MicroStrategy owns almost 2% of all circulating bitcoin — now what?

Bitcoin famously has a coded limit on how many of the asset can be mined going forward — an even 21,000,000 coins. At time of publication, more than 19.6 million of those 21 million bitcoins have been mined, meaning that 93% of all bitcoins that will ever be produced already have been.

While it’s impossible to determine exactly how many bitcoins have been lost — estimates range from 20% to nearly 40% — these lost coins play a crucial role in determining how widespread and evenly distributed ownership of the currency is. In this sense, what’s good for Michael Saylor and MicroStrategy might not be good for a decentralized protocol.

According to the most recent 8K for MicroStrategy, the company holds 214,246 bitcoins. Ultimately, this means that one company now controls between 1.3% and 1.8% of all bitcoin that can ever be moved.

Read more: MicroStrategy hints at bitcoin bag dump while offloading shares

Concerns for MicroStrategy not Bitcoin

While it’s not impossible to imagine a world where MicroStrategy continues to buy as much bitcoin as possible for decades to come, harming the decentralized nature of Bitcoin and exerting a level of monopolistic power over the protocol, what’s far more likely is that Saylor’s buying spree winds up hurting MicroStrategy and possibly Bitcoin.

This is due to the fact that cornering any market, while perhaps profitable at first, needs to be unwound. When this unwinding occurs, devastation is wrought.

There have been several instances in the past century where commodities markets were cornered by individuals. Those people were never able to keep the markets cornered and prices up, and almost all went down in infamy.

One such example is the Sumitomo Copper Affair when Yasuo Hamanaka and R. David Campbell devised a scheme to drive copper prices while creating fake demand. While the price of copper stayed high for years, after the duo were punished by regulators for their impropriety, copper markets collapsed and remained low for nearly a decade.

Another famous instance of market cornering was ‘Silver Thursday.’ In 1980 the Hunt brothers were able to successfully control roughly a third of all freely traded silver markets — until the price dipped below their margin requirements and they were liquidated. This ended up bankrupting the brothers and decimating the price of silver, which has never recaptured those highs.

Of course, Saylor and MicroStrategy don’t control anywhere near the 33% of the market that the Hunt brothers controlled, but it stands to reason that the more leverage you utilize, the more you need price to stay up. Also, the more of a not-super-liquid asset that you own, the harder it will become to position yourself and your company to come out in profit and on the right side of the law.

But, hey, maybe this time it’s different.