MicroStrategy CEO defends bitcoin purchases, compares them to early investment in Facebook

MicroStrategy CEO Michael Saylor defended his enterprise software company’s debt-funded bitcoin purchases on Friday, telling CNBC he viewed the cryptocurrency purchase right now as comparable to the investment in Facebook at the start of the social network.

“We have $ 2.2 billion in debt and we’re paying about 1.5% interest, and we have a very long time horizon,” Saylor said on “Squawk on the Street”. “Our point of view is that being a leveraged, long-running bitcoin company is good for our shareholders.”

MicroStrategy has become well known on Wall Street over the past year after the Virginia-based company began buying and holding bitcoin, initially using cash on its balance sheet to acquire digital tokens before turning to the market. of debt to make more purchases. Saylor’s own profile has skyrocketed as the executive evangelized what he believes to be the great potential of bitcoin, comparing it to “digital real estate.”

Some people are very skeptical of MicroStrategy’s bitcoin bet, concerns that have only been magnified in recent months as the world’s largest cryptocurrency by market value went through a period of weakness.

“If you borrow billions of dollars at 1% interest and invest it in the next big tech digital network that you think is the main Amazon or [Alphabet’s]gugg Google or Facebook money, why don’t you? ”Saylor.“ I mean, if I could borrow $ 1 billion and buy Facebook ten years ago for 1% interest, I think I would have very well done. “

Facebook went public in 2012, about eight years after its inception. Its public debut got off to a rocky start, but has since grown into a business worth over $ 1,000 billion in market value.

MicroStrategy CEO Michael Saylor speaks at the 2021 Bitcoin Convention, a cryptocurrency conference held at the Mana Convention Center in Wynwood on June 4, 2021 in Miami, Florida.

Joe Raedle | Getty Images

MicroStrategy’s shares have risen about 400% in the past 12 months, although the stock has more than halved since it hit $ 1,315 on February 9.

The company’s first bitcoin purchase was announced last year on August 11, with the purchase of 21,454 bitcoin for an aggregate price of $ 250 million including fees and expenses. In August of last year, bitcoin was trading in the low range of $ 11,000.

As of June 30, when the company’s second quarter ended, MicroStrategy held a total of 105,085 bitcoins at a total cost of $ 2.7 billion. This bitcoin treasure was valued at around $ 4 billion, based on Friday’s trading price of around $ 39,000, according to Coin Metrics.

Bitcoin hit a record high of nearly $ 65,000 per token in mid-April, coinciding with the excitement surrounding the successful direct listing of the crypto exchange Coinbase, which fizzled out after a first pop. Bitcoin has also struggled since, falling twice below $ 30,000.

“Everyone is looking for this open way to store value and move it at the speed of light using a computer chip and a cell phone,” Saylor said. “You had Google. They created digital books. You had Facebook; they created digital communications. Apple gave us digital music and Amazon gave us digital retail. Bitcoin is digital property on a large, open, technological money network. “

“Our point is that it’s only a matter of time before billions and billions of people have cell phones plugged into bitcoin, and we just want to be there first,” said Saylor.

In further advocating for the company’s bitcoin game, Saylor said it helped MicroStrategy’s business intelligence software operations. In the second quarter, total revenue increased 13% year-over-year to $ 125.4 million. That’s up 6% from the second quarter of 2019, when the coronavirus pandemic had yet to disrupt the global economy.

“It’s a door opener,” Saylor said of the company’s bitcoin association. “It is very important that people know who you are. This starts the conversation. It’s been great for our enterprise software business and it’s been great for employee morale as well.

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