I think you're reading too much into this. MSTR/Silvergate term loan covenants said Bitcoin reached a price level where they needed to post more collateral. So they posted more collateral. And they can continue to do so until when/if the price of Bitcoin gets down to ~$3500.tysker said:Selling your deflating hard assets to cover to cover expenses and debts specifically related to that deflating hard asset is rarely a great long term business strategyDeluxe said:If that's a joke, I'm probably missing it. He has like 100k+ unencumbered BTC on his balance sheet that he can post.tysker said:What collateral? LUNA?Deluxe said:
Why would he be forced to sell? He can either sell the prerequisite number of Bitcoin OR post more collateral. He's going to post more collateral.
(still working on replying to your other post)
Its a joke because LUNA is worthless. MSTR is down to $152 from almost $900 8 months ago, so a secondary offering stock isnt much of an option. Debt financing is getting expensive and I bet they couldnt justify the rates they'd have to pay. Saylor can service the margin calls and debt but at the expense of devaluing the underlying asset
eta: Per filings MSTR Stockholder equity is about $863MM as of 3/31/22. The 129k BTC is currently worth only $2.85 Billion (based on the 3/31/22 BTC closing price). Not a complete wipeout of equity for shareholders but we'll see what happens
Educate me on bitcoins fall
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Last: 4 yr ago by MRB10
Its a bad deal for MSTR, its shareholders, and maybe for BTC in thr short run. We dont know if the extra capital call will be for BTC or cash. If it is cash, then there will be extra selling pressure induced by MSTR as it creates cash liquidity.Deluxe said:I think you're reading too much into this. MSTR/Silvergate term loan covenants said Bitcoin reached a price level where they needed to post more collateral. So they posted more collateral. And they can continue to do so until when/if the price of Bitcoin gets down to ~$3500.tysker said:Selling your deflating hard assets to cover to cover expenses and debts specifically related to that deflating hard asset is rarely a great long term business strategyDeluxe said:If that's a joke, I'm probably missing it. He has like 100k+ unencumbered BTC on his balance sheet that he can post.tysker said:What collateral? LUNA?Deluxe said:
Why would he be forced to sell? He can either sell the prerequisite number of Bitcoin OR post more collateral. He's going to post more collateral.
(still working on replying to your other post)
Its a joke because LUNA is worthless. MSTR is down to $152 from almost $900 8 months ago, so a secondary offering stock isnt much of an option. Debt financing is getting expensive and I bet they couldnt justify the rates they'd have to pay. Saylor can service the margin calls and debt but at the expense of devaluing the underlying asset
eta: Per filings MSTR Stockholder equity is about $863MM as of 3/31/22. The 129k BTC is currently worth only $2.85 Billion (based on the 3/31/22 BTC closing price). Not a complete wipeout of equity for shareholders but we'll see what happens
How is posting BTC term loan collateral a cash event?
I dont know the terms of the capital call. Is it cash or BTC?
Gotcha. Maybe that was our disconnect. It's BTC.tysker said:
I dont know the terms of the capital call. Is it cash or BTC?
Seems pretty breakeven at best. Stockholder equity was ~550MM at end of 2020 when BTC was over $28k. Stock was trading closer to $400 at that time.ac04 said:
MSTR is trading at basically the same price as it was prior to saylor buying BTC, and it is the same company except now they have 100k+ bitcoin in the treasury. seems like an ok deal to me.
So he is breakeven-ish with his cost basis? Does that piss you off?ac04 said:
he started buying in august 2020, not at the end of 2020. my statement stands as written. its very difficult to have a conversation with you about this topic because you are intentionally obtuse and difficult at every opportunity.
Not trying to be obtuse as much as asking questions and challenging assumptions based on 20 years of financial operations and compliance experience and seeing lots and lots of ****housery.
One compliant about Saylor is that he was the marketeer pushing the price up as he was also buying, which benefited him. Enticing people into the investment without proper disclosures and safeguards. Its very hard to hard to tell if selling us all snake oil or a truly prosperous future.
I'm trying to be a full disclosure guy and open with my biasesac04 said:
and now we're back to repeating your credentials again. so painfully predictable.
Nm
ac04 said:
MSTR is trading at basically the same price as it was prior to saylor buying BTC, and it is the same company except now they have 100k+ bitcoin in the treasury. seems like an ok deal to me.
The major difference is that the business has an additional $2B in debt, and most of the ongoing cash flow is committed to debt service on the secured term loans.
Who needs pay to speak money when you say stuff like this just two months ago:Deluxe said:
How much did the Bitcoin management team pay him to speak on its behalf?
https://money.yahoo.com/michael-saylor-calls-bitcoin-perfect-201957709.htmlQuote:
"Bitcoin's digital property and that makes it the perfect asset for a retirement plan. It's less risky than bonds and stocks and commercial real estate and gold," Saylor told CNBC in a Tuesday interview. MicroStrategy is the largest publicly traded corporate holder of bitcoin, the highly volatile and world's most-traded cryptocurrency.
tysker said:Who needs pay to speak money when you say stuff like this just two months ago:Deluxe said:
How much did the Bitcoin management team pay him to speak on its behalf?https://money.yahoo.com/michael-saylor-calls-bitcoin-perfect-201957709.htmlQuote:
"Bitcoin's digital property and that makes it the perfect asset for a retirement plan. It's less risky than bonds and stocks and commercial real estate and gold," Saylor told CNBC in a Tuesday interview. MicroStrategy is the largest publicly traded corporate holder of bitcoin, the highly volatile and world's most-traded cryptocurrency.
We'll see in 20-30 years if he's right!
Absolutely. Saylor can be right in the long run but wrong in the short run. BTC is not a fraud and cannot be manipulated, but the humans within the system can be.Deluxe said:tysker said:Who needs pay to speak money when you say stuff like this just two months ago:Deluxe said:
How much did the Bitcoin management team pay him to speak on its behalf?https://money.yahoo.com/michael-saylor-calls-bitcoin-perfect-201957709.htmlQuote:
"Bitcoin's digital property and that makes it the perfect asset for a retirement plan. It's less risky than bonds and stocks and commercial real estate and gold," Saylor told CNBC in a Tuesday interview. MicroStrategy is the largest publicly traded corporate holder of bitcoin, the highly volatile and world's most-traded cryptocurrency.
We'll see in 20-30 years if he's right!
That being said, BTC needs institutional adoption, but as I hinted at before, the largest institutions (e.g banks, brokers) don't add value to the system, only risk. So by nature, they cant extract a profit without also increasing the risk profile. So until the costs of risk costs < profits, the banks and brokers have little incentive to adopt
cjsag94 said:
https://www.sechistorical.org/museum/galleries/kennedy/lastDays_c.php
If you're implying bitcoin is a security, you're wrong. You're right about almost all other "crypto" though (and I agree).
I'm implying price manipulation by the big fish that kills the little guy has been around for a long time. That is all.
Agreed. Despite the fact that Bitcoin is not a security, Saylor still leads a publicly traded firm that is a security. To the extent he decides to dump all his Bitcoin in an attempt to manipulate the price, he'd be violating representations he's made in regulatory disclosures and I'm sure would be subject to shareholder lawsuits.cjsag94 said:
I'm implying price manipulation by the big fish that kills the little guy has been around for a long time. That is all.
Cyp0111 said:
I'm not a beginner in investing etc. I've just yet to hear a clear fundamental case for Crypto from anyone. The tangent always goes off topic to justify the value.
Crypto and NFTs in my opinion were the first and most tangible sign that the economy at the time had significant excess liquidity.
I'm not a crypto expert but I know that an argument out of ignorance isn't normally a strong one.
I don't think that's an unreasonable take. I think banks and brokers will ultimately have plenty of incentive to adopt, but we'll see how it plays out.tysker said:Absolutely. Saylor can be right in the long run but wrong in the short run. BTC is not a fraud and cannot be manipulated, but the humans within the system can be.Deluxe said:tysker said:Who needs pay to speak money when you say stuff like this just two months ago:Deluxe said:
How much did the Bitcoin management team pay him to speak on its behalf?https://money.yahoo.com/michael-saylor-calls-bitcoin-perfect-201957709.htmlQuote:
"Bitcoin's digital property and that makes it the perfect asset for a retirement plan. It's less risky than bonds and stocks and commercial real estate and gold," Saylor told CNBC in a Tuesday interview. MicroStrategy is the largest publicly traded corporate holder of bitcoin, the highly volatile and world's most-traded cryptocurrency.
We'll see in 20-30 years if he's right!
That being said, BTC needs institutional adoption, but as I hinted at before, the largest institutions (e.g banks, brokers) don't add value to the system, only risk. So by nature, they cant extract a profit without also increasing the risk profile. So until the costs of risk costs < profits, the banks and brokers have little incentive to adopt
I've been thinking about your other question today too and honestly I'm not sure I have a good way to stuff Bitcoin into a traditional value investor, intrinsic value framework. I could go into how I think the Lightning Network will be wired into all sorts of physical/digital applications and supplant Visa/Western Union, or give a spiel about proof of work/energy input that tangibly goes into each coin that's minted, but 1) I'm not sure I can explain those long-form topics concisely enough for a message board and 2) I'm not sure you'd be convinced anyway given what I interpret to be your investment MO.
Your brief description of intrinsic value in digital vs physical property is probably sufficient anyway. Physical property generally has value >0 but possibly has value <0 and a long track record. Digital property possibly has value >0 but possibly <0 and a short track record.
(To clarify, I consider Bitcoin to be the only relevant digital property)
When examining physical vs digital property taking into account personal habitation, you'd generally rather own the physical land. For the sake of the following brainstorm, I'm assuming you already own the land you live on and are comparing the merits of physical vs digital property from an investment point of view.
Physical property:
-Can generate income (renting, farming, mineral rights, etc) less expenses (property taxes, maintenance fees, insurance, etc.). Generally >0 in the long run but possibly <0.
-Process of selling takes month(s) with numerous intermediaries taking a cut. Intermediaries only open during business hours.
-Geographically constrained. Can't pack it up and take it with you to another state, country, etc.
-Fully subject to local laws/regulation. Can be seized (ie imminent domain), subject to govt rent controls, etc. No escape.
-Can't be divided (unless rural acreage or other unique circumstance). Process of dividing time-consuming and fee-ridden.
Digital property:
-Not income generating (at least not for any current practical purposes)
-No carrying fees (other than maybe buying a cold storage wallet)
-Fully liquid market of global participants. Market open 24/7. Quickly transferrable to another person/entity in a different location.
-Subject to local laws/regulation, but geographically agnostic. Can pack it up and move it anywhere.
-Can be easily divided into 8 decimal point units
There's a time and place for owning either and I think I smart investor should own some of both. Especially in a globally connected world that's becoming increasingly digital.
If you live in Texas, you'd probably rather have more physical than digital property. If California, you'd still rather own physical property but it's a slightly harder discussion. If you lived in Ukraine in Jan 2022, you'd definitely rather have the digital property. Anywhere on earth with a governmental regime that suppresses physical property rights, you'd rather have digital property. In a country where the currency is collapsing, you'd rather have a decentralized digital property untethered to your home currency. You can probably conjure up lots of examples that would lean either way.
There might be some analogy to hardware vs software. Hardware is the physical structure. Software connects the computer to programs/apps/internet/etc. Physical property is for use in the physical world. Digital property (Bitcoin) harnesses energy from the physical world, digitizes it and makes it transmittable around the digital world, where more and more human activity takes place.
Maybe that's all just a bunch of mumbo jumbo to you. Just wanted to offer up my two cents in the spirit of friendly dialogue among finance guys who view Bitcoin different.
Thanks for the post, I hope to make some time to respond in kind. I'll agree most of the discussion points are too broad or technical to translate well across a message board. Certainly easier over beers and better when we're trying to learn and not trying to 'win'Quote:
1) I'm not sure I can explain those long-form topics concisely enough for a message board and 2) I'm not sure you'd be convinced anyway given what I interpret to be your investment MO.
...
Maybe that's all just a bunch of mumbo jumbo to you. Just wanted to offer up my two cents in the spirit of friendly dialogue among finance guys who view Bitcoin different.
No worries about responding if you don't want to. These long form sort of posts take time and mental energy, which we'd generally rather deploy in other areas life than Texags haha.
I think I have an idea of where you're coming from and your critiques aren't without merit. You've clearly put some thought into Bitcoin but just see it differently. I respect that.
I think I have an idea of where you're coming from and your critiques aren't without merit. You've clearly put some thought into Bitcoin but just see it differently. I respect that.
Saylor is a sunshine pumper for sure. But his BTC loan idea wasn't for any sort of operational need, it was a proof of concept exercise to find a bank that would lend 9 figures on BTC collateral. And he found one, the first one ever.
My read is he's crazy like a fox and he's moved the needle. Too bad the macro environment is spinning down the drain, or he would have a better story to tell. He will come out on top in the end.
My read is he's crazy like a fox and he's moved the needle. Too bad the macro environment is spinning down the drain, or he would have a better story to tell. He will come out on top in the end.
JSKolache said:
Saylor is a sunshine pumper for sure. But his BTC loan idea wasn't for any sort of operational need, it was a proof of concept exercise to find a bank that would lend 9 figures on BTC collateral. And he found one, the first one ever.
My read is he's crazy like a fox and he's moved the needle. Too bad the macro environment is spinning down the drain, or he would have a better story to tell. He will come out on top in the end.
He's moved the needle pumping and shilling it hard. But eventually there's no more fools to fool. And a fool once burned is generally not going to make the same mistake twice.
Bitcoin definition in one sentence:
World's first rules based global, decentralized, digital currency.
There is value in each of those aspects:
1. Global: Bitcoin can be transferred across the world instantly, at darn near zero cost, to anyone in the world. No Western Union with processing fee and 4-5 day wait time needed. All that's needed is the internet. There's value there for the market of remittances. There's value there for people that don't have access to major global currencies like USD or Euro.
2. Decentralized: the biggest draw. It cannot be diluted by government monetary policy. The supply is fixed. The rules are fixed. It's 21 million. No more no less. Ask someone from Argentina or Turkey about the value of not having a government ruin the local currency.
3. Digital: 13 years of proof and still going strong even during this downturn. BTC hash rate and network still operating effectively.
World's first rules based global, decentralized, digital currency.
There is value in each of those aspects:
1. Global: Bitcoin can be transferred across the world instantly, at darn near zero cost, to anyone in the world. No Western Union with processing fee and 4-5 day wait time needed. All that's needed is the internet. There's value there for the market of remittances. There's value there for people that don't have access to major global currencies like USD or Euro.
2. Decentralized: the biggest draw. It cannot be diluted by government monetary policy. The supply is fixed. The rules are fixed. It's 21 million. No more no less. Ask someone from Argentina or Turkey about the value of not having a government ruin the local currency.
3. Digital: 13 years of proof and still going strong even during this downturn. BTC hash rate and network still operating effectively.
La Bamba said:
Bitcoin definition in one sentence:
World's first rules based global, decentralized,digital currency.open-sourced, communication technology allowing information, like digital currency, to be scarce and validated.
There is value in each of those aspects:
1. Global: Bitcoin can be transferred across the world instantly, at darn near zero cost, to anyone in the world. No Western Union with processing fee and 4-5 day wait time needed. All that's needed is the internet. There's value there for the market of remittances. There's value there for people that don't have access to major global currencies like USD or Euro.
2. Decentralized: the biggest draw. It cannot be diluted by government monetary policy. The supply is fixed. The rules are fixed. It's 21 million. No more no less. Ask someone from Argentina or Turkey about the value of not having a government ruin the local currency.
3. Digital: 13 years of proof and still going strong even during this downturn. BTC hash rate and network still operating effectively.
I'd like to simplify my addition, but bitcoin (the network)isn't a "currency" but a layer of unbreakable information exchange. The units of measure (satoshis/bitcoin) can be used in the same manners as traditional currency/asset, sharing the characteristics of the network (immutability being a major characteristic).
Just saw the price action for the crypto that never sleeps.
Really tough market right now, still searching for what fair value is?
Really tough market right now, still searching for what fair value is?
If Bitcoin is a currency (digital or otherwise) it has not fallen. Currencies do not fall…..they inflate and deflate. Their exchange rate with other currencies can fluctuate for sure. But if it costs two euros to buy a loaf of bread in Germany today and it cost two euros a year ago….the euro's value has not changed in Germany even if a dollar will buy you twice as many euros as it did a year ago.
If one Bitcoin buys a lot less bread (goods and services) than it did a year ago in every geographical location that it is exchanged ….that is simply inflation.
If you believe Bitcoin isn't a tulip or a beanie baby, then you must believe that Bitcoin hasn't fallen…….but rather that it is experiencing inflation equal to or greater than some of the most egregious banana republics that issue currency.
What is causing that inflation? It's certainly not a foolish central bank. My conclusion……whether inflating or deflating……Bitcoin must not yet be a generally accepted currency and remains a tulip for the time being. That might change someday.
If one Bitcoin buys a lot less bread (goods and services) than it did a year ago in every geographical location that it is exchanged ….that is simply inflation.
If you believe Bitcoin isn't a tulip or a beanie baby, then you must believe that Bitcoin hasn't fallen…….but rather that it is experiencing inflation equal to or greater than some of the most egregious banana republics that issue currency.
What is causing that inflation? It's certainly not a foolish central bank. My conclusion……whether inflating or deflating……Bitcoin must not yet be a generally accepted currency and remains a tulip for the time being. That might change someday.
Even most of its biggest detractors don't deny all that.
The question, if you think about it in terms of currencies, is that whether those benefits even remotely are worth the premium on the coin.
Put another way, in 2011 or so, that Bitcoin premium was around 10:1 against the dollar. Now, even after the downturn, its 19k to 1. Why?
First it was "it's reserve currency", even though it doesn't at all behave like one.
Then it was "it's the modern gold", even though it doesn't behave like gold, and has no other uses Iike gold does to underpin its value.
Then it was an inflation hedge, despite crashing now when there's inflation.
Or a market hedge, even though it goes in the same direction generally as the riskier end of the market.
So are we to believe that the 1900 fold premium against the dollar in the last 10 years is worth it strictly based in decentralization and a closed system?
Add to that, there's no way to really define what it's fair market value is, other than maybe a bit more than the dollar. And here we are. People online today literally saying "keep the faith", because that's all that's underpinning it right now.
It won't die now, there's too much behind it in the ecosystem, but this downturn shows its vulnerability.. it went below the 2017 high today, and if you bought the last big dip at 30k Bitcoin you are still down over 30 percent.
/rant.
The question, if you think about it in terms of currencies, is that whether those benefits even remotely are worth the premium on the coin.
Put another way, in 2011 or so, that Bitcoin premium was around 10:1 against the dollar. Now, even after the downturn, its 19k to 1. Why?
First it was "it's reserve currency", even though it doesn't at all behave like one.
Then it was "it's the modern gold", even though it doesn't behave like gold, and has no other uses Iike gold does to underpin its value.
Then it was an inflation hedge, despite crashing now when there's inflation.
Or a market hedge, even though it goes in the same direction generally as the riskier end of the market.
So are we to believe that the 1900 fold premium against the dollar in the last 10 years is worth it strictly based in decentralization and a closed system?
Add to that, there's no way to really define what it's fair market value is, other than maybe a bit more than the dollar. And here we are. People online today literally saying "keep the faith", because that's all that's underpinning it right now.
It won't die now, there's too much behind it in the ecosystem, but this downturn shows its vulnerability.. it went below the 2017 high today, and if you bought the last big dip at 30k Bitcoin you are still down over 30 percent.
/rant.
I've asked this before on TexAgs, and it's worth repeating now.
What happens when Bitcoin runs out of new adopters?
I think we may be at that point. We have crypto super bowl ads. Everyone with an internet connection at this point has been exposed to Bitcoin, has been advertised to, and has had the opportunity to buy it. Basically, all potential buyers have been reached.
It is kind of like a Ponzi scheme that runs out of new investors, the price can't keep skyrocketing going up anymore. It will stagnate, and be at risk of crashing when the current holder sell. Which has been happening the past few months.
What happens when Bitcoin runs out of new adopters?
I think we may be at that point. We have crypto super bowl ads. Everyone with an internet connection at this point has been exposed to Bitcoin, has been advertised to, and has had the opportunity to buy it. Basically, all potential buyers have been reached.
It is kind of like a Ponzi scheme that runs out of new investors, the price can't keep skyrocketing going up anymore. It will stagnate, and be at risk of crashing when the current holder sell. Which has been happening the past few months.
What percent of the global population has seriously considered Bitcoin and found it wanting? I would guess that we're not even middle game in that regard.
“There is no red.
There is no blue.
There is the state.
And there is you.”
“As government expands, Liberty contracts” - R. Reagan
There is no blue.
There is the state.
And there is you.”
“As government expands, Liberty contracts” - R. Reagan
If you want a more immediate and less esoteric answer though. The current fall, is:
Drying up of stimulus funds that many people threw into the market and inflated it.
Inflation driving people out of the market
Losses in other investments in the current downturn forcing some to liquidate to cover
The sudden collapse of Luna and now maybe Celsius scaring many people out of the crypto market entirely.
The market likely reaching maximum carrying capacity as far as users. There are still parts of the world that aren't there, but they are pretty small dollar wise. So nowhere to go but down, at least short term.
And to my earlier point, Gravity - a 1900 fold increase in 10 years isn't at all sustainable. Especially when many of the reasons for crypto haven't held up in This downturn,
Drying up of stimulus funds that many people threw into the market and inflated it.
Inflation driving people out of the market
Losses in other investments in the current downturn forcing some to liquidate to cover
The sudden collapse of Luna and now maybe Celsius scaring many people out of the crypto market entirely.
The market likely reaching maximum carrying capacity as far as users. There are still parts of the world that aren't there, but they are pretty small dollar wise. So nowhere to go but down, at least short term.
And to my earlier point, Gravity - a 1900 fold increase in 10 years isn't at all sustainable. Especially when many of the reasons for crypto haven't held up in This downturn,
NTXAg10 said:
What percent of the global population has seriously considered Bitcoin and found it wanting? I would guess that we're not even middle game in that regard.
We have super bowl ads and celebrity endorsements, and athletes making contracts in bitcoins. I think the majority of potential adopters have all been reached. What percentage of people do you know that have not heard of Bitcoin? I can't think of a single person. From my senior relatives to 12 year old cousins, everyone knows about it at this point.
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