Meta shareholders rejected the Bitcoin plan with less than 1% in favour. The proposal called Bitcoin a hedge against inflation and weak bonds. GameStop and Metaplanet are among firms copying Saylor’s Bitcoin play.
Their value-add is that they financialize their bitcoin holdings to grow their bitcoin-backed shares faster than the bitcoin itself. Higher risk than just holding bitcoin or ETFs that just hold bitcoin, but something like 30-40% better returns.
In good times. We’re yet to see how they do in a bitcoin winter.
What does “financialize their bitcoin holdings” mean? Do you mean they use leverage (i.e. debt) to buy bitcoin than they could otherwise? That’s nothing new and is a common ETF strategy (see BITX). And yeah, it also means the bad times hit much harder.
They issue “convertible notes”, which this coindesk article explains far better than I could because I am not a finance head and honestly do not fully understand them.
Yep, that’s leverage. They sold notes which can be converted to shares of microstrategy. So while they don’t have to issue more shares right now (which would dilute shareholders and lower the value of individual shares), they will have to in the future given the conditions on the convertible notes. If they have to convert those notes into shares while the price of bitcoin is dropping, it’s a double whammy because the value of their holdings (which their value is entirely based on) drops AND they’re diluting individual shares by having to issue more shares. This wards off investors which will tank the price even more.
Their value-add is that they financialize their bitcoin holdings to grow their bitcoin-backed shares faster than the bitcoin itself. Higher risk than just holding bitcoin or ETFs that just hold bitcoin, but something like 30-40% better returns.
In good times. We’re yet to see how they do in a bitcoin winter.
What does “financialize their bitcoin holdings” mean? Do you mean they use leverage (i.e. debt) to buy bitcoin than they could otherwise? That’s nothing new and is a common ETF strategy (see BITX). And yeah, it also means the bad times hit much harder.
They issue “convertible notes”, which this coindesk article explains far better than I could because I am not a finance head and honestly do not fully understand them.
Yep, that’s leverage. They sold notes which can be converted to shares of microstrategy. So while they don’t have to issue more shares right now (which would dilute shareholders and lower the value of individual shares), they will have to in the future given the conditions on the convertible notes. If they have to convert those notes into shares while the price of bitcoin is dropping, it’s a double whammy because the value of their holdings (which their value is entirely based on) drops AND they’re diluting individual shares by having to issue more shares. This wards off investors which will tank the price even more.