We have many times heard about Microstrategy Bitcoin purchases and the strategy that Michael Saylor is currently following in order to expand Bitcoin’s influence around the world. Microstrategy became one of the largest Bitcoin holders in the world and has taken a very strong position defending the largest cryptocurrency in the world.
Microstrategy Bitcoin’s strategy is very interesting and offers a different point of view on how a company can plan its Bitcoin holdings. In the next sections of this post, we are going to analyze how Microstrategy Bitcoin strategy evolved over the last year and how it could be an example for other firms in the market.
What is Microstrategy?
Microstrategy is known for being one of the companies that purchased Bitcoin and that has pushed for a wider Bitcoin adoption around the world. But what is Microstrategy doing as a company?
Microstrategy is a business intelligence company that offers software solutions to companies from all over the world. The goal is to help enterprises make decisions and optimize business processes. Rather than making decisions based on comments or without data, Microstrategy focuses on offering reliable and advanced solutions for companies to understand their needs based on quantitative and qualitative data.
Therefore, Microstrategy Bitcoin strategy does not seem to be a core of its business, unless until recently. Additionally, the company is offering consulting, training and other support services to firms that require more advanced solutions.
Furthermore, Microstrategy has now decided to invest in Bitcoin for the long term. This is why Microstrategy Bitcoin strategy involves having BTC on its balance sheet. Therefore, this company became one of the first in the world to purchase Bitcoin and gain exposure to the market.
What is Microstrategy Bitcoin Strategy?
Nowadays, Microstrategy Bitcoin holdings are among the largest for a single entity, which shows the impact that this firm has had in the market. Microstrategy Bitcoin strategy focuses on avoiding holding cash on the balance sheet and investing in an asset that has a large potential compared to the risk attached to it.
According to Bitcoin Treasuries, MicoStrategy LLC (NADQ:MSTR) holds 129,698 BTC or 0.618% of the total Bitcoin supply. Tesla, Inc. is the second company with the largest holdings of BTC. This shows that there is a clear interest in Bitcoin around the world, especially from these two firms that together get very close to holding 1% of the total Bitcoin supply capped at 21 million BTC. Other companies holding large sums of BTC include MTGOX, Block.one, Grayscale Bitcoin Trust, and CoinShares, among others.
As mentioned before, the main strategy is to bet on Bitcoin moving higher in the future, avoiding losses from holding cash, which gets devalued every single day. Over the last year, we have seen inflation rates skyrocket to over 9% in the United States and even 20% in some Eurozone countries.
Therefore, Microstrategy Bitcoin strategy involves believing in a future in which Bitcoin becomes a store of value and wins against inflation around the world. Few companies are so invested in Bitcoin as Microstrategy, hence, they are a leading company in terms of Bitcoin investments.
Why Bitcoin?
There are many reasons why Microstrategy decided to buy Bitcoin and not other virtual currencies. First of all, Bitcoin is the oldest cryptocurrency in the market with a total supply capped at 21 million BTC and that requires work and energy to be protected and secured.
There are no other blockchain networks as secure as the Bitcoin blockchain. This shows that Microstrategy Bitcoin strategy takes into consideration Bitcoin as the future of money and as a store of value that cannot be devalued by centralized authorities.
Indeed, Bitcoin is not controlled by a centralized organization. It is indeed managed by the community and by a consensus algorithm called Proof-of-Work (PoW). Bitcoin miners are in charge of protecting the network and processing transactions. The larger the number of miners and the more decentralized they are, the better it becomes for the whole Bitcoin network and its ideas.
Moreover, people can participate by running nodes. This makes the whole consensus more decentralized and community-driven. Running a node is quite easy and should not be expensive for most investors. Nodes are very important, as they approve the rules on top of which the whole Bitcoin network operates.
At the same time, the issuance of a new BTC is controlled by difficulty and halving events. Every four years, the network halves the rewards that miners receive for their work. Moreover, if new technological advancements take place, then difficulty adjustments apply. That means that if a minor is able to have a larger hashing power (sudden increase in the hashing power), the Bitcoin blockchain will make it more difficult for this miner to find more blocks.
With these difficult adjustments, the creation of new Bitcoins stays always close to 10 minutes on average. If it becomes easier to mine more BTC, the difficulty will adjust upwards and the network will come back once again to 10 minutes blocks (on average).
These are just some of the reasons why Bitcoin is special and why Microstrategy Bitcoin strategy involves purchasing this cryptocurrency. Another thing that is worth taking into consideration is related to the fact that there is no centralized authority controlling it. Bitcoin transactions can take place without an institution or government being able to do anything for this transaction not to happen. Due to this reason, Bitcoin becomes a tool for some individuals that live under oppressive regimes to avoid being sanctioned or having their savings confiscated.
Michael Saylor’s Role in the Cryptocurrency Market
Michael Saylor is the Chief Executive Officer (CEO) of Microstrategy and became one of the most popular figures in the cryptocurrency industry. He is known for being a Bitcoin supporter even before his company decided to buy Bitcoin. There were many reasons why he supported this virtual currency, including some of the things that we mentioned before.
Nowadays, Michael Saylor talks at different Bitcoin events, conferences, and on Twitter. On Twitter, he tends to explain why Bitcoin is important, why this virtual currency is better than other coins, and why proof of work is better than proof of stake or other consensus algorithms.
He can be defined as a Bitcoin maximalist. In a recent Twitter poll, he asked whether he is a Bitcoin sceptic, a Bitcoin trader, a Bitcoin technocrat or a Bitcoin maximalist. 53.9% of the respondents said that he is a Bitcoin maximalists, followed by Bitcoin trader with 19.9% of the votes. Technocrat and Skeptic received 14.2% and 12% of the votes, respectively.
At the same time, Michael Saylor works in order to push for Bitcoin adoption at the retail level but also for corporations and larger companies. He is considered to be one of the most popular influencers in the market when it comes to Bitcoin adoption. Moreover, he has close contact with financial institutions and regulatory agencies in the United States (US) due to different reasons.
On a regular basis, Michael Saylor talks about how different countries debase their currency and how Bitcoin becomes a clear solution to these debasement problems. As already mentioned in this post, inflation rates have skyrocketed over the last years and some countries suffered more than others.
On Twitter, Michael Saylor wrote:
“In countries suffering from collapsing currencies, centrally managed banks, capital controls, and excessive economic regulations, corporations, individuals, & families need a global ethical economic solution like Bitcoin to protect their wealth and prosper.”
Therefore, Michael Saylor is pushing for Bitcoin adoption and working with leading companies around the world to increase support for Bitcoin. He focused on the cultural aspect of Bitcoin but he also worked with Microstrategy to buy Bitcoin and become one of the leading companies in the industry when it comes to holding BTC.
Get the Latest Bitcoin Data Using Hyperintelligence’s Tool
MicroStrategy has also launched a website where they show information about Microstrategy Bitcoin strategy and how this virtual currency behaves compared to other assets. They compared the risk-adjusted returns of currencies, indexes, metals, stocks, & bonds vs BTC.
As we already know, Microstrategy is a business intelligence company that provides companies with valuable tools to make various decisions based on data. Nowadays, it is very important to have valuable data, recognize important variables, and make decisions based on this accurate information.
Microstrategy Bitcoin hyperintelligence website is used by investors to have a clear idea of how the market behaved in the past and what we can expect in the future from Bitcoin and other assets. Microstrategy knows very well how to analyze data and how to get this information ready for others to use and analyze.
The Microstrategy Bitcoin Hyperintelligence site is one of the latest additions to Microstrategy Workstation that allows investors and analysts to get some of the latest data and information for users to check how Bitcoin behaved and compare it to other assets. This tool can be easily connected to other websites and mobile devices.
Indeed, the service can also be used and connected to Microsoft Outlook to bring answers to people. All the information is gathered from CoinMarketCap and Yahoo Finance, two of the most popular websites when it comes to financial and cryptocurrency information. In the future, MicroStrategy Bitcoin Hyperintelligence website could add new functionalities depending on what companies and users need.
This is a great tool for analysts that require valuable information to make decisions and analyze how the cryptocurrency market behaved in comparison to other assets. As we can see, MicroStrategy is working on the Bitcoin market and building different solutions that bring value to the crypto industry. This is just one of the examples of how Microstrategy is contributing to the whole ecosystem.
Companies Buying Bitcoin
As we discussed in this post about Microstrategy Bitcoin purchases, there are other companies that have also entered the market and gained exposure to Bitcoin (BTC). Thanks to the data provided by Bitcoin Treasuries, we can get valuable information about which are private companies acquiring Bitcoin, how much they own, and whether they reduce or increase their stack.
After MicroStrategy decided to purchase Bitcoin, other companies followed and added BTC to their balance sheets. It is worth pointing out that many of these companies entered the market when Bitcoin was close to its all-time high. Usually, when Bitcoin hits a new high, investors that do not want to miss the opportunity to acquire BTC at lower prices enter the market even if there has already been a strong bull market.
Some of the companies that purchased Bitcoin in the last few years include the following:
- MicroStrategy: 129,698 BTC
- Tesla: 43,200 BTC
- Core Scientific: 8,497 BTC
- Marathon Digital Holdings: 8,133 BTC
- Square inc.: 8,027 BTC
- Hut 8 Mining Corp: 7,078 BTC
- Riot Blockchain, Inc.: 6,536 BTC
- Coinbase Global Inc.: 4,487 BTC
Therefore, we see that there are different companies holding more than 0.01% of the total Bitcoin supply of 21 million. This is definitely something positive for BTC as it shows that there is a clear interest from market participants to get access to this virtual currency, including Microstrategy Bitcoin holdings.
In the future, we could see some companies selling their coins, especially if the market falls as it has in recent months. However, there is also a possibility for new companies and businesses to get access to Bitcoin at lower prices, which tends to happen every few years.
It is also worth pointing out that not every single company would like to get access to Bitcoin as some of them fear regulations, liquidity issues, or extreme volatility.
Countries Buying Bitcoin
There are not only companies purchasing Bitcoin but the world has already seen different countries make Bitcoin legal tender. El Salvador and the Central African Republic (CAR) are the first two countries that use Bitcoin as a legal tender.
El Salvador was perhaps the most popular case and the most covered by the media. Nayib Bukele, the president of the country, became an outspoken supporter of Bitcoin. Every single time that Bitcoin falls below certain price levels, the country purchases more Bitcoin for its international reserves.
According to Bitcoin Treasuries, El Salvador holds 1,771 BTC and has been adding more BTC on a regular basis. People in the country are now able to use BTC alongside the U.S. dollar (USD) on a regular basis to pay for goods and services.
Companies and businesses in the country are obligated to accept both currencies USD and BTC for the goods and services that they offer. Despite this decision to make Bitcoin legal tender, the international financial community has been pressing El Salvador to stop its transition towards BTC.
In the future, other countries could take the same steps as El Salvador in 2021. It is worth pointing out that this transition can take several years as it requires companies to adapt to a new monetary system. However, El Salvador was quite efficient and fast when it decided to add Bitcoin to its economy.
Nonetheless, there are already companies and countries already using Bitcoin on a daily basis and the trend could continue in the future. Microstrategy Bitcoin purchase was one of the first and it allowed other firms to analyze this possibility as well.
