MicroStrategy’s Bitcoin Gambit: The Boldest Bet in Corporate History?
How Michael Saylor is Using Game Theory and Share Issuance to Dominate the Bitcoin Market—and Redefine Financial Strategy
Personal Note: Surfing the internet tonight, I came across the following tweet:
The MicroStrategy (MSTR) proposal seeks shareholder approval to dramatically increase the company’s authorized shares of Class A common stock from 330 million to 10.33 billion and preferred stock from 5 million to 1 billion. This 31x increase in share authorization is part of a bold strategy to raise additional capital for acquiring Bitcoin, consistent with their ongoing "21/21 Plan." The company has already raised $42 billion in equity and convertible instruments to amass Bitcoin and plans to continue leveraging equity issuance to expand its holdings. The proposal also includes amendments to its 2023 Equity Incentive Plan to ensure proper compensation for new directors, aligning their incentives with the company’s Bitcoin acquisition strategy. This move is aimed at solidifying MicroStrategy’s position as a dominant Bitcoin proxy and preparing the company to capitalize on the potential future appreciation of Bitcoin.
Full disclosure: I own MSTR.
I asked GPT 4o-mini and Grok to help me consider the implications of the above proposal. AI's response is below.
This is not financial advice.
Ty
MicroStrategy’s Bold Bitcoin Strategy: A Game Theory Masterclass
Michael Saylor and MicroStrategy (MSTR) are rewriting the playbook for corporate treasury management, leveraging Bitcoin and financial game theory to drive shareholder value. Their recent proposal to increase authorized shares from 330 million to 10.3 billion—a staggering 31x increase—has set the financial world abuzz. While skeptics worry about dilution, Saylor’s strategy is far more nuanced and, if executed successfully, could make MSTR a legendary case study in financial innovation. Here's a breakdown of the strategy and its implications.
The Core of Saylor’s Strategy: Bitcoin Scarcity
At the heart of MicroStrategy’s approach is Bitcoin’s finite supply—a maximum of 21 million coins, with an estimated 5 million already lost forever. This inherent scarcity drives Saylor’s belief that demand for Bitcoin will skyrocket as institutions, governments, and individuals seek a hedge against inflation and currency devaluation.
Saylor's bold move to issue shares and use the proceeds to acquire Bitcoin capitalizes on this scarcity:
Each Bitcoin purchase reduces market supply, driving up prices.
Higher Bitcoin prices increase MSTR’s stock value, enabling further share issuance.
This creates a self-reinforcing cycle where MicroStrategy becomes a dominant holder of Bitcoin.
Bitcoin Yield Per Share: Mitigating Dilution
Critics of the share issuance proposal cite dilution concerns, but Saylor’s method ensures that the Bitcoin yield per share (BTC/share)—the amount of Bitcoin each share represents—continues to grow. By timing share issuance to buy Bitcoin efficiently, the company ensures:
Shareholders benefit from rising BTC/share ratios.
The value of each share increases as Bitcoin prices rise over time.
This mirrors the game theory of early adoption: securing Bitcoin now, even at the cost of dilution, positions MicroStrategy and its shareholders to reap exponential rewards as Bitcoin’s value grows.
The Scale of the Opportunity
If approved, the share issuance plan could enable MicroStrategy to raise trillions of dollars over time to buy Bitcoin. For example:
A 10% issuance of the proposed shares could raise $335 billion at current prices.
This capital could add 1 million Bitcoin to MicroStrategy’s holdings, further reducing market supply and driving prices higher.
By staggering share issuances and capitalizing on rising Bitcoin prices, Saylor could theoretically acquire millions of Bitcoin, potentially controlling 20% of the total supply. Such dominance would not only solidify MSTR as a Bitcoin proxy but also position the company as a key player in global financial markets.
Game Theory on Steroids
Saylor’s strategy leverages game theory principles to drive adoption:
First-Mover Advantage: Early Bitcoin adopters secure assets at lower prices, maximizing returns as demand grows.
Institutional FOMO: MicroStrategy’s aggressive accumulation creates pressure on other corporations, institutions, and even governments to follow suit, fueling a feedback loop of demand.
Scarcity vs. Infinite Fiat: By issuing shares (essentially printing “fiat”), Saylor accumulates a scarce, appreciating asset while protecting shareholders from inflationary effects.
Saylor likened his approach to a nation-state printing its currency to acquire Bitcoin, highlighting the strategic foresight behind the plan.
Risks and Challenges
While the strategy is compelling, it’s not without risks:
Market Liquidity: Bitcoin’s limited daily supply (~450 coins mined per day) means acquiring millions of coins could take years and significantly push up prices.
Execution Risk: Staggered share issuances must be carefully timed to avoid spooking markets or diluting shareholder value excessively.
Dependence on Bitcoin: MicroStrategy’s stock performance is increasingly tied to Bitcoin’s price. If Bitcoin underperforms, the strategy could backfire.
Despite these challenges, the potential upside is extraordinary. If Bitcoin reaches $1 million as predicted, MSTR’s stock could skyrocket due to its leveraged Bitcoin exposure.
The Big Picture
Michael Saylor’s strategy represents more than just corporate treasury innovation—it’s a bold bet on the future of money. By positioning MicroStrategy as a dominant Bitcoin holder, Saylor is creating a model for how corporations and even nation-states might manage reserves in a world of finite, deflationary assets.
For shareholders, the stakesThe stakes for shareholderseds, everyone wins big. If it doesn’t, the losses could be significant. But for those who trust in Bitcoin’s long-term trajectory—and in Saylor’s vision—the and could be unpara, leled.
The question isn’t whether Saylor can execute the strategy. The real question is: can you afford not to own MicroStrategy shares?
Final Thoughts: MicroStrategy’s Bitcoin play is a high-risk, high-reward proposition but one rooted in sound mathematics and game theory. Whether you’re an investor or an observer, one thing is certain: this is a financial revolution unfolding before our eyes.