Look, I'm no public markets expert, but raising money to buy more bitcoin seems to be the obvious new alpha for public companies.
MicroStrategy pioneered this strategy and now, 4 years later, it is the most compelling and successful story in corporate finance. Microstrategy has been the best performing stock over the past 4 years, outperforming all US companies including NVIDIA. That's crazy, right? All thanks to bitcoin.
I'm sure the CFOs of most public companies are now looking at MicroStrategy and analyzing how they turned a billion dollar company into a $70 billion empire in just 4 years, and thinking about how they can do the same.
Here's the playbook:
Use earnings, equity and debt to buy more bitcoin. And tell the world out loud.
But let's be real: MicroStrategy's bitcoin playbook won't boost stock prices forever, at least not for other public companies. The arbitrage opportunity is rapidly closing as more companies adopt similar strategies.
MicroStrategy enjoys first-mover advantage and guru status with Michael Saylor. The new corporate buyers of btc lack that credibility and cult among Bitcoiners. The impact decreases with each new adopter.
bitcoin's growth is also slowing down. Making 5x annually becomes more difficult as increasing marginalized competition for a somewhat fixed btc supply means diminishing relative returns.
Let's also remember: Investors today can gain exposure to bitcoin more easily than when MicroStrategy began. ETFs and funds reduce the impact of new companies that own btc directly.
All of this means that the MicroStrategy playbook is quickly closing for public companies. Companies considering it must act quickly to maximize profits before the strategy is overdone.
To be clear, I am incredibly optimistic about corporations adopting btc treasury reserves. The thing is that the first to act will be the ones who will benefit the most. The impact will decrease over time for new users.
And of course, regardless of time, companies will continue to benefit from adopting this strategy as the price of bitcoin continues to rise forever.
This article is a Carry. The opinions expressed are entirely those of the author and do not necessarily reflect those of btc Inc or bitcoin Magazine.
