The Ministry of Corporate Finance’s “sylorization” has become one of the trends at this point. However, with more companies copying this model, the following questions arise: How sustainable is it? oWhat risk should you predict for companies following this path?
Before continuing, the first thing to consider to read this article is that the term “Saylorization” comes from Michael Saylor as a reserve asset from the heart behind this Bitcoin accumulation model. Strategic CEO is the largest list of Bitcoiners and maintains it BTC is a unique asset, with its price tending primarily to bullish in 2045, reaching $13 million.
As Cryptootics reports, its strategy is to issue debt through convertible bonds to increase BTC holdings without having to rely on operating income. This purchasing approach has become increasingly proactive over time. It doesn’t matter whether it’s a software company or not. The only relevant thing is its Bitcoin accumulation strategy.
Therefore, it has become the company to quote in the Treasury bag with more BTC. Currently there is 592,100 BTC.
In this context, more and more companies are adopting the same strategy and issuing debts to acquire BTC. So far, while Saylor’s experiments were working, Matthew Sigel, head of Vaneck Digital Assets Research, warned of it. Replication of this model is risky.
Through a post on X’s personal account, he explained: “Some of these companies are gathering capital through large market (ATM) programs to buy BTC, which creates risk. If the stock is negotiated with liquid value, the ongoing issuance of shares can be diluted rather than creating value. It is not capital formation.
It should be clarified that ATMs are the term used to define the mechanism by which companies issue actions to obtain funds quickly and flexibly. In this case, it will be allocated to fund the purchase of BTC.
Christmas divides the value of assets a company has by the amount of distribution action. If an action is sold near its value, the new issued will not generate substantial additional revenue and may simply dilute the participation of existing shareholders.
If this scenario is specified, then Sigel’s recommendation is The company announces a break in issuing shares via ATMs. For example, if a company has a BTC balance and its NAV is $10, but the market is trading below $9.50, continuing to issue shares under these conditions means it is below its actual value. This results in a dilution that destroys the value instead of generating it.
Meanwhile, Vanek executives have suggested that if Bitcoin prices rise, it should lead to an increase in the company’s stock price. However, if that appreciation is not reflected in the contribution of the stock market, Shack’s repurchase can be an option to bridge the gap between the assets owned by the company and the real value of the prices cited in the market, resulting in profits for current shareholders.
The third idea that Sigel shared is reviewing business headlines. Merger with another company, splitting the business into separate units Or abandon your Bitcoin accumulationif it is thought that it no longer contributes value to shareholders.
In that sense, Sigel emphasizes: “Official pay should match the growth of NAVs per action, not the size of Bitcoin’s position or the total amount of actions in circulation. When cited in liquid value, stock dilution becomes strategic.
As Cryptootics reports, Shigeru is not the only one who places magnifying glass in Saylor’s strategy Be careful not to take risks. Financial analyst Jacob King compares the model with a loop similar to the Ponzi scheme.
To explain the paper, use images that show dynamics that revolve around a repetitive sequence.
As seen in the previous image, everything is when the company issues debt or stock, and then uses those funds to purchase BTC (helps prices by reducing the available supply), and an increase in Bitcoin value increases the company’s market capitalization.
This attracts mostly retailers – new investors. This allows the cycle to be repeated with new emissions. Therefore, for the King, this mechanism depends on all step operations in the chain. If it fails, The model will become unsustainable.