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     9 days ago  

    Part 1/4:

    Micro Strategy's Infinite Money Glitch: How to Leverage Debt and Bitcoin for Massive Gains

    In a remarkable financial maneuver, Michael Saylor's company Micro Strategy has engineered a strategy that has turned $3.9 billion in debt into a $15 billion Bitcoin fortune. This "infinite money glitch" is not just for billionaires and large corporations - there are ways for individual investors to apply this playbook to their own investments.

    The Math Behind the Glitch

    Micro Strategy has been borrowing billions at incredibly low interest rates, as low as 0.8%, and using that debt to purchase Bitcoin. Over the past 4 years, Bitcoin has averaged a 55% annual return, far outpacing the performance of stocks, bonds, and other assets.

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     9 days ago  

    Part 2/4:

    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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     9 days ago  

    Part 3/4:

    Micro Strategy has offered the market "volatility as a product" - leveraging Bitcoin's price swings to create even more volatility in its own stock price. This has allowed the company to outperform not just Bitcoin, but the broader stock market and tech giants like NVIDIA.

    In fact, since January 2023, Micro Strategy's stock priced in Bitcoin has surged nearly 300%, highlighting the power of this financial engineering.

    How to Steal Micro Strategy's Playbook

    While individual investors can't access the same ultra-low interest rates as Micro Strategy, there are ways to apply a similar strategy:

    1. Leverage Existing Debt: Instead of aggressively paying down mortgages, car loans, or credit cards, you can use that debt to purchase Bitcoin. As long as your expected Bitcoin gains exceed the interest rates on your debt, you can profit.

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     9 days ago  

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    1. Borrow Against Assets: Options like home equity lines of credit, title loans, or margin loans can provide access to debt that can be deployed into Bitcoin, as long as you have the cash flow to service the debt.

    2. Invest in Leveraged Bitcoin Plays: Companies like Metaplanet in Japan and Matador (a new publicly traded company I'm involved with) are applying Micro Strategy's playbook, offering investors exposure to leveraged Bitcoin plays.

    The key is to manage the risk by ensuring you have sufficient cash flow to cover the debt service, even in down markets. Leverage can be a double-edged sword, so caution is advised. But for those willing to take on the risk, the potential rewards of this "infinite money glitch" are substantial.

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