At this week’s BTC Prague conference, Michael Saylor, co-founder of Strategy (formerly MicroStrategy), said that Bitcoin finance companies can grow as quickly as possible by issuing fairness and credits to buy Bitcoin.
Driving into the business models of Bitcoin finance companies such as strategy, Saylor explained how corporate investments in BTC can far outweigh individual investments.
Bitcoin Finance Company Business Model
Several major companies have announced plans or are pondering the launch of the Bitcoin Treasury Ministry. For example, earlier this week, Brian Armstrong, CEO of Coinbase, the largest US crypto exchange, suggested the launch of the BTC Treasury Department. The $2.3 billion Trump media, a majority owned by President Donald Trump, was raised to buy BTC, and was effectively approved by the U.S. Securities and Exchange Commission (SEC) earlier this month.
Saylor explained that the BTC finance company, which has become increasingly popular over the past few months, has a very simple yet “elegant” business model.
Saylor explains this as an example. Let’s say your dentist buys about $200,000 worth of BTC each year. Twenty years later, the dentist had purchased about $2 million worth of BTC.
However, the Corporation can purchase BTC at a much faster speed. Companies can issue credits in all forms, from convertible bonds, junk bonds to preferred stocks, and purchase BTC worth $2 million in a month.
According to Saylor, companies that buy BTC will be profitable quickly, and will be able to issue securities and purchase large quantities of BTC each month. He said:
“…The simplicity of the business model is to issue billions of dollars, billions of dollars, billions of dollars in securities and buy billions of dollars and billions of dollars of bitcoin.”
This model believes that it will change equity and capital markets from cash-based to Bitcoin-based.
“…I think it goes to what we see in the market right now, the world we dominated BTC.”
BTC finance companies can grow as fast as possible issuing fairness
Saylor noted that “rates that a company can issue stock or credit” and that it is “exponential” to purchase BTC using it. Therefore, the growth rate of Bitcoin Treasury is significantly faster than the traditional business cycle. Saylor said:
“As long as you can issue security and buy Bitcoin, you can literally grow, which is an investment cycle that is 1,000 times faster than a physical real estate or business cycle.
According to Saylor, credit or equity is valued based on expected future cash flows. Investors buy security and lend money to the company based on the amount that the company can earn in the future. In the long term, cash value could also decrease. This means there is a long “uneven equity risk,” Saylor said.
However, Bitcoin finance companies are valued based on their ability to purchase Bitcoin through operations.