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By borrowing at 1.76% and earning 55% on their Bitcoin holdings, Micro Strategy is netting a 53.2% annual profit. This "speculative attack" of borrowing in a depreciating currency (dollars) to buy a harder, appreciating asset (Bitcoin) has been a massive windfall for the company.
Micro Strategy's Pivot to Bitcoin
Micro Strategy was originally a software business, but as the cash flow from that business began to decline, CEO Michael Saylor looked for a way to preserve the company's capital. After considering various options, Saylor concluded that Bitcoin was the best place to park a large sum of money for the long-term.
Saylor's views on Bitcoin have evolved dramatically. In 2013, he dismissed Bitcoin as a "scam" and "joke." But by 2020, Micro Strategy had completed its first major Bitcoin acquisition, setting the stage for the company's remarkable financial engineering.
Volatility as a Product
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