Contrary to popular belief, this decision to sell stems not from a liquidity crunch, but from institutional perception management. Saylor listed the reasons why they were open to selling Bitcoin as follows:
- To refute the arguments of some critics and short sellers that “MicroStrategy can never sell its Bitcoins, therefore these assets are worthless,” Saylor stated that they wanted to prove that the $65 billion in assets on the balance sheet were “real and liquid.”
- To use Bitcoin’s capital gains to pay dividends on the “Stretch” (STRC) type credit instruments issued by the company.
- To protect the company’s financial strength by using the Bitcoin spot market, the world’s most liquid market, during times when stock markets are illiquid.
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Saylor likened Bitcoin to a real estate development model: “You buy a piece of land, develop it, and when it appreciates in value, you convert a portion of that value into cash and pay the investor. What we’re doing with Bitcoin is exactly the same thing.” Reminding that Bitcoin appreciates by an average of 30-40% annually, Saylor argued that all dividends could be paid indefinitely with just a small portion of that profit (2.3%).
Responding to claims by renowned gold advocate and Bitcoin critic Peter Schiff that “MicroStrategy is a Ponzi scheme,” Saylor stated that MicroStrategy is a “Digital Treasury Company.” He explained that they create Bitcoin-based lending vehicles (STRCs) for investors wary of Bitcoin’s volatility, thereby generating returns from digital capital.
*This is not investment advice.