HITS

MicroStrategy’s relatively new Bitcoin strategy has started helping its older, core software business, according to Michael Saylor, its CEO and chairman

“The MicroStrategy business has now emerged as two businesses,” he said Sept. 14 during a keynote at the Jefferies Software Conference.

“We have a $500 million software business growing 10 percent-15 percent a year… and we have a $5 billion dollar digital property business growing more than 100 percent a year – and that’s the Bitcoin strategy,” he explained.

The company’s Bitcoin “leadership” has been helpful to the company on multiple fronts, he said, noting it has driven the company’ stock price up, which helps MicroStrategy investors and employees, who are also MicroStrategy shareholders.

“People are much more aware of the company’s products,” he said. “They’re much more aware of who we are. There’s a lot more confidence in us. It’s increased the perception that we are industry leaders and technology leaders.”

The Bitcoin strategy has also helped MicroStrategy retain employees, increased demand for its products and has “dramatically strengthened the balance sheet,” he said.

Also, “our brand has increased in awareness by a factor of 100,” he pointed out, noting: “Everybody knows who we are now. It’s much easier for us to get meetings with” chief experience officers (CXOs) and “all of our customers and all of our prospects.”

The Crypto Market

The cryptocurrency market is still nascent but growing rapidly. “I think we’re like 1 to 2 percent into” the cryptocurrency journey – “we’re still very early,” Saylor said.

“On the tech side, the early movers have been Square and PayPal building Bitcoin directly into their mobile apps,” he noted, predicting their success will “drive Google, Apple, Microsoft, Amazon eventually to get into this space.”

Smart investors will be taking some of their capital each year that previously would have gone into Manhattan buildings, Kansas farmland, gold, silver and other commodities, the stock market, or sovereign debt, and “putting it in digital property because it’s pure and it’s programmable and it’s dematerialized and it is universally desirable,” he said.

The reason why is that “every rich person on the planet – it doesn’t matter if you’re in China, if you’re in Russia, if you’re in the Middle East, if you’re in Africa, if you’re in South America, if you’re in North America – everybody on the planet wants a billion dollars of your Bitcoin,” he explained.

“They don’t want your ranch in California. They don’t want your building in Buenos Aires. They don’t want the stock in the company X, Y or Z. They might not even legally be able to own that stuff. The one thing that they do want, that they know they want is the dominant digital property network.” And that dominant digital property network is Bitcoin, he noted.

“Fear of the unknown” is the only thing stopping more investors from entering the crypto space, he said.

The number of publicly-traded companies trading Bitcoin has been growing and he predicted there will be “about 36 to 40 publicly-traded companies holding Bitcoin” by the end of this year after growing from 0 last year to about two dozen now. Of those 36-40, there will probably be 12 publicly-traded Bitcoin miners by year-end, he predicted.

Other cryptocurrency currencies are more risky than Bitcoin, he said, noting there is a general consensus that Bitcoin is a digital property but the same can’t be said of the other crypto currencies whose legal statuses are uncertain.

“The ability to buy funds that support Bitcoin or give you Bitcoin exposure through J.P. Morgan or Morgan Stanley or Wells Fargo or other big banks – that was a big catalyst” when it started happening in recent months, he said.

Access will also become easier if a Bitcoin exchange-traded fund is introduced, he said, predicting “that’ll be a catalyst” for accelerated adoption of Bitcoin also. If the accounting treatment of Bitcoin is normalized to be more of a financial asset, that will also be a major catalyst, he added.