Say it isn’t so! Apparently, MicroStrategy ‘s Michael Saylor is considering lending the company’s Bitcoin. It makes complete sense at a corporate level. As a Bitcoiner, it doesn’t. So, if MicroStrategy decides to do it, the world will know where Saylor’s loyalties lie. No one should be surprised by this. Saylor is hinting at this since a while.
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This all happened, “Thursday on the company’s investor day call with shareholders,” Bloomberg informs.
What Did Saylor Say In MicroStrategy ‘s Call?
His exact words were:
“There may be opportunities to either put a mortgage against it and generate long-term debt under favorable circumstances, which we could leverage up against the Bitcoin, or we think that we could lend it to a trustworthy counterparty. That could become a good source of income for us, or we could develop it with some kind of interesting applications.”
So, they’re still thinking about it and there are a few options on the table. There are endless possibilities even if they decide to loan Bitcoin for yield. What does “a trustworthy counterparty” mean? Does it mean a company with the ability to guarantee their BTC’s yield, custody and return? Or are they talking about a company that’ll use that Bitcoin in an ethical way and not short their own investment?
That’s one of the main reasons hardcore Bitcoiners are against lending. Borrowing BTC is often used to short Bitcoin. These people bet on Bitcoin, driving the market lower. MicroStrategy would be best served if they did this. Is it worth the risk? Maybe they won’t. Maybe they’ll find a use case in which the lender doesn’t use their Bitcoin for nefarious purposes.
The other reason Bitcoiners are against lending doesn’t affect MicroStrategy. Hardcore Bitcoiners don’t lend their BTC because they don’t want to lose custody. Self-custody is paramount in Bitcoin culture, and the yield isn’t worth the risk of surrendering your BTCs to another entity.
If the rumors are true, Coinbase is already the custodian of MicroStrategy ’s Bitcoin. You can take what you like from that.
BTC price chart 12/17/2021 EXMO. Source: BTC/USD tradingview.com| Source: BTC/USD on TradingView.com
MicroStrategy Looks at a Bond Option
There’s a second quote in the Bloomberg report that points to yet another option. This one might be more akin to what’s going on in the world, but, what do we know? In response to a question, Saylor reportedly said:
“I think that we’re still a little bit too soon to say whether there’s a good Bitcoin-backed bond market, but I look forward to exploring that in the future,” he said, adding that he would approach this kind of bond offering if it was accretive to shareholders.”
MicroStrategy will then evaluate the El Salvador Bitcoin Volcano Bond before making a commitment. The eyes of the world are on that investment vehicle, as they’ve been on El Salvador since the country announced the Bitcoin Law. MicroStrategy has a history of bonding. Their “junk bond deal from June (…) currently trades around par, or 100 cents on the dollar, according to Trace bond-pricing data.”
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Get a Bonus as a Digital Property
Last but not the least, we want to ask why Michael Saylor kept dropping hint about their Bitcoin lending. A recent “What Bitcoin Did” episodeHe spoke about Bitcoin as digital property. Perfect. The idea was likened to a hotel. Ok. Ok. It sounds reasonable. The hotel owner could easily rent out all rooms in digital form. It could even be located in any part of the globe. Saylor, where are you heading with all this? He said that we could actually rent these rooms each day. WHAT?! This man is definitely considering lending MicroStrategy ‘s Bitcoin.
James Coleman, Featured image on Unsplash Charts by TradingView