The ALL IN philosophy of Bitcoin believer Michael Saylor

This article is from Deep Chain Finance, authored by Hegel.

Due to his frenzied buying of Bitcoin over the past two years, Michael Saylor has become a veritable "high-stakes gambler" in the cryptocurrency field.

Currently, MicroStrategy (stock code: MSTR) holds a total of 105,000 Bitcoins, accounting for 0.5% of the total Bitcoin supply, ranking first among publicly traded companies worldwide.

While others use Bitcoin to diversify their asset allocation and combat inflation, Saylor seems to be gambling on the future of both the company and himself with Bitcoin.

From being a graduate of MIT to the CEO of a publicly traded company, and now a die-hard Bitcoin bull, it is not hard to see that "all in" has always been the hallmark of Saylor's life.

"A Publicly Traded Company Holding 100,000 BTC"

If you look at the financial reports, you will find that by Q1 2021, MicroStrategy had total assets of $2.443 billion, of which $1.946 billion came from digital assets. On the cash flow statement, the company spent $1.086 billion in the first three months of this year, with only $447,000 used for purchasing fixed assets and other "real assets," meaning that 99.96% of the money spent was used to buy Bitcoin.

This has also made long-time employees of MicroStrategy quite unhappy. Originally a business intelligence software company, the investment in BI software development is only $29.482 million, which is less than even the small change used to buy Bitcoin.

"The Bitcoin thing is strange; we employees feel that the company is a bit unfocused." One employee expressed on the job site Glassdoor.

MicroStrategy Q1 2021 Cash Flow Statement

At the quarterly meeting in July 2020, Saylor announced that MicroStrategy planned to purchase Bitcoin, gold, and other alternative assets to replace the cash still held on the balance sheet.

A month later, MicroStrategy used $250 million of its cash reserves to buy 21,454 Bitcoins.

In September and December 2020, MicroStrategy spent $175 million and $50 million, respectively, to purchase Bitcoin.

Did the company spend all its $500 million cash just to buy so little Bitcoin? Perhaps feeling it was not enough, a dramatic scene in securities history unfolded:

On December 11, 2020, MicroStrategy issued $650 million in convertible bonds, all to be used for buying Bitcoin.

It is widely recognized in the industry that Saylor pioneered two firsts: making MicroStrategy the first publicly traded company in history to purchase Bitcoin and incorporate it into its capital allocation strategy; and being the first company to dare to borrow money to buy Bitcoin.

Of course, borrowing money to buy Bitcoin is a bold move, and the criticism is significant. Citigroup analysts have repeatedly issued negative evaluations, and after MicroStrategy officially announced the issuance of convertible bonds, they directly downgraded their rating from "neutral" to "sell."

Interestingly, MicroStrategy's stock price did not drop; instead, following the issuance of the convertible bonds, the stock entered a new upward cycle.

On February 9 of this year, due to the popularity of the MicroStrategy World 2021 event, the stock price soared to an all-time high, closing at $1,272.94. A few days later, investor sentiment cooled, but it remained above $900.

MicroStrategy's stock price changes over the past year (Source: Nasdaq official website)

At that time, a long-time employee of ten years felt proud and boasted on social media: "Look! Our boss was selected as one of the most influential figures in the crypto space in 2020! Our company now holds over 70,000 Bitcoins!"

MicroStrategy's Q1 2021 Bitcoin purchase situation, showing that Saylor increased his holdings when Bitcoin prices were falling (Source: Coinsmart.com)

Traditional financial institutions are dismissive of MicroStrategy's eccentricity. S&P Global Ratings assigned MicroStrategy a credit rating of "CCC+", below "investment grade." HSBC even prohibited clients from purchasing MicroStrategy stock, stating that they had no interest in such "virtual currency."

However, the market's enthusiasm for MicroStrategy remains high. On June 14 of this year, MicroStrategy announced the completion of a $500 million secured senior note issuance. The market showed exceptional demand for this bond, with orders reaching $1.6 billion.

After receiving this money, on June 21, MicroStrategy purchased another 13,005 Bitcoins. By this point, MicroStrategy held a total of 105,085 Bitcoins, accounting for 0.5% of the total Bitcoin supply, ranking first among publicly traded companies worldwide.

Calculating the cost, MicroStrategy has spent a total of $2.741 billion, with an average holding cost of $26,080 per Bitcoin. Among them, 92,000 Bitcoins are managed by its subsidiary "MacroStrategy."

It can be said that MicroStrategy is betting on Bitcoin. It has pinned all its hopes on the appreciation of Bitcoin, with little progress in its own business and no output from the "real economy," making it impossible for the company to use sufficient income to pay interest.

On the surface, the convertible bonds do not mature until 2027, and the coupon rate is 0, meaning that the principal only needs to be paid in six years, with no pressure to pay interest for a long time, thus not creating significant cash flow pressure; however, if a super bear market like 2014 or 2018 occurs, with Bitcoin prices plummeting over 50%, MicroStrategy will become insolvent and on the brink of bankruptcy. At that time, if MicroStrategy does not want to go bankrupt, the only choice will be to sell Bitcoin for cash.

An analyst from Seeking Alpha, Juan de la Hoz, calculated that MicroStrategy's stock price market value is 2.92 times its book value, indicating a significant bubble. In other words, spending $3 buys something that is actually worth less than $1.

"I've never seen such a bizarre company. In short, for MicroStrategy's stock, everyone should sell if they can."

However, Saylor seems to have never cared about the comments from within the company or from the outside world.

"From Mocking Bitcoin to Betting on Bitcoin"

Now, Saylor is so obsessed with Bitcoin that it is something he never imagined back in the day. Because shortly after publishing "The Mobile Wave" in 2013, he tweeted to mock Bitcoin:

"Bitcoin won't last long. It's only a matter of time; its fate will be like online gambling."

At that time, he thought Bitcoin would either be declared illegal and completely banned or would not measure up to other cryptocurrencies and thus fade into history.

Saylor's tweet mocking Bitcoin seven years ago

Seven years later, he has finally become the very thing he despised the most, the world's largest Bitcoin "gambler."

In fact, this is not impulsive; it is a realistic consideration from a CEO of a publicly traded company and a graduate of MIT.

MicroStrategy holds special significance for Saylor. When he went to MIT with dreams of joining the military, he was rejected by the Air Force two months before graduation due to a heart murmur, leaving him "unemployed" before graduation. After struggling in the job market for over two years, he founded MicroStrategy, which became his only faith at that time. When he first became a boss, he owed over a thousand dollars in debt, had no house, and could only sleep on friends' sofas.

In the early days of founding MicroStrategy, Saylor expressed his wish to build it into a business group like General Electric, to be passed down for generations. Thus, he has repeatedly rejected acquisition offers.

Back then, he was resolutely unwilling to sell the company; today, he is resolutely unwilling to sell Bitcoin; back then, he wanted to build MicroStrategy into a century-old empire; today, he vows to hold Bitcoin for at least a century. The history is remarkably similar.

Saylor's journey with MicroStrategy was once very smooth. Leveraging his technical advantages in business intelligence analysis software, he successfully listed on Nasdaq, and his personal wealth once reached $7 billion, with the American elite political magazine "Washingtonian" commenting that he was "the richest man in the capital."

At that time, Saylor was only 35 years old, and the second richest person on the wealth list had only $1 billion in assets.

However, entering the new century, Saylor and MicroStrategy faced increasing challenges.

In March 2000, the U.S. Securities and Exchange Commission (SEC) charged Saylor and two executives for failing to accurately report financial conditions for two consecutive years. By the end of that year, Saylor reached a settlement with the SEC, without admitting wrongdoing, but paid a $350,000 fine and voluntarily forfeited $8.3 million in "illegal gains." Subsequently, the company's stock price plummeted, and Saylor's personal assets reportedly shrank by $6 billion.

But MicroStrategy did not stop there. It subsequently acquired over 4,000 clients in both the public and private sectors, including Coca-Cola, Johnson & Johnson, and Starbucks. Among the three Nasdaq segments, MicroStrategy is listed on the Global Select Market (Nasdaq-GS), equivalent to the main board of China's A-shares. Moreover, MicroStrategy's blue-chip SAAS clients have a high renewal rate, and the recurring revenue from licensing and support services remains robust.

However, in the context of a sluggish global economy, MicroStrategy also faced a "midlife crisis," with declining profitability.

In 2016, the company's net income was $90.91 million; in 2017, it shrank directly to $18.2 million; after a slight rebound, it was $22.5 million in 2018 and $34.36 million in 2019; by 2020, it turned into a loss of $7.52 million.

The middle five columns of the table show MicroStrategy's net profit from 2016 to 2020 (Source: Market Watch)

As the pandemic began to sweep across the United States, MicroStrategy's stock price remained low for a long time, almost in a straight line, hovering around $128 per share. When MicroStrategy first bought Bitcoin on August 11 last year, there was no significant fluctuation in the stock price, but from that day on, MicroStrategy began to break free from a long-standing stagnation.

Earlier news reported that MicroStrategy held 105,000 Bitcoins, with cumulative losses exceeding $500 million, and Bloomberg warned of a potential $77 million asset write-down.

However, a closer calculation reveals that the media reports were biased: MicroStrategy's average cost for buying Bitcoin is $26,080 per coin, and as of the writing of this article, the price of Bitcoin on the FTX exchange is $34,960. Roughly calculated, the profit from investing in Bitcoin is $933 million, far exceeding the net income from traditional business over the past few years. In terms of the company's stock price, even though it has recently declined, it remains above $500, far exceeding the $120 level at the beginning of last year.

Additionally, according to recent data from Forbes this year, Saylor's personal assets exceed $2.3 billion, returning him to the ranks of billionaires, ranking 1,362nd globally. He ranks fourth on the cryptocurrency billionaire list, behind only the founders of Coinbase, FTX, and Ripple.

If we set aside the fluctuations of Bitcoin afterward, at least for now, Saylor's strategy of betting on Bitcoin can be considered successful.

"The True Believer in Bitcoin?"

Many people are curious: MicroStrategy has profited from investing in Bitcoin, but does Saylor really believe in Bitcoin?

From his repeated high-stakes bets and his online and offline Bitcoin evangelism, no one believes in Bitcoin more than Saylor.

TIME previously interviewed Saylor, and the reporter did their homework, starting with an academic question:

"Nobel laureate Robert Shiller mentioned a concept called 'irrational exuberance,' which essentially means that once the price of something rises, people will rush to invest, spreading like an infectious disease. Even if they don't believe this thing has value, they will join the gamble out of envy for others' success. Is Bitcoin an example of such irrational exuberance?"

Saylor's response was very straightforward:

"Oh no, quite the opposite. Bitcoin is a textbook case of rational response to inflation. What is 'rational behavior'? Finding a store of value to preserve and increase wealth. What is 'speculation'? Shorting, squeezing, and destroying the opponent—that's speculation. Investing in Bitcoin is not speculation, okay? Bitcoin is a brand new technology, like Facebook and Google in finance, with enormous potential for appreciation in the future."

The reporter was not satisfied: "If that's the case, why does Bitcoin have such a bad reputation among ordinary people?"

The reporter referred to the noise from traditional finance. Warren Buffett, the "Oracle of Omaha," once said Bitcoin is "rat poison squared," and this year he refused to discuss Bitcoin at the shareholders' meeting; JPMorgan CEO Jamie Dimon called Bitcoin a "scam," stating that dealing with Bitcoin is a waste of time, and he would fire any employee who dared to trade it.

Saylor's reaction was very mild:

"This is a paradigm shift issue; you can't blame anyone. Moreover, these people are very smart, which is why they are so successful in their careers. We can look back at history and understand: when electricity was invented, the vast majority of people on Earth could not understand what it was for a full 24 months after hearing the term. A Harvard philosopher named Thomas Kuhn once said: a new paradigm means a complete change in the way we view the world, and vested interests often do not accept new things; our only hope lies with the next generation. Because unless there is a war or a very serious event, these vested interests will not change their views; young people are different."

Michael Saylor during an interview with TIME magazine

The reporter pressed on: "So, what are your ambitions?"

Saylor simply said: "I want to fix the balance sheets of the whole world."

All of this goes back to last March. At that time, MicroStrategy had $500 million in idle cash; at that time, Saylor had not yet developed such a strong interest in Bitcoin. On a rainy day, he looked out the window at the Washington Monument and instructed his subordinates to buy U.S. Treasury bonds.

However, the pandemic in the U.S. quickly spiraled out of control, becoming more severe than in China and Italy. In response to the economic shock, the Federal Reserve first implemented zero interest rates and then began printing money at an unprecedented scale, even exceeding the entire history of human currency over the past 5,000 years.

"We must ensure that our investment returns exceed the rate of dollar depreciation. After thinking it over, only Bitcoin qualifies."

At this year's Miami Bitcoin Global Conference, Saylor also attended. At the conference, he left a statement that excited countless people:

"I believe Bitcoin is the safest, most reliable, and most certain thing in the entire economic universe."

Of course, some have questioned his "loyalty."

An analyst from a former Soviet republic, Vlad Costea, expressed his disdain for the emotional appeal: "I suspect Saylor has studied 'The Art of War.' He should have learned from members who left the Bitcoin development team, like Gavin Andresen, Mike Hearn, and Jeff Garzik, that he does not intend to truly develop Bitcoin but only wants to maintain the status quo, which is most beneficial for his company. Moreover, his company's partners include the U.S. Department of Homeland Security, the Department of Defense, and the military, which is hard to reconcile with the belief in decentralization."

Sun Tzu once said: "Thus, the skillful fighter puts himself into a position which makes defeat impossible, and does not miss the moment for defeating the enemy." After all, he is someone who is very adept at using social media for "brand promotion," somewhat akin to Trump and Musk. Moreover, without media coverage, people would not notice that the $500 million in cash MicroStrategy had was obtained by laying off hundreds of employees and cutting back on traditional business. Indeed, human nature and technology are complex, but for many Bitcoin enthusiasts, they would rather believe that Saylor is a true believer in Bitcoin rather than a second Musk.

"Life is Playing Games with God; If You Don't Go All In, There's No Game"

People like to say that Saylor is a "zealot." On this point, Saylor admitted over twenty years ago.

"My belief is: If you are going to play a game, you might as well go all in. There are no exceptions. I don't believe those who hold back will be the last ones laughing."

Saylor is a Christian and has been baptized. But in his view, life in the real world is like playing a game with God.

"You see my ring—there's a dam, right? And a beaver. This beaver is playing a game with God amidst the waves. Edison was also playing a game with God. Rockefeller, Carnegie… these people are just like me; their lives are just a game."

Like other internet company founders, Saylor has an almost legendary life experience. Having gone through struggles and uncertainties, he has a profound understanding of life as a play.

Born on February 4, 1965, in Nebraska, Saylor moved around military bases in Japan, New Zealand, Nebraska, and Florida due to his father's career as an Air Force officer. When he was 11, his family settled in Ohio, living near Wright-Patterson Air Force Base. This base is said to be the place where UFO wreckage and alien bodies are stored.

Young Saylor lived next to the Air Force base rumored to house alien bodies (Source: Google Maps)

Saylor was a good kid who loved to read, leaving a good reputation at his high school, Fairborn High. At the graduation ceremony, he was chosen to speak as an outstanding graduate; during a school voting event, he was selected as "most likely to succeed." Classmate Spahr later recalled: "This guy read more books than all of us combined. When talking to him, he could always take you back to ancient Greece and Rome."

It was also due to his yearning for the "Axial Age" (a term proposed by German philosopher Karl Jaspers, referring to the ancient Greek and Roman era, roughly equivalent to China's Spring and Autumn and Warring States periods) that Saylor has this permanently pinned, philosophically charged tweet:

"Bitcoin is a swarm of network hornets serving the goddess of wisdom, living off the fire of truth, becoming smarter, more agile, and stronger at an exponential rate, protected by a wall of cryptographic energy."

A Twitter user illustrated "network hornets" based on Saylor's post

Once, a media outlet interviewed Saylor and asked him why he loved reading so much. His answer was likely something 99% of people would never guess:

His parents wanted him to read "serious books," while Saylor preferred comics. For a child, a comic book costing 25 cents was too expensive. To cultivate Saylor's reading habit, the family made a decision: as long as Saylor finished a "serious book," they would pay him a dime (10 cents). Thus, to save money for comic books, Saylor read classics voraciously, always carrying a book wherever he went.

He understood from a young age: the more books he read, the more money he would earn, allowing him to exchange for more of what he wanted in the market. So, during one summer, he could finish reading a hundred "serious books." Even after becoming the boss of an internet company, Saylor still retains the habit of reading physical books.

On his first day of college, Saylor attended class wearing a sleeveless T-shirt. The T-shirt featured the logo of the band Def Leppard, which was on par with Michael Jackson in the 1980s. He even styled his beard like a band member, so that anyone who got close could smell a strong metallic vibe. During college, he enjoyed jumping onto the roof at night to play guitar, creating "strange sounds."

His friends liked to call him "Nuclear." Saylor seemed to enjoy this nickname and once said while half-drunk: "I initially studied 'nuclear engineering,' and my personality is quite volatile; sometimes you can feel a fierce flame burning when you get close to me. Wherever I am, everyone has to step back, like a nuclear fission event."

Saylor also possesses a quality of "spending all and returning again," making him less sensitive to many things. The year he became the richest man in Washington, a neighbor crashed their car into Saylor's house, destroying furniture, gas lines, and the outer wall. Reflecting on the accident later, he downplayed it: "It's nothing serious; the only interesting part was the five minutes at the scene. But honestly, this is really not a big deal; everything in the office is a thousand times more important than this guy driving into my house. I even criticized my secretary, saying: for this trivial matter, couldn't you just call me and let me know? Why did I have to go to the scene? It's just a house issue, not a life-or-death situation; I couldn't even be bothered to blink. Anyway, broken things can always be fixed. What's the big deal?"

After graduating, Saylor worked for the accounting giant DuPont, creating data models to predict growth. Saylor predicted that there would be a massive bubble in the last decade of the 20th century, and DuPont's performance would plummet.

The executives were unhappy, thinking Saylor's Windows computer was too slow and that he had made a mistake, so they had him recalculate using an Apple computer. Saylor insisted on his view and argued with the company for a long time. Eventually, DuPont decided to pay Saylor $350,000 to let him start his own analysis company, rather than stay in the DuPont office. This money later became the founding capital for Saylor to establish MicroStrategy.

His strong personality makes him unpredictable, which is why, despite many secrets, he remains single and has never been married.

In the company, his personality makes employees both love and hate him. MicroStrategy was once nominated by Fortune magazine as one of the 100 best employers, but the internal management chaos also made employees feel uncomfortable.

Once, Saylor told a reporter from Washington, D.C.:

"I never said I wanted to change everything in the world. But if I were to lead people from ignorance to knowledge, or even to 'omniscience,' there is still a bit of religious meaning in this. But to be honest, if God came to the world, He would be very disgusted with the current state of affairs."

With a strong personality, a persistent and unwavering spirit, and a belief in the philosophy of going all in, from this perspective, Saylor's gamble on Bitcoin is not surprising at all.

"Understanding and Then Believing"

On May 15 of this year, Saylor tweeted a very short message:

"Bitcoin is eternal."

Saylor's tweet this year stating "Bitcoin is eternal"

It must be said that having such a genius betting on Bitcoin is both a blessing and a disaster for the Bitcoin community.

As a book-loving Christian, Saylor should understand that there was a debate in medieval Christianity that influenced the history of modern science: Do people understand the content of their faith because of their belief? Or do they have faith because they understand the content?

Saylor's belief in Bitcoin is not baseless. Before deciding to buy Bitcoin, he carefully compared various investment options, including cash, bonds, stocks, gold, real estate, and Bitcoin.

"Based on the current M2 supply of dollars, it will increase by 5% in 2020, and in the next 20 years, it will increase by 24% each year. This means that purchasing power is constantly declining. At least for the next 3-4 years, the cash we hold will depreciate by 15% each year. The macro economy also has an inflation rate of 2% per year. When you do the math, the Federal Reserve is like someone sneaking into your backyard and openly robbing your wealth."

In the currency market, the dollar will become increasingly weak. This means that the capital market, real estate market, and commodities, including gold, will also perform poorly. The actual investment return rate is almost zero, or even negative. "In contrast, Bitcoin is a hundred times better than gold, even a million times better. I will not sell Bitcoin. I intend to hold Bitcoin for a hundred years."

Of course, countless people have asked him: Isn't what your company doing just a Bitcoin ETF? What if Bitcoin falls? Wouldn't that mean the end for the company?

Saylor is very firm: "Bitcoin is not a security at all! Bitcoin is currency!"

For him, understanding is belief, and belief is understanding. Whether it is Christianity, earthly life, or Bitcoin, it is all the same.

To outsiders, the enormous volatility of Bitcoin signifies extremely high risk, and leveraging puts the company on the brink of bankruptcy at any moment, which is extremely disrespectful to investors. Additionally, the highly concentrated investment portfolio puts MicroStrategy's stock at risk similar to or even higher than Bitcoin, making it a strong sell.

However, given Saylor's personality, even if Bitcoin truly crashes, he likely would not "repent."

He has always been that unwavering person, the smart kid who earned money by reading in the Air Force dormitory, the MIT scholar who enjoyed jumping onto rooftops to play guitar, and the tech whiz who wanted to create a business myth that would last for generations.

That is the gambler who believes in Bitcoin.