are rejoicing in CEO Michael Saylor's latest comments about turning the firm into a Bitcoin bank.
In an interview with Bernstein, Saylor described Bitcoin as the "most valuable asset in the world" and that ultimately the "endgame" for MicroStrategy is "to be the leading Bitcoin bank or merchant bank, or you could call it a Bitcoin finance company."
MicroStrategy would be creating Bitcoin capital market instruments such as equity, convertible securities, fixed income products, and preferred shares.
"If we end up with $20 billion of converts, $20 billion of preferred stock, $10 billion of debt and say $50 billion of some kind of debt instrument and structures instrument, we'll have $100 billion to $150 billion of Bitcoin," Saylor said.
The firm, which describes itself as a business intelligence company, currently holds just over 252,000 BTC worth $15.7 billion.
To fund its Bitcoin purchases, MicroStrategy has also been actively raising capital. Between September 13 and September 19, the firm acquired an additional 7,420 BTC for approximately $458.2 million.
Earlier that month, the company completed an upsized $1.01 billion private offering of convertible senior notes due 2028. The proceeds from this offering will be used to redeem existing debt and potentially acquire more Bitcoin.
"I think it's infinitely scalable," Saylor said. “I don't have any problem seeing how we could raise $100 billion more capital and then $200 billion after that. It's a trillion-dollar asset class going to $10 trillion and then going to $100 trillion. The risk is very simple—it’s bitcoin. You either believe bitcoin is something, or you believe it's nothing."
Saylor has no intention of slowing down either. "We just keep buying more Bitcoin," Saylor said. "Bitcoin is going to go to millions a coin, you know, and then we create a trillion dollar company,"
With a target price of $13 million by 2045, Saylor believes Bitcoin's share of global financial capital will increase from 0.1% to 7%.
Saylor's confidence and vision have continued to fuel MicroStrategy's stock price. Over the week, MicroStrategy's stock price is up more than 18% and up over 210.26% YTD.
However, as visionary as Saylor might be, the concept of a Bitcoin bank is nothing new. In fact, American cryptographer, Hal Finney, had harped on about a Bitcoin bank back in December 2010.
“There is actually a very good reason for banks backed by Bitcoin to exist, issuing their own form of digital cash that could be redeemable for Bitcoin," Finney said on the Bitcointalk forum that year.
"Bitcoin itself cannot scale to include every financial transaction in the world on its main blockchain. A second layer of lighter and more efficient payment systems is needed. Similarly, the time required for Bitcoin transactions to settle will be impractical for medium-to-large value transactions."
"Bitcoin-backed banks will solve these problems. They can work like banks did before nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserve while others may be 100% Bitcoin backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others."
"I believe this will be the ultimate fate of Bitcoin, to be the "high- powered money" that serves as a reserve currency for banks that issue their own digital cash."
People decrying $MSTR's #bitcoin bank endgame probably don't realize that Hal Finney foresaw this as the endgame for bitcoin more than a decade ago.
— Bitcoin Overflow (@btc_overflow) October 12, 2024
Though I think we should still strive to build first-class self-custody solutions to keep the system honest. pic.twitter.com/x2H4FgC6rf
Saylor Academy, Michael Saylor's nonprofit initiative, even quoted Finney in a section titled "Visions of Layered Bitcoin."
"Finney passed away in 2014, but his early insight into Bitcoin's potential as world reserve currency echoes in eternity," Saylor Academy stated.
Nonetheless, Saylor taking heed from Finney is still encouraging and the weight behind his words is strong enough for investors to buy into his vision.
MicroStrategy becoming a Bitcoin bank might not be Saylor's original idea but will still be one of the first, which is all that truly matters.
Elsewhere
Blockcast
On this week’s Blockcast, we speak with Luca Prosperi, co-founder and CEO at M^0 Labs, whose man-bun and genial personality belies battle scars from almost 2 decades of traditional banking, helping to build MakerDAO and, a health scare. Luca dissects the concept of money creation and some of the foundations behind M^0’s quest to build infrastructure for a crypto dollar.
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