MicroStrategy Target: 1 Satoshi

Source: Liu Jiaolian

Overnight, BTC sought support from the 5-week line near 96k. In the early morning, Microsoft shareholders' vote on BTC reserves failed, which was within the market's expectations. MicroStrategy increased its position again. Michael Saylor posted: "MicroStrategy has purchased 21,550 BTC at a total price of approximately US$2.1 billion, with an average price of approximately US$98,783 per coin. The quarterly cumulative BTC-based yield reached 43.2%, and the year-to-date yield was 68.7%. As of December 8, 2024, MicroStrategy held 423,650 BTC, with a total purchase cost of approximately US$25.6 billion and an average price of approximately US$60,324 per coin." Netizen Fred Krueger analyzed MicroStrategy's strategy of increasing its holdings: At the beginning of November: MicroStrategy held 252,000 BTC. BTC price 69k. MicroStrategy's stock price is 2.1 times its net asset value per share.

MicroStrategy developed a plan to increase its holdings by 171,000 BTC, a 68% increase in position. A total of $160 was spent, of which $3 billion was raised from the US stock market through convertible bonds. In the end, MicroStrategy's stock price successfully increased to 2.4 times its net asset value per share.

Math magic: Due to the higher average net asset value multiple (2.9 times) and the use of convertible bonds, this plan to increase BTC holdings by 68% only resulted in the issuance of 40 million new shares (an increase of 17%). Verification: 1.68 / 1.17 = 43% fourth quarter return (in line with the statement).

Review summary: MicroStrategy spent $16 billion and increased earnings per share by an astonishing 43%.

Lecture chain note: Fred Krueger wrote 40k in the number of new shares issued. Jiaolian suspects that he made a typo and might have meant to write 40M, because as of December 2024, MicroStrategy's total outstanding shares are about 230 million shares). Another thing worth complaining about is that when searching for MicroStrategy's total shares on the Internet, I couldn't find a reliable number. The numbers given by various financial websites are different. Whenever I get into these details, I will silently believe that blockchain and digital assets will definitely replace these old financial systems in the future. These old systems even make retail investors unable to understand a single number, and there is no way to verify them in an open, transparent and reliable manner. It is simply doubtful whether it is deliberately ambiguous. Because the number issue is the most critical number for manipulating the dilution of additional issuance. Anyone who has been exposed to the blockchain token economy knows that one of the most important top-level designs of the token economy is the total amount and the method of additional issuance.

Back to the topic. Then, Fred Krueger proposed a new BTC unit of measurement: 1 Nakamoto, equal to 1.1 million BTC - this is the number of BTC that Nakamoto is suspected to have mined in the early years.

Previously, the smallest unit of the BTC original chain was one 100 millionth of a BTC, called 1 satoshi. Now we can have a relatively large unit of hoarding coins, 1 Satoshi, which is equal to 1.1 million BTC.

We know that just a few days ago, the total holdings of the US spot BTC ETF just exceeded 1 Satoshi.

Fred Krueger calculated that if Michael Saylor tried to let MicroStrategy hoard BTC to reach the amount of 1 Satoshi, there would still be 676,350 BTC short. Based on the current price of 96k, it would cost about 64.9 billion US dollars. This is 4 times the previous 16 billion US dollars.

Drawing on the previous gold-backed paper money, all of them paid attention to a "gold content". Now, with BTC backing stocks, there can be a "satoshi content", that is, how many Satoshis BTC are behind each share.

According to the current MicroStrategy holding of 423,650 BTC after the recent increase in holdings, and the total share capital after the increase is about 230 million plus 40 million new shares, which is about 270 million shares, the satoshi per share is:

423650 / 2.7 = 157,000 satoshis/share

If MicroStrategy can still raise 4 times the US dollars with the same financing efficiency and increase its holdings to 1 Nakamoto Satoshi, then the holding will increase to 1.1 million BTC, the total share capital will expand to 430 million shares, and the satoshi per share will increase to:

1100000 / 4.3 = 256,000 Satoshi/share

After calculating here, I wonder if you readers have discovered that according to MicroStrategy's gameplay, although it has been issuing additional stocks to dilute, because it has exchanged all the US dollars raised from the additional issuance into BTC, the Satoshi content per share has increased. If the value growth of BTC is optimistic in the long term, this means that the value of MicroStrategy per share has also been further improved through this operation.

Of course, this calculation is too idealistic. First of all, it is a question whether MicroStrategy can continue to raise funds from the US stock market at a high premium. Secondly, if MicroStrategy keeps buying like this, the price of BTC will never stay at 96k and wait for it to slowly increase its position. In other words, first, it may not be able to raise so much money smoothly, and second, even if it raises money, it may not be able to buy so many BTC at a low price.

Despite this, MicroStrategy still took advantage of the flood of US dollar liquidity in the US stock market to achieve the strategic goal of hoarding a large amount of BTC. This clever use of momentum is really amazing.