Microstrategy could have pocketed $1.3 billion if Saylor bought ETH


Defiant Data Crunch shows Ether would have paid well for the software maker

What if Michael Saylor had bought Ethereum instead of Bitcoin?

During the 2020-21 bull market, Bitcoin-enthusiastic CEO of Microstrategy Saylor made one of the most famous crypto bets of all time – he ordered the business intelligence software maker to invest $4 billion in the No. 1 cryptocurrency, according to Bitcoin Treasuries data.

Now, with the crypto falling into a punishing bear market, Saylor’s move has left Microstrategy with a paper loss of $1.3 billion.

If only he had bought Ether.

Passive return

Microstrategy reportedly earned nearly $1.3 billion from a $5.3 billion worth of Ether stash today, according to The Defiant’s analysis of data from CoinMarketCap and BuyBitcoinWorldwide tracking data. company bitcoin purchases. Thanks in large part to The Merge, Ethereum’s native token has soared 51% since June 30 compared to Bitcoin’s 7% surge, according to data from Defiant Terminal.

The Virginia-based company is also said to have earned passive return by staking ETH. Staking Rewards estimates that Ethereum stakers earn 4.67% per year, which would equate to $246 million at the current price of ETH.

In addition, analysis of Flashbots says stakers running its MEV-Boost software earn 135% more than those who don’t. Increased rewards on a $5.27 billion stake could yield over $527 million every year if the price of ETH is stable.

Performance of Microstrategy’s BTC holdings over time. Source: Bitcoin Treasures

There are other implications of the theoretical movement. If Microstrategy had invested in ETH rather than BTC, it would hold 2.8% of Ether’s supply and could be a centralizing force for the network. If the entire hypothetical supply of ETH were staked, it would represent more than 20% of the Ether staked.

Undue influence

“It’s fine for big companies to stake on the mainnet, but they need to stake in relative proportion to others so as not to exert undue influence on the network,” Superphiz, co-founder of the EthStaker community and ardent advocate of staking diversification, told The Defiant.

“I totally agree with a single entity operating around 2% of the network, but when it exceeds that level, it puts us at high risk of centralization,” he continued. “As of now, a 2% stake from a new entity could actually decentralize the channel by bringing in a new party.”


JPMorgan dives into DeFi after CEO ransacks Crypto as ‘Ponzi’

Lender’s Onyx Unit Executes Token Currency Live Trades in Pilot Project

Instead, Saylor resigned from the company he co-founded in 1989 in August, although he retained a sense of humor about the situation. In May he tweeted a photo-shopped image of himself selling fries at a McDonald’s.

Sincerely believing that Bitcoin would fulfill its destiny as the reserve asset of the global economy, Saylor, 57, pioneered the strategy of filling a corporate treasury with cryptocurrency instead of cash and usual US government bonds. He adopted not only laser eyes but also lightning eyes for his Twitter profile picture. Saylor liked to make grandiose claims about Bitcoin to his 2.7 million followers.

fire of truth

“Bitcoin is a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth,” he said. tweeted in 2020. “Ever faster, smarter and stronger exponential growth behind a wall of encrypted energy.”

That year, the software specialist launched Microstrategy’s BTC purchases. The first seven tranches raised $2.2 billion to buy 90,531 Bitcoin between August 2020 and February 2021. While those first BTC positions are worth $1.8 billion, the same investment in Ether would now be valued at 4.64 billions of dollars.

The company then slowed its purchases, investing $80 million in BTC between March 2021 and June 2021, before injecting another $1.26 billion in the second half of 2021 and $215 million in the first half of 2022.

ETH/BTC price on Binance since mid-2020. Source: TradingView

Only five of Microstrategy’s BTC purchases were made below Bitcoin’s current price.

money on the table

“Sometimes as an investor you end up leaving money on the table (even if it’s not your choice) and that’s certainly what we’re seeing with MicroStrategy given their buying down BTC,” Mark Monfort of web3 venture studio, NotCentralized, told The Defiant.“The equivalent they have in BTC reserves could have brought in a significant windfall for ETH if they had bought it instead (and they could also add to that revenue by staking that Ether).” Montfort continued. “Having said that, they were big buying in over 20 tranches since the start of 2021, so how they would have moved the dial in regards to ETH instead of BTC is a guess we may never know. “


Comments are closed.