MicroStrategy goal: 1 Satoshi

Source: Liu Jiaolian

Overnight, BTC sought support near 96k for the 5-week moving average. The vote by Microsoft shareholders on BTC reserves in the early morning did not pass, as expected by the market. MicroStrategy has once again increased the position. Michael Saylor posted:

“MicroStrategy has purchased a total of 21,550 BTC at a total price of about 2.1 billion USD, at an average price of about 98,783 USD per BTC. The quarterly cumulative BTC-based return rate reached 43.2%, and the year-to-date return rate was 68.7%. As of December 8, 2024, MicroStrategy holds 423,650 BTC, with a total purchase cost of about 25.6 billion USD, at an average price of about 60,324 USD per BTC.”

Netizen Fred Krueger analyzed MicroStrategy’s increase the position strategy:

At the beginning of November: MicroStrategy holds 252,000 BTC. The price of BTC is 69k. The stock price of MicroStrategy is 2.1 times the net asset value per share.

MicroStrategy has formulated a plan to increase the position of 171,000 BTC, with a position increase of 68%. In total, it spent $160 million, of which $3 billion was raised from the US stock market through convertible bonds. Ultimately, MicroStrategy’s stock price successfully increased to 2.4 times its net asset value per share.

Math Magic: Due to a higher average net asset multiple (2.9 times) and the use of convertible bonds, this BTC Holdings plan to increase by 68%, resulting in the issuance of 40 million new shares (a 17% increase). Calculation: 1.68 / 1.17 = 43% fourth-quarter return (in line with the statement).

Review summary: MicroStrategy spent 160 billion U.S. dollars, increasing earnings per share by an amazing 43%.

Chainlink Note: In the digital issuance of new shares, Fred Krueger wrote 40k. Chainlink suspects that he made a typo, possibly wanting to write 40M, because as of December 2024, the total circulating shares of MicroStrategy were about 230 million. It is also worth complaining that when searching for the total share capital of MicroStrategy on the internet, not a reliable number can be found. The numbers given by various financial websites are all different. Every time delving into these detailed issues, it silently reinforces the belief in the future replacement of these old financial systems by blockchain and digital assets. These old systems even make it difficult for retail investors to understand a single number, and there is no open, transparent, or reliable way to verify it. It is simply suspicious whether it is deliberately ambiguous. Due to the quantity issue, it is crucial to manipulate the key number of dilution in new share issuance. Anyone who has dealt with the token economy of blockchain understands that one of the most important top-level designs of the token economy is the total amount and the method of issuance.

Back to the point. Then, Fred Krueger proposed a new BTC unit: 1 Nakamoto, which is equivalent to 1.1 million BTC - this is the suspected amount of BTC mined by Nakamoto in the early years of Mining.

Previously, the smallest unit of the BTC original chain was 1/100 million BTC, called 1 Satoshi (1 satoshi). Now we can have a larger unit of Coin Hoarding, 1 Middle Satoshi, equivalent 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 calculates that if Michael Saylor tries to accumulate BTC to the level of one Satoshi Nakamoto, he still needs 676,350 BTC. At the current price of 96k, it is estimated to be about 649 billion US dollars. This is four times the previous 16 billion US dollars.

In the past, gold-backed paper money paid attention to the ‘gold content’. Now, using BTC to back stocks, there can be a ‘Satoshi content’, which is the amount of Satoshi BTC support behind each share.

According to the current micro-strategy, after the recent increase in the position, we hold 423,650 BTC, and after the total share capital increase, it will be approximately 230 million plus 40 million new shares, which is equivalent to an estimated 270 million shares. The amount of Satoshi per share is:

423,650 / 2.7 = 15.7万Satoshi/股

If MicroStrategy can still raise 4 times the amount of USD with the same financing efficiency, holdings will increase to 1 million BTC, total share capital will expand to 430 million shares, and the Satoshi content per share will increase to:

1100000 / 4.3 = 25.6万Satoshi/股

By this point, I wonder if readers have noticed that according to this micro-strategy, although it has been diluting its stock by issuing more shares, it has actually caused the earnings per share to rise because it has exchanged all the dollars raised through issuing more shares into BTC. If BTC’s value keeps rising in the long run, this means that the value per share of MicroStrategy has also been significantly increased through this operation.

Of course, this algorithm is too idealized. First of all, whether MicroStrategy can continue to finance at a high premium from the US stock market is a question. Secondly, if MicroStrategy keeps buying in this way, then the price of BTC will never stay at the 96k position and wait for it to slowly increase the position. That is to say, firstly, it may not be able to smoothly raise so much money, and secondly, even if it raises money, it may not necessarily be able to buy so much BTC at a low price.

However, MicroStrategy has still managed to achieve its strategic goal of accumulating a large amount of BTC by leveraging the abundant USD liquidity in the US stock market. This clever move is truly impressive.