Levered Bitcoin

MicroStrategy as a levered bet on Bitcoin

The most public Bitcoin evangelist today is Michael Saylor, chairman and co-founder of MicroStrategy. Saylor has done more than anyone else to advance the idea of Bitcoin to corporate America, especially the financial media. I'm amazed at his energy and patience in explaining the core value proposition of Bitcoin over and over again. But not only is Saylor an exponent of bitcoin as digital property, he has also steered MicroStrategy into a levered Bitcoin ETF.

Over the last two years, he has used all the spare cash at MicroStrategy to buy bitcoin. Initially, this started as a response to the expansion of the monetary supply by the Federal Reserve, where he noticed that the value of the corporate cash at MicroStrategy was collapsing. Last year, he started acquiring debt and using the proceeds to buy bitcoin. On MicroStrategy's balance sheet, its largest asset by far is its bitcoin, which eclipses the underlying operating business in software analytics and business intelligence. Let's dive into the valuation of MicroStrategy, factoring in the bitcoin it owns.

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The table below shows the stock price, market capitalization, and number and value of MSTR’s bitcoin over time. I pulled the bitcoin purchases from MicroStrategy's public announcements. I compute the value of the bitcoin on each date below when the company made a bitcoin purchase. That will provide a comparison of the market capitalization of a company against the fair value of its bitcoin holdings.