Bitcoin outperformed Nasdaq by a factor of ten, says Bill Miller IV. The notes in the hand of MicroStrategy represent its only debt, he said.

Bill Miller IV, a portfolio analyst at Miller Value Partners, announced in a letter to shareholders the incorporation into the Income Strategy fund, managed by that firm, of a percentage of MicroStrategy’s convertible bonds or notes, based on bitcoin (BTC).

One of the reasons for acquiring MicroStrategy’s convertible bonds is CEO Michael Saylor’s managerial performance, Miller said in the investor communication. Miller noted that Saylor managed to reverse a severe crisis of his company; after the company had wasted 99.86% of its market value.

The executive also points out an explanation given last December by his father, Bill Miller III, founder of Miller Value Partners. After explaining the basics of bitcoin technology, the 21 million caps on its supply, and the fact that growing activity on the network could revalue BTCs whose scarcity is already evident, Miller asks, “Why would I want to someone have some bitcoin?”

Then, using data from the IMF, the World Bank, and the Organization for Economic Cooperation and Development (OECD), Miller states that with its market capitalization of $ 700 million, ‘Bitcoin is approximately 0.5% of the global money supply of 130 trillion, despite the advantages it has over the traditional monetary system.

The investor claims that from the end of 2019 to October 2020, the global money supply grew 20%, while the supply of Bitcoin only grew 2.5% in 2020 and highlighted the unique advantages of bitcoin over other financial systems.

User’s supply will not change due to new jurisdictions, policy errors, or unforeseen consequences. No one will threaten to temporarily shut down owners’ access to Bitcoin due to a pandemic. It is more challenging to steal than other stores of value and changes hands much more quickly. There is more transparency around Bitcoin than in any currency in world history, and buyers know that they are pretty confident about their investment in the money.

Bill Miller IV, Miller Value Partners

Miller provided users with a detailed summary of the performance of the first cryptocurrency as an asset. He highlighted that bitcoin achieved the best performance in eight of the last ten years.  “Its annualized yield has pulverized the next best performer, the Nasdaq, by a factor of ten in the last decade.”

Miller continued refuting the main arguments against Bitcoin. For instance, those that it is a Ponzi scheme, that it has no intrinsic value, that it is too volatile to be a haven asset, or that it is good but that regulators will forbid it, among others.

The investor then explains the reasons for purchasing convertible bonds from those issued by MicroStrategy. This firm carried out the issuance for a total of USD 650 million in mid-November.  According to Miller, that is the only debt that MicroStrategy has. He also   estimates that the amount of the assignment is approximately half the value of the company.

By: Jenson Nuñez


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