MicroStrategy CEO defends debt-financed bitcoin purchase, says its like investing early in Facebook

Business analytics service provider MicroStrategy Inc’s CEO Michael Saylor defended the company’s debt-financing for bitcoin, as he sees buying the digital coin now as equivalent to investing in Facebook’s early days.

“We’ve got $2.2 billion of debt, and we pay about 1.5% interest, and we have a very long time horizon,” Saylor told CNBC on ‘Squawk on the Street.’ “Our point of view is being a leveraged, bitcoin-long company is a good thing for our shareholders.”

The Virginia-based company has become well-known on Wall Street in the past year after it started buying and holding bitcoin. MicroStrategy initially used cash on its balance sheet to acquire the cryptocurrency and later turned to bonds to make additional purchases.

Saylor’s also got a boost in his personal profile as the executive evangelized about bitcoin’s potential, likening it to “digital real estate.”

“If you borrow billions of dollars at 1% interest and invest it in the next Big Tech digital network that you thought was going to be the dominant Amazon or Google or Facebook of money, why wouldn’t you?” Saylor said. “I mean, if I could borrow $1 billion and buy Facebook a decade ago for 1% interest, I think I would’ve done quite well.”

Facebook listed itself in 2012, about eight years after its founding, and since grew as a company worth more than $1 trillion.

Shares of MicroStrategy rose as much as 400% within a year.

In August last year, it bought 21,454 bitcoins for $250 million as its first investment. 

As of June 30, MicroStrategy held 105,085 bitcoins at an aggregate cost of $2.7 billion, valued at around $4 billion, based on Friday’s trading price of around $39,000.

Some investors are doubtful of MicroStrategy’s bitcoin bet, concerns that have been amplified in recent months as the world’s largest digital currency has weathered a period of weakness.

Bitcoin hit an all-time high of nearly $65,000 in mid-April, which disappeared after an initial pop and struggled since, twice breaking below $30,000.

“Everybody is looking for this open way to store value and move value at the speed of light using a computer chip and a mobile phone,” Saylor said. “You had Google. They created digital books. You had Facebook; they created digital communications. Apple gave us digital music, and Amazon gave us digital retail. Bitcoin is digital property on a big tech, open monetary network.”

“Our view is it’s only a matter of time before billions and billions of people have mobile phones pugged into bitcoin, and we just want to be there first,” Saylor added.

While discussing the company’s bitcoin investment, Saylor said it helped in the intelligence software operations business.

1. “It’s a door-opener,” Saylor said of the company’s bitcoin association. “It’s very important that people know who you are. That starts the conversation. It’s been great for our enterprise software business, and it’s been great for employee morale, as well.”

Picture Credit: Business Insider