Michael Saylor’s Personal History With BTC
Michael Saylor’s Personal History With BTC
This is the tale of the man who became the first CEO of a publicly listed firm to make a long-term investment in Bitcoin.
In the summer of last year, no one in the crypto community had heard of Michael J. Saylor. His message has a lot of weight these days — and the ability to drive Bitcoin’s price fluctuations.
On Aug. 11, 2020, when the MicroStrategy CEO announced that the Nasdaq-listed business intelligence firm was making a long-term investment of $250 million in Bitcoin, it all began. He described Bitcoin as a “reliable store of value and an attractive investment asset with greater long-term appreciation potential than cash.”
Those four words — “dependable store of value” — are powerful ones on Wall Street. A store of value is an asset that will be worth the same or more in the long run rather than depreciating, such as gold. And with the Federal Reserve printing trillions of dollars to cover COVID-related stimulus spending, the dollar is starting to look dangerously inflationary.
Saylor’s statement was a first: a prominent public company’s head calling Satoshi Nakamoto’s cryptocurrency a long-term investment and putting his corporate treasury where his mouth is.
On Sept. 15, Saylor increased his investment in MicroStrategy by adding another $175 million to the company’s balance sheet. This new infusion of cash allowed them to purchase a total of 38,250 BTC.
The organization’s haul has since exploded. As of March 1, the company held 90,859 BTC for around $2.2 billion. Later in the month, when Bitcoin hit a new all-time high of $61,683, that investment was worth over $5.6 billion. MicroStrategy was sitting on paper earnings of $3.4 billion — seven months after making its audacious wager.
The company’s annual revenue is strong, aside from BitCoin. It has however declined slightly for seven consecutive years and was only $481 million in 2020.
Saylor announced the initial $250 million Bitcoin investment when MicroStrategy’s stock was trading around $135. Since then, the share price has jumped exponentially, even reaching record highs of $1,272 on Feb. 9th; that’s an 842% increase! The company might have cooled down a bit since then, but even today’s prices at $631 per is nothing to balk at.
Saylor is a genius based on the only measuring stick that matters on Wall Street.
Since MicroStrategy went public with its investment in Bitcoin, many companies have followed suit and invested billions of dollars into the cryptocurrency. Even investing legends such as billionaire Stanley Druckenmiller, who previously said he didn’t want to own any crypto, have now acknowledged that BTC has a place in investors’ portfolios.
This past March, Visa announced plans to let customers spend cryptocurrency directly at 70 million merchants worldwide. This not only includes retail stores but also online platforms and service providers. Not to be outdone, major banks such as JPMorgan and Morgan Stanley have started offering crypto investments to wealthy clients and institutional investors. Matt McDermott, head of digital assets for Goldman Sachs said in early March that 40% of the bank’s institutional customers already had some exposure to cryptoassets confirming that this trend is here to stay. When asked about her stance on cryptocurrencies during her confirmation hearings, treasury secretary Janet Yellen didn’t hesitate to reaffirm her negative view saying “I think many [cryptocurrencies] are used – at least people believe – primarily for illicit financing.”
While Saylor may not be credited with bringing Bitcoin to the mainstream, it’s fair to say that his very large investment and loud evangelism helped.
“Michael Saylor’s decision to invest MicroStrategy’s treasury has paved the way for other business executives to consider integration of Bitcoin into their balance sheets,” Anchorage co-founder and president Diogo Mónica said.
“2021 has witnessed a deluge of institutional, blue chip, and general attention to digital assets. The institutional tone has changed from one of begrudging acceptance to one of demand for particular types of involvement.”
Saylor’s August announcement proclaimed Bitcoin to be “digital gold.” He went on to say that it is “…harder, stronger, faster, and smarter than any money that has preceded it.”
While the phrase was popularized by New York Times reporter Nathaniel Popper in his widely praised 2014 book, “Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money,” it was an extreme statement from the head of a major public corporation at the time. Bitcoin was valued at about $11,400 at the time.
By November, Rick Rieder–the chief investment officer for global fixed income at BlackRock (with $7.8 trillion under management)–was telling CNBC that Bitcoin could potentially “replace gold.” At the time, Bitcoin waspriced at $18,600.
By January, Anthony Scaramucci–whose titles include founder of venture capital fund SkyBridge Capital and former White House Communication Director for a measly 10 days–had this to say about Bitcoin: “Bitcoin is better at being gold than gold is at being gold.” His statement came when Bitcoin was priced at $34,200.
“When he first announced MicroStrategy’s Bitcoin investment, Saylor described the company’s objective as becoming “the primary treasury reserve asset” in reference to Bitcoin,” according to Investopedia.
Since then, his aspirations have increased. In February, he said that MicroStrategy was no longer just a software firm and it was no longer only investing its extra cash in BTC to avoid losing money to inflation. On Feb.17, Saylor revealed that MicroStrategy planned to sell $900 million in debt to buy more BTC — which it did successfully buy for just over $1 billion a week later when Bitcoin was priced at around $49,600.
Beyond that, Saylor has been portraying himself as a corporate expert on Bitcoin purchases. And to be honest, he’s making progress.
Saylor hype up the “Bitcoin for Corporations” virtual event that took place in February, telling Time shortly before it occured that 1,400 attendees had signed up. He was significantly overestimating attendance numbers, as he later told Time:
“I thought maybe a couple thousand people would show up. It ended being more than 10 thousand each day though, and we even overloaded our video server.”
By the time Saylor entered the picture, Bitcoin had already secured a foothold among Wall Street banks and was well on its way to becoming the world’s first billion-dollar cryptocurrency.
He was able to converse with corporate executives in their own language because he had run a stable and successful firm for decades. He was, however, a showman more than capable of the very bombastic claims that crypto enthusiasts on Reddit and Twitter adore, even by industry standards.
This tweet is pinned at the top of his Twitter feed: “#Bitcoin is a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth, exponentially growing ever smarter, faster, and stronger behind a wall of encrypted energy.”
He also managed to not-quite take credit for Elon Musk’s $1.5 billion Bitcoin purchase for Tesla’s treasury, even though it was his idea.
On Dec. 20, Saylor tweeted in response to Musk’s tweet about Bitcoin by suggesting that he would do Tesla shareholders a huge favor by investing the electric car company’s treasury into BTC.
“If other firms on the S&P 500 were to follow your lead, it could grow to become a $1 trillion favor,” he added. When Musk replied by asking if “such large transactions are possible,” Saylor responded.
“Yes. In recent months, I’ve spent over $1.3 billion in Bitcoin and would be glad to share my strategy with you offline.”
On March 21, Time did an interview with Saylor in which they called him a “crypto guru” because of a simple Twitter conversation.
When asked if he had spoken to Musk, Saylor replied that it would be “against business etiquette” to comment.
Saylor, when asked whether he believed the Twitter spat influenced Tesla’s selection, responded with a one-word answer: “Yes.”
Another reason Saylor is an ideal fit for the role of Bitcoin evangelist is that, like Bitcoin, he has spent two decades building a reputable corporate CEO reputation but is still trying to shake off an earlier bad reputation — much as Bitcoin continues to fight against its image as a money used by tax evaders and Silk Road-style dark market dealers in illicit drugs and even less desirable items.
He, along with two other top MicroStrategy executives, settled fraud allegations brought against the firm by the United States Securities and Exchange Commission in December 2000 over claims that it had misstated revenues, inflating profits into losses.
Before the SEC case, when MicroStrategy shares soared due to an incorrect story about their revenue, Saylor had pledged $100 million to create an online university with the goal of “free education for everyone on earth.” Even though this seems like a tall order that hasn’t been met yet, it’s one he’s still working towards.
According to the organization, after restating its earnings for 1997 through 2000, the firm’s share price plummeted from $333 to $33 in a few months, including a 60% single-day plunge.
The three officers and the company agreed to pay $11 million to settle the charges without admitting any guilt.
Saylor, as a majority shareholder, took the brunt of the financial damage and reportedly is no longer a billionaire.
Time and Bitcoin have a way of healing all wounds, and it isn’t just MicroStrategy that has put its money where its mouth is. Saylor is said to own roughly $300 million in bitcoin today, at current rates.
Given his stake in MicroStrategy, Saylor may be worth as much as $3 billion.