Opinion:

A recent CoinShares report identifies three primary challenges to MicroStrategy's "21/21 Plan," which aims to invest $42 billion in #Bitcoin over the next three years.

1. Convertible Notes and Rising Interest Rates:

MicroStrategy has utilized convertible notes to fund Bitcoin acquisitions, benefiting from lower interest rates compared to traditional debt.

"CoinShares accurately points out that increasing interest rates on converts could diminish the effectiveness of this strategy, making future borrowing more costly and potentially less attractive."

2. Selling Bitcoin and Yield Potential:

CoinShares expresses concern that selling Bitcoin could negatively impact MicroStrategy's yield potential.

"However, this overlooks MicroStrategy's stated strategy of holding Bitcoin long-term, with no intention to sell. This commitment suggests that the company does not plan to liquidate its holdings, rendering this concern less applicable."

3. Tax on Unrealized Gains:

The report warns that potential future tax legislation could impose significant taxes on MicroStrategy's unrealized gains.

"While tax policies can change, the current U.S. tax system does not tax unrealized gains, and implementing such a policy would require substantial legislative changes. Therefore, this concern appears speculative at this time."

"In summary, while the first concern about rising interest rates is valid, the other two challenges seem less aligned with MicroStrategy's current playbook and the existing tax framework."