Look, I’m no expert on public markets, but raising money to buy more Bitcoin seems like the obvious new beginning for public companies.
MicroStrategy pioneered this strategy, and now, 4 years later, it is the most compelling and successful story in corporate finance. Microstrategy has been the best-performing stock in the past four years, outperforming every U.S. company, including NVIDIA. This is crazy, isn’t it? All thanks to Bitcoin.
I’m sure the CFOs of most public companies are now looking at MicroStrategy and analyzing how to turn a $1 billion company into a $70 billion empire in just 4 years, and they’re thinking about how to do the same.
Here’s the playbook:
Use dividends, stocks, and debt to buy more Bitcoin. And tell the world about it out loud.
But let’s be real – Bitcoin’s MicroStrategy Guide won’t drive up stock prices forever, at least not for other public companies. The arbitrage opportunity is rapidly diminishing as more companies adopt similar strategies.
MicroStrategy has first mover advantage and guru status with Michael Saylor. New corporate BTC buyers lack this credibility and following with Bitcoiners. The effect diminishes with each new user.
Bitcoin’s growth is also slowing down. Doing 5x annually becomes more difficult as increasingly marginal competition for a more or less fixed supply of BTC leads to diminishing relative returns.
Let’s also remember – investors today can get exposure to Bitcoin easier than when MicroStrategy started. ETFs and funds reduce the influence of new companies that directly own Bitcoin.
All of this means that MicroStrategy’s playbook is closing fast for public companies. Companies considering this must act quickly to maximize gains before the strategy is overestimated.
To be clear, I’m incredibly bullish on companies embracing Bitcoin treasury reserves. It’s just that the first movers will benefit more. The effect will diminish over time for new adopters.
Of course, regardless of time, companies will continue to benefit from adopting this strategy as the price of Bitcoin continues to rise forever.
This article is a takes. The opinions expressed are entirely those of the author and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.