Does Microstrategy Own Too Much Bitcoin?
To investors,
Microstrategy announced yesterday they now hold a total of 423,650 bitcoin. This means the public company controls more than 2% of all bitcoin that will ever be in circulation.
Microstrategy has spent over $25 billion acquiring the bitcoin and the average purchase price is just north of $60,000 per coin.
But bitcoin is supposed to be a decentralized technology, so it begs the question — does Microstrategy own too much bitcoin?
This is a loaded question. There is no simple answer.
On one hand, bitcoin was built as a peer-to-peer electronic cash system that could not be controlled by anyone, yet was accessible to anyone with an internet connection. Free markets and democratic participation were baked into the code by Satoshi.
It would be antithetical to bitcoin’s ethos to have one person or company own a large percentage of all bitcoin. Does 2% qualify as that threshold? I am not sure. I will let others debate the exact threshold, but I know 2% is closer to the threshold than 1% or 0.5%.
With that said, although Microstrategy owns more than 2% of the bitcoin supply, they have no additional control or perks from the bitcoin network. You and I have the same participation and control in the network as Microstrategy. Concentrated ownership of the coins does not necessarily give you special powers. It just gives you a lot of bitcoin.
Additionally, bitcoin operates in a free market so bitcoiners believe anyone should be allowed to buy as much bitcoin as they want. This highlights the complexities and paradoxes of bitcoin — we want decentralization, but we cheer on someone centralizing ownership.
We want free markets, but we get nervous if someone exploits the free market too well. Again, I said there was no simple answer to the question posed today.
For example, bitcoin’s decentralization ethos are thrown a curve ball when Wall Street shows up. Blackrock currently has more than 500,000 bitcoin in their ETF and all ETFs combined have more than 1.1 million bitcoin collectively. This doesn’t sound very decentralized, right? It sounds like Wall Street is eating up all the bitcoin and we are recreating the legacy financial system.
But Wall Street does not get any special powers by owning large amounts of bitcoin. And Wall Street technically is holding the bitcoin on behalf of their clients, so the answer to “who owns the bitcoin in Blackrock’s ETF?” is not as clear as you would wish.
The truth is we need Wall Street if we want true mass adoption.
This presents bitcoin holders with a tough call — do you seek mass adoption or do you actively work to keep Wall Street away from bitcoin? The answer doesn’t matter because Wall Street is already here. There is no stopping them now. Decentralized ownership is the unfortunate loser in this development.
This brings us back to Microstrategy.
The company owns 2% of all bitcoin that will ever be created. Michael Saylor has publicly stated his intention to continue buying as much bitcoin as he can. I would bet he ends up with a lot more bitcoin than the current 423,000 the company owns today.
You may be okay with that idea. You may hate that idea. But either way, it is going to happen so stop worrying about what other people are doing and try to acquire as many bitcoin as you can. There is a global race underway for the 21 million coins and Microstrategy is ahead of the curve on trying to win the race.
Don’t hate the player, hate the game.
Hope you all have a great day. I’ll talk to everyone tomorrow.
-Anthony Pompliano
Founder & CEO, Professional Capital Management
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Nope MSTR is smarter than most companies just taking advantage of the crypto revolution
People who understand Bitcoin were aware of these types of situations well before any company, Wall Street, or government entered the space. We appreciate bitcoin for the FREEDOM FACTOR. Saylor is FREE to buy as much as he wants, let's not stop appreciating free markets now just because somebody is a more effective free market player than we are.