What is MicroStrategy?
Before it added Bitcoin to its balance sheet, MicroStrategy was best known for its business intelligence software solutions, which were designed to help businesses more easily analyze data for improved decision making. Founded in 1989 by Michael Saylor, MicroStrategy quickly became successful, going public and trading on the NASDAQ in 1998 as MSTR. However, just two years later, Saylor and two other top executives at MicroStrategy had to settle a case with the SEC, which alleged that the company had “materially overstated revenues and earnings from the sales of software and information services.”
MicroStrategy’s Bitcoin Treasury Reserve
In 2020, MicroStrategy made a groundbreaking move: the company adopted Bitcoin as its primary treasury reserve asset. Concerned about the devaluation of the United States dollar and fiat currency due to inflation, Saylor spearheaded the company’s first purchase of $250 million in Bitcoin as a hedge against economic uncertainty. “This investment reflects our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash,” he said at the time.
Michael Saylor, Bitcoin Bull
Though Michael Saylor is now one of the loudest voices advocating for Bitcoin, he wasn’t always a Bitcoin bull. Just seven years before his company adopted the crypto as its main reserve asset, Saylor posted on Twitter that “#Bitcoin days are numbered. It seems like just a matter of time before it suffers the same fate as online gambling.” Since then, Saylor has done a complete 180°, claiming Bitcoin is the best long-term asset to hold while committing to “buying the top forever,” referring to consistently purchasing the asset at its peak prices—which MicroStrategy continues to do.
The Case Against MicroStrategy’s Bitcoin Reserve
MicroStrategy’s persistent Bitcoin acquisitions via the sale of debt has faced scrutiny by analysts and media in the space. In November 2024, Robinhood-backed Sherwood Media outlined the “math problem,” with MSTR being worth 3x the amount of BTC that it holds and the potential of forced liquidations in a drawdown. These ideas have seeped into the wider crypto community as well, with formerly bullish Citron Research taking a short position in November 2024, betting on the share price of MSTR to go down.
The Future of MicroStrategy
Other companies have adopted MicroStrategy’s Bitcoin reserve strategy, including Japanese firm Metaplanet and Canadian crypto firm Matador Technologies. While MicroStrategy has continued its consistent Bitcoin purchases, the firm signaled in October it has no plans on slowing down in the future. At that time, MicroStrategy announced plans to raise up to $42 billion in order to add more of the leading cryptocurrency asset to its balance sheet.
Conclusion
In conclusion, MicroStrategy’s journey from software company to Bitcoin-focused institution is a remarkable one. From its humble beginnings to its current status as a leader in the cryptocurrency space, MicroStrategy has consistently demonstrated its commitment to innovation and its willingness to take calculated risks. As the company continues to grow and expand its Bitcoin holdings, it will be interesting to see how its strategy evolves and what impact it will have on the broader cryptocurrency market.
FAQs
Q: What is MicroStrategy’s business model?
A: MicroStrategy’s business model is centered around providing business intelligence software solutions to help businesses analyze data for improved decision making.
Q: What is MicroStrategy’s relationship with Bitcoin?
A: MicroStrategy has adopted Bitcoin as its primary treasury reserve asset, purchasing millions of dollars’ worth of the cryptocurrency to hedge against economic uncertainty.
Q: Who is Michael Saylor?
A: Michael Saylor is the co-founder and CEO of MicroStrategy, a position he has held since the company’s inception in 1989.
Q: What is the “math problem” referred to in the article?
A: The “math problem” refers to the idea that MicroStrategy’s Bitcoin holdings are worth 3x the amount of BTC that it holds, and that the company may be forced to sell its Bitcoin holdings to repay its debt, which could have a negative impact on the price of Bitcoin.
Q: What is Citron Research’s position on MicroStrategy?
A: Citron Research has taken a short position on MicroStrategy, betting on the share price of MSTR to go down.
Q: What is MicroStrategy’s plan for the future?
A: MicroStrategy has announced plans to raise up to $42 billion in order to add more of the leading cryptocurrency asset to its balance sheet, and has signaled that it has no plans on slowing down in the future.
