Michael Saylor says investing in MicroStrategy is closest you’ll get

MIAMI — MicroStrategy may technically be in the business of enterprise software and cloud-based services, but CEO Michael Saylor says the publicly traded company doubles as the first and only bitcoin spot exchange-traded fund in the U.S.

“We’re kind of like your nonexistent spot ETF,” Saylor told CNBC on the sidelines of the Bitcoin 2022 conference in Miami.

So far, the Securities and Exchange Commission has only approved ETFs that track contracts speculating on the future price of bitcoin, instead of the cryptocurrency itself. The commission has refused to greenlight any of the formal applications for a pure-play bitcoin-based ETF — a financial instrument that would give investors the chance to invest in bitcoin without having to go through the motions of signing up for an exchange, opening a crypto wallet, or dealing with any of the other logistics involved with buying and holding bitcoin.

“If there was a spot ETF, you’d be paying a 1% fee, and it wouldn’t be leveraged. With MicroStrategy, we have a software company that generates cash flow, so we convert our cash flows into bitcoin,” continued Saylor, who says the de facto MicroStrategy bitcoin spot ETF generates a 4% to 5% tax-deferred yield.

MicroStrategy, which was launched by Saylor in 1989, has been adding bitcoin to its corporate balance sheet for the last two years. The company has now spent close to $4 billion acquiring bitcoin at an average price of $30,700.

Saylor doesn’t have any plans to stop buying bitcoin, which will only further grow MicroStrategy’s exposure to the digital asset.

“Why would we ever stop?” he said.

“As we generate cash flows, we think that the responsible thing to do for our shareholders is we convert currency which is devaluing, into an asset which is appreciating,” said Saylor, who also noted that MicroStrategy is not diversifying because he feels the company owes shareholders a consistent strategy.

“If you want to be 2% exposed to bitcoin, you’d put 2% of your portfolio into MicroStrategy, and the other 98% of your portfolio, you can invest in whatever you want. They don’t want the CEO of a publicly traded company to be unpredictable and random.”

When MicroStrategy first added bitcoin to its balance sheet in August 2020, it was a pretty unpopular thing to do.

This was back at the tail end of the crypto winter when the coin was trading in the low $11,000 range, and many institutional investors and big Wall Street banks remained bearish on digital assets.

But Saylor’s move soon proved prescient.

As bitcoin’s upswing began in earnest in October 2020, old-school, billionaire hedge fund managers like Stanley Druckenmiller reversed course and began buying bitcoin. Major companies like Tesla, Block (formerly Square), and insurer MassMutual also followed suit, plowing hundreds of millions of dollars into bitcoin.

This kind of mainstream adoption is hugely important, because cryptocurrencies like bitcoin aren’t backed by an asset, nor do…