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In this new Bitcoin-centric financial ecosystem, the old metrics of corporate valuation will become obsolete. BTC yield will reign supreme, as shareholders and investors focus singularly on the growth of Bitcoin holdings per share. The pioneering work of MicroStrategy and others is just the beginning of this historic shift.
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The Rise of Bitcoin-Backed Corporate Finance
The Pioneering Strategies of MicroStrategy and Others
The Corporate Treasury Strategy for Bitcoin
The corporate treasury strategy for Bitcoin has evolved significantly over the past few years. Back in August 2020, MicroStrategy's Michael Saylor first announced the company's decision to put its cash reserves into Bitcoin, viewing it as the "fastest horse" and "digital gold."
However, the Playbook has become much more advanced and well-oiled since those early days. MicroStrategy has rebranded itself as a "Bitcoin Treasury Company," with a novel strategy that goes far beyond simply holding Bitcoin on the balance sheet.
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The key innovation is the concept of "BTC yield" - measuring a company's performance not by traditional metrics like earnings per share, but by the amount of Bitcoin held per fully diluted share. This flips the traditional corporate finance model on its head, as companies now seek to maximize their Bitcoin holdings through strategic equity and debt issuance, rather than minimizing capital and returning it to shareholders.
The Power of Dilution
The announcement of MicroStrategy's $42 billion capital raise, including the largest-ever at-the-market (ATM) equity offering, exemplifies this new approach. Traditionally, such dilution would crater a company's stock price. But for MicroStrategy, its shares actually outperformed Bitcoin on the day, as shareholders cheer the company's ability to rapidly increase its Bitcoin holdings per share.
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This is a remarkable shift. Whereas traditional corporate finance has been about minimizing capital, reducing volatility, and returning cash to shareholders, MicroStrategy is intentionally embracing dilution, volatility, and capital expansion - all in service of accumulating more Bitcoin.
The Bitcoin Denominated Investor
For Bitcoin-denominated investors, this BTC yield metric is the key benchmark. Rather than valuing companies based on earnings multiples or net asset values, the focus is on the growth of Bitcoin holdings per share. This aligns perfectly with the Bitcoin ethos of using the cryptocurrency as the unit of account and store of value.
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Importantly, this strategy is not limited to MicroStrategy. Companies like MetaPlane in Japan are also adopting similar approaches, tailoring the model to their local environments. And the potential for this to spread is immense, as trillions of dollars in institutional capital seek exposure to Bitcoin in a way that traditional investment vehicles cannot provide.
The Hyperbitcoinization of Finance
Looking ahead, the implications of this corporate Bitcoin treasury strategy are profound. As more companies embrace Bitcoin as a core part of their balance sheets and financing strategies, it will drive the "hyperbitcoinization" of finance.
Traditional fixed income markets will be disrupted, as Bitcoin becomes the preferred collateral for lending. Banks will rush to custody Bitcoin, not just to hold, but to lend against. And a new class of Bitcoin-denominated securities, from convertible notes to structured products, will emerge to satisfy institutional demand.
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