The theory of a speculative attack on fiat currencies was born around 2014 (Marty Bent had a show on this topic yesterday but I haven’t watched it yet so consider listening to it). Bitcoin at the time had a very small cap and it was unreasonable to expect a corporation or government to buy and hodl as a reserve asset on their balance sheet. Individuals who have realized what bitcoin actually is were also few. Fast forward 10 years and we have initial steps in the realization of this theory. Companies like MicroStrategy, Tether, Block, MetaPlanet use various means such as retained earnings or issuing stock and bonds in order to purchase bitcoin. The government of El Salvador has even launched a website where we can track how many bitcoin they own. All of these to me are the initial steps on the road to hyperbitcoinization. But we could all be wrong...

My bet is certainly far smaller than that of the American entrepreneur and one of the founders of MicroStrategy - a business intelligence company - namely Michael Saylor. This move of his to be able to figure out what bitcoin is and at the same time sell the idea to the other c-suite and shareholders at MSTR could turn out to be one of the most significant actions of this century. That's because at the moment, with the exception of exchange-traded funds buying bitcoin, no other company owns 1% or more of the limited 21 million supply. And it cost them under $10 billion. There are quite a few companies that have larger cash holdings, one of which is Dell Technologies. I mention it for a reason, because its owner Michael Dell made waves on Twitter with 2 bitcoin posts. Their problem is that it takes time to accumulate 210,000 bitcoin, and if the price remains stable around $60,000 it would cost them almost $13 billion. But the price of something with limited supply and relatively stable or even rising demand can almost never be stable.

But let's go back to the other Michael. Because it is a publicly traded company, we have all the data we need for some simple calculations. Their first recorded purchase was in August 2020, when they paid $250 million for 21,454 bitcoin (an average price of almost $12,000). The surveilance sickness and lockdowns in 2020 caused Saylor to think about how to transform what he says a dying company referring to MSTR, and after an extensive search he comes across bitcoin. The source of funds for their initial purchase were retained earnings. So his goal was to transform the US dollar sitting as retained earnings on the company's balance sheet and depreciating slowly as time goes by into bitcoin. Over time, the conviction of everyone involved in this operation became greater and greater, and they decided to use other means - issuing convertible bonds and common stock. MicroStrategy transformed from a business intelligence software company into a bitcoin fund. Investors wanting exposure to bitcoin are happy to finance the company at super low interest rates of under 1%. Let's take a look at was this worth it? The most important thing for a company right after being profitable is to properly allocate capital. In the case of MicroStrategy, their strategy is quite simple – raise funds and purchase bitcoin.

In the following Excel spreadsheet, we can analyze how successful they have been in their strategy to maximize the amount of bitcoin per share. If the bitcoin that 1 share buys steadily decreases, it means diluting the current shareholders, 1 share buys them less and less of the thing they want. This metric is also essential for a company operating in the fiat world where the end goal are things such as buildings, machinery, intellectual capital, cash. Some brief clarification on the columns - date, bitcoin hodl and number of shares need no explanation. Number of convertibles means all options/bonds that can be converted to shares in the future under certain conditions, i.e. they are not shares at the moment, but we have to take them into account in the calcs because they can dilute current shareholders and their shares in the company. That's what the next column is, it just adds up the previous two. The last 4 columns are the result of our analysis, namely how many bitcoin (or in this case satoshis) we own if we have 1 share of the company. The ideal scenario is that the number of sats increases over time. The same applies to the number of sats per convertible plus share. We can see that over a period of nearly 4 years this has been the case - with 1 share at the end of 2020 we could have held 735,058 sats, and by March 2024 this had increased to 1,214,246 (65% growth).

The number of shares or number of convertible instruments + shares to 1 bitcoin is also an interesting metric. As expected it is in a positive trend for the company's shareholders – as at 31 December 2020, 136 shares were needed to own 1 bitcoin, and by March 2024 they had dropped to 82.

The takeaway from this data, at least in my opinion, is that the strategy of using leverage in the form of bonds or shares in order to purchase bitcoin has been quite successful so far for MSTR. In almost 4 years they have managed to reach 1% of the total supply for just a 75% increase in stock and convertibles.