Making billions by trading Bitcoin with a listed company, he is the happiest person in the bull market

Author: shushu, BlockBeats

As the price of Bitcoin once again breaks its historical high, the stock price of MicroStrategy has also surged significantly, rising over 2500% since mid-2020. This performance far exceeds Bitcoin's approximate 660% increase during the same period and even outperforms AI leader Nvidia.

Last night, MicroStrategy's stock price soared 15% during trading, reaching a peak of $498.89, once again setting a new historical record, and its market capitalization also surpassed $100 billion for the first time. Currently, MicroStrategy has entered the top 100 U.S. publicly traded companies by market capitalization, ranking 33rd on Nasdaq, 89th on the S&P 500 index, and 85th overall in U.S. stocks.

As of now, MicroStrategy and its subsidiaries hold approximately 331,200 Bitcoins, with a total cost of about $16.5 billion and an average purchase price of $49,874. According to data from Bitcoin Treasuries, MicroStrategy is the publicly traded company with the most Bitcoin in the world, far surpassing Bitcoin mining companies like Marathon, Riot, and leading crypto exchange Coinbase, which are more "crypto-native" in their business models. Analysts point out that MicroStrategy still has $15.3 billion in funds available for further Bitcoin purchases, and its aggressive accumulation strategy may continue until the end of the year.

Statistics on MicroStrategy's Bitcoin purchase dates, prices, stock prices, and market capitalization; data source: bitcointreasuries, mstr-tracker

In addition, the company's founder and CEO, Michael Saylor, personally holds over 17,000 Bitcoins and owns 14% of the company’s shares. If the price of Bitcoin reaches $100,000, Saylor's personal wealth will reach $11.1 billion, enough to elevate his global billionaire ranking by nearly 200 places, surpassing Peter Thiel.

In this year of his zodiac sign, at the age of sixty, Michael Saylor not only went all in on the company by buying Bitcoin but also leveraged his investments, completely changing his and MicroStrategy's fate with a bold gamble.

Since 2020, Saylor has been using the company to strategically hold Bitcoin as a reserve. Originally focused on business intelligence, data analytics, and cloud computing, the company transformed into the publicly traded company with the most Bitcoin globally due to its bold investment strategy.

However, this die-hard Bitcoin enthusiast, who has been buying aggressively, once said ten years ago, "Bitcoin won't last long; it's just a matter of time before it ends up like online gambling." At that time, he believed Bitcoin would either be declared illegal and completely banned or would not measure up to other cryptocurrencies, thus fading into obscurity.

So, what exactly happened in the past decade that prompted Michael Saylor to transform from a Bitcoin skeptic into one of its most ardent believers and advocates?

Playing Games with God: The First Half of Business Genius Michael Saylor's Life

"My belief is that if you're going to play a game, you might as well go all in, with no exceptions. I don't believe those who hold back can laugh last."

Like other internet company founders, Saylor has a nearly legendary life story. His father was a master sergeant in the U.S. Air Force, and his mother was the daughter of a country singer.

"My father was the typical, disciplined military man," Saylor recalls. "If you decide to do something, you must do it to the best of your ability, you know? He was an absolutely honest person. I have never seen him lie; he never cut corners with anyone or anything. It wasn't until I grew up that I realized how unique this quality is. Many people like to take shortcuts and bargain, but my father never did; he never took shortcuts."

In a color photo, his mother, Phyllis, is all smiles. "My father taught me what character is, while my mother taught me what charm is."

His father told him that some things must be done; his mother told him he could do anything he wanted because he was smart. In seventh grade, he was named the paperboy of the year, and his mother pulled him aside and whispered in his ear, "You will make a great contribution to society when you grow up because you are talented and smart—so make sure to use those talents well."

Saylor was an excellent student, learning to fly gliders in high school and graduating at the top of his class. Later, he received a ROTC scholarship to attend MIT, where he studied the history of technology and aerospace. However, due to a heart murmur discovered during a physical examination, Saylor had to give up his dreams of becoming a pilot or astronaut.

The Ups and Downs of Entrepreneurship

After working for a while as a computer simulation planner at DuPont, in 1989, 24-year-old Saylor co-founded MicroStrategy with his MIT roommate and fraternity brother, Sanju Bansal.

At that time, Saylor realized that the internet had powerful data analysis capabilities that could help businesses analyze vast amounts of data about products and markets. Soon, clients began paying MicroStrategy hundreds of thousands of dollars each year to create intuitive charts that displayed consumer trends, such as which consumers preferred specific beverages or insurance products.

The turning point for the startup truly occurred when MicroStrategy signed a $10 million contract with McDonald's, which funded the development of applications to assess the effectiveness of promotional measures and played a crucial role in MicroStrategy's early development.

In 1992, 27-year-old Michael Saylor celebrated MicroStrategy's first client, McDonald's, securing a $10 million contract; image source: Instagram @michael_saylor.

By 1998, during an 11-day roadshow for its IPO, Saylor's performance was already outstanding. He even invited a reporter from The Washington Post to document the entire process. Saylor's sales style relied on passion, stage presence, and grand narratives rather than numbers; his dazzling presentations were far more engaging than any PowerPoint.

Wall Street generally viewed Saylor as arrogant but undeniably charismatic. From news reports at the time, it was clear that Saylor had a great passion for data analysis technology and painted a compelling roadmap for its future, with investors signing contracts largely based on their confidence in him.

One software investor on Wall Street, who loved to disparage CEOs in the software industry, calling them "garbage," was persuaded by Saylor's eloquence to sign on the dotted line. At Bear Stearns, Saylor secured a 10% stake in the company in just 20 minutes. The world's largest mutual fund company, Fidelity, was known as the hardest to penetrate, but according to Saylor, he broke into the company "like a slam dunk."

MicroStrategy was also a pioneer in enterprise data analysis technology, which allowed retail companies, pharmaceutical giants, banks, insurance companies, and government agencies to discover important trends from vast amounts of data. With this expertise, MicroStrategy secured over 300 long-term clients, including giants like KFC, Pfizer, Disney, Allianz, Lowe's, and ABC.

After going public in June 1998, MicroStrategy quickly became Wall Street's darling. By March 2000, its stock price had reached 16 times its initial offering price, with a market capitalization of nearly $18 billion.

However, at this time, MicroStrategy became embroiled in an accounting scandal, with its stock price plummeting 62% in a single day. Saylor lost $6 billion in personal wealth and even became the answer to a trivia question in the game "Who Wants to Be a Millionaire?": "Who lost the most money in a single day?"

In March 2000, MicroStrategy's auditing firm, PricewaterhouseCoopers, required it to restate its revenues and profits for the previous two years. After the re-audit, MicroStrategy's performance for 1998 and 1999 changed from a profit of $28 million to a loss of $37 million. Saylor, along with another founder and the company's CFO, chose to pay a $11 million fine to settle the related charges, with Saylor personally paying $8.3 million, but Saylor and others involved in the scandal did not admit to any wrongdoing.

Saylor appeared on the front page of the Daily News on March 21, 2000.

By mid-2002, MicroStrategy's market capitalization had plummeted to around $40 million, a 98% decline from its peak.

However, at this point, Saylor had another idea, which led to MicroStrategy's resurgence. He foresaw an explosive growth in mobile devices and believed that programs could be developed to help clients analyze the vast amounts of data collected from users' iPhones and laptops.

Around 2009, Saylor provided his software for free to Facebook's new COO, Sheryl Sandberg. MicroStrategy's technology was crucial for Facebook, enabling salespeople to understand how much revenue each product could generate. Facebook eventually became a stable client for MicroStrategy, bringing in millions of dollars in revenue each year, and Saylor capitalized on the mobile trend to achieve sustained profitability.

Becoming a Revered Thought Leader

Although his business was not particularly large, Saylor's personal life was luxurious. He owns a villa in Miami Beach with 13 bedrooms and 12 bathrooms. He also has a $47 million Bombardier jet and two yachts, one of which is named "Hal," in honor of the ship that brought his ancestors from Rotterdam, Netherlands, to Philadelphia in 1736.

Saylor is also a party enthusiast. In 2010, he celebrated his birthday at the W Hotel in Washington, organizing a wildlife-themed party and even draping a Burmese python around his neck for photos. Every year before Thanksgiving, he hosts a rock festival in Manhattan's SoHo, where guests dress up as rock stars.

In an interview with Fortune, Saylor's former colleagues noted that besides his glamorous social life, Saylor also aspired to have a broad influence in the tech world, wanting to become a renowned thought leader. As one former employee put it, he wanted to "become a revered thought giant."

However, according to former colleagues, Saylor is an unpredictable person who manages with meticulous attention to detail, with some saying he "manages too strictly." Saylor is extremely confident, believing he can handle everything himself, which leads him to be reluctant to delegate authority to his subordinates.

But it has been proven that Saylor is very good at observing major trends. In 2012, he published a bestselling book, "The Mobile Wave: How Mobile Intelligence Will Change Everything," which foresaw how mobile devices would trigger revolutions across various sectors, from retail to banking.

Saylor has created at least two notable new businesses within MicroStrategy. One former colleague remarked, "He has the ability to foresee the future."

In the late 2000s, Saylor developed a monitoring platform that allowed homes and businesses to monitor their security systems through the website Alarm.com. In 2008, he sold this business for $28 million. In the early 2010s, Saylor developed the first cloud-based automatic voice response systems for call centers, naming it Angel. In 2013, Genesys acquired Angel for $110 million.

His former colleagues stated, "Saylor does not allow people to do things their own way; however, without that freedom to operate, people cannot grow. Of course, I think the benefits outweigh the drawbacks. Just think, if you followed his investments every step of the way, first in the internet, then in mobile technology and cloud computing!"

However, Saylor's emotional and unpredictable style has also put significant pressure on the management team, somewhat hindering the company's development. Since 2018, he has changed three marketing directors, and one CFO left after just a year. Saylor struggles to retain top talent, which explains why he has not been able to scale up successful ideas like Angel and Alarm.com but instead sold them to other companies.

Michael Saylor's favorite game is Dungeons & Dragons, and he has always insisted on being the Dungeon Master because he "likes to create and control the situation," just as his business journey has repeatedly validated his correct choices, all of which rely on Saylor's judgment of the situation.

The entrepreneurial experiences of his first half of life have given Saylor enough risk-taking experience. Saylor is a Christian and has been baptized, but he views life in the real world as playing a game with God. "Look at my ring—there's a dam, right? And a beaver. This beaver is playing a game with God amidst the waves. Edison was also playing a game with God. Rockefeller, Carnegie… these people are just like me; this life is just a game."

Michael Saylor's second half of the game has begun.

Calling Musk to Join the Ride: Why is Saylor Buying Bitcoin?

In 2015, MicroStrategy's revenue was $134 million, but after that, the company's revenue declined year by year. By 2018, revenue had sharply dropped to $3.981 million, and in 2019, it lost $1 million. In the first three quarters of 2020, MicroStrategy reported a revenue loss of about $14.02 million.

At that time, the world was in the midst of the pandemic's black swan event, and Saylor had an epiphany. MicroStrategy had a large amount of cash on hand, and Saylor was concerned that the Federal Reserve's loose monetary policy would exacerbate inflation, leading to a severe devaluation of the cash he held.

At the quarterly meeting in July 2020, Saylor announced that MicroStrategy planned to purchase Bitcoin, gold, and other assets to replace the cash still held on its balance sheet.

A month later, MicroStrategy used $250 million of its cash reserves to purchase 21,454 Bitcoins. In September and December 2020, MicroStrategy spent $175 million and $50 million, respectively, to buy more Bitcoin.

In December 2020, to further expand its Bitcoin holdings, MicroStrategy issued $650 million in convertible bonds, which typically have long maturities, most maturing in 2027-2028, with some even being zero-coupon bonds. This allowed the company to maintain low financing costs in the coming years and quickly use the bond financing to purchase Bitcoin, directly adding it to the company's balance sheet.

Through bond financing, MSTR continuously increased its Bitcoin holdings, which not only increased the number of Bitcoins on its balance sheet but also created a significant upward pressure on Bitcoin's market price. As the proportion of Bitcoin in MSTR's asset portfolio continued to rise, the correlation between the company's stock market value and Bitcoin prices further strengthened. According to MSTR Tracker, the correlation coefficient between MSTR stock price and Bitcoin price recently surged to 0.55, setting a new historical high.

Since the latter half of last year, MicroStrategy has adopted a new method of acquiring Bitcoin by issuing and selling its own MSTR stock to buy more Bitcoin. This "sell stock to buy Bitcoin" strategy may initially seem foolish, as it could hurt the stock price and even threaten MSTR's market positioning as a "leveraged Bitcoin" company. However, upon closer analysis of the logical chain, it becomes clear that the issuance of new shares does not negatively impact MSTR's price; rather, it makes MSTR more valuable.

When MicroStrategy issues new stock to purchase Bitcoin, the newly issued shares typically trade at a price above their net asset value. With this premium, MicroStrategy can acquire more Bitcoin than what each share of MSTR truly represents when selling each share.

For example, if we calculate the correlation coefficient between MSTR and Bitcoin, 36% of the value of each MSTR share represents the Bitcoin backed by the company. Without any premium, when MicroStrategy sells MSTR, it can only exchange for 36% of Bitcoin in the market. However, currently, MSTR has a premium of around 2.74 to Bitcoin, meaning that each time MicroStrategy sells a share of MSTR, it can exchange for about 98% of Bitcoin.

This means the company can use funds above the net asset value of Bitcoin to increase its Bitcoin holdings, thereby expanding its Bitcoin position on the balance sheet. The core of this strategy lies in MSTR financing through high premiums, which accelerates the speed and scale of Bitcoin holdings, far exceeding the previous "issuing bonds to buy Bitcoin" speed.

According to the latest 8-K filing, MicroStrategy achieved a 41.8% return on Bitcoin in 2024, which translates to a net gain of 79,130 Bitcoins for shareholders, averaging about 246 Bitcoins per day—without incurring the high costs associated with mining. If all miners globally were to achieve the same results, it would take about 176 days.

Thus, Saylor has pioneered two firsts: first, making MicroStrategy the first publicly traded company in history to purchase Bitcoin and incorporate it into its capital allocation strategy, and second, being the first company to dare to borrow money to buy Bitcoin.

"Repairing the World's Balance Sheets"

Not only does he buy for himself, but Saylor also encourages his business magnate friends to buy.

Now, "Comrade Ma Baoguo," who is on friendly terms with Trump, had not been deeply involved in cryptocurrency four years ago. In December 2020, Musk posted a somewhat teasing image of a monk with hands clasped in prayer, gazing upward, unable to resist the temptation of Bitcoin. Saylor replied to Musk, suggesting he do "a $100 billion thing for Tesla shareholders" by converting Tesla's balance sheet from dollars to Bitcoin.

Musk asked, "Is such a large transaction feasible?" Saylor responded, "Of course, I have purchased over $1.3 billion in BTC in the past few months and would be happy to share my strategy with you privately."

In February 2021, Musk's Tesla disclosed that it had used cash on its balance sheet to purchase $1.5 billion in Bitcoin and announced it would begin accepting Bitcoin as a payment method for its products.

In October of this year, Saylor again reached out to Microsoft CEO Satya Nadella, stating, "If you want to earn another trillion dollars for Microsoft shareholders, please contact me." According to an SEC filing, Microsoft is preparing to discuss potential Bitcoin investments at its shareholder meeting in December.

Time magazine once interviewed Saylor, and the reporter opened by asking if Bitcoin was an example of irrational exuberance, "Even if people don't believe something has value, they may blindly join the gamble out of envy for others' success."

Facing this sharp question, Saylor confidently replied, "No, quite the opposite. Bitcoin is a textbook case of rationally responding to inflation. 'Rational behavior' means finding a means of value storage that can preserve and increase value. Speculation, on the other hand, involves tactics like shorting and squeezing to undermine opponents; that's speculation. Investing in Bitcoin is not speculation at all! Bitcoin is a new technology, comparable to Facebook and Google in finance, with enormous potential for future appreciation."

The reporter posed an even more challenging question: "If that's the case, why does Bitcoin have such a bad reputation?"

"A new paradigm means a complete change in how we view the world, and vested interests often do not accept new things. Our only hope lies with the next generation. Unless there is a war or a very serious event, these vested interests will only change their views then, while young people are different."

The reporter asked, "Do you have any ambitions?"

Saylor simply said, "I want to repair the world's balance sheets."

Michael Saylor's fervor for Bitcoin is not just a business venture but a belief. From a pioneer in data analysis to a staunch advocate for Bitcoin, he has driven MicroStrategy's transformation with his strong personal will and business insight, while also demonstrating to the market how to reshape a company through extreme risk-taking.

However, this gamble strategy has also sparked market skepticism. Some analysts worry that MicroStrategy's high leveraged exposure to Bitcoin could amplify the impact of market volatility on the company, especially in times of significant Bitcoin price fluctuations. Furthermore, although Saylor claims to want to repair the world's balance sheets, whether such a vision can withstand the test of time remains to be seen.

Saylor has said, "Life is a game," and it is clear that he has no intention of stopping this game about Bitcoin.