Phong Le believes that every company should have a part of its reserves in Bitcoin. The CFO defined MicroStrategy’s strategy as “buy and hold (hodl)”.
Regarding institutional investments, MicroStategy CFO Phong Le believes that “it is still early to invest in Bitcoin.” In recent days, the executive had a conversation with Jeremy Price, senior vice president of financial analysis at said company.
They agreed that corporations should have at least a part of their capital in the cryptocurrency that Satoshi Nakamoto created. According to Le, there are no excuses for publicly traded companies in any country not to invest in Bitcoin.
Both explained that this reason led them to decide to share the learning that they have obtained in MicroStrategy’s bitcoinization process. This US-based company owns 71,079 BTC, which is equivalent to more than USD 2,600 million. They obtained most of these bitcoins during the year 2020.
Necessary Strategies to Invest in Bitcoin
Phong Le said that a company must define a strategy on how it will invest in Bitcoin before starting to do it. For this reason, those responsible for conducting this activity should previously ask themselves some questions about different aspects.
Institutional investors might be interested in knowing what their purpose is, what type of strategy they will use, or how much money they will invest. They might also want to enter Bitcoin mining or run a Bitcoin node. The executive explained that those in charge of making the investments should talk with the board of directors of his company.
Phong Le revealed that MicroStrategy decided on a balancing strategy in which Bitcoin is its main reserve asset. He added that they converted their excess cash flow into Bitcoin and acquired debt to convert that cash into Bitcoin. The CFO summarized the organization’s strategy by defining it as “buy and hold (hodl).”
MicroStrategy CEO Michael Saylor has said that he owns at least 17,000 BTC. Furthermore, he claims that he follows a strategy similar to the one that Phong described. He considers Bitcoin to be “the most valuable property on earth”, even regarding it as digital gold.
Those interested in incorporating Bitcoin into the reserves of their corporations can study Price and Le’s recommendations. These include taking proper security measures and having insurance to cover possible failures or attacks. Likewise, companies can train a team that knows how to use the bitcoins that they have acquired.
Keys to a Bitcoin-Based Corporate Strategy
Michael Saylor complemented this presentation of the “Bitcoin Corporate Playbook” by revealing three keys to a corporate strategy based on Bitcoin. Saylor recommended maintaining a balance in Bitcoin, converting fiat derivatives into Bitcoin, combining those strategies, and developing new business opportunities.
Saylor said that capital will flow from weaker assets to stronger ones, which is why he recommended holding assets that appreciate. He added that this is more than a macroeconomic idea as Bitcoin is an opportunity for companies.
He explained that the strategy of converting the company’s fiat derivatives into Bitcoin dilutes the underlying value of fiat money. He believes that this offers a return of 200% per year.
By Alexander Salazar
