[cocktailpeanuts]

If BTC price doesn't recover soon and falls further, Microstrategy is what will kill BTC. I don't know why BTC investors are so crazy about Microstrategy buying BTC (This would have never happened back in the early days of Bitcoin), but if BTC price goes down further, Microstrategy will be forced to sell their BTC by their shareholders. Otherwise the Microstrategy stock itself will crash. Also when Microstrategy loses too much money, they may finally have to shut down because they borrowed so much money from people just to buy BTC.

When Microstrategy crashes, along with them, the public sentiment for BTC will go to shit, and that will cause the crash of BTC itself since the whole recent price climb was based on the "institutions are buying up BTC" narrative. This is the scariest scenario. Once the downward spiral happens it will be unstoppable, it will be like the crash Mt. Gox caused, but like 100 times harsher.

[anonporridge]

Michael Saylor, the CEO, holds 70% of the voting shares.

All the other shareholders can kick and scream all they want, but Saylor controls the ship. The only power others have is to exit the ship by selling.

Every indication is that Saylor would hold bitcoin into the ground, unless he's totally full of shit. Their main business is still generating enough cash to pay the loans, so where's the pressure to sell?

[cocktailpeanuts]

They will have to sell if the Bitcoin price goes down enough that their measly revenue from their obscure enterprise software can't cover the loss from their Bitcoin investment.

He can keep holding, but it will lower the morale of the employees as well as himself. Unless you think Microstrategy has completely become a hedge fund, they have products to build and they will even lose what's left of their customers if things go bad. You really think the guy can keep holding when he lost hundreds of millions of dollars through BTC? (At the moment he's still in the positive even after the crash, but I'm talking about when it goes down further) Also he can and likely will get into trouble with the SEC when things get bad.

This is not the first time Saylor did stuff like this. https://www.computerworld.com/article/2589923/update--micros...

[nly]

They could try and sue him

[sakopov]

We get into the same conversation every time people buy at the top and the price sinks 60-80%. And for the past decade it has only bailed people out. So I don't see any reason speculating what will be the demise of Bitcoin because so far every single cycle has created more HODLers at pretty much any insane price valuation.

[temp8964]

What do you mean "recover soon"? Two month? One year? Three years? Ten years? BTC has survived so many crashes, why do you think this is it, the final straw?

[TheParkShark]

MicroStrategy is up over 13% today. So the market doesn’t care or they can afford to lose some more on their Bitcoin hedge.

[onlyrealcuzzo]

Why would you expect a crypto stock to go down on a day when Crypto was up almost 10%?

[jkhdigital]

Every cycle converts more people, people who will never sell. These are also the same people who will buy hand over fist when the price approaches anything in the ballpark of their cost basis.

[vmception]

No, they wont have to because all they have to do is pay bondholders slowly over time

The corporate credit markets are really flexible, they dont care that they bought bitcoin, they care that they have enough revenue to cover the bonds

That was the entire calculus and that is still working

The market might assign speculative pricing of MSTR shares with Bitcoin price and sentiment, but that has nothing to do with anything

[nly]

That's not true. Paying the coupon is crucial of course, but hey need the capital to pay back those bonds on maturity.

[sentinel]

This might be a better argument for the crash than any of the 7 the author presented. (later edit: except for the 70% voting rights that Saylor still has – just read this further down)

[phasnox]

If you are a shareholder, why would you sell on a loss?

[mjol]

because $MSTR will go to $0 a share if BTC loses another 50%

[brian_cloutier]

Your answer only rephrases the question. The only way for it to hit $0 is if nobody is willing to buy the stock. This seems unlikely, given that the Bitcoin they're holding, even at 50% of present value, is still worth significantly more than $0.

[jonnydubowsky]

Microstrategy's average cost of bitcoin is $26,080.

If the price of Bitcoin fell 50% from today's price of $36,404 it would be at $18,202.

They would be down $7878 on their cost per bitcoin, under 30% loss on their total investment.

https://www.cnbc.com/2021/06/21/microstrategy-owns-over-3-bi...

[mjol]

The losses from their bitcoin position can exceed their current market cap.

[vidarh]

Their Bitcoin holdings seems to add up to about half their current market cap, so that seems to make no sense.

EDIT: From [1]:

> “As of June 21st, 2021, MicroStrategy holds an aggregate of approximately 105,085 bitcoins, which were acquired at an aggregate purchase price of approximately $2.741 billion and an average purchase price of approximately $26,080 per Bitcoin, inclusive of fees and expenses.”

From [2]:

> Market cap: $6.08 Billion

So ~half, and average purchase price is still substantially below current BTC price.

[1] https://dailyhodl.com/2021/06/23/michael-saylors-microstrate...

[2] https://companiesmarketcap.com/microstrategy/marketcap/

[noch]

>> if BTC price goes down further, Microstrategy will be forced to sell their BTC by their shareholders.

Your assumptions about capital structure are likely wrong here. Consider:

Microstrategy has its Bitcoin holdings in a subsidiary, Macrostrategy LLC. https://www.microstrategy.com/en/investor-relations/press/mi...

---

> 2) Bond Covenants

> - No covenants -- no one can force a sale of $BTC

> - $MSTR is allowed to raise more debt at the unrestricted BTC co which would be structurally senior to the $3.4B (so original convertible bond holders are potentially getting primed).

>This $MSTR secured bond is just a standard secured bond that has very little to do with $BTC.

> Bondholders basically sold a call option (for 6.125% yield) and a put option... MSTR walks away with a ton of upside optionality, and it has a marginal impact on #Bitcoin

(https://twitter.com/jdorman81/status/1403068157867274253)

---

> [5/N] Their main business makes about ~50M in net profit - basically, Saylor makes enough money to cover the annual interest by 10X.

> - This means that from now till 2025 at least, Saylor CANNOT be liquidated as long as he pays the interest on the 0.75% 2025 bond.

> [6/N] But oh no! what if the board forces saylor to sell?

> Saylor himself owns 25% of microstrategy but he also owns the majority of Class B shares which have 10x voting power giving him 72% of the voting power. I.E Saylor CANNOT be forced by anybody to sell.

> [8/N] In conclusion

> 1. The latest round of purchase will not have the ability to liquidate his previous holdings

> 2. The interest payment on his bonds CANNOT liquidate him

> 3. Nobody has the power to force him to sell. At All.

(https://twitter.com/hodlKRYPTONITE/status/140216585565644800...)

---

In what scenario could Microstrategy's liabilities exceed its assets in 2025? https://twitter.com/UrbanKaoboy/status/1385644214092898308?s...