Michael Saylor Extensively Discusses MicroStrategy's Bitcoin Investment Strategy and Its Broader Business Initiatives

Earlier today, in an interview on CNBC’s “Squawk Box,” Michael Saylor, MicroStrategy’s co-founder and executive chairman, extensively discussed the company’s Bitcoin investment strategy and its broader business initiatives.

MicroStrategy Holdings Inc (NASDAQ:MSTR) has remained committed to its Bitcoin strategy, even amid market volatility. The company has been consistently adding to its BTC position since August 2020, and its total cryptocurrency holdings are now valued at $8.3 billion, Blockworks reported on Friday.

According to MicroStrategy’s co-founder and executive chairman Michael Saylor, the company’s Bitcoin investment has delivered superior returns compared to traditional stock market investments. In an interview with CNBC’s ‘Squawk Box’, Saylor highlighted that BTC’s value has increased by an average of 44% annually since MicroStrategy’s initial investment. This outperforms the S&P 500, which rose by 12% annually over the same period. Even compared to high-flying tech stocks, MicroStrategy, with its Bitcoin-focused strategy, has outperformed every company in the S&P 500, including Nvidia, which had seen gains of 821% as of the interview date.

But does this mean that MicroStrategy is no longer interested in its original software business? Not quite. Saylor clarified that the company continues to operate its software arm, describing it as a “cash cow.” However, the primary focus has shifted to securitizing Bitcoin.

The company has been selling convertible bonds backed by Bitcoin, that offer a range of investment options. Some investors prefer high-risk options, while others prefer less volatile investments. MicroStrategy caters to both by providing exposure to Bitcoin with varying levels of risk.

Saylor also highlighted how MicroStrategy pioneered the Bitcoin-backed bond market, issuing convertible bonds collateralized with BTC. These bonds offer the potential for significant returns while allowing investors to hedge against volatility.

When asked about the impact of new US-listed spot Bitcoin ETFs on the market, Saylor acknowledged that these ETFs increased demand for Bitcoin but warned that they can also introduce volatility. He pointed out that spot ETFs provide one-for-one performance with minimal fees but lack the yields that MicroStrategy can generate through its convertible bond offerings.

Saylor explained that MicroStrategy captures a 50% premium on its bonds and benefits from Bitcoin’s performance on the backend. He also addressed recent outflows from spot Bitcoin ETFs, which he attributed to the fast nature of Bitcoin trading.

“Bitcoin is smart, fast, strong money. It's designed to move quickly and efficiently. It’s fast money that can be traded quickly, and this is a feature, not a bug. It's also designed to be used as a monetary good, and this allows investors to enter and exit positions very quickly. But this fast liquidity is a double-edged sword. It helps in the long run but can also contribute to short-term volatility in the market.”

He further added that, compared to traditional assets, Bitcoin is much more liquid and fungible. Saylor used the example of a missile strike to explain that, unlike real estate, Bitcoin can be quickly traded or moved across borders, making it a valuable asset during periods of uncertainty.

Despite its volatility, Saylor reiterated that Bitcoin acts as “digital gold” over the long term, and its performance, in his view, justifies its use as a store of value.

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