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33 sats \ 4 replies \ @HardMoney 21h \ on: Saylor's Latest Strategy: Raising Funds to Pay Dividends econ
The preferred shares is basically an instrument that is moving fiat money from the future to buy more bitcoin in the present. If you think BTC will cagr at a rate higher than the dividend yield then it’s gonna be accretive to MSTR shareholders
Also each preferred share has an ATM on it so instead of issuing new MSTR shares to buy bitcoin they can ATM prefers to buy more BTC while limiting selling of MSTR stock
Most interesting thing here is the yield on these shares could hypothetically be more secure than essentially any other fixed instrument. One could argue they should be at the US treasury rate yield which basically doubles the price on the preferred share.
Imo long story short MSTR is gonna be the biggest company in the world and essentially a bitcoin bank in the future. Will earn yield on their BTC by lending to things that need bitcoin liquidity. Could lend to companies leveraging protocols like Lightning or ark etc.
If you think BTC will cagr at a rate higher than the dividend yield then it’s gonna be accretive to MSTR shareholders yes, I understand that... and it's also perfectly consistent with a Ponzi scheme. If Bernie Madoff's ability to acquire funds had exceeded his cost of/amount of withdrawal, his scheme would have been "accretive to Madoff shareholders"
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Except madoff was committing blatant fraud and was insolvent while MSTR and associated instruments are rather transparent in what their strategy is. Every investor in MSTR generally knows and wants MSTR to acquire more BTC by issuing more shares and other instruments and accepts the risks.
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true... makes it better that Saylor isn't lying/deceiving investors. Is the economic mechanism different?
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There is a pyramid type of structure to the business in the sense the success of refinancing requires there is investor interest in the model in the future.
I think a better mental model is a Flywheel. When BTC is going up the business and strategy will scale considerably.
If BTC goes down it’ll be interesting to see how MSTR can weather the storm. In general tho assuming BTC doesn’t go to $0 they should be able to delever and pay for things by diluting common shareholders and if no one wants to buy more shares the bitcoin could always settle debt and obligations.
IMO for the model to fail it probably means something went significantly wrong for bitcoin. Their business could likely absorb 1-2 year bear market cycle without becoming forced sellers
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