Micheal Saylor held a miniconference for CEO's early in 2024, ahead of the Bitcoin ETF Approvals, and he provided a detailed plan for how they could add Bitcoin to their balance sheets, increase their market capitolization and basically double backstop their Bitcoin INvestment.
Many CEO's thanked him for the knowledge and acknowledged that they didn't have the power to do this, but they thought it was a good plan.
Micheal Saylors strategy is basically to issue new stok or other stock-like instruments based on his companies balance sheet, then take loans against that stock and then ise the money to by Bitcoin. The loans are now secured by both stock and bitcoin.
Then when Bitcoin price goes up again, he issues new stock based on this new equity, takes loans against this new stock and then buys more Bitcoin. Rinse and repeat. He is building a tower of stock, loans against the stock and Bitcoin. I calle this the Grand Strategy to grow Bitcoin reserves iindefinitely, as long as BItcoin proce goes up. I call it Saylorizing your company and double backing your debt.
The question is could you do this?
Saylorize your Bitcoin Stack
First you need an asset, which you can borrow against. Let's say you own a home worth one million dollars . You borrow 500,000 dollars against this home, and the loan is backed by the equity or value of the home.
Second you take the 500,000 and buy BItcoin, with all of it. And you assign ownershio of the BItcoin to the owners of the debt along with the debt. NOw your house, which you own, has a loan against it for 500,000 and that loan is backed by a million dollar home, so the collateralization ratio is 2 dollars of home for one dollar of debt. But once you buy 500,000 worth of bitcoin, and assign it to the owner of the home, you know have the 500,000 loan backed 2:1 by the home and 1:1 by Bitcoin, so now 3 dollars of Home and Bitcoin back up every dollar of a loan.
Third, now you have 1.5 million dollar asset home and BItcoin, backing 500,000 in debt, so you are lkess then 2:1, and you can borrow more, 250,000 more, to get back to 2:1. So if you borrow an additional 250,000 the equity to debt ration becomes 2:1 , with 1.5 million in equity and 750,000 in loans.
Fourth, now you take the 250,000 and buy Bitcoin, and assign it to the owner of the house. Now the loans of 750,000 are secured by a 1 million dollar house an 500,000 plus 250,000 in Bitcoin or 1.75 million in equity and 750,000 in debt, or greater then 2:1.
Fifth you can now borrow more , 125,000 against your new equity. This brings your Equity to 1.75 million or 1,750,000 and debt to 875,000, a 2:1 ratio of equity to debt. Very secure loan, and growing Bitcoin stack. Now without any additional outside capitol we have grown our asset to 1.75 million dollars.
The debt is safely secured by a 2:1 equity to debt ratio, which makes the banks feel very secure.
So instead of only having a million dollar home as an asset you now have a million dollar home asset and 875,000 dollars of BItcoin as an asset.
Now if there is a blackswan event like Covid or the California Forest Fires or the Eastern United States Floods and Sunami and inflation is so bad your assets appreciate 50 percent in a year you have essentially leveraged yourself into a position where your home is now worth 1.5 million dollars and your BItcoin is worth over 1.2 million dollars. Now instead on having a single million dollar asset, you have two assets worth an astonishing 2.75 million dollars.
Sixth, because Bitcoin and the house continue to appreciate, you can keep borrowing against their value indefinitely and building your Bitcoin Stack indefinitely.
Last the asset can become a performing asset, which makes you money.
Both the house and the BItcoin are an Asset because they Appreciate in value. But did you know that they can be performing assets also, defined as they can earn you income?
A house is an appreciating asset when it gains in value each year. But the house can also be a performing asset or make you money if you rent all or a portion of it out and collect rent. A house can also be a performing asset it can be used in the tourism industry, if people will pay to visit the house, or visit another features of the house, such as a garden.
Bitcoin can also generate income through what is called staking, where you loan your BItcoin to someone for a fee, or through loans, where you borrow against a very small percentage of the BItcoin to pay loan payments. You can borrow in a stablecoin like USDC and then add USDC to a trading pair to earn transaction fees or stake it to earn a fixed APR like 15% or more.
So yes you can Saylorize your assets and you can reproduice Micheal Saylors strategy.
This is not investment advice, but me thinking out loud and putting my ideas down on paper for execution and revision.
