I don't understand companies whose only purpose is to hold Bitcoin. If you're not producing cash flow through other means, how are you going to grow the "Bitcoin per share"?
What's the problem these companies are solving that a Bitcoin ETF doesn't solve already?
are is through other understand If solve problem ETF whose don't to Bitcoin. per means, solving to "Bitcoin the companies going purpose you I producing hold are a companies already? cash how that grow the not Bitcoin you're doesn't flow share"?
What's these only
I think they’re a product of the fiat system. Without the brrrr available I do not think they would exist.
In the case of MSTR its securities are its products. I.e. it creates a variety of ways you can get exposure to bitcoin. E.g. What if you want exposure but can only buy bonds? Or you want income?
These two slides are from MicroStrategy’s Q3 2024 earnings call.
Thanks. So, assuming you buy a bond denominated in fiat at X%, is MSTR assuming the risk of Bitcoin outperforming the bond rate?
Hmm not entirely sure what you mean.
When MicroStrategy issues a bond it’s typically at a very low interest rate (sometimes 0%). And the proceeds are used to buy Bitcoin so I guess they’re betting Bitcoin will grow faster than that low interest rate
Investors are willing to buy those bonds at low interest rates because they can be converted to shares of MSTR at a certain price. I.e. they can buy $100 worth of these bonds, have essentially no risk of losing their initial investment (in nominal terms at least), but they still have some exposure to the upside of Bitcoin. If bitcoin rips (likely so does MSTR) they can convert their bonds to shares at a profit.
The convertible bonds are just one of the securities MicroStrategy issues though. They have the common stock, MSTR, and now a variety of preferred stock which kinda sit between equity and debt e.g. STRF, STRK
Which gets kinda complicated, but they’re goal in issuing these securities is always to increase bitcoin per share
Sorry for the long message, hope that makes sense
Thanks for the detailed response. I understand what you mean
These companies are using Bitcoin to keep debt based fake money on life-support.
