MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

<i>&quot;[We] spent months deliberating to determine our capital allocation strategy. Our decision to invest in Bitcoin at this time was driven in part by a confluence of macro factors affecting the economic and business landscape that we believe is creating long-term risks for our corporate treasury program ― risks that should be addressed proactively. Those macro factors include, among other things, the economic and public health crisis precipitated by COVID-19, unprecedented government financial stimulus measures including quantitative easing adopted around the world, and global political and economic uncertainty. We believe that, together, these and other factors may well have a significant depreciating effect on the long-term real value of fiat currencies and many other conventional asset types, including many of the assets traditionally held as part of corporate treasury operations.&quot;</i><p>Wow.

If most assets are still rising and breaking all time highs in a downturn economy what it really means is that the dollar is falling in a race to the bottom with all other fiat currencies.<p>People avoid holding money by buying stocks and housing, not because of natural P&#x2F;E ratio but forced by the continuously devaluation of cash.<p>What &quot;money&quot; do you expect businesses want to hold in this situation?

At this point in time, I believe that &quot;investing&quot; in Bitcoin is, in fact, a short in the dollar (for Americans).

Decentralized Finance (DeFi) is the green shoots of a new and innovative financial system. It will break, it will be hacked, but longterm I believe this is the direction of finance - borderless, global, instant, peer to peer. Artificial barriers &#x2F; borders &#x2F; regulations simply don&#x27;t matter when the mechanism for such transfers and investment are unstoppable and permission-less.<p>Look at Compound Finance - $2 billion+ in assets deposited and over $1 billion borrowed <a href="https:&#x2F;&#x2F;compound.finance&#x2F;markets" rel="nofollow">https:&#x2F;&#x2F;compound.finance&#x2F;markets</a><p>This can&#x27;t be stopped - and there is no government regulating it!

This company apparently was&#x2F;is quite cash rich. It bought back $250m of its own shares and then bought 250m of BTC... wow.<p>Does anyone have the wallet address? or pinpoint it?

It could also signal that they&#x27;re unable to deploy capital to innovate (and bring future cash flow).... MicroStrategy has been an acquisition target for many years.

As a shareholder of any company, I’d be extremely wary of outlier moves in mechanical business areas like cash management. Maybe there is something real going on there, but holding egads of cash and then putting it in a (by market-cap) fringe alternative is a weird move. It’s maybe interesting, but I’d be highly skeptical, it’s like seeing smoke... I want to find the embers...<p><i>MicroStrategy moves its cash into Bitcoin; shares up 9%</i><p>Oh go home 2020, you’re drunk.

AFAICS, Bitcoin has a deeply flawed long-term security model.<p>Its block reward, which constitutes a subsidy for its security budget, halves every four years.<p>Unless the halving of the security subsidy is made up for by additional transaction fees, Bitcoin&#x27;s security decreases.<p>Given that Bitcoin blocks are full - with only a little space left for further optimizations via SegWit adoption and Schnorr signatures - transaction volumes cannot appreciably increase, and thus the only mechanism by which total transaction fees can increase is by the average fee per transaction increasing.<p>I can&#x27;t see any way for transaction fees to ever reach the fantastical sums (e.g. $2,000 per transaction) needed to keep Bitcoin secure when the block subsidy becomes insignificant.<p>This wasn&#x27;t the case back in 2015 when Bitcoin still had the hope of undergoing a hard fork to raise the protocol limit on its block size, which would have enabled it to increase the volume of transactions it processes by orders of magnitude. But now its governance structure is firmly captured by anti-hard-fork parties, so I see no long term viability in its protocol.

It&#x27;s just crazy how flush with cash some SaaS companies are. With a current ratio of 2.8 (cash over short term liabilities) it&#x27;s no surprise they want to diversify a bit.

I see shareholder lawsuits on the horizon if this does not work out.

I feel conflicted by this expectation from people that bitcoin will continually grow ad eternum, just because the supply is limited.<p>I&#x27;m a believer on cryptocurrencies, but bitcoin being a first generation project, still has several pitfalls, such as transaction throughput, slowly trying to be addressed by other projects. What happens when people start flocking to ethereum, cardano, eos, or something else? Will it retain demand?<p>Maybe it will, considering that gold is almost as worthless, and it&#x27;s still used as a major hedge against financial turbulence. But it&#x27;s something to keep in mind.

Their stock has risen 12.4% today so far (NASDAQ: MSTR)

It’s so crazy that it might just be completely crazy. Behaviour that is grounds for an investigation by shareholders.<p>In a world where the governments can’t support their own currencies, nobody will give a shit about Bitcoin.<p>“I don’t trust the real hospitals because of medical negligence, better get my amputation done by that guy operating out of his garage just to be safe.”

If a company like MicroStrategy starts investing in Bitcoin instead of reinvesting in own business it means it has no good ideas how to generate value as a company. In other words, it doesn&#x27;t believe its own business can generate more revenue than Bitcoin trade.<p>They may be genius Bitcoin traders, but clearly they are no longer Business Intelligence visionaries as they once were. A famous company that now admits it has no future. That&#x27;s how I see it.

Here is a list of 20 companies buying Bitcoin recently:<p><a href="https:&#x2F;&#x2F;www.forbes.com&#x2F;sites&#x2F;michaeldelcastillo&#x2F;2020&#x2F;08&#x2F;06&#x2F;valuable-sec-data-on-20-institutional-bitcoin-investors-could-soon-disappear&#x2F;#6a77d3fe1de2" rel="nofollow">https:&#x2F;&#x2F;www.forbes.com&#x2F;sites&#x2F;michaeldelcastillo&#x2F;2020&#x2F;08&#x2F;06&#x2F;v...</a><p>Keep in mind that 250 mil, and 250 mil times 20 is a drop in the $214.4 billion bitcoin market cap and doesn&#x27;t move anything. Just a sign of mild interest.<p>Furthermore, Grayscale just ran a crypto ad campaign on large TV networks such as Fox.

I bookmarked this HN thread back when the crypto bubble popped:<p><a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=18640755" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=18640755</a><p>Interesting to re-read this (and other) threads now that BTC is one of the best performing asset classes in 2020...

Corporate treasury speculating on currency. What could possibly go wrong?

Good luck to them. They&#x27;ll need it.

How is Bitcoin not just a proxy for USD?

Original press release submitted here: <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=24120060" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=24120060</a>

They do not care about the environment. Bitcoin contributes a lot to global warming by design.