A Billionaire Discovers Bitcoin
Have you ever considered what the thought process looks like for a billionaire who goes all in on bitcoin? Today’s story examines just such a scenario, as we study Michael Saylor’s deep dive into the bitcoin rabbit hole.
The predicament
"When the covid crisis hit, everybody got sent home, and we all had to contemplate ideas that we had previously rejected, and embrace ideas that were very foreign to us. At MicroStrategy we had a mega, mega, mega problem: I have a lot of cash, and I'm watching it melt away. I'm helped to realize I have a mega problem by seeing a V-shaped recovery in the bond and equity markets. By generating $50M in operating income, simultaneously sitting on a cash pile of $500M, the natural asset inflation rate being 10%, each time I generate $50M in operating income, I burn $50 million in purchasing power on the stockpile. We were running as hard as we could to stand still."
This is Michael Saylor in September 2020, telling Anthony Pompliano on "The Pomp Podcast" episode 385, what situation his company was in during the beginning months of the COVID crisis.
The discovery
A month later, in October, he appeared on the "What Bitcoin Did" show hosted by Peter McCor
"I decided to read The Bitcoin Standard when I heard you say on a podcast you disagreed with Saifedean Ammous, the author of The Bitcoin Standard, I had never heard of him before that. The nuggets I took from the book were the 7% expansion of the money supply for 10 years. That's the eye-opening thing. And once you see that the monetary supply is expanding at 7%, there is no inflation, and interest rates are low, and then you see that the S&P500 is going up by 8% a year for a decade, and then you start to look at the bond rate. Okay, well, interest rates on the 10-year bond went from 550 basis points to 50 basis points. Then you realize a $1 million bond inflated to be $10 million dollars. You have to pay $10M to get the same $50K in interest that you could have gotten for $1M ten years ago, and that means the inflation rate on a bond is 22%. That's when I realized I had to do something. But what was I supposed to do?
I started thinking 10 years, 30 years out, a 100 years out, and then I discounted back, and it became clear that real estate, bonds, stocks, corporate debt, sovereign debt, gold, silver, commodities – none of these things are going to work. They all have defects with them. You'll lose 99.5% of your money if you leave it in the bank for a 100 years. We cycled through all these other assets, and we concluded bitcoin is the purest treasury reserve asset. If I had a $100M and I wanted to put it into a vault, and take it out in 30 years. Maybe I wanted to take it out a 100 years from now. Most people roll their eyes when I say this, their argument being that none of us will be around in a 100 years. That's not the point. The point is, when you are thinking about 100 days from now, there's just a bunch of noise. It's all irrational. There's that phrase, 'the market can stay irrational longer than you can stay solvent.' When people think about 90 days, 1 year, 2 years 3 years, they're making a decision based upon the greater fools theory. When you go out 10 years, it is different. But when you go 100 years out, it's extremely clarifying, because now you realize the structural defects with all the other ideas you have."
It's clear Saylor and his team rigorously studied all their options. At the risk of stating the obvious, their decision to go all in on bitcoin in 2020 turned out to work out brilliantly.
The payoff
On November 18th, 2024, Michael appeared on "Coin Stories" hosted by Natalie Brunell. Saylor expresses his relief:
"When I found bitcoin, I was in despair. I had worked for a decade, I had spent 20,000 man-years, attempting to do everything under the sun. I could not get ahead, and I was the same me. I wasn't stupid. The most pernicious thing you can do to someone, is make them think they're just not smart enough and the reason they're failing is because they don't work hard enough.”
Many people understandably found themselves squeezed, and pushed into a corner by the events that transpired in 2020. An X user reposting Saylor's comments from the recent episode with Natalie Brunell said:
"This is exactly how I felt when I found bitcoin. I’m deeply moved by Saylor’s articulation that I’m sure most entrepreneurs can relate to. As an entrepreneur I had worked myself to death for years, finally realizing that there was literally no way out of the rigged system. No matter how hard I worked or how committed I was to growing my companies, there was no genuine store of economic energy and value that could preserve and grow my efforts. It was beyond disheartening and, yes, I can concur, led to a state of despair because business owners give it their ALL when creating something of successful value for others. Studying the technology, consciousness, and impact of bitcoin on global finance and geopolitical sovereignty has completely changed my life and given me so much renewed hope for our future. It’s actually healing my relationship with life and my creative drive in the most unexpected ways.”
The expectation
On November 22nd, 2024, Michael Saylor appeared on CNBC when Andrew Sorkin asked Michael about the effective risk of being in a levered bitcoin position like the one MicroStrategy is currently in. This is what he had to say:
"We expect bitcoin will go up 29% a year for the next 21 years. It's been going up 60% a year… Over the last two weeks, Andrew, we've generated $5.4B in BTC gains, we're making $500M a day…We may very well be the most profitable company in the United States, growing the fastest right now, because there’s not many companies that are making $500M a day doing what they’re doing. And so, if you don’t like bitcoin, you don’t want any piece of it. But if you like bitcoin, then this is a monster for you."
Bitcoin has gained the hearts and trust of entrepreneurs all around the world. One could have predicted that, given the global, immutable nature of the bitcoin protocol.
Discover bitcoin for your business
Like Michael, anyone can study every aspect of bitcoin to understand how it can help their corporation or business. But it’s a process that requires dedication, focus, and time that you may not have available. To streamline the process, Sovreign has a team of expert consultants suited to assist and support you along the way. If you’re ready to adopt the Bitcoin Business Standard for your company, set up a consultation today, and we’ll get you up to speed and unlock new potential for your business.
