Michael Saylor, founder and executive chairman of MicroStrategy (NASDAQ: MSTR), is arguably one of the biggest Bitcoin (CRYPTO: BTC) bulls on the planet. Ever since his company started aggressively buying Bitcoin in August 2020, he has predicted that the price of Bitcoin has nowhere to go but up. He now thinks that Bitcoin could hit a price of $13 million by 2045.
At the end of October, he delivered more welcome news for Bitcoin investors: the launch of a spectacular $42 billion Bitcoin buying plan during the next three years. That’s roughly equivalent to 3% of all Bitcoin in circulation, and it could set off a huge Bitcoin rally for years to come.
The plan to buy $42 billion worth of Bitcoin
In a call with analysts, MicroStrategy said the next step in what it calls the “21/21 Plan,” is to raise $42 billion, then use it to buy more Bitcoin. Half of the funds, or $21 billion, would come from at-the-market offerings of new shares in the company. The other $21 billion would come from new fixed-income offerings, primarily in the form of convertible debt.
To put this plan into perspective, MicroStrategy already has 252,200 Bitcoins on its balance sheet, worth more than $21 billion at today’s prices. So the plan is to double the company’s current Bitcoin holdings. Already, MicroStrategy has the largest Bitcoin holdings of any company in the world. In fact, MicroStrategy currently holds more Bitcoin than either the U.S. or the Chinese governments.
To call a $42 billion buying spree aggressive is an understatement. As Saylor sees it, though, we’re already in the midst of a decade-long Bitcoin “gold rush,” and he’s determined to transform his enterprise software company into something he’s now calling a “Bitcoin Treasury Company,” or BTC, as a way to capitalize on this.
Will other companies follow MicroStrategy’s lead?
Already, a handful of companies have shown a willingness to follow MicroStrategy. For example, Semler Scientific (NASDAQ: SMLR) is now ratcheting up its Bitcoin buying plans as it increasingly transforms from a medical device company into a Bitcoin Treasury Company. And MARA Holdings (NASDAQ: MARA), the world’s largest publicly traded Bitcoin mining company, has said that it’s about to add a lot more Bitcoin to its balance sheet.
Why are they doing this? The answer is simple: as long as the price of Bitcoin continues to rise, it makes sense from a purely financial and accounting perspective. In fact, MicroStrategy now uses a metric known as Bitcoin yield to guide its Bitcoin buying activity. Bitcoin yield is defined as the period-to-period percentage change of the ratio between the company’s Bitcoin holdings and its assumed diluted shares outstanding.
