EddieJayonCrypto
23 Nov 24
Lionel Laurent, a Bloomberg Opinion columnist, argues in a Friday op-ed that MicroStrategy's debt-for-Bitcoin strategy is not sustainable in the long term. Citron Research's disclosure of a short position in the company caused shares to drop by over 16%. MicroStrategy recently became one of the top ...
Bloomberg Opinion columnist, Lionel Laurent, argues that MicroStrategy's debt-for-Bitcoin strategy is not sustainable long-term. Citron Research's disclosure of a short position caused a 16% drop in shares. Despite this, the company has become one of the top 100 U.S. public companies, rivaling Intel, with a valuation 50 times higher since adopting Bitcoin as its treasury asset. MicroStrategy recently completed a $3 billion convertible notes offering to fund future Bitcoin purchases, leveraging cheap debt. However, risks of a Bitcoin price crash and premium over net asset value pose challenges for the company. CEO Michael Saylor acknowledges these risks but asserts that investors have accepted them.
MicroStrategy's bold Bitcoin play involves leveraging cheap debt to fund future purchases. The company's recent $3 billion convertible notes offering, along with its total Bitcoin holdings surpassing $30 billion, exemplifies this approach. Despite potential risks, including a Bitcoin price crash and a high premium relative to net asset value, CEO Saylor remains undeterred. He acknowledges the risk of a potential "extinction-level event" for Bitcoin but notes that investors have accepted this risk.