Fears Strategy (MSTR) Will Be Forced to Sell Bitcoin Chairman Michael Saylor told CNBC that falling prices were “unfounded concerns” and reiterated the company’s commitment to continued purchases.
“Our net leverage is half that of a typical investment-grade company,” Thaler said. “We have 50 years of dividends and Bitcoin, and we have two and a half years’ worth of cash dividends on our balance sheet… We’re not going to sell, we’re going to buy Bitcoin. I predict we’ll be buying Bitcoin every quarter forever.”
Last week, the company accumulated 1,142 Bitcoins at a price of about $90 million, with an average price of $78,815 per coin. The company currently has a total stack of 714,644 Bitcoins, with a purchase price of approximately $54.35 billion, bringing the average cost per Bitcoin to $76,056, well above the current price of approximately $69,000.
Thaler’s comments come as Bitcoin has seen significant volatility over the past few months (with almost all losses), although he emphasized that volatility is part of the asset’s design. “The key thing to remember is that Bitcoin is digital capital,” he continued. “It’s going to be two to four times more volatile than traditional capital like gold or stocks or real estate. It’s going to perform two to four times more than traditional capital over this decade. It’s the most useful global capital asset in the world, and you can put more leverage on it. You can trade it in more ways than any other type of capital asset. So volatility is the problem, but volatility is the characteristic.”
Strategy reported an operating loss of $17.4 billion and a net loss of $12.6 billion in the fourth quarter, which mainly reflected non-cash mark-to-market accounting related to the decline in Bitcoin prices. The results highlight how fluctuations in the value of cryptocurrencies continue to impact the company’s financial statements despite its long-term investment strategy.
Thaler also addressed the idea that Bitcoin’s current price levels could represent a new form of market maturity, which he believes is a good thing.
Saylor said Strategy’s balance sheet and digital credit business are core to its strategy. The company’s digital credit structure has become one of the most actively traded credit instruments of the decade, generating much higher cash flows than traditional fixed income products and far exceeding preferred stock trading volumes.
“There is no credit risk on the company’s balance sheet,” he said.
Thaler declined to provide short-term Bitcoin price predictions but reiterated confidence in long-term performance. “I don’t really make predictions beyond 12 months. I think Bitcoin will double or triple the performance of the S&P over the next four to eight years. I think that’s the only thing we need to know.”
The company’s shares fell 3% on Tuesday, bringing their year-to-date decline to 15% and year-on-year decline to 60%.
