Assert that that is not so! According to reports, Michael Saylor of MicroStrategy is contemplating lending the company’s Bitcoin. That makes perfect sense on a business level. It does not, as a Bitcoiner.
In any event, no one should be surprised by the loans. Saylor has been throwing clues for some time that he plans to do so. reports that all of this information comes from the “company’s investor day call with shareholders” on Thursday.
His precise words were as follows: “We believe there may be changes to mortgage it and produce long-term debt under favourable conditions, which we could leverage against the Bitcoin, or we believe we could lend it to a trustworthy counterparty. That may become a lucrative source of revenue for us, or we could expand it further with some novel uses.”
As a result, they’re still considering it, and there are a few viable choices. And, even if they chose to lend the Bitcoin for a return, the alternatives are limitless. What does it mean to be a “trustworthy counterparty”? Is it just a corporation that can guarantee its BTC’s yield, custody, and return? Or are they referring to a business that will utilise the Bitcoin ethically and will not short their own investment?
Why is one of the primary reasons that die-hard Bitcoiners are opposed to lending. Borrowers of Bitcoin often use it to short Bitcoin. They wager against the asset and attempt to depress the market. Is that in MicroStrategy’s best interests? Will they engage in the activity just for the sake of profit? Perhaps they will not. Perhaps they’ll discover a use case in which the lender does not utilise the borrower’s Bitcoin for illicit reasons.
The second reason Bitcoiners oppose lending has nothing to do with MicroStrategy. Hardcore Bitcoiners avoid lending their BTC for fear of losing custody. In Bitcoin culture, self-custody is vital, and the reward is not worth the danger of surrendering your BTCs to another organisation. Coinbase is already the custodian of MicroStrategy’s Bitcoin, if the claims are accurate. Make what you will of it.
MicroStrategy Examines Bonds
A second quotation in the Bloomberg piece indicates still another possibility. This one may be more pertinent to current events, but what do we know? Saylor allegedly said in answer to a question:
“I believe it is still too early to determine if there is a viable Bitcoin-backed bond market, but I look forward to investigating it in the future,” he said, adding that he would consider such an issuance if it was accretive to shareholders.
In other words, MicroStrategy will monitor the performance of the El Salvador Bitcoin Volcano Bond before making a commitment. The world’s attention is focused on that investment instrument, as it has been since El Salvador unveiled the Bitcoin Law. In any event, it’s worth noting that MicroStrategy is not unfamiliar with bonds. Their “junk bond transaction from June (…) is presently trading at or around par, or 100 cents on the dollar, according to Trace bond price data.”
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