Last Thursday (January 28), the CFO and CEO of Nasdaq-listed business intelligence company MicroStrategy Inc. (NASDAQ: MSTR) talked about Bitcoin during the company’s Q4 2020 Financial Results webinar.
On 11 August 2020, MicroStrategy announced via a press release that it had “purchased 21,454 bitcoins at an aggregate purchase price of $250 million” to use as a “primary treasury reserve asset.”
Michael J. Saylor, Co-Founder, Chairman, and CEO of MicroStrategy, said at the time:
“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.”
Since then, MicroStrategy has made several more large purchases of Bitcoin for its treasury. However, now, it seems that the company has decided to make an even stronger commitment to Bitcoin.
During MicroStrategy’s Q4 2020 earnings call, Phone Le, who is the company’s President and CFO, had this to say about Bitcoin:
“… regarding our Bitcoin strategy, our pioneering decision to make Bitcoin our primary treasury reserve asset has made MicroStrategy a thought leader in the cryptocurrency market and generated great interest in MicroStrategy as a corporation. Going forward, we continue to plan to hold our Bitcoin, invest additional excess cash flows in Bitcoin and explore various approaches to acquire additional Bitcoin as part of our overall corporate strategy.“
And Saylor, MicroStrategy’s Chairman and CEO, added:
“A few words on our capital allocation strategy. As you know, we’ve been using Bitcoin as our treasury reserve asset, and we continue to believe that Bitcoin serves as the best store of value.
“And it’s a very attractive investment asset with more long-term appreciation potential to holding cash. Going forward, we’re going to pursue two corporate strategies. One strategy is to grow our enterprise software business. The other strategy is to acquire more Bitcoin.
“It is a Bitcoin strategy. That means we’re not only holding our Bitcoin as a primary treasury reserve asset, but we’ll also be seeking to actively acquire additional Bitcoin as part of our overall corporate strategy…
“Our view of Bitcoin is it is the technically superior digital asset in the world. It is a superior asset for storing value over the long term…
“That means we expect capital to flow into this asset from other weaker assets or other assets that don’t have the favorable technical characteristics of Bitcoin.“
Saylor also talked about MicroStrategy’s upcoming Bitcoin for Corporations summit (which is being held on Wednesday, February 3, 12:00 – 4:45 pm EST).
“We intend to continue in our role as an innovator and as a market thought leader in the space. One thing we’ve done is prepared a Bitcoin corporate playbook, and we have gathered all of our documents related to governance, to accounting, to security, to technical protocols, to finance that we believe would be interesting to other corporations that wish to integrate Bitcoin into their corporate strategy. And we’re going to open source these documents and make them freely available to the world. We think it’s good for the industry, we think it’s good for us.
“And if you sign up for our Bitcoin for Corporations Summit next week, you’ll be able to get early access to these documents. We will go beyond this to make other Bitcoin education materials available to anyone in the world that’s interested in them. We have done that up to now by placing many of these education materials on our hope.com domain. So if you ever want to know more about Bitcoin, just remember, Bitcoin is hope and type H-O-P-E, and you will go to our hope domain, and you will see not only the ability to sign up for this conference but also all of the other Bitcoin materials we have gathered and curated.“
As for his role as a Bitcoin evangelist, Saylor said:
“I continue to advocate the Bitcoin standard and evangelize Bitcoin as a solution to many problems that corporations and individual investors around the world face. We’ve had good success in our outreach…
“We believe this is good for Bitcoin. We believe it’s good for MicroStrategy’s brand. We believe that it’s going to help us to grow our enterprise software business, as well as to pursue our Bitcoin strategy. And so far, we’ve seen lots of positive benefits from our educational initiatives.“
Then, during the Q & A session, Saylor made some more interesting comments about Bitcoin.
One of those questions was if MicroStrategy was “a software company or just a Bitcoin investment vehicle.”
“We’re a global leader in enterprise analytics, software, and services. We continue to operate the software business, as we have over the last 30 years. But at the same time, Bitcoin is an important part of our strategy. We have a Bitcoin strategy in addition to our software strategy.
“So if you just keep in mind that we’ve got two strategies, we’re going to pursue them both very enthusiastically, then I think that’s the best way to think about the company. We’re going to grow our enterprise software business, and we’re going to acquire additional Bitcoin on the balance sheet.“
And when asked if MicroStrategy’s Bitcoin strategy depended on “selling high and buying back more Bitcoin at lower prices”, Saylor replied:
“No. No, it doesn’t. Our belief is that Bitcoin is the first effective digital monetary network, and it’s going to grow over time. We’re early adopters, the early Bitcoin holders or adopters…
“I think the price will continue. And certainly, there’s no reason why it shouldn’t replace gold as a non-sovereign store of wealth, and gold is a $10 trillion asset class. So we don’t try to time the market. We don’t think there’s any particular point at which you would ever trade out of the market.
“Bitcoin is a better safe-haven asset than gold. If, in the future, God comes down and invent something better than Bitcoin and more money and more people adopted that, and that becomes bigger and stronger and better, and we see that, well, we’ll share that with our shareholders. And we may incorporate that into our treasury reserve strategy. But right now, Bitcoin seems to be a dynamically strongest asset and a technically superior asset.
“So we just intend to progressively acquire more Bitcoin. And we’ll probably do it at prices that are going up. I think when we acquired Bitcoin at $11,800, then we did it at $10,000 when it dipped down, and we did it at $19,000, then we did at $21,000, then we did it at $31,000. We’re not really attempting to time the market. We’re strategic buyers, and we’re looking out a decade or longer, which we think is the right way to think about this…“