MicroStrategy never stops to amaze with its commitment to Bitcoin strategy. The company announced yesterday the rebranding and going forward it will operate under the name Strategy. It is not simply Strategy, but Strategy with bitcoin symbol - ₿ at the end. In other words, MicroStrategy no more. It is now Strategy to the power of Bitcoin. Michael Saylor likes symbolism and he is very good at it too. His ability to explain complex concepts in simplest terms, especially when it comes to the topic of money and bitcoin, is brilliant and enlightening. He has a good number of critics as well. However, so far Saylor has been able to prove them all wrong.
The rebranding seems very simple, apt, and at the right time. It is as if the company was founded two decades ago just for this mission. Imagine it was always going to become the Strategy, but had to walk through its long journey as MicroStrategy until it has evolved into something it was destined to be, that is Bitcoin Reserve Company. Strategy's core business has very little to do with what the company actually is. Its bitcoin strategy worked so well, that core business operations are very small compared to its market cap. That is not to say company's core business is not important. It is because of its core business Strategy has achieved this success so far. If it wasn't a publicly traded operating company, it wouldn't be able to implement innovative financial strategies that allowed the company to accumulate hundreds of thousands of bitcoin and grow it market cap to almost hundred billion dollars.
I will never stop talking about Saylor and his Strategy. People will never stop discussing the company and what he has accomplished. History books will not forget the role it has played in bitcoin's journey. Universities will have courses on this topic. Yet, this is not the end of the book. It is simply turning to the next chapter, which I have no doubt will be very interesting to observe as things unfold and how Strategy will reach epical heights. The Strategy has fully formed as company with a core strategy of leading the way in transformation of finance, markets, and business into the bitcoin standard world.
It wasn't too long ago, Saylor and Strategy plunged into this journey. It seems Strategy has been part of bitcoin's life forever, but it was only 4-5 years ago Saylor truly discovered bitcoin and found a way forward for his company through adopting bitcoin as its treasure asset. I don't think even Saylor knew at that time how far the company would come in only four years, and how it would transform the company completely from a business analytics software to a Bitcoin Reserve Company. Consider this, Saylor was ready to retire and leave the company. The company was at the point that Saylor couldn't offer anything else to make it any better. At the same time, the inflation during pandemic made Saylor to reevaluate companies treasury strategy and research options to preserves its half a billion dollars of cash.
Inflation is a norm in fiat system. With the USD Fed's ability to keep inflation at or around 2% made it so it wouldn't be too noticeable. Many other fiat currencies experience much higher inflation throughout currencies existence, and inflation is very noticeable and has huge negative impact on daily lives of ordinary people. Keep low inflation such as 2% regularly may create an illusion of no inflation. Covid changes things. Massive printing revealed the true nature of monetary inflation. It devalues the money people hold in cash. It devalues people regular incomes. Companies like MicroStrategy that have half a billion dollars in treasure see how the value of their holding is disappearing quickly. Saylor explained the situation very well, company makes $50-$75 million in profits annually. But because of inflation it is losing the same amount of value by holding fiat in treasury. All the work, all the energy input was resulting in net zero gains. As a CEO of a publicly traded company Saylor had a fiduciary responsibility to come up with a solution that wouldn't lose value for company's shareholders.
After extensive research into different types of investments including bitcoin, Saylor find the best solution for the problem. However, this solution was also super risky. Nobody has done yet. It is risky from investment point of view, and also legal point of view as well. We didn't have pro-bitcoin government at that time. The government and its agencies were hostile against bitcoin if anything. Things have changed now. MicroStrategy may have played a role in these changes as well. Once invested in bitcoin, Saylor became a vocal supporter of the bitcoin as a financial instrument, revolutionary technology, and something that has a potential of benefitting humanity.
Saylor has become an influential figure in bitcoin, financial, and business worlds. He was able to deliver impressive speeches, interviews, and self published content that nobody has done before. His approach in bitcoin education and bitcoin adoption is very unique one. He has his own style, a very effective one. He was able to convince others business leaders like Musk that bitcoin is a good investment for companies. However, his success in convincing companies hasn't been massive. Otherwise we would see hundreds of MicroStrategy like companies. He has made a bitcoin pitch presentation for Microsoft's board and shareholders in December. That didn't win over any votes for bitcoin. Microsoft shareholders overwhelmingly voted against considering bitcoin strategy. Other companies have their own journeys, and there are many others things they need to figure out for themselves. It is not Saylor's responsibility to convince them about bitcoin. Yet, he is generous enough to share his time and wisdom with those who are interested.
When it all started for Strategy, it was very risky move. Today, Strategy spends tens of billions buying more bitcoin. Spending 2-3 billion to buy more bitcoin in a week is a normal week for the company. What the company does today seems a lot less risky than the early days of bitcoin treasury strategy. It is one thing to understand that bitcoin is a revolutionary technology, and great investment asset. It is completely different thing to implement this idea for a publicly traded company. There are financial risk, there are legal obstacles, there are executives and shareholder to convince. At the end it may seem like just buying the bitcoin and holding. But there is a lot of legal prep work, research to be done to avoid risks, and making sure there are clear guidelines to follow, and security measures are in place. With traditional assets all the templates and blueprints are ready. With bitcoin, blueprints had to be created from scratch.
Initial bitcoin move by MicroStrategy was the most riskiest one, but it also was the simplest and made the most sense. The strategy turned out to be a great idea and the company achieved great success. It didn't have to do anything else. The bitcoin treasury strategy worked perfectly. Saylor became very obsessed with bitcoin, and continued researching and exploring what else company could do with bitcoin. And that began the refining and improving phase of their strategy. The company was able to obtain loans in billions at near zero interest rates. Free money - Saylor thought and kept buying more bitcoin. When bull market started, the strategy started paying off and $MSTR prices kept going up, more and more investors started joining the journey.
It didn't take too long for Saylor to discover the "loopholes" a publicly traded company can't utilize to obtain more capital by issuing bonds and stocks at favorable to company terms. The money raised was always going to buy bitcoin. Traditionally, publicly traded companies would raise capital by issuing bonds or stocks to cover their operational costs and projects. The same option was available for MicroStrategy, and instead of raising this money and spending it, they used the proceeds to keep buying bitcoin. The complete transparency and clear delivery of the plan earned the company trust among many investors. If this was working to get billions, why not $42 billion? This is what the company announced last November, a three year plan to raise $42 billion more to buy more bitcoin. The very next week MicroStrategy was buying billions worth bitcoin. I didn't do the math, but the rate they have been spending money, they may have gone through $21 billion already or very close. Once $42 billion worth bitcoin buying plan reaches the target, I think they will keep raising the goals. Why stop? If strategy is working? Might as well rebrand to Strategy₿ already. That they did.
