Industry News MicroStrategy wants to put its Bitcoin to Work for the Company

MicroStrategy wants to put its Bitcoin to Work for the Company

December 21, 2021

If there is a superstar in the domain of institutional crypto investment, it has to be MicroStrategy. This IT company from the US has managed to become a household name for all fans of cryptocurrencies and especially bitcoin. With a massive investment in crypto that represents a huge piece of its corporate coffers, this business showed time and time again that it is all-in when it comes to its commitment to the BTC. At the same time, it is not some kind of novel startup or some similar venture that only began working in the real world. Instead, it is an established business that has been present on the traditional stock market for years. 

Now, with literal billions of USD worth of bitcoin tokens in its pockets, the company is looking for ways to invest the same crypto clout. Its CEO, Michael Saylor, believes that there are numerous ways it could make its BTC holdings work for it. If any of those turn out to be valid, MicroStrategy might carve out a pathway for other businesses looking to do something similar. That would in turn bolster not just the overall standing of the crypto markets, but also add further institutional investment to the same growing financial and technological landscape.

MicroStrategy BTC Holdings

The crypto-famous company really has an impressive fund of cryptocurrencies. That comes in the form of BTC tokens, which MicroStrategy possesses in huge quantities. As of December 10, the business has precisely 122,478 BTC tokens in its possession. This makes the same business analytics software company the biggest institutional holder of BTC tokens. However, it did not come to this number all of the sudden. Instead, the same business began a prolonged campaign of purchasing bitcoin over a number of years. 

The main drive behind that was Michael Saylor, who did things like adding laser eyes to his profile picture on social media some time ago, signaling publically that his enterprise is interested in crypto. Then, at the end of 2020, the company bought BTC in big waves. Since then, the company purchased around 3.7 billion worth of bitcoin. Right now, their holdings add up to nearly six billion USD or more precisely, 5.8 billion USD. But, Saylor and the company are now working on using the same BTC tokens as a means of actively adding wealth to their corporate coffers. Not only that, but they also have a selection of clear ideas on how that might take place. 

Partner of Trust

The first idea that the MicroStrategy boss presented is probably the least developed. It also has very little to do with the cryptocurrency domain in any shape or form. Instead, Saylor simply envisions finding a reliable and trustworthy counterpart for some kind of a joint venture. If an entity like that is found, the company would be willing to give out a portion of their BTC tokens to the same business or organization. Now, there is no mention of things like startups and esports organizations, which are by default still very risky undertakings. 

Instead, Saylor wants to strike up a partnership with someone like a major tech company or a financial entity. The second group would even include the possibility of partnering up with a bank. Here, Saylor believes that MicroStrategy could act as a financial partner to the other entity in that deal, basically lending out their bitcoin tokens for the purpose of creating the same shared venture. While this option is logical in the broadest financial and business terms, there still remains the question regarding the way this other business would employ the same BTC tokens. 

Debt and Mortgage

The company is open to another more traditional concept that would allow it to earn a profit from its BTC tokens. That would include MicroStrategy putting a mortgage against its BTC tokens and some or all of its bitcoin holdings. The same would end up generating a long-term debt under what Saylor brands as favorable circumstances. 

However unlikely this scenario might be, it is still the most interesting approach that the company and its CEO offered. The way it blends traditional finance and cryptocurrency holdings inside of an institutional framework is also novel and interesting. But, there could be a series of purely technical and regulatory hurdles keeping MicroStrategy away from a scenario like this, even though it could be more than profitable under the right circumstances.

App Development

The last idea that Saylor presents is probably the most ambitious one. It sees the possibility of MicroStrategy developing an application of their own that utilizes bitcoin in some shape or form. Here, the company would use its tech background to build a software application that is not just in the crypto sphere but also uses its existing tokens inside of its ecosystem. 

On one hand, this makes sense as the company already shared its interest in building some kind of an analysis tool for cryptocurrencies, which would be useful to traders, investors, and also people like esports players who might get their salaries or bonuses in this cryptocurrency. But, on the other hand, the use of actual BTC tokens in that setup would not require more than just a couple of tokens, divided into their smallest satoshi elements. A different option would be for MicroStrategy to develop something more akin to a lending program but the SEC already put an end to similar plans in the much bigger Coinbase.

No Active Projects

Despite all of these ideas and concepts, Saylor also took the chance to say that the company did not start to develop any of these in actual projects. The same goes for contacting any potential partners – MicroStrategy did nothing of that. Yet, there is still a sense that the dilemma they are in is more than relevant. Yes, it pays off to invest in bitcoin or some other cryptocurrency if the process is done right. But, even when it is, there has to be a way to further monetize the same holdings.

Source: Coindesk