The Muso blockchain believes that as of February 2nd, the MicroStrategy has nearly 72,000 Bitcoins. It is the leading Bitcoin holder in the American corporate world, whose value exceeds the value of its core business. MicroStrategy originally planned to issue US$600 million of convertible bonds in early February to buy Bitcoin with net proceeds. Due to the rush of investors, the issuance scale was expanded to US$900 million, with an optional increase of US$150 million. At the time of delivery on February 19, the fundraising requirement of US$1.05 billion was fully met.
MicroStrategy used the company’s cash to purchase cryptocurrencies last summer. In August, it announced that it would invest 85% of its cash reserves in Bitcoin, and then issued a convertible bond of US$650 million for the first time in December to purchase Bitcoin. Citibank immediately downgraded MicroStrategy to a “sell” recommendation. However, since the first purchase was announced on August 11, the price of Bitcoin has doubled by 5 times, and the stock price of MicroStrategy has soared by more than 700%. Obviously, the market is bullish due to the Bitcoin strategy taken by the company.
The selling point of Bitcoin to MicroStrategy is that the US government prints money, which will make holding cash a very high risk. Under the leadership of the Federal Reserve and the support of other central banks, global quantitative easing asset purchases will reach a staggering US$6 trillion in 2020 alone, accounting for more than half of the cumulative value of global quantitative easing in 2009–2018. In the past 12 months, the US M2 money supply has grown by more than 25%.
In response to the epidemic, the Federal Reserve expanded its balance sheet by more than 75% (US$3.25 trillion). Since the end of fiscal 2019, the U.S. Treasury has accumulated US$3.7 trillion in debt, while the European Central Bank has accumulated more than 2 trillion euros. Such a large-scale expansion of financial assets has caused many people to question the long-term value of fiat currencies and look for alternative assets such as commodities and cryptocurrencies to hedge against the inflation.
As the CEO of MicroStrategy, Michael Saylor believes that the headwinds of the macro economy will affect US$400 trillion in capital, which is trapped in the depreciating fiat currency. He also argued that inflation depends on the goods to be purchased, not the consumer price index. For example, high technology stock prices mean that the purchasing power of cash is reduced, and the actual cash return rate in 2020 is -30%.
Saylor believes that the Fed’s large-scale money printing policy has planted the seeds of hyperinflation, making the use of cash in fiat currencies such as euros and US dollars on corporate balance sheets to lose approximately 15% of their purchasing power each year. Since the most important job of every CEO is capital allocation, the most important decision every CEO must make in the next 10 years will be the decision whether and how to adopt Bitcoin, because cash has become a liability.
Saylor pointed out that in the face of a world where a lot of money is printed, every company must choose either to reduce capital, which is like self-destruction, or change to a faster appreciation rate. The asset of the expansion speed of the money supply is Bitcoin. The cryptocurrency represented by NGK is one of the representatives. The NGK uses blockchain technology to create crypto assets and replace currencies with high inflation. The NGK has recently launched SPC and VAST projects to promote the liquidity of NGK computing power. Last month, the SPC and VAST airdrops and other activities have been intensively launched. The market response has been extremely enthusiastic. There will be more NGK computing power activities in the future. So, now is the best time to join, hurry up!