Interview with the CEO of MicroStrategy: Bitcoin will rise in the coming year, fueled by halving and ETFs

Original: CNBC

Compiler: Nan Zhi

Yesterday, MicroStrategy announced the purchase of 155 BTC for a total position of 158, 400 BTC, with a current total average cost of 29,586 USDT, or $790 million based on the market price of 34,600 USDT. Also yesterday, MicroStrategy co-creator Michael Saylor participated in an interview with CNBC, which is compiled by Odaily as follows.

Bullish on Bitcoin’s triple attributes

**Q: Is 158,000 BTC enough? Will you still buy it? **

A: You would never say “own too much Bitcoin”.

We are experts in the Bitcoin space. We believe that Bitcoin is a digital asset, but without the risks and liabilities of commercial real estate; It is a digital commodity, without the risks and liabilities of gold; It’s a digital technology investment without the risks and responsibilities of big tech. So we’re bullish.

MicroStrategy is growing other businesses at the same time

Q: People sometimes forget that you are an enterprise software company. I noticed that you’re working on some new partnerships with Microsoft on AI, and I wonder if that good news will be swept under the rug. **

A: We’re very excited about working with Microsoft and AI. We were the first BI company to incorporate AI into our product line. It provides a huge AI boost to our business intelligence business. We will grow our business by acquiring new customers and accelerate cloud adoption across our customer base.

Bitcoin spot ETFs do not pose a threat

**Q: It seems likely that the SEC will approve Bitcoin spot ETFs. Has the introduction of ETFs helped or hurt investor interest in MicroStrategy? **

A: I think that will help. It will accelerate adoption, and it will also accelerate Wall Street’s institutional awareness and education efforts to educate the 99% of investors who don’t know about Bitcoin.

MicroStrategy offers differentiated products. I think spot bitcoin ETFs are a good thing for investors, but we don’t charge fees. We use smart leverage, and we can generate a tax-deferred Bitcoin premium for our investors. So, for those who are really bullish on Bitcoin over the long term, we are a very attractive option compared to spot ETFs.

Q: It sounds like you think MicroStrategy as a stock will continue to receive a premium associated with Bitcoin. **

A: You don’t charge a fee, you’re generating a premium, and you’re holding it for a long time, then people will think it’s going to be valued at a premium relative to the underlying asset.

The halving will help the rally

Q: Bitcoin will be halving next year, what will happen when this happens, and what impact will this have on the Bitcoin price? **

A: Most of the natural sellers of Bitcoin in the market today are Bitcoin miners who have to sell to pay electricity bills and capital costs and pay off debt. That’s roughly the equivalent of selling $1 billion a month to the market. The (Bitcoin) protocol mandates that it be halved around late April next year. So you’re going to see $12 billion a year in organic sales that translates into $6 billion a year in organic sales, while things like spot bitcoin ETFs increase the demand for Bitcoin. So that’s why we’re all pretty optimistic about the next 12 months. Demand will increase and supply will contract, which is quite unprecedented in the history of Wall Street.

Not sure when the spot ETF will pass

Q: Can you tell us when the SEC’s approval of the Bitcoin spot ETF might happen? **

A: Bloomberg analysts believe this is likely to happen in early January. I think it will happen when it happens.

But in the long run, I guess the most important point is that institutions are adopting Bitcoin. This is likely to happen, either in the first quarter of next year, or sometime in the next 12 months, which is a very ideal entry point if you have a 12-month to 48-month timeframe.

Impact of the new accounting standards

Q: The Financial Accounting Standards Board voted unanimously to approve a new standard that requires companies to use fair value accounting for Bitcoin and other cryptoassets. More guidelines are expected by the end of the year before being implemented in 2025. What does this mean for MicroStrategy? What does this mean for the wider company? Does it make it more attractive to start holding Bitcoin. **

A: In the long run, this will lead to corporate adoption of Bitcoin as a “treasury” asset and shareholder value creation opportunities through the balance sheet. The secret of MicroStrategy is that we are making the most of our balance sheet as well as our income statement. We have more than $5 billion in assets on our balance sheet, and Bitcoin is growing three to four times faster than the cost of capital.

So, imagine what would happen if other companies were able to use their balance sheets as assets instead of liabilities. At present, the existing accounting system favors the use of credit and government bonds, and the after-tax income from credit cannot keep up with the cost of capital. As a result, most companies have adopted strategies to increase their share capital, such as mergers and acquisitions, share buybacks, and dividends, which are taxable. They can’t really hold billions of dollars in capital and beat the cost of capital and generate shareholder returns.

The crypto industry needs to move to a mature system

Q: There are still bad and dark cases of cryptocurrency, what do you think? **

A: I think that the liabilities or the early “crypto cowboys”, the crypto tokens, their unregistered securities, the unreliable custodians have raised the level of the industry, and we need to move to mature regulation.

We need big banks to be custodians of cryptocurrency. We need Wall Street to play and we need to get rid of our dependence on tens of thousands of cryptocurrencies.

Bitcoin is an asset that has no issuer. It is a recognized agreement, a “commodity in space”. So when the big banks on Wall Street and responsible custodians manage Bitcoin, and the industry turns its attention away from those dizzying little tokens that are distracting and hurting shareholder value, I think the industry is going to move to the next level and will be expected to increase in value tenfold.