Last summer, no one in the crypto industry knew who Michael J. Saylor was. Barely a year later, his words have serious weight — and the power to move Bitcoin’s price.
It all began on Aug. 11, 2020, when the MicroStrategy CEO announced that the Nasdaq-listed business intelligence firm was making a long-term investment of $250 million in Bitcoin.
He described Bitcoin as a “dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash.”
More than anything else, those four words — “dependable store of value” — are magic words on Wall Street. A store of value is an asset that will be worth the same or more over time, rather than depreciate — gold being the oldest and most reliable. And with the U.S. Treasury printing trillions of dollars to pay for COVID-related stimulus spending, the dollar is looking mighty inflationary.
Saylor’s move was a first — the head of a mainstream public company calling Satoshi Nakamoto’s cryptocurrency a good long-term investment, and putting his corporate treasury where his mouth was.
On Sept. 15, Saylor doubled down, adding another $175 million to MicroStrategy’s balance sheet. That $425 million bought a total of 38,250 BTC.
The company’s haul has since grown dramatically. The firm held 90,859 BTC as of Mar. 1, which it purchased for about $2.2 billion. When Bitcoin hit a new all-time high of $61,683 later in the month, that investment was worth a jaw-dropping $5.6 billion. MicroStrategy was sitting on paper profits of $3.4 billion — seven months after its audacious gamble.
Aside from Bitcoin, the company’s annual revenue is strong… but it has declined slightly for seven consecutive years, coming in at $481 million for 2020.
MicroStrategy’s stock was trading at about $135 when Saylor announced the initial $250 million Bitcoin investment. The share price has surged since and hit record highs of $1,272 on Feb. 9, an 842% increase. Although MSTR has cooled since then, the current price of $631 is nothing to sniff at.
This, by the only standard that matters on Wall Street, makes Saylor a genius.
Opening the Floodgates
Since MicroStrategy went public with its investment in August, companies ranging from Tesla and Square to insurer MassMutual have poured hundreds of millions, if not billions, of dollars into Bitcoin. Investing legends such as billionaire Stanley Druckenmiller — who as recently as June said he didn’t want to own crypto — have said BTC has a place in investors’ portfolios, alongside Paul Tudor Jones and Jim Cramer.
Visa has announced plans to let customers spend cryptocurrency directly at 70 million merchants, and banks from JPMorgan to Morgan Stanley have started offering cryptocurrency investments to wealthy clients and institutional investors. By early March, Goldman Sachs’ head of digital assets Matt McDermott said 40% of the global investment bank’s institutional customers already had exposure to crypto assets. Treasury Secretary Janet Yellen was asked about it during her confirmation hearings.
While it’s not reasonable to credit Saylor for this mainstream embrace of Bitcoin, it’s fair to say that it likely happened faster because of his very large investment and very public evangelism.
“Michael Saylor’s decision to invest MicroStrategy’s treasury has paved the way for other corporate leaders to explore adding Bitcoin to their balance sheets,” Diogo Mónica, co-founder and president of crypto custodian Anchorage, told CoinMarketCap Alexandria.
“2021 has seen an avalanche of institutional, blue chip, and mainstream interest in digital assets. The institutional tone has shifted from considering crypto to asking for specific forms of participation.”
Buying Digital Gold
In his August announcement, Saylor declared that Bitcoin is “digital gold,” adding that it is “harder, stronger, faster, and smarter than any money that has preceded it.”
While the phrase was popularized by New York Times reporter Nathaniel Popper in his highly regarded 2014 book, “Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money,” they were at the time very strong words from the head of a mainstream public company. At the time, Bitcoin was below $11,400.
By November, Rick Rieder, the chief investment officer for global fixed income for BlackRock — the world’s largest asset manager, with $7.8 trillion under management — was telling CNBC that Bitcoin could “replace gold.” Bitcoin was at $18,600.
By January, Anthony Scaramucci, founder of venture capital fund SkyBridge Capital (and the Trump White House’s communication for all of 10 days) was saying “Bitcoin is better at being gold than gold is at being gold.” Bitcoin was at $34,200.
A New Line of Business
When he first announced MicroStrategy’s Bitcoin investment, Saylor described the company’s goal as adopting Bitcoin as its “primary treasury reserve asset.”
His aspirations have grown since then. In February, he said MicroStrategy was no longer just a software firm, and it was no longer just investing its extra cash in BTC to avoid losing money to inflation. On Feb. 17, Saylor revealed that MicroStrategy was selling $900 million in debt to buy more BTC — which it did, to the tune of just over $1 billion, a week later. Bitcoin was at $49,600.
“The company remains focused on our two corporate strategies of growing our enterprise analytics software business and acquiring and holding Bitcoin,” Saylor said on Feb. 24. “The company now holds over 90,000 Bitcoins, reaffirming our belief that Bitcoin, as the world’s most widely adopted cryptocurrency, can serve as a dependable store of value.”
Beyond that, Saylor has been positioning himself as a corporate guru on buying Bitcoin. And to be fair, he’s getting some traction.
In early February, MicroStrategy ran a “Bitcoin for Corporations” virtual event that, Saylor bragged shortly before it took place, had attracted 1,400 corporate attendees to sign up. He was pretty far off, he told Time recently:
“I thought it would be a couple of thousand people showing up. It ended up being more than 10,000 a day, and it broke our video server.”
The Bitcoin Evangelist
By this time, Saylor was already reveling in the role of Bitcoin’s evangelist to Wall Street, and was in many ways the right man for the job.
Having run a stable and successful company for decades, he was able to speak to corporate executives in their own language. But he was also a showman more than capable of the remarkably bombastic pronouncements that crypto enthusiasts on Reddit and Twitter eat up, even by the industry’s less-than-subtle standards.
Pinned at the top of his Twitter feed is this gem: “#Bitcoin is a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth, exponentially growing ever smarter, faster, and stronger behind a wall of encrypted energy.”
He also managed to not-quite take credit for Elon Musk’s $1.5 billion Bitcoin purchase for Tesla’s treasury.
On Dec. 20, Saylor replied to a vaguely lewd, Bitcoin-focused tweet by Musk by suggesting that he would do Tesla shareholders a “$100 billion favor” by shifting the electric car company’s treasury from dollars to BTC.
“Other firms on the S&P 500 would follow your lead & in time it would grow to become a $1 trillion favor,” he added. When Musk replied by asking if “such large transactions are even possible,” Saylor responded.
“Yes. I have purchased over $1.3 billion in #BTC in past months & would be happy to share my playbook with you offline.”
In an interview published on March 21, Time called it “a casual Twitter exchange that solidified Saylor’s position as a crypto guru.”
Asked directly if he actually spoke to Musk, Saylor declined to comment, saying it would be “against business etiquette.”
However, when the interviewer asked whether he thought that Twitter exchange had an impact on Tesla’s decision, Saylor responded with a one-word answer: “Yes.”
Skeletons in the Closet
Another factor that makes Saylor a good fit for the role of Bitcoin evangelist is that, while he’s spent two decades building a reputation as a respected corporate CEO, he is still trying to shake off an earlier dodgy reputation — much like Bitcoin is still trying to overcome its reputation as the currency of tax evaders and Silk Road-style dark market dealers in drugs and even less-savory goods and services.
In December 2000, he and two other top MicroStrategy executives settled fraud charges brought against the company by the U.S. Securities and Exchange Commission over allegations that it misstated revenues, turning losses into profits.
Before the SEC case, when MicroStrategy shares were going up on the (false) news of their revenues, Saylor had pledged $100 million to create an online university with the goal of "free education for everyone on earth, forever” — a relatively lofty goal that seems to quite not have been met, yet.
After restating its profits for 1997 to 2000, the company’s share price dropped from $333 to $33 within a few months, including a 60% single-day decline, the agency stated.
The three officers and the company paid $11 million to settle the charges without admitting wrongdoing.
As a majority shareholder, Saylor took a far larger hit, reportedly dropping far out of billionaire status.
Time and Bitcoin heal all wounds — and it isn’t just MicroStrategy that has betted big. Saylor is said to own about $300 million in BTC at today’s prices.
Given his stake in MicroStrategy, estimates say Saylor could be worth as much as $3 billion.